Nayax Reports Third Quarter 2022 Financial Results

Revenue Grew 53% Year-Over-Year to $47.2 Million

Recurring Revenue Grew 39% Year-Over-Year

Reaffirming Mid-Term Revenue Growth Target of 35%

HERZLIYA, Israel, Nov. 16, 2022 /PRNewswire/ -- Nayax Ltd. NYAX NYAX, a global commerce enablement and payments platform designed to enable retailers to provide consumers with digital, cashless, connected commerce experiences, and enhance consumer loyalty and conversion, today announced its financial results for the third quarter ended September 30, 2022.

"We delivered outstanding results in the third quarter, with revenue growth of 53% over the prior year quarter, reaching a record high that was driven primarily by our organic growth initiatives," said Yair Nechmad, Chief Executive Officer and Chairman of the Board. "Similar to last quarter, we continued to see strong demand for our comprehensive solutions and broad-based customer momentum across our global and diverse footprint, with new customer growth of 56% over the prior year quarter, and a 48% increase over the prior year quarter in our managed and connected devices. Importantly, we achieved these results while executing our growth initiatives, such as our international expansion and winning large customers globally."

Mr. Nechmad continued, "The strength of our results, combined with our market position and the many opportunities we see across the Nayax businesses, reinforce our confidence in our ability to achieve our committed growth trajectory and continue to execute against our mid-term and long-term growth aspirations."

Nayax reports in U.S dollars, according to IFRS

Third Quarter Financial Highlights

• Total revenue was $47.2 million, an increase of 53% over Q3 2021.
• During Q3, foreign currency exchange rate fluctuations had a negative impact of about $1.4 million on revenues compared to Q2 2022
• Recurring revenue from monthly SaaS and payment processing fees grew 39% compared to Q3 2021 and represented 58% of total revenue in Q3 2022.
• Q3 2022 results included a consolidated P&L of On Track Innovations (OTI), which had a favorable impact on hardware revenue ($3.7 million) while gross margin was in line with Nayax's margins. OTI operating expenses had an overall impact of 8% on total operating expenses, with 6% negative impact on operating loss and minor impact on Adjusted EBITDA.

• Q3 2022 gross margin of 34% remained stable compared to the previous quarter and decreased in comparison to prior year quarter. Gross margin was impacted by higher hardware revenue and higher processing fees which have lower gross margin. We continue to expect hardware gross margins to be temporarily impacted by the global component shortages.
• Gross profit reached almost $16 million, an increase of 28% over Q3 2021.
• Operating expenses, including research and development, share-based compensation expenses, and depreciation and amortization amounted to $23.7 million, an increase of 28% over Q3 2021. This reflects an increase of our investment in talent acquisition, customer base expansion and product innovation. Other investments included higher go-to-market expenses and enhanced infrastructure to support our global growth as we gain scale and become a much larger company. During Q3 2022, operating expenses had a minor positive impact of about $0.4 million as a result of foreign currency exchange rate fluctuations compared to Q2 2022.
• Operating loss was $9.2 million, compared to an operating loss of $6.4 million in Q3 2021.
• Net loss for Q3 2022 was $9.9 million, or ($0.3004) per diluted share, compared to a net loss of $6.7 million, or ($0.2065) per diluted share for Q3 2021.
• Adjusted EBITDA was a negative $3.7 million compared to negative $1.6 million in Q3 2021 largely due to increase in operating expenses from strategic investments mentioned above that support our growth strategy.

Explanation of Company Revenues

Nayax generates revenue from the sale of its POS devices, a monthly subscription fee for access to its SaaS solutions, and payment processing fees for transactions made at the point-of-sale and through its global platform, as provided in the chart above.

The Company provides payment processing and business operations software solutions and services through its global cashless payment platform. In Q3 2022, the Company recorded strong growth in its recurring revenue from SaaS and payment processing, reflecting 58% of total revenue. This increase in recurring revenue represents growth in both the number of transactions processed through our devices as well as an increase in transaction value. This growth is a result of our growing install base of managed and connected devices as well as the continued rapid adoption of cashless payments by consumers.

