Executive Summary / Key Takeaways

• 2024's Inflection Creates Durable Economics: Nayax transformed from a cash-burning growth story into a profitable platform generating positive free cash flow, with Q3 2025 gross margins hitting 49.3% and processing margins expanding to 39.6%—demonstrating that scale and mix shift are delivering real operating leverage.

• One-Stop-Shop Moat Drives 123% Net Revenue Retention: The integrated hardware-software-payments platform creates extreme stickiness, with customers deepening engagement over time and expanding across devices. This low-churn model converts 74% of revenue into high-margin recurring streams, a structural advantage that pure-play competitors cannot replicate.

• EV Charging Vertical Transforms Revenue Quality: With average transaction values of $18 for DC chargers versus $2.40 for the overall platform, the EV charging segment is accelerating ARPU growth and processing margins. The Autel Energy partnership for 100,000 UNO Mini devices through 2026 signals OEM penetration that could replicate this high-value model at scale.

• M&A Strategy Building End-to-End Ecosystem: Acquisitions like VMtecnologia (Brazil), Roseman (fueling), and Lynkwell (EV charging) are not mere geographic expansion—they create cross-sell opportunities and vertical integration that deepen the platform's moat while targeting $150+ million in additional inorganic revenue by 2028.

• Execution Risk Tempered by Strong Balance Sheet: While delayed M&A deals forced a guidance cut to $400-405 million for 2025, the company holds $173 million in net cash and generated $18 million in free cash flow in 2024, providing ample runway to execute its 2028 targets of 35% growth and 30% EBITDA margins without dilutive financing.

Setting the Scene: The Unattended Retail Revolution

Nayax Ltd., incorporated in Herzliya, Israel in 2005, spent its first 15 years building what management calls a "good start company"—methodically establishing a global footprint across 100+ countries while competitors focused on single markets. This patient foundation now underpins a business that processed $1.8 billion in transaction value in Q3 2025 across nearly 110,000 customers and 1.4 million connected devices. The company operates in the unattended retail ecosystem, a fragmented $10+ billion market spanning vending machines, EV charging stations, car washes, laundromats, and fueling stations.

The industry is undergoing a structural shift from cash to cashless. Cantaloupe (CTLP)'s data shows 77% of U.S. vending transactions are now cashless, while Nayax's own metrics reveal a 35% increase in dollar transaction value outpacing 21% transaction growth—clear evidence of cash-to-cashless conversion. The total addressable market is expanding from 45 million to 60 million connected devices globally, driven by regulatory mandates (EV chargers must accept card payments for public funding) and consumer behavior shifts. Nayax sits at the center of this transformation, but unlike pure-play competitors, it offers a unified platform that replaces multiple vendors with a single integrated backend.

Competitively, the landscape is consolidating. Cantaloupe dominates U.S. vending with 15.5% market share but lacks global scale and EV charging depth. ChargePoint (CHPT) leads EV charging networks but burns cash and lacks Nayax's payment facilitator infrastructure. NCR Voyix (VYX) provides self-service kiosks but remains burdened by legacy hardware dependencies. Nayax's differentiation lies in its end-to-end control: hardware manufactured in Israel and the Philippines, proprietary payment processing, and a management suite that integrates telemetry, loyalty, and now embedded banking. This vertical integration eliminates third-party onboarding friction and delivers higher reliability, creating switching costs that manifest in 123% net revenue retention.

Technology, Products, and Strategic Differentiation

Nayax's core technology is not a single product but a modular architecture that scales across verticals. The VPOS TOUCH and ONYX devices combine contactless payment readers with telemetry in a single unit, enabling remote monitoring that reduces operator site visits by a factor that management implies is "significantly greater" than competitors' solutions. This hardware-software fusion is the foundation of the "one-stop-shop" value proposition that CEO Yair Nechmad emphasizes as "a true differentiator that few others can offer."

The UNO Mini embedded payment product represents a strategic breakthrough for the EV charging vertical. Six Chinese OEM partners completed SDK certification in Q3 2025, with Autel Energy committing to 100,000 units through 2026. Why does this matter? Embedded devices create stickiness at the factory level, reducing customer acquisition costs while locking in long-term processing revenue. As Chief Strategy Officer Aaron Greenberg notes, "OEMs don't replace their hardware and go through UL certification every 6 months. Once we've gone through this process with them, they'll be using us for many years." This creates a multi-year revenue annuity that competitors cannot dislodge without forcing customers through expensive recertification.

