Hello, everyone. My name is Mayank Tandon. I'm the fintech analyst at Needham. I'd like to welcome everyone to a session with the Chief Financial Officer, Sagit Manor of Nayax. Sagit's gonna go through a presentation, and then we'll have some time for a Q&A at the end. Sagit, the floor is all yours. Thank you, Mayank, and thank you for having us here and having me. So let's start. Nayax, if you haven't heard about us, we are in the unattended space, so everywhere that you don't have a person in front of you when you make a transaction. So it's the massage chair, vending machine, kiddie ride, laundromat, EV charging, and whatnot, and we'll talk more about that later. So maybe to start with introducing myself, my name is Sagit Manor. I'm Nayax CFO, joined 2.5 years ago, been in the payment industry most of my professional life, and excited to be here and presenting Nayax. So who we are, right? At the end of the day, we're trying to make our customers' life easier. So we are simplifying their life, whether it's the commerce side of the business or the payment side of the business, in order to do basically two things: one, drive their costs and reduce their, drive their growth and reduce their costs. And while we do that, basically engage and create that loyalty, that stickiness with their customers. So who we are? We were founded in Tel Aviv, in Israel in 2005, and since then, we grew basically over the years, whether it's the number of managed and connected devices that grew over the years, we're almost at 1 million devices, through the nine offices we've opened around the world, and our flagship product, which you can recognize it, the yellow box, the Nayax device, the VPOS Touch. So who we are? We have nine offices around the world. We're selling a product more in more than 80 countries, both direct and indirect. We are very proud of our 46 and more distributors. We have 80 payment methods. We are accepting more than 50 currencies. I spoke about almost 1 million devices that we have, and maybe the most impressive things that I like to mention is the very high net retention rate of 145% and very low churn rate of less than 4%. And then when I get to speak about our customers and who they are, and you will learn that 70% of our customers are small businesses, you will even appreciate that more. So what are we trying to solve, right? On one hand, there is the consumers, that they want everything. They want the offline to the online. They want the mobile to the unattended connectivity. They want to pay in every payment method. They want to pay in every currency, and by the way, to be appreciated as a loyal customer. Our retailers, on one hand, are trying to solve the consumers' wishes, as well as to manage their business, whether it's manage inventory, manage their accounting, managing their employees, and whatnot. We come with our end-to-end solution, right? It's a platform that gives us the payment, the commerce, connectivity, the management suite, and of course, the loyalty program. So again, this is a picture of a little bit of who we are and who are we serving. We serve more than 40 different verticals around the unattended space, and this is our end-to-end. So we, which are those four legs that we talked about? So one, it's the integrated POS devices that we design and develop in-house, so we have the flexibility to move very fast in cases that another solution is needed or a component cost issues is happening and whatnot. We are very proud of our management suite and telemetry that really provide our customers from almost being blind to have a full vision and ability to manage their business in a tight way. Obviously, the payment side of the business, payment is the center of gravity, as our CEO likes to say, and of course, the loyalty side. So with the Nayax device, what you get is very simple, as I started to say. You get an increase of your sales between 25%-30% increase, and you get a reduction of your cost between 20%-25%, so no-brainer. This is a little bit overview on our Nayax solutions and basically the platform that we are creating. So of course, we have the unattended. This is what I just spoke about. But we have basically four different dimensions, three that are currently available and one that is still in development that we are giving really the end-to-end solution to our customers. So that's the Nayax Energy, Nayax Retail, and Nayax Loyalty. Again, very comprehensive solution to what our customers need... So a little bit about the market opportunity. Before we went to an IPO on Tel Aviv Stock Exchange 2.5 years ago, and then we've listed our shares on Nasdaq in September 2022. Before we went to the IPO, we have done a third-party market research analysis about the market opportunity, and what we've learned is very interesting part. One is that there's 44 million devices out there as of 2020, growing to 54 million devices as of 2025. The interesting part for us is that it's completely under-penetrated. We believe that less than 20% of those devices actually accept cashless solution, so between 4 million-8 million of that accepting cashless solution. So if you take that into account, you realize that from our perspective, and that's how we based our selling go-to-market strategy, that's how we are basing our pricing methodology, that's why we are so successful, is that we've basically analyzed and realized that the cash is the real competition, not really the other cashless solution that is out there that are out there. And with that in mind, and I'll get to that later, you will see that the payment processing, which is one item in our revenue, and I'll touch that later, are growing, are tripling