Executive Summary / Key Takeaways

• Nayax is rapidly transforming into a diversified, profitable fintech platform, leveraging its global leadership in unattended retail payments to expand into high-growth verticals like EV charging and embedded banking.
• The company's strategic focus on high-margin recurring revenue, driven by a robust SaaS and payment processing model, is yielding significant financial improvements, including record Q2 2025 revenue of $96 million and Adjusted EBITDA of nearly $13 million.
• Technological differentiators like the UNO Mini embedded reader and smart routing capabilities are enhancing competitive moats, lowering customer acquisition costs, and improving transaction margins.
• Strategic M&A and OEM partnerships are accelerating market share capture and geographic expansion, particularly in Brazil and the EV charging sector, while maintaining a low customer churn rate of under 3% annually.
• Nayax has reaffirmed its ambitious 2025 guidance, projecting revenue of $410 million to $425 million and Adjusted EBITDA of $65 million to $70 million, with long-term targets for 2028 including a 50% gross margin and 30% Adjusted EBITDA margin, signaling a clear path to sustained profitability and cash flow generation.

Nayax's Foundation: Powering the Future of Unattended Commerce

Nayax Ltd., incorporated in 2005 and headquartered in Herzliya, Israel, has evolved into a global commerce enablement, payments, and loyalty platform. The company's core business revolves around providing end-to-end cashless payment solutions, management software, and telemetry services for automated self-service retailers and other merchants. This foundational strength has positioned Nayax as a global leader in the unattended self-service payment space.

The industry landscape is undergoing a profound transformation, driven by a pervasive shift from cash to digital payments. Consumers increasingly expect seamless, automated transactions, creating a vast and expanding total addressable market (TAM) for Nayax's solutions. Projections indicate the number of connected devices globally is expected to grow from approximately 45 million in 2024 to 60 million by 2029, underscoring the significant runway for growth. Nayax's overarching strategy is to capitalize on this trend by driving profitable top-line growth, enhancing its recurring revenue mix, increasing market share, and expanding its geographic footprint.

Nayax's competitive positioning is robust, built on a trusted brand and a reputation for reliability. The company's integrated platform, which combines modular payments, hardware, and management software, is designed to scale without compromise, serving a diverse customer base across more than 100 countries. This global-local partner approach for unattended self-service is a significant advantage, enabling plug-and-play solutions for international exporters and simplifying operations for customers worldwide. Nayax's end-to-end control of hardware, software, and payment processing for solutions like micro markets and smart coolers further differentiates it from competitors that rely on third-party systems.

Technological Edge and Innovation

Nayax's technological differentiation is a cornerstone of its investment thesis, providing tangible benefits that enhance its competitive moat and financial performance. The company's core technology spans a range of devices and software platforms designed for diverse unattended environments. The VPOS Touch, a flagship cashless payment and telemetry device, has been instrumental in its growth. More recently, the UNO Mini, an embedded reader, has emerged as a critical innovation. This device is integrated directly inside OEM products, such as EV chargers, creating significant customer stickiness and enabling high-volume deployments with a much lower customer acquisition cost (CAC).

The UNO Mini, while having a very low hardware revenue component, drives higher-margin SaaS revenue from these customers, which is notably higher than that from the traditional vending industry. This strategic shift towards embedded solutions positions Nayax as a first-mover in the EV charging industry, where the technical complexity of integration and certification presents a high barrier to entry for competitors. Nayax's EV Kiosks application, which utilizes the OCPI network, further enhances the user experience and provides a significant edge in its product portfolio for EV payments.

Beyond hardware, Nayax's smart routing capabilities are a key operational differentiator. This technology allows the company to optimize transaction costs by intelligently routing payments to different acquirers based on factors like transaction size and merchant category code (MCC). This sophistication directly contributes to improved processing margins. The company's R&D efforts are also focused on new technologies, particularly in its newly created embedded banking division. This initiative, which fully consolidates Nayax Capital, aims to offer embedded finance solutions such as bank accounts, card issuing, and bank financing. Partnering strategically with Adyen (ADYEN), Nayax plans to roll out these solutions, starting in the U.S. market, with the goal of bringing more value to customers and increasing recurring revenue over time. This technological roadmap, from embedded hardware to intelligent software and financial services, underpins Nayax's strategy to deepen customer engagement and expand its high-margin recurring revenue streams.

