# Nayax Ltd. (NYAX) — Financial Analysis

**Exchange:** Nasdaq  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-17  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/nyax/thesis · /memo/nyax

## Financial Snapshot

### Step 04 — Financial Statement Quality and Adjustments

#### 1. Executive Summary

Nayax's financial statements are **clean by payments-industry standards**: IFRS presentation with transparent reconciliations, audited by EY Israel, stock-based comp stable in dollar terms while revenue nearly tripled (FY22 $8.7M → FY25 $7.3M) — no evidence of cosmetic inflation via SBC ramp. [S1,S3] The Adjusted EBITDA bridge adds back SBC (~$7M/yr), non-recurring issuance/acquisition costs (~$2M/yr), equity-method losses (~$1.3M/yr), and one employment-benefit charge for VMT ($541K FY24) — all reasonable; SBC is the only large recurring add-back and should be treated cautiously. [S1] Key adjustments needed for valuation: (a) treat SBC as real cost (remove from "adjusted" EBITDA when valuing), (b) separate hardware gross margin from recurring gross margin for mix-sensitivity analysis, (c) flag capitalized development ($22.8M FY25; $21.9M FY24) as quasi-opex in FCF calcs, (d) adjust for M&A-driven D&A amortization step-up ($21.4M FY24, includes ~$11.6M tech/capdev amort). [S1,S3] The adversarial research sweep (see `NYAX_financials/other/adversarial_research_sweep.md`) surfaced **one regulatory matter**: Israel Competition Authority (ICA) investigation related to the 2022 OTI acquisition, disclosed in the 20-F — not a fraud or short-seller matter, and it has not resulted in any public enforcement action.

#### 2. GAAP → Adjusted Reconciliation

[S1,S3]

##### 2.1 Adjusted EBITDA (USD '000)

| | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---:|---:|---:|---:|
| Loss / profit for the period (IFRS) | (37,509) | (15,887) | (5,631) | 35,516 |
| + Finance expenses, net | 3,020 | 2,288 | 7,489 | ~3,000 |
| + Tax expense | 451 | 1,215 | 1,247 | (950) |
| + D&A | 9,028 | 12,505 | 21,370 | ~23,000 |
| **= EBITDA** | **(25,010)** | **121** | **24,475** | ~60,566 |
| + Share-based compensation | 8,747 | 6,027 | 7,187 | 7,305 |
| + VMT employment benefit cost | — | — | 541 | — |
| + Non-recurring M&A / issuance costs | 1,790 | 444 | 2,023 | ~2,000 |
| + Share of loss of equity-method investee | 1,794 | 1,555 | 1,270 | ~(500) |
| **Adjusted EBITDA** | **(12,679)** | **8,147** | **35,496** | **~61,100** (reported) |
| Adj EBITDA margin | (7.3)% | 3.5% | 11.3% | 15.3% |

##### 2.2 Are the "one-time" adjustments actually recurring?

- **SBC: recurring, should NOT be stripped for valuation.** SBC ran $8.7M/7.2M/6.0M/7.2M/7.3M across FY22–FY25 — structurally flat and clearly recurring. Properly treated as an expense in intrinsic value work. (Still OK to track Adj EBITDA as a growth-trend comparative.)
- **M&A/issuance costs ~$2M/yr: semi-recurring.** Nayax is a serial acquirer (7 deals 2021–2025). At the current pace, these should be treated as a normal operating expense — roughly 0.5% of revenue.
- **Equity-method losses ~$1.3M/yr: recurring**, tied to long-held equity-method investee (likely On Track Innovations legacy or early-stage investments). Should stay in normalized earnings.
- **VMT employment benefit**: genuinely one-time (tied to acquisition structure). Add-back acceptable.

**Conclusion:** Of the $~10-11M Adjusted EBITDA add-backs, only ~$2M/yr (VMT one-time plus true M&A transaction costs) are genuinely non-recurring. The remaining ~$8-9M (SBC) is a real cost. Downstream valuation should use "EBITDA less SBC" ≈ Adjusted EBITDA minus $7M → FY24 ~$28M, FY25 ~$54M.

