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 second quarter 2023.
Yair Nechmad, chief executive officer and chairman of the board, said in the announcement: “Our business momentum continued into the second quarter. We delivered strong revenue growth of 36% year-over-year and improved adjusted EBITDA to $1.3 million, driven by the excellent growth of our recurring revenue sources and ongoing operating efficiencies across the business. More importantly, I am pleased that we reported an improvement in our overall gross margin mainly from our hardware component cost management. These results reflect the continued execution of our strategic initiatives and the secular trends driving our core unattended market.”
Nechmad continued, “Nayax’s business fundamentals remain strong and our differentiated growth strategies and value proposition as a global solutions provider, with a complete end-to-end solution, continues to resonate with our diverse customer base. We remain focused on executing our strategies while maintaining a balance between growth and improved profitability.”
Second-quarter financial highlights
Total revenue of $56.2 million, an increase of 36.4%.
Recurring revenue from monthly SaaS and payment processing fees grew 42.9% and represented 65% of total revenue in Q2 2023.
Q2 2023 gross margin was 37%, higher compared to Q1 2023 of 34% and Q2 2022 of 33%. The improvement was mainly attributed to hardware component cost management execution and favorable hardware selling prices. During the quarter, hardware gross margin improved to 19% from 12% in Q1 2023. For 1H 2023, hardware gross margin was 15%, as previously communicated.
Overall 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 $20.9 million, an increase of 48%.
Q2 2023 operating loss was $3.7 million, compared to an operating loss of $8.6 million, representing a significant improvement in expense management.
Net loss for Q2 2023 was $4.0 million, or ($0.120) per diluted share, compared to a net loss of 10.3 million, or ($0.316) per diluted share.
Adjusted EBITDA was a positive $1.3 million for the first time in two years, since Q1 2021, a marked improvement of $4.5 million to adjusted EBITDA compared to negative $3.2 million in Q2 2022.
In Q2 2023, the company recorded strong growth in its recurring revenue from SaaS and payment processing, reflecting 65% of total revenue. This increase in recurring revenue represents growth in both the number of transactions processed through its devices as well as an increase in total transaction value, as well as an increase in SaaS revenue. 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.
Second-quarter business and operational highlights
- Expanded its diverse customer base this quarter, by adding 4,000 new customers across global footprint, bringing total customer base to 56,000, as of June 30, 2023, an increase of 47%.
- Dollar-based net retention rate was 139%, reflecting the high satisfaction and loyalty its customers place on comprehensive solutions to increase their revenue and improve their operations.
- Added almost 56,000 managed and connected devices during the quarter, driven by robust customer demand, bringing the total number of managed and connected devices to 824,000. This represents an increase of 38%.
- Number of processed transactions grew by 41% to 446 million.
- Total transaction value increased by 51% to $885 million.
- Extended relationship with Primo Water in the U.S. with additional Nayax devices and plan to expand globally.
- The leading U.S. unattended retail provider extended its program with Nayax by purchasing devices for a water refilling project at a large car manufacturer.
- Added Synergy Energy as a new Tier 1 customer. Synergy Energy is Western Australia’s largest energy retailer and generator. Synergy has chosen to rollout their EV DC chargers with Nayax devices embedded. This deployment of EV fast chargers with cashless payments is the first in Australia.
Full-Year 2023 outlook
Revenue on a constant currency basis to be in the range of $235 million to $240 million, representing year-over-year growth of at least 35%. Adjusted EBITDA to be between $3 to $7 million in 2023.
Full-year 2023 assumptions:
Continued execution of strategic growth plans and benefits of secular trends in digital payments.
Customer demand continues to be strong.
Assumes no material changes in macroeconomic conditions.
Mid-term outlook
The company is reaffirming its mid-term revenue outlook of 35% annual growth, driven by organic growth initiatives, with customer growth, market penetration and continued expansion of its integrated payments platform as well as emerging growth engines and strategic M&A.
Long-term outlook
The company is reaffirming its long-term outlook of 35% annual growth, driven by organic growth initiatives and strategic M&A.
Its long-term gross margin target of 50% is driven by leasing options for IoT POS, growing SaaS revenue and payment processing fees along with services offering through emerging growth initiatives.
Long-term adjusted EBITDA margin target is 30%.
