管理層發言
Hello, everyone, and welcome to Nayax's Second Quarter 2025 Earnings Conference Call. 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.
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 will be making forward-looking statements. All forward-looking statements on our call today are based on assumptions and therefore 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?
Thank you, Aaron, and thank you, everyone, for joining the call this morning to discuss our results for the second quarter and the progress we are making across the business. Our second quarter results reflect the successful execution of our strategic initiatives and the positive momentum of the business. We delivered yet another quarter of strong operational and financial performance, driven by profitable revenue growth, robust global demand for our solutions and services, and an ever-expanding geographic footprint for our installed base. Our Total Addressable Market (TAM) is large and growing, driven by the ongoing shift from cash to digital payments and our expansion into new verticals. We're continuing to gain market share across our core vertical. With strong global demand and a clear product-market fit, we are not only acquiring new customers at scale but also doing so at a pace that exceeds broader market growth.
As the global leader in the automated self-service payment space, we have a trusted brand and reputation that enables us to deepen relationships with existing customers and consistently onboard thousands of new customers each quarter. Importantly, our growth continues to be achieved with a very low customer churn rate of under 3% annually, reflecting the stickiness of our platform and the mission-critical role we play for our customers. Customers are not only sticking with us but deepening their engagement with our platform as they add more devices, process more transactions, and expand into new verticals over time. Our role goes far beyond enabling transactions. We are a true partner to our customers, helping them grow their business with a platform shaped by two decades of listening, learning, and building for their specialized needs. Whether it is launching in new locations, expanding into new verticals, or introducing value-added services, our technology and team are there every step of the way.
We deliver a complete solution that combines modular payments, hardware, and management software built to reflect the diversity of our customers' ambitions and designed to scale without compromise. That's what makes Nayax not just a solution provider, but a longer-term growth partner. Turning to our results, revenue for the quarter increased 22% over Q2 '24, reaching $96 million. Recurring revenue grew at an even faster pace, rising 32% over Q2 2024, lifting its share of total revenue to 74% from 68% in the same quarter last year. Our consistently growing share of high-margin recurring revenue reflects the long-term success of our strategy to build a more profitable and predictable business. In terms of profitability, adjusted EBITDA was nearly $13 million for the quarter, representing approximately 13% of total revenue. This underscores our disciplined focus on delivering profitable growth while expanding our top line.
We see revenue acceleration in the second half of the year. We expect increased shipments and adoption of our recently launched product, including our embedded reader called the UNO Mini, as we ramp production to meet growing demand across multiple regions. Furthermore, we see strong growth in emerging segments such as EV chargers, smart coolers, and family entertainment centers. Stronger enterprise sales, particularly from customers with longer procurement cycles, are expected to contribute significantly to this acceleration in the second half of the year. With that, we are reaffirming our full-year 2025 guidance. I'd like to now share some customer success stories and key developments from the quarter that highlight our continued expansion in the automated self-service space. Earlier this week, we announced a major milestone, both for our embedded payment solution and for our presence in the fast-growing EV charging vertical when we signed a strategic partnership with Autel Energy.
As one of the largest electric vehicle charging equipment manufacturers in the world, Autel Energy is expected to purchase 100,000 UNO Minis to be embedded inside their manufactured AC slow chargers through the end of 2026. We are seeing strong momentum for the UNO Mini product, which are devices integrated inside OEM products. In Q2, we announced a strategic partnership with Lynkwell, a leader in EV charging solutions in the United States, to deliver a comprehensive suite of integrated payment and management capabilities to the North American EV charging market. With the current tariff environment in the U.S., we believe that Lynkwell's Buy America EV charger embedded with our UNO Mini payment reader will see strong demand over the coming quarters. We expect to announce more partnerships with manufacturers as our UNO Minis continue to gain traction for high-volume deployment. We also advanced our M&A strategy in the quarter.
We acquired Inepro Pay, our long-standing distributor in the Benelux region, further strengthening our position in Europe and bringing us closer to our customers through the establishment of a full-service Nayax office in the Netherlands. In addition, we acquired a remaining 51% of Nayax Capital, a joint venture we initially launched in 2023. Nayax Capital is now fully consolidated under our recently created embedded banking division. Embedded finance solutions such as bank accounts, card issuing, and bank financing will bring more value to our customers and increase recurring revenue for customers over time. We are also focused on integrating our recent acquisition to streamline operations, combine complementary capabilities, and realize synergies in key markets. In Brazil, we brought together UPPay and VMtecnologia under the Nayax Brazil brand, defining a common market strategy and unifying our sales, service, and support operations nationwide.
