Nayax Ltd.

Earnings Release • May 27, 2021

Nayax: First Quarter Revenue Grew 26% YoY to \$22.8M

Connections grew to more than 400K

Gross Transaction Value totaled \$246M

HERZLIYA, Israel, May 27, 2021 /PRNewswire/ -- Nayax Ltd. (TASE: NYAX), a global commerce enablement and payments platform designed to help merchants scale their business, today reported financial results for the first quarter of 2021.

"Today marks the first quarter we report as a publicly traded company. Our recent public offering of 44 million ordinary shares successfully generated approximately \$130 million. These funds will fuel our growth strategy through sales and marketing initiatives aimed at supporting customers' cashless payment options in the post pandemic environment," commented Yair Nechmad, Chief Executive Officer and Chairman of the Board.

"We look forward to enhancing relationships with each group in our stakeholder community and upholding the highest standard of customer relations. Revenues for the quarter increased substantially year over year despite one of our main markets, Europe, remaining under strict lockdown measures and Q1 2020 being mostly unaffected by Covid-19. This growth demonstrates the resilience of our business and the growing demand for our solutions," concluded Yair Nechmad.

First Quarter Financial Highlights

Total revenue was \$22.8 million, an increase of 26% over Q1 2020.

Recurring revenue of monthly software and processing fees increased by more than 30% over Q1 2020, increasing their share of total revenue from 57% in Q1 2020 to 59% in the current quarter.

Operational expenses (including R&D, share based expenses and depreciation and amortization) amounted to \$12.7, an increase of 30%. This is due to our growth strategy of expanding our sales, marketing and R&D staff and improving overall infrastructure.

Capital expenditure (in cash) was \$2.3 million, an increase of 28% over Q1 2020.

Gross margin for the quarter was 46%, in line with historical results, resulting in a gross profit of \$10.5 million, an increase of 21% over Q1 2020.

Operating loss was \$2.2 million, compared to a loss of \$1.1 million in Q1 2020.

Adjusted EBITDA (excluding one-time costs related to the IPO and share based expenses) was break even. Net loss was \$2.2 million, compared to a net loss of \$1.3 million in Q1 2020.

As of March 31st, 2021, Nayax had \$13.3 million in cash and cash equivalents.

The IPO generated approximately \$130 million, net.

GAAP Results (\$M)

Revenue Breakdown	Q1 2021	Q1 2020	Change (%)
Software & Payments	13.5	10.3	+30%
Hardware	9.3	7.8	+20%
Total	22.8	18.1	+26%

As part of our strategy to increase the number of points of sale (POS) subscribed to our platform, we launched the first unattended eCommerce channel intended to help us capture a substantial portion of the SMB market and automate the onboarding process and KYC. We are well positioned to capture the global small and midsize business which is a dominant portion of the unattended market.

First Quarter Operational Highlights

Total number of connections for the quarter reached 402,000. We connected 21,000 new devices in Q1, which is equal to 50% of the entire growth of connected and managed devices in 2020.

Operational expenses amounted to \$8.1 million, excluding IPO expense and share based expenses. Research & Development expenses excluding share based expenses were \$3.2 million. These expenses increased 31% and 65%, respectively, compared to the same quarter last year. Our points of sale in new machines contribute significantly to R&D expenses as we position ourselves for high growth.

We continue to execute our proven strategy of partnering with our customers to grow within our customer base, while capturing new markets, entering new verticals and launching new marketing initiatives.

During the quarter, we acquired control of Weezmo Technologies Ltd. and expect to complete the acquisition by the end of 2021. Weezmo is an omni-channel marketing solution. We plan to integrate this technology as we enter new markets and strengthen our presence in current and potential operating regions.

Software	Q1 2021	Q1 2020	Change (%)
Average Transaction
Value	1.7	1.5	+13%
Total Transaction
Volume	246	189.4	+30%
Take Rate % (Payments)	2.4%	2.3%	7.4%

First Quarter Key Performance Indicators

Outlook

As our key markets accelerate their exit from Covid-19 related restrictions, we expect that unattended retail will enjoy increased adoption, tied with an accelerated shift in consumer behavior towards digital payments. Australia and the U.S. have been strong drivers for growth in terms of new and active POS and transaction volumes.

