Nayax Ltd. (NYAX) Earnings Call Transcript & Summary

Okay. Good morning. I see we've got some folks grabbing breakfast. If you can just grab breakfast and come to a your seats, please. Thank you. You guys want to -- yes. These lights are bright. Good morning, good morning. I'm just waiting for folks to grab their -- there's some really great croissants and pastries there. So grab some energy food. Okay. Good morning again. Happy Friday. So welcome to Nayax Inaugural Capital Markets Day. I would say on behalf of the Nayax management team, they're really excited about having you guys here. It's obviously been a very busy week for everyone. And I would say that they really appreciate you coming and hearing a little bit more about Nayax and learning more about the story. So for those of you who don't know me, I've met many of you before. I'm Virginea Stuart Gibson, and I manage Investor Relations for Nayax. So why don't I move to the agenda. So what we're doing today is really trying to provide, I think, a great set of presentations from 5 of the management members of Nayax. So obviously, to kick it off is going to be a Yair Nechmad, who is the Co-Founder and CEO. And Yair is going to talk very high level about the TAM, growth strategy and introduce the company to those of you who don't really know Nayax. And then we've got the pleasure of having David, who is the Co-Founder and CTO. And following David will be a dual presentation with Keren Sharir, who's the Chief Marketing Officer, and Carly, Carly Furman, who is CEO of North America, some of you have met her before, and she's going to do a deep dive on the U.S. markets and show some really incredible case studies. We've got 3 of them to really get you an understanding of what customers say about Nayax. We'll then take a 15-minute break. And of course, we've saved the best for last. We've got Sagit Manor, CFO, who's going to do a financial overview and really help you understand the financial model. We'll then wrap up formal presentations and move to Q&A. We've set aside an hour for Q&A because I know you guys got a lot of questions. Again, Nayax is a very new company and a new name. So we want to make sure you guys ask as many questions as possible. I will moderate that with the speakers. And then as we promised, we will have a lunch with management. This is another chance for really you guys to get to hear the vision of Yair and talk a little bit more about maybe customers, maybe a little bit more about the go-to-market strategy. And the lunch will be on this floor, you don't have to leave this floor. It's basically to the right and it's in the Board room, which is, again, you take a right and then a left, you can't miss it. And we'll be there until 12:30. The other thing I wanted to say the bathrooms are to right to the back of this room. So again, you can't miss it on the left. Before we get started, there are a couple of housekeeping items that I wanted to point out. So we're going to have the presentation in the slides as well as a webcast replay on the ir.nayaxinvestorrelations website. This will occur probably an hour after the live event. So please, I encourage you to go there, if you've missed anything. It's a good way to kind of like replay the webcast. And then before I turn it over to Yair, we can't have a Capital Markets Day without safe harbor. Obviously, during this presentation, there's going to be some forward-looking statements. There's also going to be mention of GAAP to non-GAAP, and we'll -- we encourage you to go to the ir.nayax website to see all of the reconciliations for Q1 2022 or 2022 -- full year 2022. I think that's really it. Also, I just wanted to point out, we do -- the Nayax management team was able to bring many of the unattended and retail devices, which is sitting to the right of the room. I encourage you to go over there and feel, touch, get someone to help you to understand it because I think many of you have not seen the technology before. And this is a way to really -- something that's very conceptual to many of you now becomes real and tangible. So I encourage you to go to the back of the room and [ Ynon ] is there. Keren can also help show you some of the devices. And so with that, let's get started, and going to hand it over to Yair. Yair?