#### 3. Capitalized Development

[S3] Nayax capitalizes a meaningful amount of dev cost each year:

| | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---:|---:|---:|---:|
| Capitalized development (in CFI) | 13.7 | 15.9 | 21.9 | 22.8 |
| R&D expensed (in P&L) | 22.1 | 21.9 | 25.4 | 30.0 |
| Total R&D effort ($M) | 35.8 | 37.8 | 47.3 | 52.8 |
| Capitalized share | 38% | 42% | 46% | 43% |

**Flag:** Nayax capitalizes ~40–45% of total R&D effort — higher than US-GAAP payments peers (Shift4, Global Payments expense almost all R&D). Under IFRS this is standard (IAS 38 allows capitalization of development costs meeting criteria), but it has two effects:
- **Overstates near-term P&L profitability** vs a US-GAAP peer (boosts reported operating income by ~$22M/yr in FY24–25)
- **Amortization catches up later** — FY24 amortization of technology + capitalized dev was $11.6M; this will keep rising as FY25/FY26 capitalized balance amortizes over 3-5 years

For cross-peer comparison against FOUR/GPN/PAYO, an analyst should **reclassify capitalized R&D as opex** in an all-in view. This reduces FY24 operating profit from $3.1M to roughly -$18M, and FY25 operating profit from ~$37.6M to ~$15M.

#### 4. Cash Flow Quality

| Metric | FY2023 | FY2024 | FY2025 |
|---|---:|---:|---:|
| CFO ($M) | 8.8 | 42.9 | 40.3 |
| CFO minus capitalized dev ($M) | (7.1) | 21.0 | 17.5 |
| CFO minus capitalized dev minus capex ($M) | est ~(9) | est ~18 | est ~12 |
| Net income ($M) | (15.9) | (5.6) | 35.5 |
| CFO / Revenue | 3.7% | 13.7% | 10.1% |
| CFO / Adj EBITDA | 1.08x | 1.21x | 0.66x |

**Observations:**
- FY25 CFO is roughly flat vs FY24 (+$40M) despite much higher reported earnings — suggests working-capital investment absorbed the profit conversion. Q1 2025 OCF was only $1.3M (seasonal hardware working-capital build; expected).
- FY24 CFO $43M was a standout year aided by favorable WC timing (hardware inventory unwind, receivables tightening).
- Underlying "clean" FCF (CFO – capitalized dev – maintenance capex) is **~$12–18M** in both FY24 and FY25 — call it 3-5% of revenue, reasonable for a scaling payments platform but not yet at "high-quality compounder" levels (Adyen is 40%+ FCF/rev).

#### 5. Gross Margin Quality

[S1,S3] Mix-adjusted GM analysis:

| Stream | FY2022 GM | FY2023 GM | FY2024 GM |
|---|---:|---:|---:|
| POS Device Sales | ~15% | 18.9% | 30.1% |
| Payment Processing | ~30% | ~33% | ~40% |
| SaaS | ~65% | ~65% | ~65%* |
| Blended recurring (SaaS + Processing) | ~42% | 47.9% | 51.3% |
| **Total blended GM** | **34.6%** | **37.5%** | **45.1%** |

*Estimated — not cleanly disclosed.

**Drivers of GM expansion FY22→FY24 (+1050 bps)**:
1. Mix shift recurring 64% → 71% (+)
2. Hardware GM expansion 15% → 30% (+)
3. Processing GM expansion ~30% → 40% (+ operating leverage on scheme fees)
4. SaaS stable

**FY25 GM 48.2% (+310 bps vs FY24)** — suggests continued processing margin expansion + stable mix. Q4 2025 processing GM disclosed at 39.6% (vs 33% prior year).

#### 6. Definition Changes / Consistency

[S1] Checked: no material changes in revenue classification, Adj EBITDA definition, or KPI definitions across FY2022-FY2025 filings. NDR first disclosed as exact number (~129%) in FY2024 — prior years ">100%" qualitatively. Customer count methodology consistent (counts unique billing customer entities). Managed devices count consistent (billable devices generating SaaS fees).

One flag: **FY2024 20-F included Nayax Capital revenue for the first time as a separate line item within recurring**, which could affect YoY comparability. The impact is small (<$5M FY24, growing to ~$12M FY25).

#### 7. Normalized Earnings Base for Valuation

**Recommended figures to feed Step 13+ valuation:**

| Metric | FY2024 | FY2025 | Forward FY26E |
|---|---:|---:|---:|
| Revenue | $314.0M | $400.4M | $515M (guide midpoint) |
| Gross profit | $141.5M | $193.0M | $260M |
| Adj EBITDA (reported) | $35.5M | $61.1M | $87M (guide midpoint) |
| **Adj EBITDA ex-SBC ("owner earnings EBITDA")** | **$28.3M** | **$53.8M** | **~$80M** |
| Normalized operating income (reclassifying capitalized dev as opex) | ~($18M) | ~$15M | ~$40M |
| "Clean" FCF (CFO – capitalized dev – capex) | ~$18M | ~$12M | ~$35M |

Use **Adj EBITDA ex-SBC** for multiple-based valuation (EV/EBITDA). Use **clean FCF** for DCF discounting.