Financial Performance: A Story of Profitable Growth

Nayax's financial performance reflects a compelling narrative of accelerating profitable growth and increasing operational leverage. The company's "turning point" in 2024 saw record revenue of $315.2 million on a constant currency basis, a 34% increase year-over-year. Adjusted EBITDA more than quadrupled to $35.5 million, and for the first time, Nayax achieved positive net income and generated $18 million in positive free cash flow, converting over 50% of its Adjusted EBITDA.

This momentum continued robustly into 2025. In the second quarter of 2025, Nayax reported total revenue of $96 million, a 22% increase over Q2 2024. Organic revenue growth for the quarter was 20%. Critically, recurring revenue, which includes payment processing fees and SaaS subscriptions, grew at an even faster pace, rising 32% over Q2 2024 to $71 million, representing 74% of total revenue. This consistently growing share of high-margin recurring revenue is central to Nayax's strategy for a more profitable and predictable business.

Profitability metrics have shown significant improvement. Gross margin in Q2 2025 rose to 48.3% from 44.3% in the prior-year quarter. This expansion was driven by both higher recurring and hardware margins. Recurring margin increased to 52.8% from 51.5%, primarily due to improved processing margins from accelerating volumes with its new banking partner, Adyen, favorable renegotiation of key contracts with several bank acquirers, and enhanced smart-routing capabilities. Hardware margin also saw a notable increase to 35.4% from 28.7% in Q2 2024, attributed to ongoing optimization of the supply chain and better component sourcing. Adjusted EBITDA for Q2 2025 was nearly $13 million, representing approximately 13% of total revenue, underscoring disciplined cost management with Adjusted OpEx at 35.6% of revenue.

Operational metrics further highlight the company's expansion. Total transaction value (TTV) increased by over 34% in Q2 2025, reaching nearly $1.6 billion. The customer base expanded by approximately 24% to approach 105,000 customers, while the installed base of managed and connected devices grew 16% to almost 1.38 million devices. The company's take rate for the quarter was 2.7%. Nayax boasts a very low customer churn rate of under 3% annually and a strong dollar-based Net Retention Rate (NRR) of 123%, reflecting the stickiness of its platform. The Average Revenue Per Unit (ARPU) increased to $215 in 2024, up 12% from $192 in 2023, driven by the ongoing cash-to-cashless conversion and a shift towards higher Average Transaction Value (ATV) verticals like parking (potentially $4 per transaction) and EV charging (around $7 per transaction).

Nayax maintains a solid balance sheet and net cash position. As of June 30, 2025, cash and cash equivalents and short-term deposits totaled $172 million, with short and long-term debt at $156 million.

The company generated $12.9 million from operating activities and $5.6 million in free cash flow in Q2 2025. A note and warrant offering in March 2025 raised approximately $133 million, used to optimize its leverage ratio by repaying higher-cost debt.

Strategic Initiatives and Expansion

Nayax's strategic initiatives are designed to accelerate its growth trajectory and solidify its market leadership. The company's M&A strategy is a key pillar, complementing organic growth by strengthening its market position and consolidating distribution channels. Recent acquisitions include Inepro Pay in April 2025, a long-standing distributor in the Benelux region, which is now a full-service Nayax office in the Netherlands. In Brazil, the acquisition of UPPay in February 2025, combined with VMtecnologia (acquired in 2024), expanded Nayax's connected device footprint to over 50,000 and led to the integration of both entities under the Nayax Brazil brand, unifying market strategy and operations. The company also increased its ownership in Tigapo LTD, focused on family entertainment centers, from 54% to 84%.

Vertical expansion is another critical growth driver. Nayax is experiencing strong momentum in the EV charging sector, highlighted by a strategic partnership with Autel Energy, one of the largest EV charging equipment manufacturers globally. This agreement involves the purchase of 100,000 UNO Minis to be embedded in Autel's AC slow chargers through 2026. A similar partnership with Lynkwell, a U.S. EV charging solutions leader, further strengthens its North American presence. In the fueling vertical, the integration of Roseman and OTI PetroSmart has created a unified global forecourt team, delivering an end-to-end platform for fuel station operators.

The company is also making inroads into retail and hospitality. It launched a cloud-based food service kiosk solution in the Brazilian market, addressing a significant opportunity in a region dominated by legacy providers. Nayax is also "testing the water" with direct retail initiatives and expects a "big, big jump into the retail with some big news" in the next six months. The full acquisition of Nayax Capital and its consolidation into the new embedded banking division underscores a long-term strategy to offer embedded finance solutions like bank accounts, card issuing, and bank financing, aiming to increase recurring revenue. The successful rental-based model, initially proven in Brazil, is now being aggressively rolled out in Australia and other jurisdictions.