Thank you. Can you hear me? Yes. So we'll start with a movie to... [Presentation]

So thank you for coming. This is just an example of what we're doing in order to -- the action that -- what we're doing for the last 17 years. Actually, when I'm saying we, it's 3 founders, David, and Amir, which is my brother, he is Director of the company. And David and myself working for the 17 years with the understanding of payments. Maybe one character that represent us, we're always optimistic about the future. So we're still optimistic in the future regarding what's going on in the market even these days. And I'm going to show you some of why we think that we have a very -- a trajectory growth into the future with what we already stated, 35% growth year-over-year to become a $1 billion company, hopefully, in the next 7 years to come, and Sagit will also elaborate around this. So every company has, of course, some kind of mission and vision. Actually, we started the business in the way that we started it in Israel in 2005. And we looked about the vending industry, and I'm a formerly Coca-Cola advertising and marketing manager, and I knew the business in some -- to some extent. And I thought that has a simple problem, to put what we call a cashless device in order to accept cashless payment and to -- that's it. You just put the device and that's it. It happened to be that today, this is -- there is a new norm called embedded payments. And actually, what we did from 2005 is actually made an embedded payment. It means that we took the ability of the payment, the accepting of the payment from the consumer side, engaging with a machine, the IoT power, and then all of this routing to a server. And this just simple action created a lot of effort or heavy lifting that needs to be done because the machines are not really standard. The protocol are not standard. We have to reengineer a lot of the protocols to know how to serve the machines. And basically, we've become through the years, the company that's really agnostic to the machine. And it's part of what the mission statement that we are. Part of my history is when I was visiting customers, you can see all the moms and pops, which is vending operator, also grocery retailers, they are really the economy of the world. And if you look, what they're doing, they're really entrepreneurs, working day in, day out, starting early in the morning. If you look about operators in the vending industry, they're starting around 4:00 a.m. in the morning to really to take all the products from their warehouse and start the business. So our mission is really to ease up all of this burden that they have and make, what we believe, is enterprise solution to the nano and small merchant. And that's part of what we're doing in terms of reducing all the friction of the operational and making sure that the service to the consumers is frictionless from his perspective, from a customer perspective, and for this, we're building what's called the full platform solution. The vision behind this, since we are a B2B business, business to business in terms of what we are serving, were to very much look into the consumer side and see that consumer is also changing their behavior, and the way that the consumer is expecting their service, we call it the Amazon way. They would like to have everything in a click. They want to have everything immediately. They want to have everything happening to them where they are in the center of the gravity of all the services. And with this 2 platforms of mission -- 2 statement of mission and vision, we believe we are addressing ourselves into the future in the right direction. And you can see the history that we started the 2017 from $32 million and ending up last year with $119 million and already publishing the growth of quarter against quarter this year with more than 50% growth. So we believe that what we're doing is on track, and we have the team to do it, and I'll show you, and part of the team over here will show you as well how we're doing this. The important thing about how we reach out to this level is that we always look about the global local, starting with the idea, okay, Visa and Mastercard are the dominating part of the world in terms of accepting payment, but you have to really address also the local part, all the alternative payment. And while doing this slowly but surely, we came to be the -- I think the largest one that accept card present globally in the way that we are doing this, more than 62 countries around the globe with 80 payment methods in 40 currencies. And we're doing this in a way that we are connecting to more than 45 acquirers and more than 45 alternative payment acquirers. That means that consumers in Finland, or consumers in Sweden, or consumer in Switzerland are not -- is not only accepting the Visa and Mastercard or the Discover, these also have a Swish or TWINT. And if you look at the map of alternative payment in Europe, you can see dozens of alternative payment. And all of them are being required to serve the consumers. Maybe to add to this, you have to remember that an operator in the -- operating of vending contain a whole maybe 20 machine, 50 machine. He's really nano merchant. Each machine is doing around $600, and this is his business. But with Nayax, he's not really a moms-and-pop or what you call a small merchant. He can go to a tender with the airport or to a tender with a hospital and serve because we are bringing him the whole technology platform, and we are giving him the enterprise solution to his end in order to really to cope with a tender that contain also consumer engagement and loyalty and all of the above. The growth is not stopping, not because that we built just the platform because we're building everything on a scale, on the scale vision. And you can see that we keep on growing in last quarter of Q1 was 553,000 devices online, connecting to our server. More than 35,000 customers, meaning another 4,000 customers in a quarter and almost 270 million transaction in 1 quarter. All of this is basically -- has to be very carefully managed. And the focus of the management behind this is the churn and the net retention. Previously, I was working in Eden Springs, it's a 5-gallon and a small tech mineral company in Israel. And the 5-gallon