As Europe follows, we expect stronger results, especially in comparison to Q2 2020. We will continue pursuing marketing and sales initiatives in new markets to support this growth through global diversification. Consumer behavior is expected to change as lockdown measures are reduced, leading to increased cashless payments and subscription to our services by retailers.

The environment for cashless payment solutions has been directly correlated with companies' digital transformations and is imperative for adopting other technologies still in development. Annual revenue is expected to reach over \$200 million in the long term fueled by organic growth and strategic M&A. An accelerated growth rate of 30% in the medium term will also be supported by customer growth, market penetration and continued expansion of our platform. Gross margin in the long run is expected to reach 50% through a combination of providing leasing options for terminals, while increasing the share of software and payments out of total revenue. Furthermore, we expect that the combination of increased operational efficiency with growing total revenue, will result in the long-term EBITDA margin stabilizing around 30%.

An English translation of the full financial statements can be found on our web site: https://ir.nayax.com/

Conference Call & Webcast Information

Nayax will be hosting a conference call to discuss its financial results for the first quarter of 2021, today, Thursday, May 27, 2021, at 8:30 a.m. Eastern Time.

Yair Nechmad, Chief Executive Officer and Liron Grosman, Chief Financial Officer will review the Company's first quarter 2021 financial results. To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your call at least five minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

U.S. TOLL-FREE: 1-866-777-2509 ISRAEL TOLL-FREE: 1-80-9212373 INTERNATIONAL: 1-412-317-5413 WEBCAST LINK: https://services.choruscall.com/mediaframe/webcast.html?webcastid=epGRwS05

The Company encourages participants to pre-register for the conference call using the following link: https://dpregister.com/sreg/10156749/e8b8fa53af. Callers will receive a unique dial-in upon registration, which enables immediate access on the day of the call. Participants may pre-register at any time, including up to and after the call start time. The conference call will also be available via live webcast from a link on Nayax's Investor Relations website.

A replay of the conference call will be available from May 28, 2021, to June 10, 2021. To access the replay, please dial one of the following numbers:

Replay TOLL-FREE: 1-877-344-7529 Replay TOLL/INTERNATIONAL: 1-412-317-0088 Replay Pin Number: 10156749

About Nayax

Nayax is a global commerce enablement and payment platform designed to help merchants scale their business. Nayax offers a complete solution including localized cashless payment acceptance, a management suite, and consumer engagement tools, enabling merchants to conduct commerce anywhere, at any time. Founded in the unattended retail industry, Nayax has transformed into a comprehensive solution focused on our customers' growth across all channels globally. Today, Nayax has 10 global offices, over 400 employees, connections to more than 80 merchant and payment method integration and is a recognized payment facilitator worldwide. Nayax's mission is to improve our customers' revenue potential and operational efficiency. Visit www.nayax.com for more information.

The securities referred to in this announcement have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state of the

United States, and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. In the United States, any offer of the ordinary shares will be made only to "qualified institutional buyers" as defined in and in reliance on Rule 144A under the Securities Act or another available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Outside the United States, any offer will be made in accordance with Regulation S of the Securities Act.

Forward looking statement

The information included in this press release contains, or may be deemed to contain, forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). Said forward-looking statements, relating to the initial public offering, are subject to uncertainties and assumptions and the actual results may materially differ. All forward-looking statements in this press release are based on information available to Nayax on the date hereof. All written or oral forward-looking statements attributable to Nayax are expressly qualified in their entirety by the factors referred to above. Nayax does not intend to update these forward-looking statements.

Investor Relations Contact:

Miri Segal MS-IR LLC msegal@ms-ir.com Tel: +1-917-6078654

Tables to follow

				December
		March 31		31,
		2021	2020	2020
		(Unaudited)		(Audited)
	Note		U.S. dollars in thousands
Assets
CURRENT ASSETS:
Cash and cash equivalents		13,291	7,043	8,195
Restricted cash transferable to customers for clearing
activity		15,415	9,685	18,166
Short-term bank deposits		90	26	87
Receivables for clearing activity		8,568	6,612	7,213
Accounts receivable:
Trade, net		12,793	10,490	13,840
Others		1,397	1,606	1,976
Inventories		4,600	4,412	5,041
Total current assets		56,154	39,874	54,518
NON-CURRENT ASSETS:
Long-term bank deposits		799	448	798
Long-term receivables	5B	300	74	-
Property, plant and equipment, net		5,160	3,776	5,047
Right-of-use assets, net		4,579	4,134	4,761
Goodwill and intangible assets, net		35,380	24,088	27,388
Deferred income tax		241	135	241
Total non-current assets		46,459	32,655	38,235
TOTAL ASSETS		102,613	72,529	92,753

