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Segment Information and Concentrations

3 Months Ended

Mar. 31, 2019

3. SEGMENT INFORMATION AND CONCENTRATIONS

As noted in Note 1. Basis of Presentation and Summary of Significant Accounting Policies, effective January 1, 2019, NCR changed the management of its business to an industry basis from the previous model of management on a solution basis, which resulted in a corresponding change to NCR's reportable segments. We have reclassified prior period segment disclosures to conform to the current period presentation. As a result of the change, the Company manages and reports the following segments:

•

Banking - We offer solutions to enable customers in the financial services industry to reduce costs, generate new revenue streams and enhance customer loyalty. These solutions include a comprehensive line of ATM and payment processing hardware and software; cash management and video banking software and customer-facing digital banking services; and related installation, maintenance, and managed and professional services.

•

Retail - We offer solutions to customers in the retail industry designed to improve selling productivity and checkout processes as well as increase service levels. These solutions primarily include retail-oriented technologies, such as point of sale terminals and point of sale software; a retail software platform with a comprehensive suite of retail software applications; innovative self-service kiosks, such as self-checkout; as well as bar-code scanners. We also offer installation, maintenance, managed and professional services as well as payment processing solutions.


•	Hospitality - We offer technology solutions to customers in the hospitality industry, serving businesses that range from a single store or restaurant to global chains and sports and entertainment venues. Our solutions include point of sale hardware and software solutions, installation, maintenance, managed and professional services as well as payment processing solutions.


•	Other - This category includes telecommunications and technology solutions where we offer maintenance as well as managed and professional services for third-party hardware provided to select manufacturers who value and leverage our global service capability.

These segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker in assessing segment performance and in allocating the Company's resources. Management evaluates the performance of the segments based on revenue and segment operating income. Assets are not allocated to segments, and thus are not included in the assessment of segment performance, and consequently, we do not disclose total assets by reportable segment.

The accounting policies used to determine the results of the operating segments are the same as those utilized for the consolidated financial statements as a whole. Intersegment sales and transfers are not material.

To maintain operating focus on business performance, non-operational items are excluded from the segment operating results utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income from operations.

The following table presents revenue and operating income by segment:



In millions	Three months ended March 31
In millions	2019		2018
Revenue by segment
Banking	$	758	$	721
Retail	511		521
Hospitality	193		204
Other	74		71
Consolidated revenue	$	1,536	$	1,517
Operating income by segment
Banking	$	95	$	84
Retail	26		35
Hospitality	16		19
Other	10		10
Subtotal - segment operating income	147		148
Other adjustments ⁽¹⁾	47		39
Income from operations	$	100	$	109


⁽¹⁾	The following table presents the other adjustments for NCR:



In millions	Three months ended March 31
In millions	2019		2018
Transformation and restructuring costs	$	26	$	16
Acquisition-related amortization of intangible assets	21		23
Total other adjustments	$	47	$	39

The following table presents revenue by geography for NCR:



In millions	Three months ended March 31
In millions	2019		2018
Americas	$	920	$	889
Europe, Middle East and Africa (EMEA)	419		408
Asia Pacific (APJ)	197		220
Total revenue	$	1,536	$	1,517

The following tables present revenue from products and services for NCR:



In millions	Three months ended March 31
In millions	2019		2018
Product revenue	$	539	$	526
Professional services and installation services revenue	238		256
Recurring revenue, including maintenance, cloud revenue and payments	759		735
Total revenue	$	1,536	$	1,517



In millions	Three months ended March 31
In millions	2019		2018
Software	$	467	$	460
Services	585		601
Hardware	484		456
Total revenue	$	1,536	$	1,517