Nayax Ltd. (Israel) Q3 FY2024 earnings call

• Delivered strong results with record revenue, net income, and positive free cash flow.
• Adjusted EBITDA reached $11.1 million, 13% of total revenue.
• Recurring revenue grew 49%, representing 72% of total revenue.
• Customer count ended at ~91,000 vs. 60,000 in Q3 2023.
• Installed base of managed and connected devices grew to 1.23 million, a 40% YOY increase.
• Acquisitions of VMtecnologia, Roseman, and Retail Pro are being integrated as planned.
• Strategic partnership with Adyen announced, expected to generate savings and expand PayFac services.
• Joint offering in EV charging space for e-commerce planned.
• Strengthened partnership in Retail with A2Z for global automated payment solutions.

Nayax reported record revenue of $83 million for the third quarter of 2024, representing a 38% year-over-year growth. Recurring revenue, which includes SaaS subscription and payment processing fees, grew 49% to approximately $60 million, making up approximately 72% of total revenue. Hardware revenue reached $23.1 million, a 15% increase compared to Q3 2023. Gross profit was $38 million, with a gross margin of 45.7%. Operating profit was $1.5 million, and adjusted EBITDA was a record $11.1 million, representing approximately 13% of total revenue. The company achieved net income for the first time, with net income of $0.7 million for the quarter. The installed base of managed and connected devices grew to 1,230,000 devices, a 40% year-over-year increase, and customer count ended the quarter at approximately 91,000 compared to 60,000 in the previous year's third quarter.

• Revised 2024 revenue guidance to $315 million to $320 million, a 35% YOY growth at midpoint on constant currency basis.
• Adjusted EBITDA guidance for 2024 remains $30 million to $35 million, expected at higher end.
• Raised hardware margin guidance to exceed 30%.
• 2025 adjusted EBITDA expected to be at least 15%.
• Long-term targets include 35% revenue growth, 50% gross margin, and 30% adjusted EBITDA margin.

• New product certification delays impacted hardware revenue growth in H2 2024, expected to be resolved by end of 2024/early 2025.
• Macroeconomic uncertainties and regulatory changes could potentially impact business, though Nayax's business model is resilient with low churn and high net retention.

Q: Drill down on post-certification delays and EV push impact on guidance.

A: Yair Nechmad explained certification delays in EV territory were unforeseen, affecting hardware revenue in H2 2024 but not impacting adjusted EBITDA guidance. EV push has strong potential with OEM partnerships and market presence.

Q: Details on Adyen partnership and levers for EBITDA margin.

A: Aaron Greenberg discussed partnership with Adyen allows scaling, entering new countries, and reducing operational costs. Sagit Manor mentioned operating leverage and cost discipline driving EBITDA margin targets.

Q: Integration process of Adyen partnership and LatAm impact.

A: Aaron Greenberg stated integration started a year ago, initial stage completed, rolling out processing. Yair Nechmad noted VMtecnologia acquisition boosts Latin America presence, though currently in rest of world due to materiality.

Q: Take rates and verticals driving tailwind.

A: Yair Nechmad cited EV charging, parking, laundry, micro markets, and car washes as verticals driving take rates, with high ATV transactions boosting processing revenues.

Q: Impact of recent election and regulatory trends.

A: Yair Nechmad and Sagit Manor noted Nayax's business is resilient with low churn and net retention, unaffected by macroeconomic shifts, and benefits from cashless trends and protected customer base.