itself to EUR 123 billion from 2020 to 2025 in all the regions that we are acting today and in all the verticals that we are in. So what is our strategy? What is our long-term strategy, right? Taking into account the market opportunity, taking account the under-penetrated market that we are, and the global... the, the fact that we are global in all of those verticals. So we love our existing customers, and I'll touch in a second the co- the cohort analysis that we have, but we love to say as much our new wins, with both large and small customers. We continue to innovate, and this is part of what I've showed about the Nayax Energy and the Nayax Retail. We expand internationally. We've expanded this year to Turkey, and through Retail Pro acquisition, that I'll touch that- I'll touch about that in a second, we've actually grew to other regions as well. Last year, we've opened our offices in New Zealand and, and, and in the UAE, and, and more. We have more verticals that we're growing into, like parking, like FOFO, and of course, the M&A that I've mentioned. So here are two examples of those six legs of long term. One is the land and expand, and I've mentioned about the 145 net retention rate, right? This is a year of view of customers that were with us a year ago and now purchasing from us 145% more. This is a five-year view to see the cohort analysis, what's the existing customer expansion, and you can see, as an example, that customers that joined us in 2018, our revenue with them grew more than five times over the next four years that they stayed with us. So really, stickiness, our first, you know, our first customers in mind, and that's, you know, that's the result that you see. The second example I want to show is the M&A that we have done. In November, we bought Retail Pro, and it's really a combination of complementary solution to our existing product. It's a distribution channel, an amazing distribution channel with the 9,000 customers, 50,000 stores, 150 lanes, selling their product through 80 partners in 100 countries. So think about the acceleration of selling, whether it's the unattended solution and the other solutions that we have, into their, through their distributions in the markets and countries that they are selling the product. We are very excited about that, and of course, many other reasons, whether it's the addressable market in the retail space and of course, their financial profile that is very attractive. So I'd like to, you know, to summarize a kind of this section with the solution that we like to call it, we bring the global solution into the local market. And what do I mean by that? You can see that from a customer concentration perspective, 70% of our customers are small businesses. What does it mean? It means that they buy between 1-15 devices. And this is the folks that we are dealing with. At the same time, you can see the global and how we are global. So 40% is North America, around 40% is Europe, around 10% in Australia, and the rest of the world is mainly Asia and Latin America. So very, you know, penetrated in every place where today the market, the unattended market, is growing. Also, I've spoken about the very high net retention rate and low churn rate, but you can see that that's something that is happening for quite some time. And then lastly is we love our small businesses, we also love our tier one customers, and here is some of the names that you can see, and we continue to grow that nicely. So a little bit about the go-to-market strategy, where I've mentioned that we do direct and indirect, which is, you know, between the enterprise large customers, where our 9 offices with very specialized salespeople that are helping us with that, to the distributors that are dealing with the medium and small and medium. But also, I'd like to mention that we are actually pursuing the OEM and the resellers, so the machine that comes, the massage chair, the kiddie ride, the laundromat, the vending machine that comes already, usually from China, that's most of the manufacturing, are already coming with the Nayax device. So I'd like to give an example that if you are in any airport, you will see a lot of the Nayax device, devices, and it might be that the airport decided that this is... That they would like to work only with Nayax because of security, because of the service, because of whatever reasons are. It might be that each and every vending machine contacted Nayax, whether it's the CVS machine or the LEGO machine or the Coke machine, and contacted us, or it's actually through the OEM, that the machine already came into the airport with the Nayax device as is. So a little bit about our financial model. So, a very strong business model that continue to show its strengths over the, over the years. The hardware is a one-time sale. Every quarter, we start from the beginning. It's a $250-$350, on a net 30, net 60, but we love that. This is 35%-40% of our revenue, and this is the lock-in, the enabler for the recurring revenue piece, which is around 60%. And the recurring revenue is based on two things, comprised from two things. One is the SaaS. It's basically the connectivity to the management suite and to the telemetry. It's around $7 per month. And then the payment is really the processing fee that we charge for any transactions that's going through our devices, which is around 2.5% take rate. So very strong business model, as I said, growing significantly, and will continue, and I'll show you the numbers. So we are growing every year more than 35% for the last five years. This is a snapshot of the nine months ended in Q3, ended in September, where we grew from $122 million to $168 million, another 38% year-over-year growth. Also, you can see that if I zoom in into the recurring revenue, it's actually growing faster. It's a 45% year-over-year growth. We are improving our gross margin in general, and very proud of our high recurring gross margin as well, with around 50% gross margin. The higher the payment processing is growing, which is around 30%, more than the service revenue, which is around 80%, the lower the recurring margins are, but again, very strong margins in general. 