Nayax Ltd (NYAX) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and Expanding Customer Base

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Wed, May 14, 2025, 1:10 AM 5 min read

Revenue: $81 million, a 27% increase over Q1 2024; $82 million on a constant currency basis, a 28% increase.
Recurring Revenue: Grew by 35% to approximately $62 million, representing 77% of total revenue.
Adjusted EBITDA: $9.7 million, representing 12% of total revenue.
Total Transaction Value: Increased by more than 18% to over $1.3 billion.
Customer Base: Expanded by more than 30% to over 100,000 customers.
Installed Base of Managed Devices: Grew by 20% to more than 1.3 million devices.
Gross Margin: 49%, up from 44% in Q1 2024.
Net Income: $7.2 million; excluding one-time gain, net income was $1.1 million.
Cash and Cash Equivalents: $176.8 million as of March 31, 2025.
Free Cash Flow: Minus $5.7 million, mainly due to timing of cash settlements.
2025 Revenue Guidance: $410 million to $425 million, with organic growth of at least 25%.
2025 Adjusted EBITDA Guidance: $65 million to $70 million.

Warning! GuruFocus has detected 8 Warning Signs with NYAX.

Release Date: May 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Nayax Ltd (NASDAQ:NYAX) reported a strong revenue increase of 27% over Q1 2024, reaching $81 million.
Recurring revenue grew by 35% compared to Q1 2024, representing 77% of total revenue, indicating a strong and resilient business model.
The company expanded its customer base by more than 30% since Q1 2024, reaching over 100,000 customers.
Nayax Ltd (NASDAQ:NYAX) launched a cloud-based food service kiosk solution in Brazil, expanding its presence in the Latin American market.
The company reported an adjusted EBITDA of $9.7 million, representing 12% of total revenue, showcasing disciplined focus on profitable growth.

Negative Points

Free cash flow for the quarter was negative, at minus $5.7 million, mainly due to the timing of cash settlements from processing activities.
The transaction volume has been flattish for the third consecutive quarter, raising concerns about underlying growth trends.
There is a potential impact from tariffs on hardware margins, although the company is currently absorbing these costs.
Foreign currency volatility impacted revenue by approximately $700,000 in the quarter.
The company faces challenges in expanding its presence in Latin America due to the need for local partnerships and agreements with banks.

Q & A Highlights

Q: Can you break down the growth acceleration in your end markets, particularly regarding EV and cost optimization? A: Yair Nechmad, CEO: We see strong growth potential in OEM partnerships, particularly in equipping machines with Nayax devices. Our presence at industry shows confirms this. We have significant orders from Tier 1 customers, and our EV solutions are well-received, offering integrated payment and management systems. Sagit Manor, CFO: Our hardware margins have improved due to supply chain optimizations and cost reductions. The transaction volume was flat initially but is now aligning with expectations.

Q: With the recurring revenue expected to ramp up, do you foresee gross margin expansion throughout the year? A: Sagit Manor, CFO: Yes, recurring revenue margins improved from 50% to 52% due to renegotiated acquirer agreements and smart routing. We expect margins to remain stable, with processing revenue margins around 35%-36% and hardware margins between 30%-35%.

Q: How should we think about the growth in device sales versus recurring revenue? A: Yair Nechmad, CEO: Growth in hardware is driven by our flagship peoplesarch units, despite being lower-priced compared to fridges or micromarkets. Demand for our fridge products is strong, and we expect payment services to lead growth. Sagit Manor, CFO: We anticipate stronger performance in the second half of the year, with significant device orders expected.

Q: Can you discuss the dynamics of micromarkets and smart coolers relative to your core business? A: Yair Nechmad, CEO: Micromarkets are established in North America, and we offer a plug-and-play product for existing customers. Smart coolers, supported by weight sensors and cameras, are ready for market and have global potential, unlike micromarkets, which are more region-specific.

Q: What is the outlook for M&A, particularly in Latin America? A: Aaron Greenberg, Chief Strategy Officer: We are prudent with acquisitions, focusing on attractive valuations. The market remains a buyer's market, especially outside the US. We expect to close one to two additional deals this year, with opportunities in Latin America, particularly Brazil.

Q: How stable is the take rate, and what factors influence it? A: Sagit Manor, CFO: The take rate is currently 2.75% and is influenced by geography and verticals with higher transaction values, such as parking and EV charging. We expect a steady increase over time.

Q: Are there any macroeconomic impacts affecting volume growth, and what is the outlook for the rest of the year? A: Yair Nechmad, CEO: We haven't observed significant macroeconomic impacts. Volume growth aligns with our projections, and we expect it to catch up as the year progresses. Sagit Manor, CFO: Processing revenue grew by 30%, driven by increased active units and take rate improvements.

Q: How are tariffs impacting your margins, and are you absorbing these costs? A: Sagit Manor, CFO: We are maintaining steady pricing for US customers despite tariffs, thanks to supply chain improvements. The impact on hardware margins is minimal, and we expect margins to remain strong, between 30%-35% for the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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