Nayax Ltd. (Israel) Q1 FY2025 earnings call

Key Financial Highlights

• Revenue for Q1 2025 was $81M, up 27% from Q1 2024; constant currency revenue was $82M, up 28%.
• Recurring revenue grew 35% to $62M, representing 77% of total revenue.
• Adjusted EBITDA was $9.7M, 12% of revenue.

Operational Highlights

• Launched cloud-based food service kiosk solution in the Brazilian market.
• Announced strategic partnership with N-and Group to launch next-generation smart screens for OEMs with Nayax's embedded payment capabilities.
• Strong momentum in micro markets and smart coolers; end-to-end control of hardware, software, and payment processing sets Nayax apart.
• Deepened presence in EV charging space, expanded partnership with BTC Power, and introduced new feature for Easy kiosk product.

Revenue for the first quarter of 2025 saw a strong increase of 27% over Q1 2024, reaching $81 million and grew by 28% on a constant currency basis to $82 million. Recurring revenue grew by 35% over Q1 2024, representing 77% of total revenue in Q1. Processing revenue grew by 30% to $37 million in Q1, driven by a 20% increase in the installed base of managed and connected devices, an 18% increase in dollar transaction value, and a higher take rate of 2.75%. Hardware revenue in the quarter was $19 million, a 6% increase over Q1 2024. Managed and connected devices increased 20% over Q1 2024, reaching more than 1.3 million devices at the end of the first quarter.

• Reaffirmed full-year 2025 guidance: at least 25% organic revenue growth, revenue range of $410M to $425M on constant currency basis.
• Adjusted EBITDA guidance remains $65M to $70M.
• Expect hardware margins to be between 30% to 35% for the full year.
• Target 50% free cash flow conversion from adjusted EBITDA for 2025.

• Foreign currency volatility may impact results.
• Macro-economic factors could affect consumer behavior and business volume.
• Tariffs on imports to the U.S. could impact international operations if not managed properly.

Q: Hello, everyone, and welcome to Nayax's First Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Aaron Greenberg. Please go ahead, Aaron.

A: Thank you, operator, and everyone, for joining us today on this conference call. With me on the call today are Yair Nechmad, Nayax's Co-Founder and Chief Executive Officer; and Sagit Manor, Chief Financial Officer. Following management's prepared remarks, we will open the call for the question-and-answer session. Our press release and supplementary investor presentation are available on our Investor Relations website at ir.nayax.com. As a reminder, during this call, we'll be making forward-looking statements. All forward-looking statements on our call today are based on assumptions and therefore are subject to risks and uncertainties that may cause results to differ materially from those projected. We have no obligation to update these statements, except as required by law. You can read about these risks and uncertainties in our supplementary investor presentation released earlier today and our regulatory filings. In addition, today's call will include a discussion of non-IFRS measures. Management believes non-IFRS results are useful in order to enhance our understanding of our ongoing performance. However, these measures should be considered as a supplement to and not as a substitute for IFRS financial measures. A reconciliation between Nayax's non-IFRS to IFRS measures can be found in our earnings press release issued earlier today. All key performance indicators are intended to evaluate our business and properly measure factors in a macroeconomic environment to guide and support our decision-making. These key performance indicators may be calculated in a manner different from the industry standards. And finally, please note that all figures in today's call will be reported in U.S. dollars unless stated otherwise. Yair will start the call with key financial and operational highlights. Following that, Sagit will go through the details of financial results and discuss the outlook. And with that, I would like to turn the call over to Nayax's CEO, Yair Nechmad. Yair?

Q: Hannes Leitner with Jefferies asked about growth acceleration in end markets, EV product impact, hardware margin improvement, and transaction volume trends.

A: Yair Nechmad and Sagit Manor responded, discussing OEM growth potential, EV product fit, hardware margin improvement through supply chain and acquisition integration, and transaction volume trends related to seasonality.

Q: Josh Nichols with B. Riley asked about gross margin expansion, split between hardware and recurring revenue growth.

A: Sagit Manor and Yair Nechmad replied, discussing recurring margin improvement, hardware margin outlook, and growth split between hardware volume and service revenue.

Q: Cris Kennedy with William Blair asked about micro markets and smart coolers dynamics and M&A pipeline.

A: Yair Nechmad and Aaron Greenberg answered, discussing micro markets and smart coolers potential, and M&A pipeline status and valuation considerations.

Q: John Coffey with Barclays asked about Latin America expansion, M&A valuation, and take rate stability.

A: Yair Nechmad and Aaron Greenberg and Sagit Manor responded, discussing Latin America market entry strategy, M&A valuation prudence, and take rate stability.

Q: Sanjay Sakhrani with KBW asked about volume growth, tariff impact on margins.

A: Yair Nechmad and Sagit Manor answered, discussing volume growth trends, tariff impact on hardware pricing, and margin absorption of tariff costs.

Q: Rayna Kumar with Oppenheimer asked about consumer behavior impact on guidance and FX impact on revenue.

A: Sagit Manor responded, discussing consumer behavior trends related to cash-to-cashless conversion and FX impact on revenue reporting in constant currency.