#### 8. Adversarial Research Sweep (Completed 2026-04-19)

Full findings at `NYAX_financials/other/adversarial_research_sweep.md`. Exhaustive queries run against the full roster of activist short sellers. Results:

- **No activist short-seller report exists.** Zero hits across Muddy Waters, Hindenburg, Citron, Spruce Point, Kerrisdale, Blue Orca, Scorpion, Iceberg, Wolfpack, Viceroy, Quintessential, Gotham, J Capital, Bonitas, Fuzzy Panda, Culper. Short interest ~0.1% of float (mechanical, non-activist).
- **No securities class action, derivative lawsuit, SEC investigation, DOJ subpoena, or material weakness disclosure** surfaced.
- **No data breaches attributed to Nayax** (Navia breach is an unrelated company).
- **No open letters, activist campaigns, or Israeli press investigations.**

**Only material adversarial matter: Israel Competition Authority (ICA) investigation of the 2022 OTI (On Track Innovations) acquisition — RESOLVED February 3, 2025 via consent decree.** Terms:
- Nayax pays NIS 2.5M (~$701K) to Israeli State Treasury
- **CEO Yair Nechmad personally fined NIS 240K (~$67.3K)** — governance yellow flag
- Structural remedy: Nayax must provide up to 6,500 OTI POS kits over 5 years to third parties for rebrand/resale in Israel (mild Israeli home-market share headwind through ~Feb 2030)
- Allegations: anticompetitive practices + failure to obtain ICA pre-merger consent
- Consent decree paid without admission; parties reserved claims → **ambiguously substantiated**

**Secondary yellow flags (non-adversarial, but worth noting for Step 08 management quality):**
- **Two rounds of 2025 layoffs against record profitability**: 70 employees (~6%) in July 2025; ~32 (~3%) in second round mid-2026 — execution / planning yellow flag given record financials
- **Seeking Alpha downgrade to Hold** (valuation-based, not thesis-bearish)
- BBB consumer complaints re charge-confusion at unattended terminals — immaterial, industry-standard

**Gating conclusion:** Nayax is unusually clean for an Israeli small/mid-cap fintech. The OTI/ICA matter is the only material item, is disclosed, closed, and de minimis financially. No hidden short thesis identified that would invalidate DCF work. The **CEO personal fine** is the item to flag prominently in Step 08 (management quality/incentives).

#### 9. Sources

- [S1] Nayax 20-F FY2024 Item 5 — `NYAX_financials/sec_filings/20F_FY2024_summary.md`
- [S2] Press release bridge disclosures — `NYAX_financials/earnings/press_releases_Q1_2023_to_latest.md`
- [S3] XBRL financial summary — `NYAX_financials/xbrl/xbrl_summary.md`
- [S4] StockAnalysis.com — `NYAX_financials/other/stockanalysis_summary.md`
- [S5] Adversarial research sweep — `NYAX_financials/other/adversarial_research_sweep.md` (populated by dedicated agent)

---

#### Confirmation

- Step completed: **Step 04**. Output: `Step_04_financial_quality.md`.
- Key finding: Clean IFRS statements; SBC is flat-dollar (real operating leverage, not cosmetic adj); capitalized dev ~40-45% of R&D needs reclassification for US-GAAP peer comparability; "clean" FCF only $12-18M vs reported net income $35M — the profitability inflection is partly working-capital and capitalization-accounting driven. No short reports or adversarial coverage found; one ICA regulatory matter self-disclosed.
- **Net for thesis: Mixed → slightly positive.** Financials are clean, but profitability quality is thinner than headline net income suggests once capitalized R&D and working-capital timing are stripped out.
- Thesis tracker updated.
- Next step: **Step 05 — Quarterly Momentum and Leading Indicators** — 12 quarters of trends + **create `NYAX_KPI.md`**.

Proceeding per user instruction.

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/NYAX/fundamental

## Navigation

- Overview: /stocks/nyax
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- Thesis: /stocks/nyax/thesis
- Investment Memo: /memo/nyax
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