NYAX (NYAX) Q1 2025: Recurring Revenue Climbs to 77% as Platform Scale Drives 35% Growth
NYAX’s Q1 marked a pivotal shift to high-margin recurring revenue, with 77% of sales now subscription and processing-driven. Strategic expansion in Brazil and Europe, alongside disciplined cost management, underpinned margin gains and operational leverage. Guidance reiteration and accelerating device installs signal confidence in outpacing payment sector growth for 2025 and beyond.
Summary
- Recurring Revenue Dominance: Platform shift to recurring streams is accelerating margin expansion and cash flow resilience.
- Global Expansion Momentum: Brazil and Europe are fueling device installs and new vertical penetration, supporting robust organic growth.
- Profitability Leverage: Operating discipline and acquisition integration are unlocking scalable earnings improvement.
Performance Analysis
NYAX delivered 27% top-line growth, with revenue reaching $81 million, underpinned by an 18% organic increase and further boosted by recent acquisitions. The most striking shift was in the revenue mix: recurring revenue—comprising payment processing and SaaS subscriptions—rose 35% year-over-year to $62 million and now forms 77% of total sales. This transition to a subscription and transaction-fee model, which provides predictable and high-margin income, is reshaping the company’s financial architecture.
Gross margin improved to 49% (from 44%), with recurring margin at 52% and hardware margin surging to 39.5% (from 27.3%) due to supply chain optimization and favorable sales mix. Adjusted EBITDA margin doubled to 12%, reflecting both scaling benefits and disciplined opex management. Device deployment accelerated, with 69,000 additions (44,000 organic) bringing the installed base to over 1.3 million. Transaction value grew 18%, and take rate increased to 2.75%, further driving processing revenue gains.
- Recurring Revenue Mix Shift: 77% of revenue now recurring, up from 72%, reinforcing business model durability.
- Hardware Margin Upside: Hardware margin jumped to 39.5%, driven by supply chain gains and sales mix, though management guides to 30-35% for the year.
- Device Network Scale: Installed base up 20% year-over-year, supporting the flywheel for future processing revenue.
The Q1 performance underscores NYAX’s ability to leverage platform scale and recurring revenue to drive both growth and profitability, while maintaining balance sheet strength and investing in expansion.
Executive Commentary
"Most notably, the current revenue grew by an impressive 35% over Q1 2024, representing 77% of total revenue in Q1 compared to 72% in the same quarter last year. This growing share of high-margin recurring revenue continues to demonstrate the strength and resilience of our business model, a critical driver to our long-term growth and profitability targets."
Yair Nechmad, Co-founder and Chief Executive Officer
"Gross margin was 49% compared to 44% in the last year's first quarter. More specifically, our recurring margin increased to 52% from 50% in the prior year quarter as we renegotiated key contracts with several bank acquirers and improved our smart routing capabilities."
Sagit Manohar, Chief Financial Officer
Strategic Positioning
1. Recurring Revenue Flywheel
NYAX’s platform model—anchored in payment processing and SaaS subscriptions—now accounts for the vast majority of revenue, providing a compounding effect as more devices connect to the network. This high-margin, predictable stream supports both reinvestment and margin expansion, with management targeting a 50% gross margin and 30% EBITDA margin by 2028.
2. Geographic and Vertical Expansion
Latin America, particularly Brazil, and Europe are central to NYAX’s growth thesis. The Brazilian launch of cloud-based kiosks and the acquisition of AppPay have expanded reach to over 50,000 devices in the region. The Benelux acquisition deepens European presence, with Europe contributing 36% of 2024 revenue. These moves enable local bank partnerships, regulatory navigation, and faster market penetration.
3. Product Innovation and Integrated Solutions
NYAX’s integrated control of hardware, software, and payment processing is a strategic differentiator, especially in micro-markets, smart coolers, and EV charging. Recent partnerships, such as with BTC Power in EV charging, and new features for EV kiosks, demonstrate product-market fit and support for high-value verticals. The company’s ability to deliver end-to-end solutions reduces merchant friction and increases customer stickiness.
