Nayax Ltd. Price & Performance (NYAX)

And yet, not only that we were able to reach the 25%, 27%, the pre pandemic percentage of hardware margins, we have we were able to exceed that. And we are now in the 30 plus percent margins as exactly Agil mentioned, the fact that we are designing and developing the product in house We have that flexibility. And we are able to continue to drive component cost reductions in any supply chain improvement and initiatives to make sure that the hardware is in town yet cost effective. Next questions are from the line of Nick Gramma with UBS.

Please proceed with your questions.

Hey, good morning and thanks for taking my questions. First, I just wanted to go back to the 2025 revenue outlook. You just discuss some of the sources of visibility that you have for the guided acceleration in organic revenue growth versus 2024?

Perhaps some of the partnerships that you signed in Q4 the Pelican Group or the large one in France and Italy? And then how should we think about the growth on a relative basis for the three revenue lines in 2025? Thank you. Well, again, I will start and maybe Aaron and Sadip will will continue. I think we're demonstrating regarding the growth we partnership, Aditi is, as I mentioned, potentially that we have agreement with or potentially opening the door to discover to come in and increasing the revenue for our customers and then for our revenue as well. Any kind of agreement with resellers or existing customers like Five Star that are taking us to the next level. All of this is part of building channels or existing customers to continue to work with. Think we have a very strong and good transparency to see where we're going and on this level. And we de land and expand as I mentioned earlier giving us the confidence that the growth is actually built into the company. If we take it to the numbers, so just for the sake of I'm calling this the gross sale number, if you're doing $63,000,000 over here, this quarter in terms of SaaS revenue and we have been built in potentially 25%, 30% net retention dollar.

When you calculate this, it's almost reaching out to hundred million dollars We sold last year, I think $80,000,000 or $90,000,000 in terms of revenue So we already built in the company as is potentially with $400,000,000 So our expectation to reach out to the $410,000,000 $4.00 15 is not outreach from our perspective regarding the team, the quality of the team, the skills of the employees, the the brand recognition, all of this is really opening us to the level that we can say It is achievable and it's actually building up from bottom up, not just from top down. I would add that I think that one of the key areas that we've been focusing on over the last year has been the push into the OEM market, which was mentioned a couple of questions ago. But I want to stress that a little bit more because as you can see, we're growing in the 20s right now just on the MagicConnect devices side and that's been been part of the acceleration of the flagwheel effect is at the end of the day the Managed Text devices drive fast in the processing. And we see 70% to 80% of our revenues on a year to year basis is coming from the existing customers with a nearly 130% net retention rate.

That's the initial flywheel effect But what we're seeing is that as historically over the last twenty years, we've been focused more on the retrofit What we're starting to see is that we can actually get all the way to the beginning and get into the OEM machine from the factory level that's where we're really starting to push a lot of our salespeople in to. We're expanding our China team.

Which is with the OEM manufacturers, we're exporting to other countries. And actually embedding our devices into the machines at the beginning which gives a level of stickiness and quantity scale that we didn't necessarily have all the time in the past where we have all these small businesses, you have to sell one consumable to each person. Now we're selling from the OEM level and then with the when the small business is coming in and saying, hey, I want to go and buy a vending machine They're buying it already with the NIAX device in it. We don't actually have to sell it to the end customer, which is a much stickier way to actually go and sell with a much lower the end of the day. And that's what we're really starting to see some momentum in. I think to add to this, the segment of verticals that is growing quite nicely and we we don't see it or potentially the market don't see it yet, but we see potentially what's going to happen in the next few years is the electrical vehicle. And adding up to what we say about the OEM, one of the key players of the OEM channel is the EV OEM.

And over there, we have very strong hold in terms of our China office to build in OEM device, payment device IoT is the small device that is like 10% of the cost of the hardware that we're selling as a retrofit or it is improved device that can manage whole AC charger, the flow charger. So we're seeing this kind of thing that's going to happen in the next maybe potentially as we see this in 2025. But onwards, so 2026 and onwards, it will be very, very strong part of the of the channel of the growth of the new devices coming into the market.

It. Thanks for all the color you've noted on the OEM channel. For my follow-up, I just wanted to ask about the strong improvement in the payment processing gross margins in the quarter. Can you just put a finer point as to what they were in Q4 and where you them going in 2025? [indiscernible] The payments processing margin improvements was for two reasons. One, it was about renegotiating with our existing acquirers and being able to improve the cost structure that we have with them. And the second item was about the smart routing that as I mentioned, it's helping us to route the transaction where it makes more sense for Naya. And yet the customer can get the product very fast I just want to make sure that I answered your question about the processing margin expansion.

Understood on the drivers of of the margin expansion. I was just curious as to like what the margin was in Q4?

The specific margin on Q4 of the order processing? It was 36.3%. In Q4.