2023 was the turning year, where we've... In 2021 and 2022, we invested a lot in talent acquisition, product innovation, infrastructure, and automation, and this year we've spoken about really straightening and the reflecting focus on moderating our expenses. So, you know, we've committed to being OPEX in line or remain flat even compared to the Q4 2022 run rate, and we've been able to do that, and we've showed that until Q3. And then again, turning year, where we've shown that we've committed to being profitable on the Adjusted EBITDA level, and we've already shown in Q3, and in the nine months that ended in Q3, that we've reached to the lower range of our guidance in the Adjusted EBITDA level. So a little bit about the business, and we'll... And then we'll go back into the numbers. So 60,000 customers, growing 20,000 a year, growing 5,000 a quarter. Very proud of this, you know, on our great go-to-market strategy between the marketing team and sales. Growing significantly on number of managed and connected devices. You can see that three years ago, we had 400,000 devices. We're gonna finish the year in around 1 million devices, so great market penetration, taking market share in all regions. From a transaction value and the number of transactions, you can see that we're growing significantly the number of transaction value that's going through our devices. We finished the quarter, Q3, with almost a billion-dollar transaction that went through our devices, yet we are in the unattended space, where the ticketing of each transaction is very low, which is a very important piece of information when you think about the unattended space. So, it's really if you take the number of transaction, the transaction value divided by the number of transaction, it's really $2 per transaction, and that's a unique advantage in the space that we are playing. At the same time, a billion-dollar transaction on the quarterly gives us a very strong negotiation skills and ability towards the acquirers, where they are, at the end of the day, doing the transaction, although we are the merchant of record. So I believe that here, it makes sense to talk about the consumer behavior change and the fact that that's happening in the last six to seven years. It's not just COVID, but we can see the trend of moving more and more into cashless solutions. I don't know about you, but, you know, I have my $20 emergency bill in my phone, but that's mostly it, and all of the transactions are going through my credit card and my Apple Pay, et cetera. And you can see that COVID helped. COVID even helped in the store, where people just go into the checkout, you know, the self-checkout, "Don't touch my stuff, don't talk to me, and don't take my credit card," and this is also reflecting... So it's a consumer behavior change that it's reflecting, as well as more devices that we have, more transactions going through our devices. So when we spoke about 2023, we've spoken about a few things. We talked about the growing at least 35% year-over-year, that we will remain flat, you know, compared to the Q4 2022 annualized run rate of expenses, that we will reach an adjusted EBITDA positive of 4%-7%. We also communicate our five years roadmap, and in the five years roadmap, we are showing the $1 billion the company of $1 billion that we are aspired to build. So how we get there? We get there by continue to grow at least 35% in our unattended business, continue to grow our the growth engines that I've spoke about, that are very service-oriented in nature, and therefore creating a better margins in place, continue to expand internationally, and obviously targeting M&A as needed and as relevant. We're also committed to 50% gross margin, again, in the next four to five years now, and then 30% Adjusted EBITDA. Again, reaching a 30% Adjusted EBITDA by continue to improve our gross margin in the hardware space, continue the operating leverage. We've done what we needed to do on the investment, and now it's time to continue to grow on 35% year-over-year growth on the revenue side, while leveraging what we have invested in the operating, continue to improve our gross margins, create more service-oriented businesses to get to our 30% margins. And with that, I will open the conversation for M&As, for questions and comments. Thanks, Sagit, for running through the presentation. I just want to let the audience know if you do have questions, please type them in the box, and then I'll try to get them in before we wrap up here, but let me kick it off with one or two of my own. Sagit, I think you mentioned- Sure ...in one of your comments that you are taking market share. Could you talk about who the incumbents are, and who are you taking share from? Sure. So first, as I said, you know, the real competition is cash, and that's important to say. So, you know, we love the conversion from cash. We have several companies that have done that, I'm talking small or large, and saw that 25%-30% increase in the revenue and the reduction of cost, so, you know, very proud on that. There's one competitor in the U.S. called Cantaloupe. They're only in the U.S. And there are several small competitors in the countries we