Day 2 of the 43rd Annual Growth Stock Conference. My name is Chris Kennedy. We appreciate you joining us, both in person and online. I'm the research analyst here who covers Nayax. For a complete list of research disclosures and/or potential conflicts of interest, please visit our website at williamblair.com. I'm very excited to introduce Nayax. From the company, we have the CFO, Sagit Manor. Nayax is a leading provider of payment and software solutions for the unattended retail market. We've been tracking this company since 2018. They came public in 2021, and we launched coverage earlier this year. It's been fun to watch the business grow and evolve, and we're thrilled to have them here today. With that, let me pass it over to Sagit. Thank you, Chris. Do you guys hear me? I can hear myself. Good morning. Thank you for those who wake up early to come and hear the Nayax story. We'll start. Doesn't work? I'll tell you a little bit about myself. Sagit Manor. I've been with Nayax for the last two years. It was off? Okay. Been in the payment industry most of my professional life. I was in Lipman and then in Verifone for many years. Excited to be here. Who we are? Nayax is in the unattended space. If you think about the vending machine, massage chair, kiddie ride, laundromat, car wash, electric vehicle chargers, every place that you go, when there's no person that actually selling you something, that's where we operate. Our mission is to simplify commerce and payment for our customers. What does it mean? It means to help them grow their business in a better way. It means to optimize their cost, and obviously, to do that while engaging their customers to them. What does it mean? For example, with dynamic pricing, we can actually create a happy hour in a vending machine that is done between 2 to 4. It can be that every 9 coffees you buy, you get the 10th for free, and all kinds of engagement that our customers like. Just a little bit of who we are from a revenue perspective. We like to say that we double it ourselves every 2 years. We finished the year 2022 with $174 million revenue, grew 46% year-over-year. In 2023, our guidance is to grow at least 35%, reaching $235 million to $240 million revenue. We're very proud on our growth that we've shown over the years and planning to do the same this year, despite the macroeconomic conditions. On the right side, you can see the growth of our recurring revenue, which obviously is a critical point in our growth engines, you can see how fast we're growing, 47% year-over-year, if we look at 2021 versus 2022. Let's talk a little bit about who we are. We founded the company in 2005, really with the mission to take that probably very boring vending machine business and make it interesting and help, as I said, our retailers to solve their issues. We've acquired a few companies over the years. Our VPOS Touch, which our flagship, was introduced into 2018, but VPOS is our product for many years. We've done a few acquisitions over the years, and as Chris mentioned, we've IPO'd in Tel Aviv in 2021 and then did a listing at Nasdaq in 2022. We are the only global company today that does unattended. We have nine offices around the world. We use distributors in other areas, we can sell in 70+ countries that we sell our product. We accept more than 80 payment methods, and customers can use more than 50 currencies in our vending machines. I'll talk about the scale a little bit later, but maybe the most important KPI from this slide is the high 141% net retention rate and the very low churn rate, less than 4%. You'll see later who are our customers, and mostly are SMBs, small businesses that have maybe between 1 to 30 devices, so you can even appreciate more the low churn rate that we have. What is the problem we're trying to solve? You have the consumer that wants everything, the in-store and the online to be combined, right? Everything that comes from the unattended space into the mobile, even. They want to pay in every payment method that exists in every currency. Oh, by the way, to be appreciated by their loyalty, right? You have the retailer that needs to provide all of that on one hand, but also to manage its business better, right? Manage employees, manage inventory, get all the data. They can do that today with the VPOS Touch, with our Nayax solution through the mobile.... Think about how it used to be when it was cash, that an operator probably comes every week to its vending machine to collect the money and put inventory in. Not necessarily they know that the machine doesn't work for five days, right? They were counting on the customer to call and say, "Hey, I didn't get my Coke," right? Whatever it is that doesn't work. Today, they all have it on their mobile. Our end-to-end solution provides the best-in-class, or we like to say, the state-of-the-art hardware, but this is just the beginning, right? What we really see is the telemetry and the management suite that help them manage their business better. It's the payment, of course. Payment is a center of gravity, but today is a commodity, right? Everything, at the end of the day, you need to be able to pay. Then you have, of course, the loyalty, as we said, you know, the engagement, the lock-in for them. Customers that implement the Nayax end-to-end solutions actually see 25%-30% increase in their revenue and 20%-25% decrease in their costs. Think about it this way: to change the device from a cash to cashless, okay, from any