We integrated the UPPay coffee solution originally built for Brazil into the broader Nayax sales platform and are seeing strong initial demand from customers in multiple international markets. In the fueling vertical, we combined Roseman and OTI PetroSmart into one global forecourt team to deliver a single end-to-end platform for fuel station operators. With each of these partnerships, acquisitions, and integrations, we continue to bolster Nayax as the leading provider of cashless payment and management solutions, driving innovation and growth across multiple industries and markets. Looking forward, we are excited about our near-term growth opportunities, and our business fundamentals remain solid. Our team is large and growing, driven by the ongoing shift from cash to digital payments and our expansion into new verticals. While we continue to pursue strategic M&A, organic growth remains our primary building block and will continue to be the main driver of our growth.
With our expanding pipeline, we are well-positioned to continue to outpace the growth of the broader payment industry and deliver exceptional value to our customers. With that, I'll turn it over to our CFO, Sagit Manor, who will review our KPIs, our financial results in greater detail, and walk through our guidance.
Thank you, Yair, and good morning, good evening, everyone. I'll start by reviewing our KPIs and financial performance for the second quarter, and then I'll discuss our outlook for the full-year 2025, which, as Yair mentioned, we are reaffirming. I would like to start by highlighting three key performance indicators for the quarter that we consider primary measures of growth. First, total transaction value increased by more than 34% over Q2 2024, reaching nearly $1.6 billion, driving strong processing revenue growth of 35% for the quarter. Second, our customer base expanded by approximately 24% compared to Q2 2024, approaching 105,000 customers at the end of Q2. And third, our installed base of managed and connected devices grew 16% compared to Q2 2024, to almost 1.38 million devices at the end of the quarter. These KPIs reflect not only the momentum in our business and the underlying strength of our platform, but also demonstrate the flywheel effect and the success of our go-to-market strategy.
Looking at our financial performance, revenue for the second quarter was $96 million, which is an increase of 22% over Q2 2024. We continued taking market share, adding nearly 5,000 new customers this quarter and 48,000 managed and connected devices. Revenue included $1.1 million of favorable foreign exchange rates. Organic revenue growth for the second quarter was 20%. We expect organic revenue growth to accelerate throughout the remainder of the year, which I will discuss in our outlook. For the quarter, recurring revenue, which includes payment processing fees and SaaS subscription revenues, increased by 32% compared to last year's second quarter to $71 million and represented 74% of our total revenue in Q2. More specifically, processing revenue grew by 35% to $43 million in Q2, driven by a 16% increase in our installed base of managed and connected devices and a 34% increase in dollar transaction value.
This processing revenue growth continues to demonstrate our success as a scalable and valued payment partner to our diverse customer base as the market continues its cash to cashless conversion. Our take rate for the quarter was 2.7%, the same as the prior year's quarter. Hardware revenue in the quarter was $25 million, slightly higher than the prior year's quarter, with continued strong demand for our product, solutions, and technology. In the quarter, our installed base grew by 16% compared to last year's second quarter, reaching nearly 1.38 million devices, as we added 48,000 devices to our installed base. Moving now to profitability and margin for the quarter. Gross margin significantly improved to 48.3% compared to 44.3% in the last year's second quarter, driven by both higher recurring and hardware margins. More specifically, our recurring margin increased to 52.8% from 51.5% in the prior-year quarter, mainly driven by an additional improvement in processing margin from the acceleration to meaningful processing volumes with our new banking partner, Adyen, driving improved operational efficiency.
We also benefited from the favorable renegotiation of key contracts with several bank acquirers and improved smart-routing capabilities. On the hardware side, our margin increased to 35.4% compared to 28.7% in Q2 2024, driven by the continuing optimization of our supply chain infrastructure and better component sourcing and cost, consistent with our expectations. For the full year, we continue to expect hardware margin to be within the range of 30% to 35%. While total revenue grew by 22% over Q2 of last year, total gross profit grew significantly more by 33% to more than $46 million. Adjusted operational expenses of $34 million were 35.6% of revenue, a testament to our disciplined cost management. Adjusted EBITDA increased to nearly $13 million, representing 13% of revenue, an improvement of approximately $4.5 million compared to last year's second quarter and demonstrating the continued scaling of our operating leverage in the business.
Operating profit was $9.5 million and includes a one-time gain of $5.6 million, mainly from the share purchase of Nayax Capital. Excluding this one-time gain, operating profit would have been $3.9 million, an improvement of $3 million from last year's second quarter. The significant operating profit increase is mainly driven by improved gross margin. Net income for the quarter was nearly $12 million compared to a net loss of $3 million in the prior-year period. Excluding the one-time gain, mainly associated with the share purchase of Nayax Capital, net income would have been $6.1 million, a significant improvement of $9.1 million from the prior-year period. Turning to our balance sheet, on June 30, 2025, cash and cash equivalents and short-term deposits totaled $172 million, and short and long-term debt was $156 million, both driven by a note and warrant offering completed in March 2025 of approximately NIS 486 million net, maintaining a solid balance sheet and net cash position.