NAYAX LTD CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

NAYAX LTD CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) March 31 December 31,

(Unaudited) (Audited) Note U.S. dollars in thousands Liabilities and equity CURRENT LIABILITIES: Short-term bank borrowings 11,490 9,418 11,589		2021	2020	2020
Short-term bank loans and current maturities of long-
term bank loans 2,150 1,041 1,938
Loans from shareholders 5,400 - -
Current maturities of loans from others 2,710 945 3,041
Current maturities of other long-term liabilities 1,241 469 686
Current maturities of leases liabilities 1,235 1,185 1,320
Payables in respect of clearing activity 29,624 17,279 27,181
Deferred consideration and liability for option
arrangement in business combination 5A 5,829 - -
Accounts payable:
Trade 8,488 7,129 10,998
Other 6,199 3,643 5,498
Total current liabilities 74,366 41,109 62,251
NON-CURRENT LIABILITIES:
Long-term bank loans 4,589 1,866 5,391
Long-term loans from others 2,365 4,837 2,662
Long-term loans from shareholders - 270 -
Retirement benefit obligation, net 888 619 894
Other long-term liabilities 2,817 3,599 3,374
Lease liabilities 4,686 4,264 5,154
Deferred income tax 980 594 526
Total non-current liabilities 16,325 16,049 18,001
TOTAL LIABILITIES 90,691 57,158 80,252
EQUITY:
Equity attributed to parent company's shareholders:
Share capital 7 7 7
Share premium 16,689 16,689 16,689
Put option to purchase subsidiary's shares - (493) -
Capital reserves 8,918 9,493 9,238
Accumulated deficit (15,152) (11,354) (13,433)
Total equity attributed to shareholders of the parent 10,462 14,342 12,501
Non-controlling interest 1,460 1,029 -
TOTAL EQUITY 11,922 15,371 12,501
TOTAL LIABILITIES AND EQUITY 102,613 72,529 92,753

NAYAX LTD CONDENSED CONSOLIDATED STATEMENT OF INCOME Three months ended March 31 Year ended December 31,

		2021	2020	2020
		(Unaudited)		(Audited)
				U.S. dollars in thousands (excluding loss
	Note		per share data)
Revenue	4	22,774	18,102	78,783
Cost of revenue		12,273	9,441	41,603
Gross Profit		10,501	8,661	37,180
Research and development expenses		3,300	2,228	9,300
Selling, general and administrative expenses		8,316	6,621	26,545
Depreciation and amortization in respect of
capitalized development costs		878	901	3,559
Other expenses, net		161	-	-
Loss from ordinary operations		(2,154)	(1,089)	(2,224)
Finance expenses		924	377	4,277
Finance income		840	148	403
Loss before taxes on income		(2,238)	(1,318)	(6,098)
Tax benefit		56	15	15
Loss for the period		(2,182)	(1,303)	(6,083)

Attribution of loss for the period:

To shareholders of the Company To non-controlling interests	(2,176) (6)	(1,317) 14	(6,254) 171
Total	(2,182)	(1,303)	(6,083)
Loss per share attributed to shareholders of the Company:
Basic and diluted loss	(0.0088)	(0.0053)	(0.0252)

NAYAX LTD

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

	Three months ended March 31		Year ended December 31,
	2021	2020	2020
	(Unaudited)	(Audited)
		U.S. dollars in thousands
Loss for the period	(2,182)	(1,303)	(6,083)
Other comprehensive income (loss) for the period:
Items that will not be recycled to profit or loss:
Loss from remeasurement of liabilities (net) for retirement benefit obligations	-	-	(126)
Items that may be recycled to profit or loss:
Gain (loss) from translation of financial statements of
foreign activities	(384)	16	243
Total comprehensive loss for the period	(2,566)	(1,287)	(5,966)
Attribution of total comprehensive loss for the period:
To shareholders of the Company	(2,496)	(1,301)	(6,137)
To non-controlling interests	(70)	14	171
Total comprehensive loss for the period	(2,566)	(1,287)	(5,966)

