Nayax reported its second quarter on Monday, 10 August 2026, before the market opened. We are writing about it today.
Errors or inaccuracies are possible. Spotted something that looks wrong? Write to me and I will correct it.
What Nayax Does
Nayax, based in Herzliya, connects machines that sell things to the digital payments world. A drinks machine, a laundry machine in a car park, an EV charging point, a ride at an amusement park - Nayax supplies the card reader, the software that manages the device, and the processing of the transaction itself.
It is a three-layer model, and understanding it is the key to reading the report:
- Hardware - selling the device. One-off revenue, low margin.
- Software subscriptions - a monthly management fee per connected device. Very high margin.
- Processing fees - a slice of every transaction through the device. Middling margin, growing with volume.
The logic: sell hardware close to cost, and charge forever on software and processing. So the numbers that matter are how many devices are connected, and how much each device produces per year.
The Quarter
| The quarter | A year ago | |
|---|---|---|
| Revenue | $122.6 million | $95.6 million |
| Processing fees | $53.9 million | $43.1 million |
| SaaS revenue | $33.8 million | $27.6 million |
| Total recurring revenue | $87.7 million | $70.7 million |
| POS device revenue | $34.9 million | $24.9 million |
| Total gross margin | 46.9% | 48.3% |
| Adjusted EBITDA | $14.1 million | $12.6 million |
| Net income (loss) | $10.1 million loss | $11.7 million income |
| Adjusted diluted EPS | $0.144 | $0.291 |
Revenue rose 28.2%, and organic growth in the quarter was 21.4% - meaning most of the growth was not bought. Acquisitions contributed $6.5 million of the increase.
Recurring revenue, which is the core, rose 24% to $87.7 million and is 72% of total revenue.
The core margins improved too: processing margin rose to 40.5% from 39.1%, helped by renegotiated contracts with bank acquirers; SaaS margin rose to 76.4% from 74.2%.
So Why Did the Total Margin Fall
Total gross margin fell to 46.9% from 48.3%, even though every component of the core improved.
The answer is mix. Device sales grew 40.2% - faster than recurring revenue - and hardware margin collapsed to 28.1% from 35.4%, a drop of 7.3 percentage points.
The company's explanation: roughly 65% of the growth in hardware revenue came from Lynkwell, the acquired EV charging business, whose margin is materially below the VPOS product family. Higher freight and logistics costs added further pressure.
In other words, the fastest-growing part of the business is also the least profitable.
The Loss, and What Caused It
The company swung from $11.7 million of net income a year ago to a $10.1 million loss this quarter.
Three factors explain the swing, and only one of them touches cash.
1. Stock-based compensation: $12.4 million, against $2.5 million a year ago. That is an accounting expense that does not leave the till, but it does dilute ownership.
2. Financial expenses rose by $4.3 million, from foreign exchange and interest on two bond offerings the company completed on the Tel Aviv exchange in 2025, raising close to one billion shekels.
3. The comparison base is inflated: last year's profit included a one-time $5.6 million gain from buying the remaining 51% of Nayax Capital, previously held as a joint venture.
On an adjusted basis, which strips out the first and third, profit was $6.0 million against $11.0 million a year ago - a decline driven mainly by the financing costs.
Operating Metrics: Here the Picture Is Consistent
| The quarter | A year ago | |
|---|---|---|
| Total transaction value | $2,056 million | $1,593 million |
| Transactions processed | 815 million | 726 million |
| Take rate | 2.62% | 2.70% |
| Managed and connected devices | 1,553 thousand | 1,377 thousand |
| Customers | 125,400 | 104,700 |
| Recurring revenue per device | $251 | $223 |
Total transaction value rose 29.1% to $2.1 billion, and the customer count rose 19.8% with more than 5,300 customers added in the quarter.
And revenue per device rose 12.6% to $251 - this is the number that proves the model works: the same installed base produces more money each year, as machines move from cash to cashless and as the company expands into higher-ticket verticals such as EV charging, amusement facilities and car washes.
What did fall: the take rate, from 2.70% to 2.62% - eight hundredths of a percentage point. On $2.1 billion of volume, that is a meaningful number.
Guidance: What Was Reaffirmed and What Was Cut
Reaffirmed:
- 2026 revenue: $510 to $520 million, with organic growth of 22% to 25%
- Adjusted EBITDA: $85 to $90 million, a margin of roughly 17%
And what was cut, which is probably the explanation for the share price reaction.
Free cash flow conversion from adjusted EBITDA was guided down from roughly 40% to roughly 5% to 10% for the year.
This is not a small revision. In the first-quarter release the company projected that about 40% of adjusted EBITDA would convert to free cash. It now projects 5% to 10%. On adjusted EBITDA of $85 to $90 million, that is the difference between roughly $35 million of free cash flow and roughly $4 to $9 million.
The company's explanation: accelerated investment in financial services (lending, instalments and card issuing), capturing share in EV charging, and securing component sourcing. The company frames this as the timing of cash flows rather than a change in the underlying operating outlook.
And in the quarter itself free cash flow was negative $13.1 million, while operating cash flow for the entire first half was just $2.3 million.
The Balance Sheet and the Next Move
On the balance sheet: $304 million in cash and short-term deposits, against short and long-term debt of $349 million. The company sits in a modest net debt position.
On strategy: CEO Yair Nechmad noted that the company is building in-house card issuing capability and has applied for a US bank charter.
"Through Lynkwell, we are deploying DC fast chargers at more than double the pre-acquisition pace, and with Nayax Capital we are laying the foundation for embedded financial services"
One item worth flagging for next quarter: the company settled an acquisition obligation in Brazil with a payment of approximately BRL 35 million (approximately $6.8 million), and expects to recognise roughly $4.5 million in the third quarter as an acceleration of future expenses.
The Market Reaction
The stock fell 10.2% on Monday and closed at $62.00, against $69.06 on Friday.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This report is a good reminder that the market does not price growth. It prices cash.
Revenue rose 28%, organic growth was 21.4%, recurring revenue rose 24%, revenue per device rose 12.6%, and the company reaffirmed its revenue and EBITDA outlook. By every one of those measures this was a good quarter. And the stock fell 10%.
What moved the price was a single line: cash conversion cut from 40% to 5-10%.
I want to be fair here, because there are two genuine readings of that number.
The positive reading: a company that sees an opening in EV charging and financial services, and chooses to invest now rather than maximise cash today. The installed base of 1.55 million devices is a real asset, and every new service is sold into it at almost no marketing cost. That is exactly the logic that built this company.
The negative reading: a company that raised close to a billion shekels in bonds, carries net debt, posts negative free cash flow, and then announces that the cash promised for this year will not arrive. And an acquisition that supplies 65% of hardware growth at a materially lower margin is not just mix - it is a choice that lowers the quality of the revenue.
What settles it, in my view, is time. Investing ahead is a legitimate story once. If cash conversion is cut again next quarter, or gross margin keeps eroding, then this stops being investment in growth and becomes a business that is simply more expensive to run.
What I will watch: total gross margin, and the take rate. Those two numbers tell you whether scale is producing pricing power or eroding it. The installed base is growing - the question is how much stays behind from each transaction that runs through it.