solution that they have today to the Nayax, cost them exactly the same on a monthly basis, but what they gain to their business is that increase in their revenue and decrease in costs. What do we do? I like to look at this as bringing the global solution into the local market. From a global reach, we are all over the world, 40% in North America, we have 40% in Europe, around 10% in Australia and the rest of the world. You can see that 70% of our customers are small businesses. As I said, it's 1 to 30 devices. It means that, you know, we love our small businesses. This is how we build the business since 2005. At the same time, we love our tier one customers. As you can see on the left side, between Canteen and Primo Water, if you're from Europe, you will see here the café+co and many other customers that are tier one. Tier one can be even 25,000 devices, 50,000 devices, et cetera. Very large customers. As we talked about, is the net retention rate that, you know, all over through the years was high and the low churn rate. We love our land and expand strategy, and you can see even more if I focus on the cohort analysis, and this is over 6 years, you see how our existing customers grow, and we grow with them. If I take an example, the 2018 customers that join us, they are buying more and they are doing more with us, and our revenue with them is 5 times higher than when they join us. Land and expand. What is our long-term view? From a market research perspective, you know, that we have done in 2021, just before we went to the Tel Aviv IPO, we've learned that there's 44 million devices out there in the unattended space by in 2020, growing to 54 million devices by 2025. What does it mean? It means that the unattended devices are out there waiting for us to replace the cash to cashless. We also believe that less than 20% of those devices actually accept cashless transactions, so very, you know, great opportunity in this unpenetrated space. On the left side, you can see that, and I'll talk in a few minutes about our business model from a processing perspective, right, transactions perspective, it's the same thing, growing from EUR 41 billion to EUR 123 billion in 2025. This is, of course, as a result of the consumer behavior change. If you think about it, six, seven years ago, 25% of the transactions in a vending machine were cashless. Today, it's 65%. What do we mean by One Nayax and our One Nayax strategy? Obviously, the unattended space is the core business, is the foundation for everything that we do. We understand that our retailers, especially the large ones, they want a full end-to-end solution. They want us to be the unattended solution in their unattended strategy outside of their stores, and they want us to help them with their electric vehicle charger, which is a different strategy, again, if they have around 6 or 8 parking places, but they also want us in-store, in the kiosks, et cetera. We do have a few other solutions. We have the solution of Nayax Capital that provides leasing opportunity. Today, we sell our product on a one-time basis. We are now able to provide them with the ability to pay over time. I'll give the last example, is CoinBridge, where we take the loyalty assets and convert them into currencies, and we'll talk about that later. What is our strategy? Six-leg stool. One is the land and expand, as I've mentioned, very critical to our success, to our growth, to our ability to forecast in such confidence, 35% growth year-over-year. The second thing is new customers. Of course, we love new enterprise or SMBs. Innovation, it's our... I like to call it our second name. I've mentioned the CoinBridge, I've mentioned a little bit on the retail side... continue to expand internationally. Last year, in 2022, we opened our New Zealand office and our UAE. Actually, if you walk today to the Dubai airport, you'll think that Nayax is the only solution that exists out there. Obviously, with the growth engines, we have the electric vehicle vertical, we have the retail vertical, and of course, M&A, when it, if, it's relevant. From a financial standpoint, our business model is built on three legs. One is obviously the selling the product. It's a one-time sale that we start every quarter. That's the hardware. We like to call it the lock-in, the enabler for the recurring revenue base. The recurring revenue is comprised from two. We have the SaaS, which is a monthly subscription that they pay, our customers pay for connectivity to our management suite and telemetry. We have the processing fee that they pay as a% of the transactions that are going through our devices. Very strong recurring revenue base, 60% of our revenue is recurring, 40% is hardware, and that's will continue to be the ratio as we continue to gain market share and more customers and more managed and connected devices. If I look at the numbers, you know, just a quick number, Nayax by numbers. We have 770,000 connected devices, growing significantly quarter-over-quarter, as you can see. We finished the year with $174 million of revenue, as I've mentioned, 46% growth, and also recurring revenue grew as much. If you look at the bottom three, you can see that we're literally double ourselves every two years, whether it's the customers that we are growing 5,000 a quarter, which is a very impressive number, to the transaction value and transaction volume that growing significantly through our devices. Few items to point here. High gross margin base