Nayax Q2 Earnings Call Highlights

Nayax (NASDAQ:NYAX) reported second-quarter revenue growth of 28% to approximately $123 million, while reiterating its full-year revenue and adjusted EBITDA outlook. The company lowered its free-cash-flow conversion forecast, citing accelerated investments in EV charging, financial services infrastructure and component sourcing.

Chief Financial Officer Sagit Manor said organic revenue grew 21% in the quarter and approximately 24% during the first half, in line with the company’s full-year organic growth guidance. Recurring revenue increased 24% and accounted for about 72% of total revenue.

The company ended the quarter with more than 1.55 million connected devices and more than 125,000 customers globally. Total dollar transaction value rose 29% to $2.1 billion. Average transaction value increased to $2.52 from $2.20 a year earlier, while average revenue per unit rose 13% to $251.

Growth across devices, transactions and higher-value verticals

Co-Founder and CEO Yair Nechmad said Nayax’s growth continued to be driven by onboarding merchants, selling payment devices and generating recurring revenue from transactions processed through its platform. Net revenue retention remained near 120%, with what Nechmad described as historically low churn.

Management said growth is increasingly coming from both additional deployed devices and higher-value verticals, including EV charging, amusement and car washes. Manor said the company continues to benefit from the conversion of machines from cash-only to cashless payments, as well as the expansion into verticals with larger transaction values.

During the question-and-answer session, Manor said growth was broad-based across geographies and verticals, including Europe, the U.S., Asia and Latin America. She said the company expects the second half of the year to account for roughly 55% of annual revenue, compared with about 45% in the first half.

Hardware revenue rose 40% year over year to $35 million. Approximately two-thirds of the year-over-year hardware revenue increase came from Lynkwell, Nayax’s EV charging-related business. Manor said Lynkwell’s project-heavy business and lower hardware margins weighed on the segment’s profitability, but she expects hardware margins in the third and fourth quarters to return to approximately their first-quarter level.

Margins and profitability

Overall gross margin was 47% in the second quarter. Recurring revenue gross margin improved to 54% from 53% a year earlier, while processing margin increased to nearly 41% from 39%. SaaS margin rose to 76% from 74%.

Hardware margin was 28.1%, affected by the mix of Lynkwell hardware revenue and higher freight and logistics costs. Manor said the company’s recurring-revenue mix, processing and SaaS margin improvement, and a projected hardware margin recovery are expected to support margin expansion in the second half.

Adjusted operating expenses totaled $44 million, or about 36% of revenue. The appreciation of the Israeli shekel against the U.S. dollar created an approximately $2.3 million headwind compared with the first quarter, Manor said. Nayax expects adjusted operating expenses of roughly $42 million in each of the third and fourth quarters, excluding changes related to financial services.

Adjusted EBITDA increased 12% year over year to $14 million. The company reported a net loss of $10.1 million, compared with net income of $11.7 million in the prior-year period. Manor attributed the change largely to higher non-cash stock-based compensation and financial expenses. stock-based compensation totaled $12.4 million, up from $2.5 million a year earlier, including costs associated with a new long-term management incentive program.

Adjusted net income was $6 million, compared with $11 million in the prior-year period, primarily due to higher financial expenses.

Bank charter application and financial services strategy

Nayax recently filed an application with the Connecticut Department of Banking to establish Nayax America Bank Inc., a non-depository Innovation Bank. Chief Strategy Officer Aaron Greenberg said the application followed about a year of drafting and engagement with the department.

Greenberg said a Connecticut charter would provide a single regulatory framework for Nayax to expand financial services for its existing payments customers, including lending and card issuing. He said Nayax intends to extend credit only to merchants already using its payments platform, allowing the company to use real-time settlement data in underwriting and repayment collection.

The review process, which includes a feasibility study and public hearing, is expected to take about six months, although Greenberg said approval is not guaranteed. If approved, Nayax expects the bank to become operational in 2027 and begin contributing incremental revenue that year, with greater acceleration anticipated in 2028 and beyond.

Nayax expects to initially fund the bank with $10 million from its existing balance sheet, with about $1.5 million restricted at opening. The company said it plans to use off-balance-sheet funding structures, such as a warehouse facility, after demonstrating proof of concept.

Guidance reaffirmed, free-cash-flow outlook reduced

Nayax reaffirmed its 2026 revenue outlook of $510 million to $520 million, including organic growth of 22% to 25%, and adjusted EBITDA guidance of approximately $85 million to $90 million. The company expects an adjusted EBITDA margin of about 17%.

However, the company now expects free-cash-flow conversion from adjusted EBITDA of approximately 5% to 10% for 2026. Manor cited investments in financial services capabilities, EV charging market-share opportunities through Lynkwell, component sourcing and the timing of payment settlements.

As of June 30, Nayax had $304 million in cash, cash equivalents and short-term deposits, while total short- and long-term debt stood at $349 million. Quarterly free cash flow was negative $13.1 million, and cash generated from operating activities during the first half was $2.3 million.

Greenberg also said Nayax continues to target two to three acquisitions annually. The company is evaluating software-focused opportunities in verticals where payments and software are closely connected, with parking, mass transit and laundry among areas of interest.

About Nayax (NASDAQ:NYAX)

Nayax Ltd. is a global fintech company specializing in cashless payment solutions, telematics and management services for unattended retail environments. Founded in 2005 and headquartered in Israel, Nayax develops hardware and software platforms that enable vending machines, kiosks, laundromats, e-commerce and self-checkout points to accept a wide range of payment methods, including credit and debit cards, mobile wallets and contactless NFC transactions.

The company’s product portfolio comprises proprietary point-of-sale terminals—such as the VPOS and Carbon series—as well as a cloud-based management suite known as the Monyx platform.

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