Nayax reports strong financial results for first quarter of 2023, raises earnings outlook

Nayax Ltd., 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, announced its financial results for the first quarter of 2023.

Yair Nechmad, chief executive officer and chairman of the board, said in the announcement: “We exceeded our first quarter expectations on both the top and bottom line and continued to realize the efficiencies from our infrastructure investments and cost discipline, while executing our key strategic priorities. We reported strong revenue growth of 54% year-over-year that again exceeded our 35% annual growth target and saw marked improvement in our net income and adjusted EBITDA. With these strong results, we are raising our adjusted EBITDA guidance to reach profitability in 2023 instead of breakeven. In Q1, we demonstrated the high level of customer satisfaction for our products and solutions as measured by our net retention rate, which increased to 141%.

“Nayax’s business fundamentals remain strong. Our continued business momentum is the result of our value proposition, adoption of cashless payments globally and the focused execution of our strategies. Our underlying business momentum positions us well to capture the growth opportunities ahead and achieve our goal toward profitability.”

First-quarter financial highlights

(All comparisons are relative to the three-month period ending March 31, 2022, unless otherwise stated):

Total revenue of $52.4 million, an increase of 54%.
Recurring revenue from monthly SaaS and payment processing fees grew 44% and represented 62% of total revenue in Q1 2023.
Q1 had positive impact on revenues from foreign currency exchange rate fluctuations of $1M compared to Q4 2022.

Q1 2023 gross margin of 34% was slightly higher compared to 33% in Q4 2022. Similar to Q4 2022, gross margin continues to be impacted by the higher mix of POS devices revenue, and increase in processing fees, which have lower margins than SaaS revenue.
Gross profit reached $17.9 million, an increase of 37%.
Operating expenses, including research and development, share-based compensation expenses, and depreciation and amortization amounted to $22.7 million, a reduction of 5% from Q4 2022. This decline reflects its efforts during the quarter to adapt its cost structure and to continue managing the business with greater cost discipline in 2023, while benefitting from the efficiencies driven by its investment in automation and enhanced infrastructure. The strong progress in moderating expenses positions us well to reach its stated goal toward profitability.
Q1 2023 operating loss was $5.2 million, compared to an operating loss of $8.9 million.
Net loss for Q1 2023 was $5.5 million, or ($0.1685) per diluted share, compared to a net loss of $9.8 million, or ($0.299) per diluted share.
The company continued to make significant strides in improving its bottom line, with an improvement of $2.7 million to djusted EBITDA. Adjusted EBITDA was a negative $0.6 million compared to negative $3.3 million in Q1 2022.

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.

The company provides payment processing and business operations software solutions and services through its global cashless payment platform. In Q1 2023, the company recorded strong growth in its recurring revenue from SaaS and payment processing, reflecting 62% 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 total 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.

Operational highlights

(All comparisons are relative to the three-month period ended March 31, 2022, unless otherwise stated):

Expanded its diverse customer base this quarter, by adding 5,000 new customers across its global footprint, bringing total customer base to 52,000, as of March 31, 2023, an increase of 54%.
Dollar-based net retention rate increased to 141%, reflecting the high satisfaction and loyalty its customers place on comprehensive solutions to increase their revenue and improve their operations.
Added almost 44,000 managed and connected devices during the quarter, driven by robust customer demand, bringing the total number of managed and connected devices to 769,000. This represents an increase of 39%.
Number of processed transactions grew by 52% to 410 million.
Total transaction value increased by 63% to $796 million.