Despite market conditions, fintech co Nayax eyes Nasdaq
Fintech company Nayax (TASE: NYAX ) is expected to list on Nasdaq in the coming weeks, roughly eighteen months after listing on the Tel Aviv Stock Exchange in the second largest IPO on the local stock market, involving a foreign underwriter and international investors . As for the company, the Tel Aviv Stock Exchange was a springboard for an IPO on Wall Street, but that move has apparently been delayed somewhat by the state of international stock markets. Nevertheless, Nayax has not given up on a Wall Street listing, and is now advancing towards one.
Nayax was founded in 2005 by brothers Yair Nechmad (CEO) and Amir Nechmad, together with David Ben-Avi. The company supplies cashless payment solutions for operators of vending machines and other automated points of sale.
Guarantor for Nayax’s IPO in May 2021 was the American investment bank Jefferies, together with Oppenheimer and Leader Capital Markets. The share price in the offer was NIS 10.5, which reflects a company value of NIS 3.3 billion. Last May, the share price had fallen to NIS 4.8, giving it a market capitalization of NIS 1.6 billion, but it has partially recovered to a current price of NIS 8.89, giving a market capitalization of NIS 2 .9 billion, 15% below the IPO. .
Since it was reported that Nayax had confidentially filed a draft registration statement seven months ago, the Nasdaq index has fallen 18%, and the KBW Nasdaq Financial Technology Index, which monitors fintech companies, has fallen 20%.
Yair Nechmad, co-founder and CEO of Nayax, is this a good time for a fintech company to go to Nasdaq?
“It is true that the market dictates the right time to make an offer, due to the company’s valuation, but in the current situation we do not raise money, but only list for trading. For us, the main criterion is what we always tell our investors: we provides a lot of information about the company, including customer parameters, agreements in our system, the number of returning customers – indicators of the trend in the company.
“On this basis, we believe that there is no reason why we should not win the investors’ trust and we will be able to continue our development in a larger market. Many Americans cannot invest in Nayax in Israel for technical reasons. because of things which has to do with their internal authorizations. We want to be in a market that is relevant to investors like these.”
In your view, will you be able to achieve a higher valuation in the US, more generous multiples?
“I can’t define how investors see valuations at the level of revenue multiples or forward earnings multiples. We have no control over that. I can control what we do and I feel comfortable with Nayax’s performance.”
In hindsight, was the Tel Aviv IPO the right thing for the company?
“Yes. It was a very nice offer, an IPO with international investors, and it suited Nayax’s strategy.”
In the first half of this year, Nayax recorded a turnover of 75.3 million dollars, 40% more than in the same period in 2021. The company is not yet profitable, and for the first half it made a loss of 20.1 million dollars, which can compared with 8 million dollars in the corresponding period last year.
By the end of June this year, Nayax had 595,000 points of sale, 15% more than at the beginning of the year, and its customer base had grown by 26.7% to 30,000.
Transactions via Nayax systems in the first half of the year amounted to $1.07 billion, which compares to $590 million in the first half of 2021. Nechmad estimates that in 2023 there will be an improvement in the supply chain, and that the company’s gross margin on hardware will consequently ladder. At the end of the first half of the year, Nayax had $49 million in cash, having completed the $4.5 million acquisition of OTI (On Track Innovations), an Israeli competitor in financial difficulty.
Looking for complementary technologies
“Globes” has learned that Nayax is currently in the process of acquiring another company in Israel, at a price apparently not significant to it. Nayax acquires Roseman Engineering, a privately held company that provides fuel station management systems, automated fueling systems, fleet systems and electric vehicle charging management systems. Founded in 1978 by Bruria and Yechiel Roseman, the company employs 55 people in Kiryat Atidim. Among the customers are the fuel companies Dor Alon and Paz, and the bus companies Egged and Dan.
“We are looking for acquisitions all the time,” says Nechmad, “technologies and companies that complement our activity. OTI gave us access to OEM customers and to the fuel sector, and in that sector Roseman is increasing our capabilities in the US and Israel markets.” According to him, a trend of replacing payment terminals at petrol stations is on the way, which requires large investments, against the background of regulatory changes.
Where will Nayax be in a year or two?
“In the medium term, we estimate a sales turnover of 200 million dollars. In the long term, 6-7 years, we are talking about 1 billion dollars with a gross margin of 50% and EBITDA of 30%. As far as profitability is concerned, we estimate that we will break even in 2023, and that by 2024 we will post a profit.”
Published by Globes, Israel business news – en.globes.co.il – September 8, 2022.
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