are, so it can be a 15,000 competitor in Spain or 20,000 in Sweden, et cetera. Got it. And then why do you win? Is it the technology? Is it the scale? Like, what is the reason behind, not so much displacing cash, but when you do replace some of the incumbents, like you mentioned, you know, what are some of the factors that go behind the decision of the client to choose you versus staying with the current vendor? I think it ends up, you know, I can talk about the nicer, faster, you know, and stuff like that. I think at the end of the day, it goes to three things: It goes to the technology and the advantages that you have there, it goes to the service, and it goes to their bottom line. So I'll start with the bottom line. At the end of the day, if you are implementing Nayax and you see a significant increase on your revenue and significant decrease on your cost, it's a no-brainer, especially if it costs you exactly as it used to cost you. So it's not about the cost, right, to operate the machine, it's immediate, an immediate improvement to your business, and this is small businesses. Remember, 70% of our customers, right, have one to 15 devices. Usually, for them, it might be even a passive income, right? So it's, it's a business that must be profitable, otherwise it doesn't make sense. Think that that's one. I think I believe that the technology makes sense. You know, and when I talk about technology, I do talk about being global, right? I do talk about being, you know. So, so if it's Australia or the German-speaking countries, or is it U.K., every region has its own, whether it's regulations that are different, the currency that is different, the language that is different, right? I call it, at the end of the day, technology. At the end of the day, you need your customer to take the Nayax device, to connect it with the right cable to the right machine, and our devices work in 10 minutes. So, you know, at the end of the day. And this is a, right, a lot. 17 years of work, right, to get to where we are, growing slowly but surely, with the small businesses on one hand, with the distributors in each of those countries at the other end, making sure that it works and worth everyone that business. And, you know, and I talked about service. I think that the service is the most important thing for us. We just announced we opened in Eastern Europe a service hub. This is very key in every decision that we make, to continue to serve our small customers, that they will be happy, as much as we serve our large customers, who are, you know, more than capable of having their own team of IT and their own team of, you know, developers and whatnot. While the small businesses, they want to work with Nayax. You get the hardware, you get the monthly subscription, which is really the management suite and the telemetry, and then you get the acquiring. And you get all of that through us. You don't need to go to each of those different buckets. That's very helpful. Well, I do see a couple of questions, so let me just ask them verbatim, Sagit. Sure. The question is: Do you still maintain the guidance on the 3Q call to reach 1 million devices or over 150,000 4Q device placements versus a normal rate of 40,000-50,000 a quarter? If so, wouldn't that, you know, result in upside relative to your guidance? And also, where should hardware gross margins go over time? So, one, we've spoken about the 1 million devices, and we will be very close there. You know, if we're gonna get to a number that is close enough, I believe I... You know, we're, we will feel very comfortable with that. We are not talking about our 2023 numbers or where we are, so I will not be able to comment on that. We have spoken about 2024, though, that you know, we said a few things that I will repeat them. One, that we'll continue to grow 35% year-over-year. Actually, we said that in the next five years. Mm-hmm. Two, that in 2024, we will reach the hardware margins as we had in the pre-pandemic life, which was around 25%-27%. So I'm, you know, very comfortable to say that. We've actually showed in Q3, 21% gross margin on the hardware. Overall, for the nine months, it was around 17%-18%, but we've already shown that the progress is there in reaching to higher margins on the hardware. We also spoke about, you know, about reaching, cash flow positive in 2024, so I can repeat that. So these are kind of the three elements that we've shared, and we are, very, very comfortable to continue to say the same. Another question from the audience is: What will capitalized R&D look like in 2024 as compared with 2023? Are they expecting much growth in this area? Referring to you, of course. Yeah. So, we are capitalizing around $4 million a quarter. That's kind of $3 million-$4 million a quarter. That was our run rate... That is our run rate for the last, few quarters, and I believe that that will continue to be the case in 2024, not necessarily from a dollar perspective, but more from a percent perspective. As I said, 2021 and 2022 were really the years of investments, and 2023, even on the R&D side, you can see, you know, that it's growing less than other areas. We will continue to monitor our operating expenses and make sure that we are very focused, you know, to continue to grow... Oh, I should say outpace, revenue growth will always outpace the expenses, to bring a better bottom line for everyone. And then another question that popped up is, was. And I don't know if you can answer this, just given the quiet period timing: Was the operating expense guidance of flat with 4Q 2022 provided on a GAAP or non-GAAP basis? Should we expect all of 2024 to have operating expenses of $24 million a quarter, even