First, we expanded the adjusted EBITDA margin to 16.7% in the first quarter, which represents an increase of 420-basis-points from the first quarter of 2020.
Second, we delivered 9% recurring revenue growth in the quarter.
That brings recurring revenue to 57% of total revenue.
We continue to make steady progress increasing our recurring revenue, which is consistent with our 80/60/20 goals.
We generated $98 million of free cash flow in the quarter, which represents the first time in many years that NCR has generated positive free cash flow in the first quarter of the year.
We have continued to progress executing our strategy and remain focused on our transition to drive NCR as-a-Service and achieve our 80/60/20 strategic goals.
We have made significant progress against these goals, particularly as we accelerate margin expansion toward our 20% adjusted EBITDA margin target.
In Banking, we continue to have positive momentum in our digital banking platform, with 11 new deals signed in the first quarter.
We recently signed a new NCR Emerald deal with Brookshire Grocery, a Texas-based super-regional grocery with more than 180 stores across three states.
During the first quarter, over 90% of all Aloha sites sold through our direct offices were sold as subscription bundles.
The payment attaches rate is also strong at roughly 85% of sales into new sites.
NCR and Steak 'n Shake recently entered into an agreement for NCR to support Steak 'n Shake for over 500 restaurants globally with the subscription-based point of sale software, hardware, and end-to-end IT services in support of their restaurants.
Starting on the top left, consolidated revenue was $1.54 billion, up to $41 million or 3% versus the 2020 first quarter, driven by solid growth in our retail and hospitality segments.
Revenue was down $87 million or 5% sequentially.
This year's Q1 sequential decline in revenue compares to an average step down of over $300 million from Q4 to Q1 over the last four years.
Recurring revenue was up 9% and comprised 57% of our revenue in the quarter.
In the top right, adjusted EBITDA increased $70 million or 37% year over year to $258 million.
Adjusted EBITDA margin rate expanded 420-basis-points to 16.7%.
On our last call, we detailed the more permanent productivity improvements that accumulated to more than $150 million in recurring annual cost savings.
The flat performance from the fourth quarter of 2020 compares to an average Q1 sequential decline of roughly $90 million in the first quarters of each of the last four years.
In the bottom left, non-GAAP earnings per share was $0.51, up to $0.20 or over 65% from the prior year's first quarter.
The tax rate of 28.2% was higher than the 2020 Q1 tax rate of 13.5% and our full-year guidance of 26%, up in both cases due to higher income and a decrease in discrete tax benefits.
And finally, and maybe most importantly, we generated $98 million of free cash flow in the quarter.
This compares to a use of cash of $20 million in the first quarter of 2020 and represents the first time in many years that NCR has generated positive free cash flow in our first quarter.
The $60 million declines from the fourth quarter of 2020 compared to an average Q1 sequential decline of roughly $425 million in the first quarters of the prior four years.
Banking revenue decreased by $7 million or 1% year over year, with more than all of that decline attributable to lower ATM hardware sales.
Banking adjusted EBITDA increased $14 million or 10% year-over-year despite the lower revenue.
As a result, the adjusted EBITDA margin rate expanded by 210-basis-points to 20.4%.
On a sequential basis, revenue was down 5%, while adjusted EBITDA increased 17%, and the adjusted EBITDA margin rate expanded 380-basis-points.
On the left, while the conversion of current quarter wins that Mike described will have a typical 9-month lag to conversion and eventual revenue generation, prior period wins at digital banking drove a 6% year-over-year growth rate in the first quarter.
Digital banking registered users increased 13% compared to Q1 2020, and despite the decline in total banking revenue, we did grow in the right places.
Recurring revenue in the Banking segment increased 8% year over year.
Retail revenue increased $60 million or 13% year over year, driven by strong self-checkout and services revenue.
Retail adjusted EBITDA increased $36 million or 97% year over year, while adjusted EBITDA margin rate expanded by 590-basis-points to 13.7%.
This first-quarter performance demonstrates the impact of double-digit revenue growth accompanied by cost discipline, with incremental EBITDA conversion of $0.60 on the dollar.
Self-checkout revenue increased 31% year over year, driven by broad-based demand both by the customer and by geography.
Platform lanes increased 51% compared to the prior-year first quarter.
And importantly, recurring revenue in this business increased 14% versus the first quarter of 2020.
Hospitality revenue increased by $10 million or 6% as we are beginning to see restaurants reopen, rework existing locations, and expand.
First-quarter adjusted EBITDA increased $18 million or more than tripled from the first quarter of 2020 due to higher revenue and lower operating expenses.
Aloha Essentials sites, which bundle software, services, hardware, and payments into a single offering grew 61% when compared to the prior year's first quarter and grew 21% sequentially.
Recurring revenue in this business was down 1% from last year and was flat sequentially.
We provide our first-quarter results for 80/60/20 strategic targets that are now very familiar to you.
We strive to generate 80% of our revenue from software and services or, described as the inverse, less than 20% of our revenue from discrete hardware sales.
In the first quarter, software and services represented 72% of our revenue, which is an increase from 71% in the fourth quarter.
The decline from 74% in the first quarter of 2020 was driven by higher SCO revenue this year.
We aim for 60% of our revenue to be recurring, to drive more resilient, more predictable, and more valuable revenue.
Recurring revenue represented 57% of total revenue, compared to 54% in the fourth quarter, and 53% in the first quarter of 2020.
And we aspire to a 20% adjusted EBITDA margin rate.
As I've already emphasized, we made significant progress in this metric with an adjusted EBITDA margin rate of 16.7%, compared to 12.5% in the first quarter of 2020, and 15.8% in the fourth quarter.
Free cash flow of $98 million in this quarter, compared to free cash outflow in last year's same quarter of $20 million.
Versus Q1 of 2020, all categories of inventory were down an aggregate of 17%, with days on hand down seven days operationally.
Receivables were down 11%, with a 9-point improvement in those longer than 90 days, and days sales outstanding improved by nine full days.
This slide also shows our net-debt-to-adjusted-EBITDA metric, with a leverage ratio of 3.2 times.
We ended the first quarter with $319 million of cash and remain well within our debt covenants.
We ended the first quarter with credit facility leverage of approximately 3.3 times, well under our debt covenant maximum of 4.6.
We amended and extended our senior secured credit facility which provided an incremental $1.3 billion of new Term Loan A, and issued new $1.2 billion in the 8-year senior notes.
The weighted average interest of these transactions is about 3.7%, which is significantly lower than our original model.
At the eventual close of the transaction, these funds will all become available, and our total leverage covenant will widen to 5.5 times to allow us to execute our plan to delever rapidly from a forecasted post-close level of 4.5 times.
So for Q2, for NCR is currently comprised, and relative to 2020's results, we expect revenue growth of 9% to 10%.
On profitability, we expect the adjusted EBITDA margin rate to expand by 250-basis-points to 300-basis-points to more than 16%.
We remain very excited about the transaction as the addition of Cardtronics will accelerate our NCR as-a-Service strategy and is expected to be accretive to non-GAAP earnings per share for the first year by 20% to 25%.
It will enhance our scale and cash flow generation while advancing our 80/60/20 strategic targets by roughly two years.
Looking forward, our key priorities are clear; First, we will continue to accelerate our NCR as-a-Service and 80/60/20 strategy.

Summary:
Starting on the top left, consolidated revenue was $1.54 billion, up to $41 million or 3% versus the 2020 first quarter, driven by solid growth in our retail and hospitality segments.
In the bottom left, non-GAAP earnings per share was $0.51, up to $0.20 or over 65% from the prior year's first quarter.