• Revenue: $83 million, a 38% year-over-year increase.
• Recurring Revenue: $60 million, a 49% increase, representing 72% of total revenue.
• Hardware Revenue: $23.1 million, a 15% increase over Q3 2023.
• Net Income: $0.7 million, marking the first positive net income since going public.
• Adjusted EBITDA: $11.1 million, approximately 13% of total revenue.
• Gross Margin: 45.7%, up from 38.1% in Q3 last year.
• Recurring Margin: 50.1%, up from 46.9%.
• Hardware Margin: 34.4%, up from 20.5% in last year's quarter.
• Cash from Operating Activities: $16.6 million for the quarter.
• Free Cash Flow: $10.1 million for the quarter.
• Customer Count: Approximately 91,000, up from 60,000 in last year's third quarter.
• Managed and Connected Devices: 1.23 million devices, a 40% year-over-year increase.
• 2024 Revenue Guidance: Adjusted to $315 million to $320 million, representing a 35% year-over-year increase at the midpoint.
• 2024 Adjusted EBITDA Guidance: $30 million to $35 million, expected at the higher end of the range.

• Warning! GuruFocus has detected 6 Warning Signs with NYAX.

Release Date: November 12, 2024

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

Positive Points

• Nayax Ltd (NASDAQ:NYAX) achieved net income for the first time in the company's history, marking a significant milestone.
• The company reported record adjusted EBITDA of $11.1 million, representing approximately 13% of total revenue.
• Revenue reached a record $83 million, reflecting a 38% year-over-year growth, driven by both new and existing customer expansion.
• Recurring revenue growth was robust at 49%, highlighting the strength and resilience of Nayax's business model.
• The company expanded its customer base significantly, ending the quarter with approximately 91,000 customers, up from 60,000 in the previous year.

Negative Points

• Nayax Ltd (NASDAQ:NYAX) experienced delays in new product certifications, impacting hardware revenue growth for the second half of 2024.
• The company had to adjust its full-year 2024 revenue forecast to a range of $315 million to $320 million, down from the previous guidance of $325 million to $335 million.
• Despite strong performance, Nayax's hardware revenue growth was only 15%, partially impacted by certification delays.
• The slightly lower sequential growth in activated devices reflects lower hardware sales in Q1 2024 compared to Q4 of the previous year.
• The company anticipates slightly lower hardware revenue growth due to certification delays, which may impact future quarters.

Q & A Highlights

Q: Can you elaborate on the certification delays impacting Q3 and Q4, and how does this relate to your revised guidance? Also, what is the expected timeline for revenue contribution from your EV initiatives? A: Yair Nechmad, CEO: The certification delay is specific to a territory with a large total addressable market (TAM) for us. Although we have global EV certifications, this particular region's requirements were unforeseen. We expect to resolve this by the end of this quarter or early next quarter. Regarding EV, we see significant potential and expect deployments by 2025, leveraging our strong OEM partnerships.

Q: With the current profitability and cost control, how sustainable are the hardware gross margins, and what should we expect for Q4 and next year? A: Sagit Manor, CFO: We continue to grow profitably while managing costs effectively. We expect our organic revenue growth to outpace operating expenses. We've raised our hardware margin guidance to over 30% due to successful cost reduction initiatives. We anticipate reaching the higher end of our adjusted EBITDA guidance range.

Q: Can you discuss the levers to achieve at least 15% EBITDA margins next year? A: Sagit Manor, CFO: We are confident in our strategy, focusing on cost discipline and profitable growth. Our operating leverage is improving, and we expect our organic revenue growth to drive margin expansion. We are comfortable projecting at least 15% adjusted EBITDA for 2025.

Q: Could you provide more details on the Adyen partnership and its expected impact on your metrics? A: Aaron Greenberg, Chief Strategy Officer: The Adyen partnership allows us to scale as a financial institution, reducing operational costs and expanding into new countries like Brazil, Malaysia, and Singapore. We have started processing transactions and expect continued margin improvements, contributing to our long-term goal of 50% margins by 2028.

Q: What are the key verticals driving the expansion in take rates, and how sustainable is this growth? A: Yair Nechmad, CEO: Emerging verticals like EV charging, parking, laundry, and micro markets are driving growth. These verticals have higher average transaction values, which help increase our processing revenues. We expect this trend to continue as we expand our platform capabilities.

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