Third Quarter Business Highlights

• We completed our direct listing on Nasdaq in September 2022.
• Expanded our diverse customer base, adding 4,000 new customers (including 300 of OTI) across our global footprint, bringing our total customer base to 42,000, as of September 30, 2022, an increase of 56% over Q3 2021.
• Dollar-based net retention rate stayed elevated at 127%, reflecting the high satisfaction and loyalty our customers place on our comprehensive solutions to increase their revenue and improve their operations.
• Added 90,000 managed and connected devices during the quarter, driven by growing customer demand, execution of our market expansion strategy and the addition of 47,000 OTI devices included for the first time in Q3 2022. The total of 685,000 managed and connected devices represents an increase of 48% compared to Q3 2021.
• Number of processed transactions grew 56% over Q3 2021 to 341 million.
• Total transaction value increased 51% from prior year quarter to $616 million.
• Established a new customer relationship in the US with Atlanta Food and Beverage. This new customer will use Vendsys as their vending management system and will place Nayax cashless on all their machines requiring cashless.
• Signed an agreement to partner with Tiba Parking to bring the Nayax's solutions to all of its North America parking operators.
• In Australia, partnered with 7-Eleven Group to supply cashless solutions for the 7-Eleven Group's "Unattended Go-To-Market" strategy.
• Scored another successful win in Austria with UKO, which has entered a partnership with Nayax to provide a market disruptive solution that does not require an additional hardware age verification solution. This will enable operators to significantly reduce their operational costs.

Operational Metrics

We regularly monitor various operational metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe these financial and operating metrics are useful in evaluating our business. Although these operating and financial metrics are frequently used by investors and security analysts in their evaluation of companies, such metrics have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results of operations as reported under IFRS. In addition, our operating and financial metrics may be calculated in a different manner than similarly titled metrics used by other companies.

Outlook

Looking forward, we remain excited about our strong long-term growth drivers and the large market opportunities, we see ahead. In the near term, we expect to continue to see disruption in supply chain which will delay immediate improvements in hardware gross margin of our POS devices due to the global shortage in components.

Our durable business model is demonstrated by our diverse customer base, verticals, and geographies. With strong secular tailwind and with our industry-leading net revenue retention rate, we believe we have a clear opportunity to drive revenue growth in the future

Mid-Term Outlook

We are reaffirming our mid-term revenue projection of $220 million, driven by organic growth and strategic M&A. We are also reaffirming the revenue growth rate target of 35% in the medium term, with customer growth, increased market penetration and continued expansion of our platform serving as the main growth drivers.

Long-Term Outlook

We expect gross margin in the long-term to reach 50% by providing leasing options for IoT POS and by growing the SaaS and payment processing revenue sources.

Our long-term Adjusted EBITDA margin guidance is set around 30%.

Conference Call

Nayax will host two conference calls and webcasts. The first in English and the other in Hebrew to discuss third quarter 2022 results on November 16, 2022. The call in English will be held at 8:30 a.m. Eastern Time, 3:30 p.m. Israel Time and 5:30 a.m. Pacific Time, followed by the conference call in Hebrew at 9:30 a.m. Eastern Time, 4:30 p.m. Israel time and 6:30 a.m. Pacific Time Participating on the call will be Yair Nechmad, Chief Executive Officer and Sagit Manor, Chief Financial Officer.

We encourage participants to pre-register for the conference call using the link below.  Callers who pre-register will be given a unique PIN to gain immediate access to the call, bypassing the live operator. Participants may pre-register any time, including up to and after the call start time. You will immediately receive an online confirmation, an email with the dial in number and a calendar invitation for the event.

The call in English will be held at 8:30 a.m. Eastern Time, 3:30 p.m. Israel Time and 5:30 a.m. Pacific Time

To pre-register, go to:

https://services.choruscall.ca/DiamondPassRegistration/register?confirmationNumber=10020395&linkSecurityString=187e0eaf56

For those who are unable to pre-register, kindly join the conference call by using one of the dial-in numbers or clicking the webcast link below.