The Vipos Media Android-based PIN-enabled device family, launching in Australia, UK, and Europe, opens higher-value use cases requiring PIN-on-glass for DC fast charging transactions. This is critical in European markets where regulations mandate PIN entry for high-value transactions. The device combines payment infrastructure with touchscreen loyalty, advertising, and promotional tools—transforming a payment terminal into a customer engagement platform. This innovation supports management's target of 50% gross margins by 2028 by enabling premium pricing in regulated markets.

Embedded banking via Nayax Capital, fully consolidated in Q2 2025, adds a fourth revenue pillar beyond hardware, processing, and SaaS. The platform offers automated hardware financing, bank accounts, and card issuing secured against gross processing receipts. This creates a flywheel: financing drives hardware adoption, which increases processing volume, which improves credit risk assessment, which enables more financing. CFO Sagit Manor notes this initiative is "alive and kicking" with a Q1 2026 U.S. launch planned, targeting higher recurring revenue per customer and 30% EBITDA margins by 2028.

Financial Performance & Segment Dynamics

Q3 2025 results provide compelling evidence that the platform flywheel is accelerating. Revenue grew 26% to $104.3 million, with organic growth of 25% showing sequential acceleration from earlier quarters. The mix shift toward recurring revenue reached 74% of total revenue, up from 71% in 2024, while processing revenue grew 33% to $48 million—faster than overall revenue, indicating expanding customer usage. This is the mathematical proof of platform stickiness: existing customers process more transactions over time, driving margin expansion without proportional sales costs.

Gross margin improved to 49.3% from 45.7% year-over-year, driven by a 350 basis point improvement in recurring margins to 53.6%. The processing margin leap from 33% to 39.6% is particularly significant. Management attributes this to consolidating payment volumes under five main acquirers, renegotiating key contracts, and implementing smart routing that automatically selects the best price and data for each transaction. This operational leverage demonstrates that Nayax's scale—processing several billion transactions annually—creates negotiating power that smaller competitors cannot match. The hardware margin also expanded to 37% from 34.4%, reflecting supply chain optimization and better component sourcing, defying typical commoditization pressures.

The balance sheet provides strategic flexibility. With $173 million in cash and $156 million in debt (net cash positive), Nayax completed a $133 million note and warrant offering in March 2025 to optimize its capital structure. Free cash flow of $3.9 million in Q3 and $18 million for 2024 shows the business is self-funding its growth. This matters because it enables disciplined M&A without dilutive equity raises, supporting the 2028 target of $150+ million in inorganic revenue contributions.

Segment performance reveals divergent growth vectors. The core automated self-service business continues gaining market share, with the installed base growing 17% and customers expanding 21%. The EV charging vertical, while still building scale, drives disproportionate value: DC charger ATVs of $18 versus $2.40 average, and the Lynkwell acquisition adds an AI-enabled management platform that complements Nayax's payment technology. The fueling vertical, combining Roseman and OTI PetroSmart, targets 3,000 connected points across 450 Israeli gas stations by mid-2025, with European and U.S. expansion planned. Each vertical deepens the platform's relevance while maintaining the unified backend that customers value.

Outlook, Management Guidance, and Execution Risk

Management's guidance narrative reveals both confidence and prudence. The original 2025 outlook called for $410-425 million revenue (30-35% growth) and $65-70 million adjusted EBITDA. In Q3, this was revised to $400-405 million (27-29% growth) and $60-65 million EBITDA, explicitly citing delayed M&A transactions. CFO Sagit Manor stated, "The gap between our organic financial results and the consensus comes from the lack of significant M&A that we were expecting." This matters because it shows management prioritizing strategic discipline over growth at any cost—a key risk mitigator.

The organic growth guidance of "at least 25%" remains intact, driven by enterprise hardware sales in Q4 and strong recurring revenue momentum. Management has "good visibility" for Q4, expecting to meet expectations due to high demand and a robust hardware sales pipeline. This suggests the core business is accelerating despite macro headwinds, with processing revenue growing 33% in Q3 providing a stable foundation.

