NYAX (NYAX) Q2 2025: Recurring Revenue Jumps to 74% as Embedded Payments Scale
NYAX’s Q2 results showcased a strategic leap in high-margin recurring revenue, propelled by embedded payments and new vertical expansion. The company’s Uno Mini product and OEM wins are reshaping its growth profile, while disciplined cost control and M&A integration are expanding operating leverage. With full-year guidance reaffirmed and a pipeline of enterprise and embedded banking opportunities, NYAX is positioned for accelerating growth into 2026.
Summary
- Recurring Revenue Mix Surges: Subscription and processing revenue now dominate, driving margin expansion and predictability.
- OEM and Embedded Payments Momentum: Partnerships like Autel and LinkWheel anchor NYAX’s move upmarket and deepen platform stickiness.
- Forward Pipeline Broadens: Enterprise, EV, and embedded banking initiatives set the stage for multi-vertical, global growth.
Performance Analysis
NYAX delivered a 22% year-over-year revenue increase, with recurring revenue outpacing overall growth at 32% and now representing 74% of total revenue. This shift reflects the company’s ongoing transformation from hardware-centric sales to a platform model built on payment processing and SaaS subscriptions. The installed base of managed and connected devices expanded 16% to nearly 1.38 million, while total transaction value soared 34% to $1.6 billion, reinforcing the flywheel effect of network growth.
Gross margin improved sharply to 48.3%, up from 44.3% a year ago, as both recurring and hardware margins benefited from scale, contract renegotiations, and supply chain optimization. Adjusted EBITDA reached nearly $13 million, or 13% of revenue, with operating leverage improving on disciplined cost management. The company generated $12.9 million in operating cash flow and $5.6 million in free cash flow, maintaining a net cash position with $172 million in liquidity against $156 million in debt.
- Recurring Revenue Dominance: Recurring revenue now comprises nearly three-quarters of total revenue, up from 68% a year ago, driving more predictable earnings and higher margins.
- Processing Revenue Acceleration: Payment processing revenue grew 35%, fueled by device growth and higher average transaction values in new verticals.
- Hardware Margin Recovery: Hardware gross margin rebounded to 35.4% as supply chain and sourcing initiatives took hold, supporting blended margin gains.
Organic revenue growth of 20% is expected to accelerate in the second half, driven by enterprise wins and embedded product adoption, while M&A remains additive but not central to the growth narrative.
Executive Commentary
"Our second quarter results reflect the successful execution of our strategic initiatives and the positive momentum of the business. We delivered yet another quarter of strong operational and financial performance driven by profitable revenue growth, robust global demand for our solution and services, and an ever-expanding geographic footprint for our install base."
Yair Nikmad, Co-founder and Chief Executive Officer
"Gross margin significantly improved to 48.3%, compared to 44.3% in the last year's second quarter, driven by both higher recurring and hardware margins. More specifically, our recurring margin increased to 52.8% from 51.5% in the prior year quarter, mainly driven by an additional improvement in processing margin from the acceleration to meaningful processing volumes with our new banking partner, Adyen, driving improved operational efficiency."
Sageet Manoor, Chief Financial Officer
Strategic Positioning
1. Platform Model and Recurring Revenue Expansion
NYAX’s business model is shifting decisively toward platform economics, where recurring revenue streams from payment processing and SaaS subscriptions now anchor profitability and predictability. This transition is underpinned by a growing installed base and customer stickiness—annual churn remains below 3%—which supports net retention and multi-year contracts. The company’s ability to upsell value-added services as customers scale usage is compounding revenue per device and per customer, especially in higher-ticket verticals.
2. Embedded Payments and OEM Penetration
The Uno Mini embedded reader is a strategic wedge into OEM and enterprise channels, as evidenced by the 100,000-unit agreement with Autel Energy and partnership with LinkWheel in North America. By embedding payment technology directly into EV chargers and other OEM products, NYAX locks in long-term customer relationships and reduces churn. The company’s early technical integration and global compliance footprint provide a competitive moat, making it difficult for OEMs to switch providers after certification.
3. Multi-Vertical Growth and Geographic Diversification
NYAX continues to expand beyond its legacy vending and unattended retail roots, targeting higher-value segments like EV charging, smart coolers, hospitality, and family entertainment. The acquisition of InnoProPay in Benelux and the full consolidation of NIAX Capital (embedded banking) further deepen local market presence and support cross-sell of banking and financing solutions. The Brazilian market is a template for scaling rental-based models and embedded finance, now being rolled out in Australia and other regions.