on the recurring revenue, around 50%. Our services have an 80% gross margin, while the processing gross margin is around 30%. Combination of those is around 50%. A gross margin of the hardware was affected by the global supply chain pandemic. It used to be around 25%-27%. We've reached 12% this quarter, I mean, Q1. We are guided the street that we're going to reach the mid-teens by the end of the year and going back to what we've used to see in 2024. I'm excited about that. We'll talk more about I call it the, you know, 2023 is the turning year. Before we get to that, 52,000 customers, as I said, growing 5,000 customers a quarter, a really record growth. Our managed and connected devices, as you can see, growing significantly. Transactions, as we talked about. Let's talk about 2023 a little bit more. Again, the turning year, the year where we continue to grow at least 35% year-over-year, improving our hardware gross margin to the mid-teens. OpEx, at the same time, will be relatively flat to Q4, run rate, annualized run rate, and that's a positive change. At the beginning, we talked about a little bit increase, but now we see the accelerated investment that we have done in 2021, in 2022, in talent acquisition, product innovation, automation, infrastructure, et cetera, coming in an accelerated pace as we come into 2023. As a result of that, we've raised the guidance to reach profitability on the adjusted EBITDA in 2023, between $3 million-$7 million. Being profitable is not, we're not unfamiliar to that. We used to, before 2021. As I said, we've invested the last 8 quarters, and now we're going back to it. Lastly is our 5 years roadmap, right? We believe that we can reach a billion-dollar revenue company in 2027, 2028. In five years, when we started to count on that, really focusing on the land and expand, as I said, in the unattended space, growing at least 35%. We do have all the growth engines that I've spoken about, and that's one of the reasons why we have invested so much, because we believe that they're gonna be a significant part in our growth, in the next, a few years. We are committed to 50% gross margin, and then the 30% adjusted EBITDA that we are committed to, again, comes from our unattended space, our OpEx optimization, and of course, the growth engines that are service-based, so higher gross margin and can reach to the 30%. Thank you. Great. Looks like we have about 10 minutes for questions. Feel free to chime in from the audience, and I guess I'll just start out. You mentioned net- Come sit next to you. Net revenue retention is a key metric for you, 140% last quarter, and it's been over 120% for several years. Just talk about the key drivers of that and how you manage it? Yeah. How we look at net retention rate is only the recurring revenue piece. Of course, if a customer had 5 units and then bought 5 more, right? We don't count for the hardware, but we do count for the services that are coming from the new devices and the processing fee that comes with it. One, it's only recurring revenue. It looks at the same customers from a year and from today to a year before, to see how much they bought previously and how much they buy today. That's how it's being counted and annualized. What we see is a few things. We see them buying slowly, so buying 5 today and then 5 units more in 6 months, and then 5 more. That's one of the reasons why we started in Nayax Capital, to help them sponsor those machines, the hardware machine. Maybe that would be a reason for them to buy the 20 or the 30 they have upfront and not over a time. We see that happening, and we also see an increase in transactions that are going through their devices. The higher transactions that go through our devices, the higher our processing fee is. Most of it comes from... You know, this is exactly the land and expand, right? Because we look at the same customers, existing customers, and how they're performing a year after. Really proud of that. You mentioned gross margin on the equipment side was negative for the last 2 years or so, and it's starting to turn positive. Just talk about what happened? Yeah recently and Right plans going forward. first, we've never been. The, you know, the lower we got is 1% gross margin. We never sold a product in a, in a loss. We used to have around 25%-27% gross margin on the hardware. We do design and develop the product in-house, we believe that, you know, this is, this always was and still is a key element in our success, because we were able to make very quick changes, whether it was to our electric board or even to develop a completely new device because of missing components in the world, that happened at the pandemic time. At some point, I call it the component war. That's how it was. At the same time, what happens now is that we see... I think I've talked about it already in around September of last year, we saw the availability of the product getting, the component getting better, which, you know, by definition, means that the prices will go down also, right? It's the supply and demand story. Indeed, what we see is that there's better availability, suppliers are starting to reduce the prices. There's a stickiness of inflation that I don't believe that will go away, and that's one of the reasons why, at the beginning of this year, we actually raised our prices a bit. We said a mid-digit price increase simply because of the stickiness. We haven't done it before because we love and appreciate our