U.S.                                                TOLL-FREE                                      1-855-327-6837
ISRAEL                                          TOLL-FREE:                                     1-809-458-327
INTERNATIONAL                          TOLL-FREE:                                     1-631-891-4304

WEBCAST LINK:

https://viavid.webcasts.com/starthere.jsp?ei=1573909&tp_key=6bcef1ee6f

Participants may also register and join the conference call by visiting the Events section of the investor relations website, found here: Events

A replay of the conference call will be available from November 16, 2022, following the call, until November 30, 2022. To access the replay, please dial one of the following numbers:

Replay                                           TOLL-FREE:                                      1-844-512-2921
Replay                                           TOLL/INTERNATIONAL:                   1-412-317-6671
Replay Pin Number: 10020395

An archive of the conference call will be available on Nayax's Investor Relations website Nayax Investors - Nayax.

An English version of the complete earnings materials can be found on our investor relations website: https://ir.nayax.com/

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this registration statement can be identified by the use of forward-looking words such as "anticipate," "believe," "could," "expect," "should," "plan," "intend," "estimate" and "potential," among others. Forward-looking statements include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including, but not limited to: our expectations regarding general market conditions, including as a result of the COVID-19 pandemic and other global economic trends; general economic, political, demographic and business conditions in Israel; fluctuations in inflation and exchange rates in Israel; our ability to implement our growth strategy; the success of operating initiatives, including advertising and promotional efforts and new product and concept development by us and our competitors; our ability to compete and conduct our business in the future; changes in consumer tastes and preferences; the availability of qualified personnel and the ability to retain such personnel; changes in commodity costs, labor, distribution and other operating costs; changes in government regulation and tax matters; other factors that may affect our financial condition, liquidity and results of operations; and other risk factors discussed under "Risk Factors" in Amendment No. 1 to our Registration Statement on Form 20-F filed with the SEC on September 12, 2022 (our "Registration Statement"). The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward- looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only estimates based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks provided under "Risk Factors" in our Registration Statement. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, to conform these statements to actual results or to changes in our expectations.

Use of Non-IFRS Financial Information

In addition to various operational metrics and financial measures in accordance with accounting principles generally accepted under International Financial Reporting Standards, or IFRS, this press release contains Adjusted EBITDA, a non-IFRS financial measure, as a measure to evaluate our past results and future prospects.

Adjusted EBITDA

Adjusted EBITDA is a non-IFRS financial measure that we define as operational income/loss plus depreciation and amortization, share-based compensation costs, non-recurring issuance costs and our share in losses of associates accounted for by the equity method.

We present Adjusted EBITDA in this press release because it is a measure that our management and board of directors utilize as a measure to evaluate our operating performance and for internal planning and forecasting purposes. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

We believe that Adjusted EBITBA, when taken collectively with financial measures prepared in accordance with IFRS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies because it provides consistency and comparability with past financial performance. However, our management does not consider this non-IFRS measure in isolation or as an alternative to financial measures determined in accordance with IFRS.

Adjusted EBITBA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. Adjusted EBITBA may be different from similarly-titled measures used by other companies. The principal limitation of Adjusted EBITBA is that it excludes significant expenses that are required by IFRS to be recorded in our financial statements, as further detailed above. In addition, it is subject to inherent limitations as it reflects the exercise of judgment by management about which expenses are excluded or included in determining Adjusted EBITBA.

A reconciliation is provided at the end of this press release for Adjusted EBITBA to operating loss, the most directly comparable financial measure prepared in accordance with IFRS. Investors are encouraged to review operating loss and the reconciliation to Adjusted EBITBA included below and to not rely on any single financial measure to evaluate our business.

About Nayax

Nayax is a global commerce enablement and payments platform designed to help merchants scale their business. Nayax offers a complete solution including localized cashless payment acceptance, management suite, and consumer engagement tools, enabling merchants to conduct commerce anywhere, at any time. With foundations and global leadership in serving unattended retail, Nayax has transformed into a comprehensive solution focused on our customers' growth across multiple channels. Today, Nayax has 9 global offices, over 800 employees, connections to more than 80 merchant acquirers and payment method integrations and is a recognized payment facilitator worldwide. Nayax's mission is to improve our customers' revenue potential and operational efficiency. For more information, please visit www.nayax.com

Investor Relations Contact:
ICR, Inc.
ir@nayax.com

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SOURCE Nayax Ltd.