with the Retail Pro acquisition? Will two months of Retail Pro add $1 million or more to 4Q EBITDA? So a lot of questions thrown in there. I can repeat it if it helps. Yeah. Yeah, so, I will not be able to talk anything about Retail Pro acquisition, you know, from an expense or from guidance perspective, no 2024 numbers at all. I can say that what we said is we guided that OPEX will stay flat versus the Q4 2022 annualized. Actually, we did not say which one because we meant both. So yes, $24 times four, it's actually $96, and $20 was the adjusted OPEX, as I like to call it, that goes into the adjusted EBITDA, and that was around $20. So $80, that was the number as well. So yes, on that front. The other questions, I can't really comment. That's fair. Totally understand. And then, the other question that one of the participants is asking is: Why do the hardware gross margins go up? Is it price, component cost, et cetera? What are the factors behind it? So we've, you know, kind of stopped talking about it in 2023 because, you know, it just, it was the story of the pandemic time, right? And we kind of growing out of it. But it's basically cost, okay? We've done a 5%-ish mid-single-digit, I call it, so a 5%-ish increase in our price, but it really was the stickiness of the inflation. You know, I can't really call it a true increase of our selling price, especially that you need to remember that we've kept our prices exactly the same. We have not raised our prices in the first two years of the pandemic because we care about our customers. We understood that they are having troubles, and, you know, we didn't wanna put any obstacle in our beautiful, amazing growth, and, you know, it worked very good for us. So that's on the... On the revenue side, we did increase at the beginning of 2023, and only then 5%, that's, you know, the stickiness of the inflation. What we did on the cost is a few things, right? It was, you know, from zero availability of product, of components that we had to kind of, you know, find under the, I call it under the radar, to very then very expensive one. I think I believe I've said around September of last year that we see the availability of the product better, right? Better availability of product that, by definition, will impact the cost because it's all, at the end of the day, right, demand... supply and demand, and that's what we've seen. So 2023 grew from, I believe, around 4%-around 21%, right? Growing every quarter very nicely to where we want that to come back to at least the pre-pandemic numbers, if not more. Got it. A couple of last few questions here in the interest of time. Sagit, you didn't mention the balance sheet, so I'm just curious, what does the balance sheet look like today? And related to that question would be, you mentioned M&A potential. What are the types of deals that you'll be looking at? Is it geographic expansion? Is it more capability-driven? What are the main drivers there? So if you, if from a balance sheet perspective, if you speak about cash, so we are in the around $30 million of cash, very flat, during the time. However, we are using our beautiful partners, I call them, which are the banks, mainly in Israel, that are helping us with any, you know, any bridge that we need to go, you know, to kind of to gap towards being a cash flow positive. The Retail Pro M&A acquisition was sponsored by a bank loan, a long-term bank loan that we've taken from Bank Hapoalim, which is the largest bank in Israel. The remaining amount that we need to pay, we can actually choose if we wanna do it through shares or cash. So that's, you know, more to come. It's a year from now. Right now, with the additional credit facility that we received from the existing banks that we work with, we are in a great shape to reach our cash flow positive, as is. Got it. I see one more question here. If you could talk about what are you doing with large customers, like various Canteen affiliates, which is where Cantaloupe was historically very strong. Any thoughts around that? We are very successful with Canteen and its franchise, whether it's Five Star or Imperial and others that we've shared, and we have done with them POs and PRs. Sorry. I believe that the success is, again, exactly what I said before, right? It's the technology, it's the service, and the fact that, you know, from a pricing perspective, you know, it makes sense for them more. One of the key elements, especially with these larger organizations, that they love is the dynamic pricing. So, you know, this is really listening to them. Think about it. It used to be that when you wanna do a happy hour, right, and you might wanna do two to four, you had to touch every single devices to put that discount, to put that, you know, code, if you will, into the machine. Now, with a push of a button, it happens, okay? Think about the massive reduction of cost just by doing that. Think about the loyalty that you've just created with your customer when you just engage, again, in a push of a button, you do, like for example, for every nine Cokes you buy, you get the 10th for free. Again, you had to touch every single device in order to initiate that. Today, you do that from advance. So they love the management system that we have. They find it very straightforward, very easy to use, which is, at the end of the day, what, you know, everyone matters. I see we're almost out of time, so I think with that, we'll wrap up. But again, really appreciate you taking the time to present at our conference and sharing Nayax story. Thank you so much, Sagit. Thank you so much for having me, and have a great conference. Continue with the conference. Thank you. Bye-bye.