4. Disciplined M&A and Channel Consolidation
Acquisitions are used to accelerate device installs, expand into new geographies, and consolidate distribution. Management remains disciplined on valuation, focusing on integration and synergy realization, with a pace of two to three deals per year. This complements organic growth and supports the long-term revenue target.
5. Operational Leverage and Cost Discipline
NYAX’s opex as a percentage of revenue improved, with adjusted opex at 38% of sales. Supply chain optimization and contract renegotiations are driving margin gains, while the company absorbs new tariffs without passing costs to U.S. customers, leveraging global manufacturing and scale to protect margins.
Key Considerations
NYAX’s Q1 highlights a business model in strategic transition—away from hardware dependence toward a platform-centric, recurring-revenue engine with multi-vertical reach. The company’s focus on operational execution, geographic expansion, and disciplined capital deployment is enabling both top-line and margin expansion.
Key Considerations:
- Recurring Revenue Scaling: The shift to 77% recurring revenue increases predictability and reduces exposure to hardware cycles.
- Device Network Effects: 1.3 million connected devices create a self-reinforcing ecosystem for future processing fee growth.
- Geographic Diversification: Brazil and Europe are proving high-growth, high-potential regions, mitigating single-market risk.
- Acquisition Integration: Recent deals (AppPay, Tigapo, Innopropay) are expanding the platform but require sustained integration focus to realize full synergy.
- Tariff and FX Management: NYAX’s global footprint buffers against regional shocks, but FX volatility and tariff absorption require vigilant cost control.
Risks
FX volatility and regional tariff changes remain material risks, with Q1 already seeing a $700,000 FX impact. While management has chosen to absorb new U.S. tariffs to protect customer relationships, this could pressure hardware margins if supply chain savings are not sustained. Competitive intensity in payment platforms and execution risk in integrating acquisitions also warrant close monitoring, especially as geographic and vertical diversification increases operational complexity.
Forward Outlook
For Q2 and the remainder of 2025, NYAX guided to:
- Full-year revenue of $410 million to $425 million (constant currency), with at least 25% organic growth
- Adjusted EBITDA of $65 million to $70 million, and free cash flow conversion of at least 50% of adjusted EBITDA
Management expects a stronger second half, driven by device deployments and seasonal acceleration in processing revenue:
- Organic revenue growth to accelerate as new distribution channels and device orders come online
- Hardware margins to normalize to the 30-35% range, with recurring margin stability
Takeaways
NYAX’s transformation to a platform-centric, recurring-revenue model is driving both growth and profitability, with device scale and geographic reach reinforcing its competitive moat.
- Recurring Revenue Flywheel: The 77% recurring mix provides margin stability and a foundation for compounding growth as device installs accelerate.
- Margin Expansion Leverage: Gross and EBITDA margin gains reflect operating leverage, supply chain optimization, and disciplined cost management.
- Growth Visibility: Reaffirmed guidance and accelerating device orders signal confidence in outpacing sector growth, but integration and FX risks remain key watchpoints for investors.
Conclusion
NYAX’s Q1 2025 results confirm the company’s evolution into a high-margin, platform-driven payments provider with a global footprint. Execution on recurring revenue scaling, operational leverage, and strategic expansion positions NYAX for sustained outperformance—if integration and margin discipline are maintained.
Industry Read-Through
The accelerating shift from hardware sales to recurring, platform-based revenue is a defining trend for payment and IoT infrastructure providers. NYAX’s margin expansion and global scaling validate the strategic imperative to own the end-to-end payment stack, especially in unattended and automated retail environments. Peers focused on device sales or with fragmented geographic footprints may struggle to match NYAX’s operational leverage and resilience. The company’s disciplined approach to M&A and local market integration also highlights the importance of balancing rapid expansion with operational control in a consolidating payments landscape.