Nayax Ltd. Q1 FY2026 earnings call

Core Business Milestones

• Installed base of connected devices surpassed 1.5 million units globally, serving 120,000 total customers, accelerating the company's recurring revenue flywheel effect
• Total transaction value grew 33% YoY to $1.8 billion, with average transaction value (ATV) increasing to $2.36 from $2.06 YoY, reflecting a favorable mix shift to higher-value verticals; take rate remained strong at 2.66%
• Average Revenue Per Unit (ARPU) increased 14% YoY to $247, driven by ongoing cash-to-cashless conversion among existing customers and expansion into higher-value verticals

Vertical Expansion

• Strong demand for pin-on-glass VPOS media devices in Europe, unlocked by local regulatory requirements for transaction pin verification, enabling penetration into higher ATV verticals
• Following the acquisition of LinkWheel (Linkwell), the company showcased the combined brand at the major EVCS EV conference and received strong customer reception; the mid-sized EV network pipeline for Linkwell's white-label platform continues to grow, with new partnerships signed post-acquisition

Geographic Expansion

• In Brazil, following successful integration of acquired VM Technology and AppPay, all operations have been fully rebranded to NICE Brazil; the company has begun onboarding new customers as a payment facilitator and plans to launch the VPOS Media product imminently to address the market with a unified offering
• Brazil's large, underpenetrated unattended cashless market, with device rental as the dominant business model (high recurring margins), presents significant long-term growth opportunity

Strategic Initiatives

• Yellow Account, the U.S. embedded banking offering developed in partnership with Adyen, is progressing through its pilot phase; the offering prioritizes faster payouts for cash-flow dependent nano-merchants and serves as a foundation for future layered services (lending, issuing, e-commerce) to increase ARPU
• AI is being embedded across R&D and product offerings: a new AI intelligence layer for the MoMA mobile management app will launch in Q2, providing conversational business insights, AI-driven strategy suggestions, and visual recognition-enabled merchandising plan setup, supporting OPEX discipline and long-term margin expansion
• M&A pipeline is active and growing, with increased deal flow in the current market; management maintains discipline to target opportunities aligned with the company's long-term strategy and growth profile, supported by a strong balance sheet

Total company revenue for Q1 2026 was $107 million, representing 32% year-over-year growth, with 26% organic revenue growth. Recurring revenue grew 27% year-over-year and accounted for 74% of total revenue. Recurring revenue margin increased to 54% from 52% in the prior year quarter, with processing margin reaching nearly 40% (up from 36% YoY) and SaaS margin improving to 76.5% (up from 75.9% YoY). Hardware revenue grew 46% YoY to $28 million, driven by strong cross-market demand. Hardware margin was lower in the quarter due to promotional activity for new pin-on-glass VPOS media devices in Europe, pulling overall gross margin to 49% (flat YoY). Adjusted EBITDA increased 43% YoY to $14 million, representing 13% of total revenue, with an adjusted EBITDA margin of 13% (up from 12% YoY).

• Management reaffirmed its full-year 2026 financial guidance, with no upward or downward revisions from prior guidance
• Full-year 2026 total revenue is guided to $510 to $520 million, with organic revenue growth of 22% to 25%
• Full-year 2026 adjusted EBITDA is guided to $85 to $90 million, representing an adjusted EBITDA margin of approximately 17%
• Full-year 2026 free cash flow conversion from adjusted EBITDA is expected to be approximately 40%
• Management expects a more balanced split of revenue across quarters in 2026, compared to the 2025 hockey-stick skew heavily to Q4; the historical seasonal pattern holds with H1 accounting for ~45% of annual revenue and H2 accounting for ~55%

• Forward-looking statements are based on current assumptions, and actual results may differ materially due to identified and unidentified risks and uncertainties, detailed in the company's regulatory filings
• Foreign currency exchange rate volatility created a $1.2 million unfavorable impact on adjusted OPEX in Q1 2026 compared to Q4 2025; while management hedges currency exposure through natural hedges and bank instruments, unforeseen volatility could create future negative impacts
• Lower hardware gross margins in Q1 reflected promotional activity for new product launches, which could pressure near-term overall margins
• Negative free cash flow of $6 million in Q1 2026 reflects elevated infrastructure investment and timing of processing cash settlements, which may continue to impact near-term cash flow
• Transition to a broader rental/lease model outside of Brazil requires upfront capital investment for fixed assets, with revenue recognized over a longer time horizon

Q: Raina Kumar (Oppenheimer) asked to discuss NIACS' EV strategy and current EV contribution, given rising fuel prices, and to explain hardware margin trends for the rest of 2026. / A: Management states the 2025 Linkwell acquisition doubled down on the company's end-to-end payment and software strategy for EV charging. Rising fuel prices are expected to drive long-term secular EV adoption and higher charger utilization in the U.S., and the company is focused on connecting as many public DC fast chargers as possible, with several new mid-sized network partnerships already signed. Q1's lower hardware margin came from European VPOS media product launch promotions; management expects overall gross margin to hold near Q1's 49% for the rest of the year, slightly higher than Q1 levels, and reaffirmed full-year guidance.

Q: Josh Nichols (B. Riley) asked what drivers have pushed processing margins to a record 40%, what the long-term ceiling is for processing margins, and what share of recent 14% ARPU growth comes from high-value verticals like EV, with room for future growth. / A: Margins expanded from renegotiated lower fees with major acquirers, improved smart transaction routing, and a favorable geographic mix of higher-margin European transactions. Management expects ongoing improvements across processing and SaaS margins. ARPU growth comes from both ongoing cash-to-cash conversion in existing machines and the shift to higher-value verticals like EV, amusement, and car wash; future ARPU growth will get an additional catalyst from embedded banking and new layered services for existing customers.

Q: Chris Kennedy (William Blair) asked for initial learnings from the Yellow Account embedded banking pilot, and an overview of the Brazil market opportunity. / A: The pilot is progressing well, and customer demand is strong, driven by the core benefit of faster daily payouts for cash-flow dependent nano-merchants. Yellow Account also serves as a foundation to layer additional personalized services over time, leveraging NIACS' unique real-time transaction data that external banks do not have. For Brazil, it is a large underpenetrated market for unattended cashless payments with limited incumbent competition; the local market uses a dominant rental model for devices, which delivers high SaaS-like recurring margins, and the company is completing integration and branding to launch its full product portfolio.

Q: Sanjay Sakharani (KBW) asked if the Middle East conflict has impacted hardware costs and what the current M&A pipeline outlook is. / A: Management reports no impact on hardware costs or margins from the conflict, with inventory levels stable despite 46% hardware revenue growth. The M&A pipeline has grown significantly, as private companies face limited liquidity and a more favorable buyer's market; NIACS is actively pursuing deals for founder-led businesses aligned with its strategy, and expects to complete multiple acquisitions in 2026, contributing to the 2028 $1 billion revenue target.