Nayax Ltd., a global commerce payments and loyalty platform designed to help merchants scale their business, announced its financial results for the first quarter, ending March 31, 2024.
Yair Nechmad, chief executive officer and chairman of the board, stated in the announcement: "I am pleased with our first quarter results, which continued our strong trajectory, and especially with the significant improvements in recurring revenue, gross margins, and adjusted EBITDA. As we look ahead through the rest of the year, we are particularly excited about the strong potential that we see in our pipeline, as well as the increased traction that both our growth engines and recent M&A will provide us. These factors set the stage for accelerated revenue growth as the year progresses. Furthermore, thanks to the strong operating leverage within our business model, we anticipate significant improvements to our bottom line, enabling us to meet our targets for the year.”
Sagit Manor, chief financial officer, added in the announcement: “Recurring revenue rose to 72% of total revenue, growing 43% year over year. Additionally, we showed a record organic growth of 62,000 in the number of managed and connected devices. We expect our revenue growth rate to accelerate in the coming quarters, allowing us to achieve our growth target for the year. Adjusted EBITDA in the quarter was $3.6 million, versus last year’s adjusted EBITDA loss of ($0.6) million. Our dollar-based net retention rate remained high at 134%, reflecting continued customer satisfaction and loyalty for our comprehensive solutions.”
First-quarter 2024 financial highlights
Revenue of $64.0 million of which recurring revenue from SaaS and processing fees comprised 72% of total revenue and grew 43%.
Hardware revenues decreased this quarter by 11% because of a shift in customer mix towards SMBs, as well as a change in product mix, which favored devices with lower average selling prices, both of which are characterized with higher gross margins.
Gross margin improved strongly to 43.8% from 34.1%. This was primarily due to significantly improved hardware margins rising to 27% from 12%, as a result of steps taken to increase efficiencies within Nayax’s business and supply chain, as well as the product and customer mix sold, as mentioned above.
Operating loss was reduced to $2.8 million, compared to an operating loss of $5.2 million.
Net loss for the period was $5.0 million or ($0.15) per share, compared to a net loss of $5.5 million, or ($0.17) per share.
Adjusted EBITDA improved by $4.2 million to a positive $3.6 million, compared to an adjusted EBITDA loss of $0.6 million.
Revenue and adjusted EBITDA were negatively impacted by an approximate $1.3 million purchase accounting adjustment, due to a fair-value adjustment to deferred revenue, related to the Retail Pro acquisition.
As of March 31, 2024, the company had $93 million in cash and cash equivalents and short-term deposits. The increase was primarily due to the successful completion of a public offering during the quarter.
As of March 31, 2024, short-term and long-term debt balances stood at $48.2 million.
First-quarter 2024 operational metric highlights
Total transaction value grew 34% to $1.07 billion.
Number of processed transactions increased 32% to 540 million.
Growth in the customer base continued at a healthy pace, adding 4,000 new customers in the quarter, bringing the total customer base to over 76,000, an increase of 46% year-over-year.
The dollar-based net retention rate remained high at 134%, reflecting strong customer satisfaction, while the customer churn rate remained low at 3.2%.
Nayax added 62,000 managed and connected devices in the quarter, a record from organic growth, driven by robust customer demand, bringing the total number of managed and connected devices to 1,108,000, representing an increase of 44% year-over-year.
Financial outlook
Full year 2024 revenue expectations continue to be in the range of $325 million to $335 million, on a constant currency basis, representing year-over-year growth of over 38%.
Hardware gross margins are expected to be in the range of 25% to 27%. Due to improvements in Nayax’s supply chain, gross margins are trending to the top end of the range. Adjusted EBITDA is expected to be in the range of $30 million to $35 million as Nayax continues to scale its business and benefit from its high operating leverage.
Over the long term, management targets an approximate 35% CAGR on revenue, driven by a combination of organic growth and strategic M&A. The long-term adjusted EBITDA margin target is 30%, and the long-term gross margin target is 50%.
Improvements over the coming years are expected to be driven by leasing options for IoT POS, continuing to grow SaaS revenue and payment processing fees, and services offered through Nayax’s various growth engine initiatives.