4. Cost Discipline and Operating Leverage
Margin expansion is being driven by both revenue mix and operational efficiency, with renegotiated acquirer contracts, improved smart routing, and supply chain optimization all contributing to gross margin gains. Adjusted OPEX remains tightly managed at 35.6% of revenue, enabling EBITDA margin improvement even as the company invests in new products and geographies.
5. M&A and Embedded Banking Integration
Strategic M&A remains a supporting lever rather than a growth crutch, with recent deals focused on consolidating distribution (InnoProPay), scaling embedded banking (NIAX Capital), and integrating regional operations (Brazil, Benelux). The embedded banking division, led by a former major bank CTO, is positioned to launch card issuing and account services in the U.S. and beyond, opening a new avenue for recurring revenue and customer lock-in.
Key Considerations
NYAX’s Q2 results reveal a company executing on a multi-pronged strategy to scale recurring revenue, deepen OEM relationships, and broaden its solution set across geographies and verticals. The underlying business is benefiting from secular tailwinds in cashless payments, but is also demonstrating operational discipline and strategic focus.
Key Considerations:
- Embedded Payments as a Moat: OEM partnerships require deep technical integration and certifications, raising switching costs and ensuring multi-year device stickiness.
- Recurring Revenue Mix Drives Margin: The shift to 74% recurring revenue materially boosts gross margin and reduces earnings volatility.
- Multi-Vertical Upside: Newer verticals like EV charging and hospitality offer higher transaction values and expand the addressable market.
- Organic Growth Outpaces M&A: While bolt-on deals support local scale, the core growth engine remains device and transaction expansion with existing and new customers.
- Embedded Banking Launch on Horizon: The rollout of card issuing and account services could unlock a new layer of high-margin, sticky revenue with cross-sell potential.
Risks
NYAX’s growth is partly dependent on successful execution in new verticals and geographies, where competitive intensity and regulatory hurdles may be significant. Integration of recent M&A and the scaling of embedded banking present execution risk, while hardware supply chain and OEM adoption cycles introduce timing uncertainty. Customer concentration in certain verticals, as well as macro shifts in payment trends, could impact transaction volume growth if not carefully managed.
Forward Outlook
For Q3 and the second half of 2025, NYAX guided to:
- Accelerating organic revenue growth, driven by enterprise and OEM shipments, especially Uno Mini in EV and smart cooler segments
- Continued gross margin improvement, with full-year hardware margin expected between 30% and 35%
For full-year 2025, management reaffirmed guidance:
- Revenue of $410 to $425 million (30% to 35% growth, at least 25% organic)
- Adjusted EBITDA of $65 to $70 million, with at least 50% free cash flow conversion
Management cited seasonal strength in the second half, a robust enterprise sales pipeline, and continued integration of recent acquisitions as drivers of confidence. The company also reiterated its 2028 targets for 35% annual revenue growth, 50% gross margin, and 30% adjusted EBITDA margin.
Takeaways
NYAX’s Q2 marks a pivotal quarter in recurring revenue scale and embedded payments execution, with the Uno Mini and OEM wins catalyzing a new phase of growth. Margin expansion and disciplined cost management are supporting improved profitability, while the embedded banking rollout and rental-based models represent future growth vectors.
- Recurring Revenue Scale: Subscription and processing now define NYAX’s business model, creating a more defensible and profitable platform.
- OEM and Embedded Banking Leverage: Integration with global manufacturers and the launch of embedded finance will be critical to sustaining high growth and margin targets.
- Future Watchpoint: Execution on embedded banking, further OEM partnerships, and vertical penetration will determine whether NYAX can maintain its outperformance against broader payment sector growth rates.
Conclusion
NYAX’s Q2 2025 results demonstrate a company shifting decisively into high-margin, recurring revenue streams while leveraging embedded payments and OEM partnerships to expand its addressable market. With a robust balance sheet, disciplined execution, and reaffirmed long-term targets, the company is positioned to accelerate growth and margin expansion into 2026 and beyond.
Industry Read-Through
NYAX’s results underscore the accelerating shift from hardware sales to platform-driven, recurring revenue models in the payments and IoT space. The company’s success with embedded payments and OEM integration highlights the importance of technical depth and compliance footprint for winning large-scale deals in verticals like EV charging and smart retail. Competitors in the payment technology and smart device sectors must prioritize recurring revenue, cross-vertical expansion, and embedded finance capabilities to remain relevant. The transition to SaaS and payment facilitation is likely to reshape how value is captured across the broader self-service and unattended payments market.