The 2028 targets—35% annual revenue growth, 50% gross margin, and 30% adjusted EBITDA margin—imply a business generating over $600 million in revenue with $180+ million in EBITDA. Management expects $200 million in inorganic revenue from 2022-2028, with another $150+ million over the next three and a half years, including "a few larger acquisitions (potentially over $100 million enterprise value) in 2026 and beyond." This trajectory requires executing on the M&A pipeline while integrating acquisitions like Lynkwell and VMtecnologia to realize cross-sell synergies.

Execution risks are tangible. The decision to "drop out" of a deep-due-diligence acquisition in Q2 because it failed prudent measures shows discipline but also highlights the difficulty of finding accretive deals. The U.S. market remains challenging—management notes "better opportunities outside of the US in Europe, Latin America, Asia" due to market dynamics. With 40% of revenue from the U.S., penetrating this market is critical for long-term targets, yet Cantaloupe's entrenched position and the merger of "and three sixty five" (likely referencing USA Technologies and another competitor) create consolidation pressure.

Risks and Asymmetries

The most material risk is M&A execution. While management's discipline is commendable, the guidance cut proves that delayed deals directly impact growth trajectory. If the pipeline of "larger acquisitions" fails to materialize in 2026, the 35% growth target becomes dependent on organic acceleration alone—a tall order as the base scales. The Lynkwell acquisition, while strategic, must integrate smoothly to justify its $25.9 million cash price and deliver the expected EV charging synergies.

U.S. market penetration presents a structural challenge. Cantaloupe's 15.5% market share in vending and deep integration with major operators creates a moat that Nayax's global platform struggles to breach domestically. Management's comment that "we're not the cheapest system out there" acknowledges a pricing disadvantage that could limit share gains, especially if competitors bundle services or offer lower transaction fees. The risk is that Nayax becomes a global leader while remaining a U.S. laggard, capping overall TAM capture.

Technology and certification cycles create timing risk. The EV charging vertical requires UL certification and OEM integration that takes 12-18 months. While this creates long-term stickiness, it also means revenue acceleration is back-loaded. If certification delays emerge (as they did prior to 2025) or if competitors achieve faster integration, Nayax's "first-mover advantage" with UNO Mini could erode. The six Chinese OEM certifications are promising, but the pipeline must scale to hundreds of thousands of units to move the needle on 2028 targets.

Tariff impacts, while currently absorbed, could pressure margins if rates increase beyond the 10-17% currently imposed on Israeli and Philippine manufacturing. Management's ability to hold U.S. hardware pricing steady reflects supply chain optimization, but this may not be sustainable if trade tensions escalate. The risk is margin compression just as the company targets 50% gross margins.

On the upside, embedded banking could be a game-changer. If Nayax Capital's automated financing and card issuing gain traction in Q1 2026, it could drive ARPU significantly higher while creating a new recurring revenue stream with 30%+ margins. The rental business launched in Australia in July 2025 provides another high-margin, sticky revenue model that could scale globally. These initiatives create asymmetry: success adds $50+ million in high-margin revenue with minimal incremental capex, while failure doesn't derail the core platform.

Competitive Context and Positioning

Nayax's competitive positioning is best understood through comparative economics. Cantaloupe (CTLP) trades at 2.47x EV/Revenue with 19.2% profit margins and 27% ROE, reflecting its mature, profitable U.S. focus but also its limited growth (single-digit) and lack of EV charging exposure. Nayax's 4.63x EV/Revenue premium is justified by 26% growth and a more diversified vertical mix, though its 6.5% profit margin and 12.9% ROE show the cost of global expansion. The "so what" is that Nayax is sacrificing near-term profitability for market share gains in faster-growing verticals—a trade-off that makes sense if EV charging and embedded banking scale as projected.

ChargePoint (CHPT) represents the EV charging pure-play comparison. With -58% profit margins, -214% ROE, and 0.94x EV/Revenue, it trades like a distressed asset despite its network scale. Nayax's positive net income and 39.6% processing margins in EV charging demonstrate superior unit economics. While ChargePoint has more charging ports, Nayax's payment facilitator model generates higher-margin transaction revenue without the capital intensity of owning charging hardware. This positions Nayax to capture EV charging growth more profitably, though it lacks ChargePoint's network effects and brand recognition.

