Nayax Ltd. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone Q4 filing. Financial statements are audited and prepared under IFRS as issued by the IASB; amounts below are in U.S. dollars unless noted.
Business context
Nayax provides payment processing, SaaS software, consumer-engagement tools and integrated point-of-sale devices for unattended and attended retail. At year-end, it reported 47,385 customers, 725,000 managed and connected devices, and operations in more than 70 countries. The platform processed approximately 1.3 billion transactions and $2.4 billion in transaction value during 2022.
Key financial results
| Metric | FY2022 | FY2021 | Change / context |
|---|---|---|---|
| Revenue | $173.5 million | $119.1 million | Up 45.6% |
| Recurring revenue | $104.8 million | $71.1 million | Up 47.3%; 60.4% of revenue in 2022 |
| Integrated POS device revenue | $68.7 million | $48.0 million | Up 43.2% |
| Gross profit / margin | $60.0 million / 34.6% | $48.2 million / 40.4% | Profit up 24.6%; margin down 5.8 percentage points |
| Operating loss | $(34.0) million | $(22.5) million | Loss widened |
| Net loss | $(37.5) million | $(24.8) million | Loss widened; basic and diluted loss per share was $(1.143), versus $(0.820) |
| Adjusted EBITDA | $(12.7) million | $(4.0) million | Non-IFRS measure; loss widened |
| Cash flow from operations | $(27.5) million | $(12.8) million | Cash use increased |
| Cash flow from investing | $(26.5) million | $(22.6) million | Cash use increased |
| Cash flow from financing | $6.2 million | $114.1 million | FY2021 included $132.6 million of IPO proceeds |
Liquidity, debt and balance sheet
- Cash and cash equivalents were $33.9 million at December 31, 2022, down from $87.3 million a year earlier. A further $34.1 million was restricted cash held for customer processing activity and should not be treated as unrestricted liquidity.
- Current assets were $150.5 million and current liabilities were $110.2 million. Current liabilities include $63.3 million of processing-related payables.
- Interest-bearing balances included $7.7 million of short-term bank credit, $2.5 million of long-term bank loans, and $7.4 million of loans from others, in addition to lease liabilities. The filing also describes a $2 million short-term subsidiary loan; confirm how this relates to the reported balance-sheet classifications before relying on a debt total.
- Inventory rose to $23.8 million from $7.7 million, while total liabilities increased to $125.9 million from $84.3 million. Shareholders’ equity declined to $104.6 million from $131.7 million.
Material changes and unusual items
- Recurring revenue grew 47.3%, driven by higher SaaS revenue from a larger device base and higher payment-processing fees from increased transaction activity. Transactions increased 64% year over year; connected devices increased 40%.
- Gross margin contracted as costs rose faster than revenue. Device cost increases included approximately $7 million attributable to component-price inflation and supply constraints. Management said it chose not to pass those higher costs through fully to device customers, seeking to support customer growth and future recurring revenue.
- Operating expenses also increased: research and development rose to $22.1 million from $19.0 million, and selling, general and administrative expenses rose to $64.1 million from $45.4 million. The filing cites headcount, compensation, professional and regulatory services, IT and other costs.
- Operating cash use increased amid inventory purchases, component-cost pressures and higher employee expenses. Investing outflows included $13.7 million of capitalized development costs and acquisition-related activity.
- Nayax acquired On Track Innovations (OTI) in June 2022 for $4.5 million cash consideration. OTI contributed $7.6 million of revenue after acquisition; the filing says its consolidation increased the year’s loss by $0.9 million. A separate $6.5 million loan facility from a processing agency was entered into in December 2022 at an effective annual rate of 10%.
- The company listed on Nasdaq in September 2022 and completed a 10-for-1 reverse share split effective September 11, 2022. The filing reports $1.79 million of 2022 expenses associated primarily with the Nasdaq listing.
Outlook, risks and contingencies
- Management stated that it planned to reach Adjusted EBITDA breakeven in 2023. This is a forward-looking target, not a guarantee; the filing provides no numerical revenue or margin guidance.
- Management expects recurring revenue to grow as a share of revenue over time, while also expecting continued near-term component-cost volatility and investment in SaaS, customer support, research and development, sales and marketing.
- Key risks include component shortages and reliance on limited suppliers and contract manufacturers; competition and customer retention; payment-network and processing-provider dependence; cybersecurity, privacy and regulatory compliance; foreign-exchange movements; and political, economic and military conditions in Israel and the region.
- A December 2022 processing-agency loan agreement requires annual processing turnover of at least €250 million and monthly volume of 3.5 million transactions, including at least 55% through Visa credit. Failure to meet the thresholds may permit the lender to demand immediate repayment of outstanding loans.
- The company reported no pending lawsuits it believed would have a material adverse effect. Subsequent to year-end, it signed a binding agreement to acquire Roseman Engineering, subject to closing conditions and Israeli Competition Authority approval. It also filed an Israeli shelf prospectus in January 2023 but had not decided whether or when to offer securities.
- The founders beneficially owned approximately 76.6% of shares at December 31, 2022, giving them substantial voting influence. The company did not anticipate paying dividends in the foreseeable future.
Important facts for investors to verify
- Confirm the 2023 Adjusted EBITDA breakeven target against subsequent results and any updated management guidance.
- Track gross-margin recovery, particularly device margins, component costs and the extent to which higher costs are passed through to customers.
- Assess operating cash burn, the decline in unrestricted cash, working-capital needs and the composition, repayment terms and covenants of borrowings.
- Monitor compliance with the processing-agency volume thresholds and any effect on the €6.5 million facility or other processing relationships.
- Reconcile device-count disclosures: the filing’s key operating metrics report 725,000 at year-end 2022, while one passage gives a different figure. Confirm the correct period-end measure.
- Review acquisition performance and integration, including OTI and the proposed Roseman acquisition, and assess the recoverability of goodwill and capitalized development assets.
- Check the filing’s inconsistent references, including the signature date shown as March 1, 2022 despite the report covering FY2022 and the auditor’s report dated March 1, 2023.