And it's in the press release. We split it up.

Okay.

Okay, great. And where do we see this going in 2025? Because that's a big improvement?

So I would say that in the year, it was around 34%. And we are expecting that to continue around that area.

Obviously, we will continue to work on expansion as we showed this year that in the in the outlook you should assume the same beautiful margins we were able to show. Improved significant improvement. I think it was more than 700 basis points from the outlook from last year. [indiscernible] Great. Thanks for all the additional color. Yes.

Thank you. The next question is from the line of Chris Kennedy with William Blair.

Please proceed with your questions.

Yes. Thanks for taking the question and appreciate all the details. Just wanted to go back to the ARPU, really appreciate you disclosing that Is there any way to think about the ARPU between different categories, whether it's micro markets, traditional vending, energy, retail, whatever you want to talk about.

Hi, Chris. Good to see you on the call. Thanks for the great question. With regards to the ARPU, this is the first quarter that we're mentioning it and giving this disclosure. There's a mix of where the ARPU is coming from, obviously, with most of it still coming from the traditional unattended segment, which is the majority of business right now. And while we're not going to split up the ARPU by vertical, it's important to mention that things like micro markets, and EV, which I mentioned before, are starting to drive the ARPU up.

Addition to again the existing devices and seeing more processing coming from those existing devices, So between the two, we start to see the mix start Maybe to add to this, Chris. I think what we're looking at Again, NIHT is a payment company. We're looking through their volume We believe that the more we have more customers and ease of doing business with NICE is easier. And of course, we are riding on the trends of consumers So we believe that payment is a big part of what we will see in the ARPU growth This is something that you already can see this in our our Q over Q in terms of the growth. And we believe that the ideal behind this is to be very efficient to the customers and what you call labor falls the processing growth, which is naturally coming and be very effective and efficient in the way that we are acquiring our processing Understood. Thank you for that. And then just kind of on the similar line, but when you think about 2028, and your targets, is there any way to think about what your business mix will look like then versus where it is now?

A year you talked about growth of EV as being a big driver of going forward. Thanks for taking the questions.

I think for for a few times ago, we talked about this. It's how to predict exactly But I think what we what Max has in our hands today and what we see into the near future like '27, '28, The down attendant is the majority as we look at this and of it is the EV. But if we split between the unattended and the EV, so potentially the EV, it depends on, of course, the macro level, what will happen. Can be, I think, 10%, 15% of the total unattended. And on top of it, we have the retail and all of this together coming to around billion dollars revenue company that we aspire to do in 2028. [indiscernible] EV, which is the majority of the business.

Understood. Thanks for squeezing me in here. Thank you. The next question is from the line of John Coffey with Barclays. Please proceed with your questions. Hi. Thank you for taking our question this morning. This is Owen on for John. Just another very solid quarter top line growth north of 30%, but wanted to kind of compare that to the 2024 guidance expectations, believe Retail Pro and Coinbridge were a benefit the quarter, but just interested if maybe there were not as much of a benefit as you'd hoped or any kind of softness in Q4 specifically that you might call out any sort of color there would be helpful.

Thank you for the question, Thiago. Maybe I will and then Aaron and Sagit will continue. I think to summarize it up, what we see in the market actually we have actually not actually internally how we see competition is twofold. One is against cash which is quite clear that what we're doing. And the second thing is against time because we don't see any headwind regarding competition or regarding something that Ola It's always potentially the channel or the go to market execution in terms of timing how to achieve this. Part of it is product readiness, fully readiness to scale potentially corn bridge rich is not there yet, while we expect it to be more than what we were what we thought. But we are really confident and believe that it's all come together. The why we can see 28 in a way that we can collaborate our growth and reaching out to the targets. So far, for some some aspects are not really fully materialized, It is in the range that we believe that we can achieve on the a year over year basis of 3% is a number that we are very pleased with according to what we see, but Again, we don't see any headwinds that hold us back from the growth And maybe to add that if you just go, I love the back on the envelope calculation, right?

That always works. And and basically took us where we are today, which almost 35% year over year growth with $315,200,000 of revenue, which is within the guidance. On a constant currency basis, obviously. But if you look at Q4 and processing sorry, recurring revenues, it was around $63,000,000 and you time it like four And then you added it around 30% net retention rate that we have you're already in the $330,000,000 of revenue. And we know how to bring $90,000,000 $100,000,000 of revenue on an annual basis. That's what we know between hardware, between additional customers, 5,000, 5,000 customers a quarter. We know how to bring 200 plus 200,000 plus managed and connected devices that's creating that flywheel and improve and increase the revenue. So we feel very comfortable with the with the guidance of revenue and the that we provided and the top line growth that is expected Yes, that's great. Completely understand that. I appreciate that. And then just a super quick follow-up on the M and A pipeline. I appreciated the discussion from Aaron, but just interested on the kind of opportunities you see. You talked about Uppay kind of factoring into 25, but specifically to the opportunities, you see them kind of still within Brazil.