small businesses, where cash is king. Well, cash is king all the time, but especially for those small businesses, and we did not want to hurt them, nor our significant growth, right? Not to put any obstacle in our growth. That worked for us. As I said, 46% growth in the revenue between 2021 to 2022. Back to the hardware gross margin this year, we're going to reach the mid-teens, and next year, in 2024, we believe that we can reach to go back to what we've used to see stronger than ever. Any questions from the audience? Can you just talk about competition? Is this a high competitive space? Yeah, sure. You know, Yair, our CEO, likes to say that the real competition are the cash companies. Yeah in the space. If you've seen the research market that we've done, you will see that there's 44 million devices out there, growing to 54 million devices by 2025. We believe that less than 20% actually accept cashless. The real competition is cash. In the cashless, you know, in the, in our area, there's many local providers. You see many of them in the, in Europe that relevant to the German-speaking countries or relevant to the Nordic countries, or... You know, you see many local players. In the US, there is Cantaloupe, who is doing also, they are also in the unattended space. If you look at us from... The companies that we are looking up to, is actually none of those companies. It's really Lightspeed and Toast, where their business model is really close to what we do. There's the hardware with very nice gross margin in it, and there's the services or the SaaS component, as well as the processing. Again, different, you know, serving the small businesses, so it's very similar from a business model perspective, and that's where we like to be compared to. Would you describe, how you calculate the adjusted EBITDA? What are you taking out? Sure, sure. Thank you. Actually, very simple. We go out from the operating margins, and then what we've taken out is the stock-based compensation and depreciation and amortization. Trying to get to a relatively cash basis, if you will, profit. That's what that is. Depreciation of what? Depreciation and amortization of our own assets. It's not the That's having to do with the hardware you sell? No. Hardware we sell, we buy and we sell. We don't lease that. Right now, there's a small portion of it that's being leased, and, but, very small. It's our own, our own hardware, our own, whatever we buy, the servers, et cetera. One more. For your selling costs, what% of sales in SG&A or selling and marketing, what% of sales is that? Percentage from revenue perspective, on a quarterly basis, our OpEx is around $22.7 million today. Out of $52 million of revenue, it's around, I don't know, 40%? How are you, so it's like 40%. How are you? How do you even? How do you do that again? As a distribution, because going out to all these small businesses is. Right. is a sales and marketing. The, we always work with small businesses. We use that, we use distributors to do that. The cost not necessarily is on us to reach the small businesses that we have. The, the way to take that down is really what we've invested so far, is to, you know, is the automation and infrastructure that we put in place in order for us to gain to where we need to be. We're already seeing that happening as we speak. How do the distributors get paid? They buy our hardware. Okay. So, um- They don't get a piece of the return? No. They just take a markup on the hardware sales. They have that, and they sometimes have, the processing themselves, so they take a portion of the processing as well. Last. Yes. How did you build the marketing? You have a pretty impressive growth, like 5,000, like I said, unique locations, 50,000 rates per quarter. How are you able to grow that fast? How are you going to market? Yeah. 3 ways. One, we have our 9 offices around the world where we do direct. The tier 1 customers, we usually use our own team to sell. We have around 35, we call it professional sales people all around the world, sitting in those 9 offices. The second thing, as I've mentioned, is the distributors. We love our distributors. We have many countries where we only have a distributor there that she or he does the work that we need it to do. We do the OEM. What does it mean? Our Asia office, our China office, their job is to make sure that every vending machine, massage chair, kiddie ride, et cetera, that goes from the manufacturing facilities have already the Nayax device. When you, if you are a Coca-Cola or if you are a LEGO, and you buy the vending machine, you already going to buy that with the Nayax device. That's the purpose of that. I always like to give an example. If you go to the Cleveland Airport, you will see the Nayax device probably everywhere, from the CVS vending machine to then a few steps further, you will see the LEGO machine, vending machine, but also the massage chair that are further away. You won't know if it's the airport that made the decision that because of secure payment, because of their reasons, they want the Nayax device. Either it's the LEGO, the CVS, the massage chair companies that contracted with us to buy our payment, or the machine already came with the vending, with the Nayax device from the facility in China. The point is, we're everywhere in that, in that sense. All right. With that, I think we should wrap it up. There will be a breakout down the hall. Thank you, Sagit. Thank you. Thank you all for coming.