Outlook and Guidance: A Clear Path Forward

Nayax's management has expressed strong confidence in its future trajectory, reaffirming its full-year 2025 financial outlook. The company projects revenue growth of between 30% to 35%, translating to a revenue range of $410 million to $425 million on a constant currency basis. This guidance includes an organic revenue growth of at least 25%. Adjusted EBITDA for the full year 2025 is expected to be between $65 million to $70 million, driven by continued revenue growth, market expansion, the full integration of recent acquisitions, and ongoing operational optimization. Furthermore, Nayax anticipates at least 50% free cash flow conversion from Adjusted EBITDA for the full year 2025.

Management expects a stronger performance in the second half of 2025. This acceleration is anticipated from increased shipments and adoption of recently launched products, particularly the UNO Mini embedded reader, as production scales to meet growing demand across multiple regions. Stronger enterprise sales, characterized by longer procurement cycles, are also expected to contribute meaningfully to this acceleration. Hardware margins are projected to remain robust, within the range of 30% to 35% for the full year.

Looking further ahead, Nayax has set ambitious long-term targets for 2028. The company continues to project an annual revenue growth of approximately 35%, fueled by a combination of organic growth and strategic M&A. It also targets a gross margin of 50% and an Adjusted EBITDA margin of 30%, reflecting a commitment to driving high-margin SaaS revenues and operational efficiency. These targets are underpinned by the continued scaling of its recurring revenue streams, particularly payment processing capabilities, which benefit from the global conversion trend from cash to cashless transactions.

Risks and Challenges

Despite a compelling growth story, Nayax faces several risks and challenges that warrant investor attention. New product certification delays, particularly for EV charging solutions in specific territories, have impacted hardware revenue growth in the second half of 2024 and early 2025. While management expects these to be resolved by the end of 2024 or early 2025, such delays can affect revenue timing. The current tariff environment in the U.S. also presents a challenge, though Nayax has strategically decided to hold hardware prices steady for its U.S. customers, leveraging its global manufacturing and optimized supply chain to mitigate the impact.

Macroeconomic conditions, while not significantly impacting Nayax's resilient business model to date due to its small average transaction values ($2-ish), geographic diversity across 120 countries, and presence in over 40 verticals, remain a factor to monitor. The company's business has historically shown resilience even through events like the COVID-19 pandemic.

In the competitive landscape, while Nayax holds a leadership position in automated self-service payments, it faces competition from larger, more diversified fintech players like Verifone (PAY), Square (Block) (SQ), PayPal (PYPL), Adyen, and Fiserv (FI). These competitors offer broad payment solutions, and some, like Adyen, excel in global integration for larger enterprises, or like Square, in broader merchant empowerment. Nayax's strength lies in its specialized, integrated solutions for unattended retail and emerging verticals, and its ability to embed its technology directly into OEM products. However, its smaller scale compared to some rivals could lead to higher customer acquisition costs in certain segments or expose it to pricing pressures. The company's focus on proprietary technology and unique distribution channels for unattended retail acts as a barrier to entry, but continuous innovation is required to maintain its edge against rapidly evolving payment technologies and competitor ecosystems.

Conclusion

Nayax is executing a clear and compelling strategy to capitalize on the global shift towards digital and unattended commerce. Its journey from a specialized payment provider to a diversified fintech platform, marked by significant financial milestones in 2024 and continued strong performance in 2025, underscores a robust investment thesis. The company's commitment to high-margin recurring revenue, driven by technological innovation in embedded payment solutions and strategic expansion into high-growth verticals like EV charging and embedded banking, positions it for sustained profitability.

With ambitious yet reaffirmed guidance for 2025 and long-term targets for 2028, Nayax demonstrates a confident outlook, supported by disciplined cost management, a resilient business model, and strategic partnerships. While facing challenges such as product certification delays and competitive pressures, its differentiated technology, global footprint, and integrated platform provide a strong competitive moat. Investors looking for exposure to the rapidly expanding unattended commerce and digital payment sectors, underpinned by a company demonstrating increasing operational leverage and a clear path to enhanced profitability and cash flow, will find Nayax an intriguing opportunity.