Looking at our cash flow, we generated $12.9 million from operating activities. Free cash flow for the quarter was $5.6 million. Turning now to our outlook and referring to our forward-looking information disclosure in our press release. As Yair mentioned, for the full-year 2025, we are reaffirming our financial outlook of revenue growth of between 30% to 35%, representing a revenue range of $410 million to $425 million on a constant currency basis. This includes an organic revenue growth of at least 25%. Consistent with prior years and reflecting the seasonal nature of our business, we expect stronger performance in the second half of the full year, mainly driven by enterprise sales, particularly from customers with longer procurement cycles. Our guidance for adjusted EBITDA remains unchanged at between $65 million to $70 million, driven by continued revenue growth, market expansion, the full integration of recent acquisitions, and continued operational optimization.
We also expect at least 50% free cash flow conversion from adjusted EBITDA for the full-year 2025. As for our 2028 target, we continue to project an annual revenue growth of approximately 35%, driven by a combination of organic growth and strategic M&A. We also continue to target a gross margin of 50% and an adjusted EBITDA margin of 30%, as we continue to drive high-margin revenues and operational efficiency. In closing, we are well positioned for future growth in 2025 and beyond, as we continue to grow our installed base globally and capture market share. We'll also continue to focus on scaling our recurring revenue stream, in particular our payment processing capabilities, which benefit from the conversion trend of cash to cashless transactions. I'll now turn the call over to the operator for our Q&A session.
分析師問答
The first question we have is from Josh Nichols of B. Riley.
Great to see the gross margin and the operating leverage is starting to come into play here. I wanted to touch on, you had some key wins this quarter, particularly in the EV market. How should we think about the larger opportunity in terms of EV as a percentage of revenue as that starts to scale a relatively small percentage today, but the win you just announced recently represents like 70% of the entire installed base and presumably with a relatively higher average transaction price than your other businesses? So how do you expect that piece of the business to scale over the next couple of years?
Josh, hello, it's Yair. Thank you for the question. First, I want to give the context of how we see payment into the decades ahead and what is important about the payment platform that we're building. It's based on trust and ease of use and scale. We are now in the era of scaling the business and scaling the business in all aspects of payment means that we have to pave the way for distribution partners and to have more and more partners that we can work with and scale our business. In terms of acquiring customers, you have to remember that we're talking about almost direct to the market, gaining and winning customers and most of them are small to medium-size businesses. When we are saying that we're in a partnership like Autel that we announced two days ago or yesterday, it's not the Autel itself that is the customer, we're looking through them that we're gaining more and more customers through the expansion of their customer base to us.
It keeps the cost of acquisition quite low and opens the door for all the customers that they are already selling to. The difference in terms of this kind of strategy and why we see a significant difference in the future on this aspect is that we moved from just an OEM, basically that takes what you call a VPOS Touch unit and retrofitting some of the orders into a solution, which is an ODM solution, meaning that all this market that Autel will sell or anyone that's working with Nayax is embedded with the Nayax payment solution. Whether it will happen in terms of activation within 1 month, 2 months, 5 months, 1 year, or 2 years, I really don't care. The only thing is that this customer is a full partner and has what you call Nayax Inside. And this opens the door for a significant market opportunity from my perspective. And that's the agreement that we're carving out today in the EV market.
We want to capture the market at the starting point and gain potentially very large market share. So we are very optimistic regarding what we can gain out of it, although in terms of hardware, it's seen that because it's a UNO Mini, the hardware revenue is very low. But in terms of customers, which is the main thing, we are getting a Software as a Service revenue out of these customers which is higher than the vending industry, which is much more important. And of course, the gross margin is much higher.
Just to add to that, this is Aaron. Josh, with regard to the Autel relationship specifically, but in terms of our broader strategy, as we discussed over the last couple of quarters now, going up the chain, not just from the bottom up with smaller operators, we are now able to come from the top down with regards to the OEMs, and that really allows us to be able to get in front of the customer at a much lower Customer Acquisition Cost (CAC), as you mentioned, at a much higher volume at the OEM level. That's why we were able to set up the relationship with someone like Autel for 100,000 devices, which will now be spread out over all of their jurisdictions. Part of that was our investment over the last couple of years after the OTI acquisition into the embedded payments business. This allows us to integrate these UNO Mini devices inside the EV charger, creating a lot of stickiness because you can't actually remove it afterward and replace it with another payment device. They receive it at the OEM level; they then go through the certification and UL certification process for the U.S. market and various other certifications for other markets. They go through that certification with the UNO Mini already built into their solution, making this a different and engaging product. Therefore, we believe we can set up relationships with other OEMs similarly.