That's been a strong market for you or any other kind of vertical specific places you see kind of that pipeline maturing Just any more color there would be super helpful. Thank you. Yes, absolutely. This is Aaron. With regard in 2025 and beyond, I go back to the three segments that we've been talking about over the last year, which regards to M and A strategy, which is geographic expansion, consolidation of the channels and then technology acquisitions. With regards to Brazil, specifically, I think we see a lot of opportunity there. UpPay was an amazing acquisition. We feel that it's very [indiscernible] They have a very good position in the coffee space specifically. Which is a unique segment, but a very fast growing segment and one that has a lot of potential for us. And we can believe that we can even take that technology potentially outside of Brazil which has upside optionality in the purchase. As we look at going forward, I think there's more opportunities in Latin America for sure. We're also looking heavily in the APAC region. These are two regions that I mentioned over the last year, our focus point. They continue to be a focus point.

And in addition to that, we are looking at some of the distribution networks that we've had We have 120 distributors around the world. We've had a lot of success over the last ten, fifteen years in buying some of these distributors setting up local offices and seeing the revenue synergies [indiscernible] not just getting closer to the customer, but expand And I believe that we'll continue to see some some upside there as well. And [indiscernible] we are looking at technology acquisitions as well. But very prudently looking at these even when we're looking at technology company that might have some sort of feature or product, looking at these as tuck in acquisitions that that complement the existing platform that we have. Generally speaking, it's a software based platform Retail Pro is a really good example of that where we can add our payment to it. Or VM Technology where it's a combination of geographic expansion and we have the ability to add our payment to it And those are the types of acquisitions that we would be looking for on the technology side. Finally, I do see that the unattended industry in general has been rapidly consolidating. I believe it's a very fragmented industry.

With a lot of very small players. And I believe that again, there's going to be a lot of really interesting opportunities over the coming years here. And we're seeing great value right now in the private lower middle market space. With all the acquisitions that we've done in the last year and a half being sub 10 times EBITDA in purchase price. Thank you. Our final question is from the line of Reina Kumar with Oppenheimer.

Please proceed with your question.

Thanks for all the details and appreciate you taking my question. Just looking for some more color on your 2025 guidance. What are you looking for for FX headwinds for 2025? And obviously, your take rate was nicely up this quarter. Is that sustainable going into 2025? And just finally, any color on how revenue growth and EBITDA growth could look by quarter? Could you give us some sense of cadence? Thank you. Thank you, Reina. For the call and for joining us. So yes, 2025 will be as a strong as 2024 was We see exactly the same tailwinds and cash to cash conversion that exists. The demand is continued to be strong. [indiscernible] from so that's from kind of from a revenue standpoint. Our go to market strategy is still working. So the land and expand on one hand and new customers, large as well as small growing as well in the same pace.

Our add a bit because that were small in 2024 and before are growing this year and to a very nice level. And so all in all, we feel very comfortable with the 2025 top line as well as the profitability that we are continuing to expand and as we showed in 2024 that will continue in 2025 as well. With respect to the [indiscernible] and adjusted EBITDA well, to the in the quarter, how it's going to look like 2025 is actually going to look very similar to 2024. Both from a seasonality standpoint. If you look at the revenue percent from the total revenue, that's going to be more or less the same you look at 2025. Also hardware versus recurring revenue, in the quarter will be more or less the same as it was in 2024. So actually very easy to project in that percent in that perspective. And we obviously have a follow-up later on, so we can share a little bit more about the in between the quarters.

I just want to add as well just on the on the headwinds related question. It's important to mention that we have a very diverse and resilient business in general, the unattended business has been very resilient over the years. Through COVID, through the pandemic, through ups and downs of each geographic location. At the end of the day, these $12 transactions and did not have a material difference quarter to quarter or with macroeconomic trends. And because of how diverse our business is, we have roughly 45 different unattended verticals in different end segments. We're expanding the segments that we're in and we're becoming more diversified in terms of the actual mix between those unattended segments. And now we're adding attended as well and other products. We believe that over time, it's going to remain a pretty resilient business.

Understood. Thank you. Thank you.

Thank you. At this time, we've reached the end of our question and answer session. Now I'll hand the floor back to management for closing remarks.

Thank you all for being here today. This is the results reflect our strong momentum and achievement fueled by our commitment to sustainable and profitable growth. We remain very confident in our ability to create lasting value for I want to extend my gratitude to employees, to our partners, for their dedication. Which has been instrumental in the reaching this milestone.

As we step into the next phase of our journey, we are excited to build on this foundation and drive even greater success Thank you all for joining us. Have a nice day.

This will conclude today's conference. You for your participation. You may now disconnect your lines at this time.