NCR Voyix (VYX) shows the legacy challenge: 0.90x EV/Revenue, -1.8% profit margins, and declining revenue. Its self-service kiosk focus overlaps with Nayax's retail initiatives, but Nayax's 26% growth and 49.3% gross margins reflect a modern cloud-based architecture versus NCR's hardware dependencies. The risk is that NCR's enterprise relationships and scale could block Nayax's retail expansion, but Nayax's integrated platform and lower cost structure suggest it can win on TCO.

Nayax's moats manifest in customer economics. The platform's "very low customer churn" and 123% NRR mean competitors must offer 20-30% price discounts to win business, which is unsustainable given Nayax's processing margins are already 600 basis points higher than 2023. The global distribution network—100+ countries with local certification—creates a barrier that would take competitors $50+ million and 3-5 years to replicate. The OEM strategy, with UNO Mini as a single SKU for global deployment, reduces CAC and creates multi-year lock-in that competitors relying on third-party hardware cannot match.

Valuation Context

Trading at $45.55 per share, Nayax commands a $1.71 billion market capitalization and $1.71 billion enterprise value (net cash neutral). The valuation multiples reflect a growth premium: EV/Revenue of 4.63x versus Cantaloupe's 2.47x, EV/EBITDA of 39.7x versus Cantaloupe's 16.5x, and P/E of 72.3x versus Cantaloupe's 13.2x. These premiums are justified by Nayax's 26% revenue growth (versus Cantaloupe's single-digit), 74% recurring revenue mix, and exposure to higher-growth verticals like EV charging.

The balance sheet supports the valuation. With $173 million in cash and $156 million in debt, Nayax is net cash positive, providing acquisition firepower without dilution. Free cash flow of $18 million in 2024 converted at 50% of adjusted EBITDA, demonstrating that growth is not coming at the expense of cash generation. This is critical for a company targeting $150+ million in inorganic revenue by 2028—internal cash generation can fund a significant portion of M&A.

Relative to the 2028 targets, the current valuation appears reasonable if management executes. Assuming $600 million in 2028 revenue and a 30% EBITDA margin ($180 million), the EV/EBITDA multiple compresses to 9.5x, well below software averages. The key assumption is achieving 35% annual growth, which requires both 25%+ organic growth and successful M&A. The delayed 2025 deals create valuation risk if the M&A pipeline continues to underwhelm, but the organic momentum (Q3 25% growth, 33% processing revenue growth) suggests the core business can support a re-rating.

For investors, the relevant metrics are not traditional P/E but EV/Revenue growth-adjusted multiples and path to EBITDA margin expansion. At 4.63x EV/Revenue with 26% growth, Nayax trades at 0.18x PEG ratio—attractive if margins expand as guided. The free cash flow yield of 1.0% is low but improving; if 2028 FCF reaches $90 million (50% of $180 million EBITDA) on the current enterprise value, the yield jumps to 5.3%, supporting a higher valuation.

Conclusion

Nayax stands at an inflection point where a decade of global platform building is translating into durable profitability and accelerating growth. The 2024 turnaround—record revenue, positive free cash flow, and margin expansion—was not a cyclical bounce but the result of a sticky, one-stop-shop platform that captures more value per customer over time. The EV charging vertical, with its $18 average transaction values and OEM partnerships like Autel Energy, provides a high-margin growth engine that competitors cannot easily replicate. Embedded banking and the rental business add new recurring revenue streams that should drive ARPU higher while consolidating the platform's moat.

The investment thesis hinges on two variables: M&A execution and U.S. market penetration. Management's discipline in walking away from overpriced deals is reassuring, but the guidance cut proves that inorganic growth is essential to hitting 2028 targets. The U.S. market, representing 40% of revenue, remains the key battleground where Nayax must take share from Cantaloupe to justify its valuation premium. Success in these areas could drive the stock toward $60-70 as margins expand and revenue compounds at 30%+.

The primary risk is that competitors consolidate faster or that certification delays slow the EV charging rollout. However, Nayax's net cash position, 123% NRR, and 74% recurring revenue mix provide a defensive foundation that loss-making peers lack. For investors willing to accept execution risk, Nayax offers a rare combination of growth, improving margins, and multiple expansion potential as the market recognizes the durability of its platform economics in the expanding unattended retail ecosystem.