Shares of NCR Corporation (NYSE:NCR) were down 12% as of 12:15 p.m. EDT Wednesday after the payment transaction solutions company announced strong first-quarter 2018 results, but it followed with underwhelming forward guidance.
On the former, NCR's revenue climbed 3% year over year to $1.52 billion, albeit driven by a 3% positive impact from foreign currency exchange. That translated to adjusted (non-GAAP) net income of $85 million, or $0.56 per diluted share, roughly flat from the same year-ago period. Both ranges were well above investors' expectations for adjusted earnings of $0.45 per share, and a slight decline in revenue.
On a constant currency basis, NCR's top line was held back by a 19% decline in software license revenue, to $70 million, and a 3% decline in software maintenance revenue to $91 million. But those drops were all but offset by growth of 9% in cloud revenue to $155 million, and a 4% gain in professional services sales to $144 million.
NCR chief operating officer Paul Langenbahn called it a "solid start to the year," particularly given cloud revenue growth and NCR's continued focus on operational efficiency.
For the second quarter of 2018, though, NCR expects revenue growth to be down 1% to up 1% year over year, with adjusted earnings per share in the range of $0.60 to $0.65. Though we don't usually pay close attention to Wall Street's near-term demands, the midpoints of those ranges sit well below expectations for adjusted earnings of $0.75 per share on a 0.8% increase in revenue.
Despite its relative outperformance in the first quarter, then, NCR opted to reaffirm its full-year 2018 guidance, which calls for revenue growth of 0% to 3% and adjusted earnings per share of $3.30 to $3.45.
In the end, that's not to say NCR should be displeased with its results. But there's no denying our market is a forward-looking machine. However minor its guidance shortfall relative to expectations, it's no surprise to see the stock pulling back in response.