Appreciate the context there and great to see the company moving up market. I guess, just to dive in a little bit, last question for me, you mentioned, you're expecting a pretty healthy step up, particularly in the second half for enterprise customers. Is a good chunk of that related to these new announcements in the EV, or are they more around other areas specifically? And is the EV ramp expected to be more of a 2026 story?
We do have EV opportunities. We do have other aspects of the business. We have the unattended business that has big opportunities. We do have also retail that's coming in front of us, and we do see something that will happen within the 6 months of all of these potential markets.
And maybe to add to that, Josh, hello. Yes, the second half of the year will see stronger hardware revenue sales, both from an enterprise perspective, as Yair mentioned, in the smart coolers area, in the EV space, and also some retrofits that we expect will happen towards the end of the year. However, we also see a very strong transaction value that is growing. Recurring revenue, in general, for example, July and August, are already showing us significant increases and give us confidence in a strong second half.
The next question we have is from Cris Kennedy of William Blair.
Can you just talk about Net Revenue Retention (NRR) and kind of how you think of that trending over the next couple of years as your business mix starts to maybe change a little bit?
I will take it first. Just to mention regarding NRR, then Sagit will continue. We think basically the NRR is driven by two engines: one is the service, and the other one is the processing. Both of them are really creating the net retention of Nayax. It may be through verbal means. It will be a little bit difficult to understand. But if you remember 2021, '22, and '23, we always stated about the time of the market. It was first and foremost in the vending, then moving out to ticketing, then moving out to car wash, and then to electrical vehicle. We're seeing now more and more that the retrofit business, customers are coming completely from cash to cashless. It's slowing down, and we're seeing more of the other verticals emerging. That has created the engine of processing, which is growing nicely, holding very strongly in the NRR. So in terms of the future, we're seeing that we're coming from a ticket which in the past was around, let's say, less than $2, and now it's much higher than $2. We're growing with the verticals that are much higher in terms of ticket value. For instance, the vending is around $1.60, $1.80; parking is potentially $4; and EV is around $7. These verticals create more of what we call the NRR that we project for the future.
And maybe to add to that, the NRR of 123% remains very strong, indicating, as Yair mentioned, healthy growth, both in Average Revenue Per User (ARPU) and Average Transaction Value (ATV). You can see that, as long as we continue to bring in 4,000 to 5,000 customers a quarter, as well as continue to grow significantly as we did this quarter with the number of managed and connected devices, the growth is there. Remember that approximately 80% of our customers are existing customers, and organic revenue grew by 32%, while organic recurring revenue grew by 29%. This really reflects the normal quarterly variation in customer usage and deployment cycle. Thus, we feel that we continue to enjoy high customer stickiness. This is evident in our very low churn rate. The scalability of the business continues to support ongoing sustainable growth.
And then just as a follow-up, can you give us an update on your hospitality and retail initiatives, essentially where you are in that journey?
On the retail front, we built a substantial infrastructure in terms of the backend, and we're moving forward with the retail initiative directly to customers. We built a team. They're doing outbound calls that are already running on our existing customers and new customers. We're seeing strong demand, and I think we'll have some news in the next 6 months regarding a big leap into retail with some significant announcements to come.
I'll also add to that. In the hospitality space, we're attempting to make a push. In the last year, since the VMtecnologia acquisition, we've spent a lot of time integrating our technology into the Brazilian market. We've released our food services business for kiosks in the Brazilian market a few months ago and are already seeing a high demand in that market for this solution. Interestingly, there weren't many cloud-based solutions fully integrated with the point of sale, providing a complete end-to-end solution in this modern generation. We feel that there's a significant market opportunity in the Brazilian market for the hospitality business specifically.
The next question we have is from Sanjay Sakhrani of KBW.
This is Vasu Govil for Sanjay. I guess maybe the first question, just around M&A, if we could get what the revenue contribution from M&A has been year-to-date. It looks like we're still expecting about $25 million contribution for the year. Do we feel like we have all the deals that you need to meet that target for this year? And then, specifically, on the Nayax Capital JV, is that part of the M&A contribution? Any insights on how big that is?
