Nayax CEO: "80% of the market is still cash-based—We have decades of growth ahead"

Nayax (NYSE: NYAX), a dual-listed Israeli fintech company, develops a commerce, payments, and customer loyalty platform aimed at helping businesses expand. The company just closed a strong quarter, showing consistent revenue growth alongside steady profitability improvements. In an interview with Bizportal following the earnings release, Chairman and CEO Yair Nechmad reflects on Nayax’s journey—from a privately held company with no external capital to a major global player operating in over 120 countries.

According to Nechmad, Nayax’s business model, which relies on recurring revenue and organic growth from existing customers, has proven resilient even in challenging times. This approach allows the company to maintain a rapid expansion rate while improving operational efficiency. Nayax continues to invest in technology and services while also exploring new markets, particularly in South America and the Far East, with the goal of further strengthening its position in the digital payments industry.

"As crazy as it sounds, 80% of our market is still cash-based, which means we see long-term growth for decades to come. We are in a highly strategic global position, with strong demand, as evidenced by our high growth rate and low churn. I see endless growth ahead. Nayax is the only global player offering an end-to-end solution—from hardware to software, payments, and support. We provide everything in one place, giving customers a comprehensive solution."

Key Highlights from the Quarter

"This quarter reflects the long journey we’ve been on. Until 2021, we were a private company that never relied on external capital. The IPO was a strategic move to take the company to the next level. That required significant investments, which we've been making for the past three to four years. Today, we are a growing and profitable company, and we just completed our fourth consecutive quarter of net profitability. Across all key metrics, we are scaling efficiently. This is the foundation of our projections for the future, including 2025 and 2028."

Nayax operates in a vast market with over 50 million potential endpoints. The company is active in more than 120 countries and continues to expand. "We are leveraging our platform to sustain growth and make it even more profitable."

Profitability Improvements and Future Optimization

The company recently improved its gross margin significantly, driven by better payment processing terms and supply chain optimizations. When asked whether there is further room for efficiency improvements, Nechmad responds:

"Our forecast for 2028 targets $1 billion in revenue, a 50% gross margin, and a 30% adjusted EBITDA margin. That requires continuous improvements—both in gross and operational efficiency. In the latest quarter, our gross margin reached 46%, so we are already close to our 50% goal. Revenue growth continues at 33-35% annually, and adjusted EBITDA already surpassed 14% this quarter. We are comfortable with this pace and will keep striving for further improvements."

Nearly two-thirds of Nayax’s growth is organic, coming from existing customers who expand their businesses with the company. "Churn is extremely low—just 2.7-2.8%—and that has been consistent for years. This proves how sticky our business model is and how confident customers are in our solution."

Analyst Expectations vs. Actual Results

Despite strong revenue and profitability growth, Nayax's latest results fell slightly short of analyst expectations. When asked about this gap, Nechmad explains:

"We exceeded analysts' expectations on EBITDA and posted our second consecutive quarter of net profit—which is a major milestone. We’ve been telling analysts the same thing for five quarters now: Nayax is consistently generating returns on capital. Of every dollar in revenue, 30% flows to the bottom line. That’s the beauty of a profitable growth company. Our projections align with this trend, demonstrating our ability to maintain operational efficiency while scaling."

The Rise of Recurring Revenue and Its Strategic Importance

Over the past year, Nayax has seen a sharp increase in recurring revenue, which now accounts for 71% of total revenue. Nechmad explains why this shift is crucial:

"Our recurring revenue comes from customers with multiple sales points powered by Nayax. We are fully aligned with the global trend of payment digitization. It’s clear that non-cash transactions are growing rapidly. Some countries have already transitioned to ‘cashless-only’ economies, and this trend is expanding across all markets we operate in. The digital payments industry continues to grow, as seen in Visa and Mastercard’s reports showing double-digit growth over the years.

This is a long-term wave that isn’t slowing down. Payment-related recurring revenue will keep rising, and we know how to manage its profitability. Additionally, existing customers are expanding their business with us by adding more sales points, increasing the scope of services we provide. While we still generate some one-time revenues, the recurring component—which has already reached 71-72%—will continue to grow. The gross margin on these revenues is significantly higher."

Nechmad reiterates, "It may sound far-fetched, but 80% of our market is still cash-based. That’s why we see long-term growth for decades ahead. Nayax is uniquely positioned as the only global provider offering an end-to-end solution—including hardware, software, payments, and support—all under one roof. Customers get a complete package from us."

The Shift from Cash to Digital Payments

When asked about the factors that will drive businesses to transition from cash to card-based payments, Nechmad states:

"Consumers have already made the shift. The businesses in our market are undergoing a gradual transition, often weighing the right timing for their own reasons."

Expansion Plans for 2025 and Beyond

Nayax has ambitious plans for geographic expansion and acquisitions. When asked which regions hold the greatest potential, Nechmad responds:

"We already operate in 120 countries—over half the world. We are focusing on deepening our presence in South America, with Brazil as a major hub. Surrounding countries like Argentina, Uruguay, Chile, and Peru are also key markets for us. Brazil will serve as our operational center for South America, and we’re making strong inroads into Mexico as well. Beyond South America, we see significant opportunities in the Far East.

Our goal is to expand from 120 countries to a truly global presence. No other company processes payments in 50 different currencies while serving 120 countries with a fully integrated technology stack—hardware, software, and services. That’s a unique advantage.

Additionally, we excel in serving small and medium-sized businesses. While most global payment providers focus on large enterprises, we have built a scalable model that allows us to profitably serve even small customers—those processing as little as $500 per month. We’ve invested heavily in reducing customer acquisition costs, making it economically viable to serve even the smallest businesses. This opens up an almost limitless addressable market."