NAYAX LTD

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Three months ended March 31		Year ended December 31,
	2021	2020	2020
	(Unaudited)		(Audited)
		U.S. dollars in thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period	(2,182)	(1,303)	(6,083)
Adjustments required to reflect the cash flow from operating
activities (see Appendix A)	5,927	1,020	12,571
Net cash provided by (used in) operating activities	3,745	(283)	6,488
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized development costs	(1,731)	(1,204)	(5,731)
Acquisition of property, plant and equipment	(523)	(558)	(2,125)
Loans extended to others	-	(26)	(141)
Advance payment on acquisition of shares (see note 5b)	(300)	-	-
Loans (extended to) repaid by shareholders	(118)	848	786
Decrease (increase) in bank deposits	(5)	-	(411)
Purchase of subsidiary net of purchased cash (note 5a)	102	(686)	(686)
Repayment of liability to pay deferred consideration in
respect to business combinations	-	-	(580)
Interest received	1	5	14
Proceeds from sub-lessee	78	69	302
Net cash used in investing activities	(2,496)	(1,552)	(8,572)
CASH FLOWS FROM FINANCING ACTIVITIES:
Interest paid	(266)	(282)	(1,065)
Short-term bank credit received, net	338	1,794	2,976
Support received (royalties paid) in respect to government
assistance plans	(55)	-	16

Exercise of stock option of subsidiary and increase in equity
interest therein	-	-	(1,049)
Long-term bank loans received	-	-	4,734
Repayment of long-term bank loans	(414)	(255)	(1,003)
Long-term loans received from others	-	3,451	3,804
Repayment of long-term loans from others	(446)	-	(920)
Loans received from shareholders	5,400	270	-
Decrease in other long-term liabilities	(72)	(43)	(280)
Repayment of lease liability principal	(317)	(254)	(1,167)
Net cash provided by financing activities	4,168	4,681	6,046
Increase in cash and cash equivalents	5,417	2,846	3,962
Balance of cash and cash equivalents at Beginning
of period	8,195	4,412	4,412
Gains (losses) from exchange differences On cash
and cash equivalents	(315)	(222)	(222)
Gains (losses) from translation of cash and cash
equivalents of foreign activity	(6)	7	43
Balance of cash and cash equivalents at end of
period	13,291	7,043	8,195

		Three months ended March 31
	2021	2020	31, 2020
	(Unaudited)		(Audited)
		U.S. dollars in thousands
Appendix A – adjustments required to reflect the cash flows from operating activities: Adjustments in respect of
Depreciation and amortization	1,672	1,433	5,908
Retirement benefit obligation, net	(6)	(43)	106
Income tax revenue	(74)	(27)	(230)
Financing expenses (income), net	130	(203)	3,428
Expenses in respect of long-term employee benefits	46	72	5
Expenses in respect of share-based payment	373	765	2,965
	2,141	1,997	12,182
Changes in operating asset and liability items: Decrease (increase) in restricted cash in respect of clearing
activity	2,751	(3,449)	(11,930)
Decrease (increase) in receivables from clearing activity	(1,357)	5,605	5,003
Increase in trade receivable	1,104	(612)	(3,894)
Decrease (increase) in other receivables	632	726	(389)
Decrease (increase) in inventory	436	107	(511)
Increase (decrease) in payables for clearing activity	2,443	(2,700)	7,203
Increase (decrease) in trade payables	(2,658)	(581)	3,154
Increase (decrease) in other payables	435	(73)	1,753
	3,786	(977)	389
	5,927	1,020	12,571
Appendix B – Information regarding investing and financing activities not involving cash flows:
Purchase of property, plant and equipment on credit	-	-	575
Acquisition of patents against offset of loan	-	-	806
Recognition of right-of-use asset in respect of lease of buildings against a lease liability	74	-	1,235
Amount of expenses attributed to development costs, capitalized and included in goodwill and intangible assets	497	224	883