Yes, this is Aaron. With regards to the M&A, as we've communicated since the beginning of the year after the first couple of acquisitions, we have a run rate still now similar to what we noted a few months ago, roughly around $10 million in inorganic growth projected for the rest of the year. Regarding the Nayax Capital, we don't see it to be a meaningful amount of inorganic growth from that activity through the end of the year. Rather, it aids our long-term strategy of advancing into financing solutions, which we've previously pushed out, particularly in markets like Brazil, separating from Nayax Capital completely. We're bringing it all into one infrastructure and rolling out a rental-based financing model into other jurisdictions. We recognized this opportunity to bring it in-house to scale more rapidly. We've also reorganized to establish a new division by bringing in Nayax Capital. We appointed the former CTO of Bank Hapoalim, the largest bank in Israel, to build out a banking division for Nayax.
We have strategically partnered with Adyen to enter the market for embedded banking solutions, like issuing cards and bank accounts, which we plan to roll out first in the U.S. market and subsequently in others. With regards to the remainder of the year's M&A pipeline, we still intend to finalize probably one to two more acquisitions this year based on our current pipeline. I don't expect that inorganic revenue will reach $25 million, but we can achieve the required inorganic growth to meet our reiterated growth targets.
Maybe to add to that, as in previous years, most of the growth will come from organic measures, as we anticipate that the second half of the year will have stronger hardware revenue as well as continue the beautiful growth we're seeing in recurring revenue.
And I guess for my follow-up, I wanted to ask about the VMtecnologia acquisition. I know there was a plan to transition from hardware sales to more of a rental or subscription model. Where do you guys stand with that, and how has the reception been? Is this a model you plan to roll out more aggressively across the organization?
As I was alluding to a bit earlier, this is a significant reason why we decided to bring the full Nayax Capital in-house. Initially, it was a joint venture. We're seeing great success in the Brazilian market with the rental-based model. This business remains strong in Brazil. With the UPPay acquisition, we've doubled our managed and connected devices there. We're continuing to grow strongly. Essentially, we are centralizing the embedded banking division to roll out a standardized model across all these jurisdictions. Recently in the Australian market, we announced a few weeks back that we're starting to roll out the rental-based model aggressively. There’s significant demand so far, and we are starting to expand it in some other jurisdictions. The intent here is to push this infrastructure more vigorously in the coming months, resulting in visible outcomes here in the upcoming quarters.
The next question we have is from Nik Cremo of UBS.
Congrats on the strong results. First, I just wanted to revisit the new EV charging partnerships you announced with Autel and Lynkwell. Can you elaborate on how competitive winning those deals was, and why Nayax was ultimately selected?
Yes, absolutely. Nik, this is Aaron. If we're looking at the EV charging industry, we entered this field at the very beginning, about seven or eight years ago. This experience has culminated in us acquiring a significant advantage today due to our know-how—learning from prior mistakes on the complexities of this industry. It's a very technical integration with these EV chargers. Now with the embedded devices, we must go through UL certification with the manufacturer. This requires hands-on collaboration, ongoing updates with SDKs, and few players operate efficiently in this market when it comes to payments due to the complexities involved. Since we have a differentiated product with the UNO Mini that we released, I personally believe there isn't another product at the same caliber currently available in the market. We also have a first-mover advantage regarding this product for the EV industry. With this momentum now, as we work through cycles of integration with OEMs, we foresee a fast run with several more partnerships. Notably, OEMs don’t replace their hardware and seek UL certification every few months or every year; they work in cycles. Therefore, we access this market potential for several years before they consider any additional request for proposals (RFP).
Just to add, you have to remember that for 20 years we've built a footprint in more than 100 countries. As an exporter, whether coming from China or otherwise, to serve customers, it's plug and play. They can run the business smoothly with embedded payments globally. That's a significant, unmatched advantage.
Yes, it’s one SKU, as Yair pointed out. It’s the UNO Mini for Autel; if they’re selling 100,000 devices, they maintain just one SKU of the UNO Mini. They won’t have to change it based on region, nor will they have to deal with multiple suppliers.
Yes, and it's lending on the ground in France, the U.K., or the U.S., and it operates because Nayax handles the onboarding of customers as a payment facilitator.
At this time, there are no further questions. I would like to turn the call back over to Yair Nechmad for any closing remarks.
Thank you for joining the call today. The quarter's performance demonstrates the strength of our strategy and the commitment of our team. By continuing to invest in innovation, expanding our global reach, and strengthening our customer relationships, we are positioning Nayax for sustainable growth and long-term value creation. I'm grateful to our employees for their dedication, which makes our success possible. The opportunities ahead are significant, and we are prepared to capitalize on this momentum in the upcoming quarters. Thank you.
Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.