business is also a subscription model. And the subscription model is carrying -- we did around 140,000 customers, consumers. And basically, you're reaching to the level, one level that's starting to really to hit you, you're bringing more consumers, but there is a churn in the consumer. So actually, you are working in what you call neutral because you're bringing new consumers and then you have a churn of consumers, and you cannot grow the business. So our focus is very much in terms of how we are building this, the platform in a stickiness way that brings everything together and the churn can stay very, very minimal in order that will be effective and keep on growing our business. So you can see that we're having less than 3% share in our retailers, in our business. I think from SMB point of view, if you look about any other stuff platform, you cannot find this kind of level of churn, which is very, very low. And the net retention is very high. When we're dealing with net retention, our strategies that we are not really trying to sell VAS, value-added services, within the customer base because a customer who's carrying a machine is around $500 and the total cost of ownership behind this $500 in terms of maintaining the services, the processing and the hardware is around $20. You cannot really push more than this in order to really to reach out to the level of added value services. So we decided to bring everything in, in one big platform. Everything -- the customer can use all the versions of all the features that are in the system according to his request, and we're not charging more. And more than this, we are technology partners. So if there is a business or some ideas that he needs more, we are developing this on our behalf and he is not paying for this. And that's how the platform is coming to be, what we call, a very much on the edge of technology because we have like 34,000 customers asking for any kind of a feature -- extra feature or extra solution to consumer journeys, and we're doing this, and everybody can enjoy from this solution. So how we are doing what we call the retention? He's starting with 5, 10 machines. And usually, what's happening after 4 years, and I'll show this in a few slides on the cohort, is more than 4x after 3 or 4 years, increasing his services with Nayax. So we start with 4 machine paying $10, for example. And then the year after, he has another 4 machine. He's paying now another $10 per machine. And then he has another 4 machine he is paying another $10. Why this is his mindset? Because he's starting with a $500 machine or $600 machine. He has also a machine on $200 or $300 per month machine. So he's not really putting cashless over there. But then the year after restarting the next tier of machines. And as you saw in the example of the video over here, they are growing slowly, but surely, they are seeing that, okay, the share of cashless is growing more and more so they can secure the risk of putting another, what you call, cost of ownership behind this. Then, we just came back last week from Italy after a trade show, the largest trade show actually in the world. It's in Italy. It's Venditalia. And one of the operator came to him and say, look, I'm not putting on my, what you call, my juice machine. I'm not putting any more cash. I'm doing only cashless. All my business now is only cashless. So this is like the flip side, after 17 years that we're working that now cashless is becoming to be the leader and not the lagger in terms of customer point of view. Until last year, we were private. We know we see. The 3 partners owner reached to the level of IPO in Israel in the TASE IPO with 100% holding of the shares. This is kind of a hint regarding how we are building the business and how the business model is working. And we're not doing only by going through what we call organic growth. We're also seeing and listening to the market and seeing what we can do in order to growth, whether it is inorganic, or I'm calling the semi-inorganic. And over here, you can see that we are buying some of the distributors that we have. Like in Australia, we bought a distributor in 2017 and now he's doing more than 7x better than what it was like 5 years ago. We bought the U.S. office that we started in 2014. And Carly is the North America LLC CEO of the group in the U.S. We bought VendSys, which is a complementary solution. I'm calling this the ERP solution specifically for the U.S. because in some cases of big operators, they want to have also the ERP part of the solution, not just the telemetry side, but also the warehousing more than this. And we are also developing our product, and you can see some of it. David will talk about this, and you can see over there some of the products that we're doing. We've bought Tigapo, which is an extended segment in the arcade gaming. We bought some initiatives that we're doing regarding retail and I'll talk about this in a few slides regarding what we see in retail and how we're moving to the retail. So we bought companies that complement our solution in the retail, whether it is Weezmo and UPITec. And recently, we're finalizing now the OTI acquisition, which is a public company traded in the NASDAQ, but caught in the corner of what they call a squeeze of cash because of the shortage in the market. They have excellent employees. They have division in the fuel and we believe strongly that the combination of this with the EV chargers that we have initiative can be very, very strong. And they have a footprint -- a very nice footprint in Japan. When I'm talking about embedded payment and what does it mean from our perspective. So if you look about in the left-hand side, and you can see the consumers, how they are expecting everything to happen around them whether it is unattended, in store, we all know that we are going online. We can buy an order or collect offline. All of this touch point need to be really consolidate in the way that their inventory management and all about the consumers are being known in order to serve the consumer quite good. All the payment we talked about regarding the acceptance of global and local payment currencies. We are doing what we call like-to-like. We're not e-commerce. So what the challenge in our case is really to integrate to a card scheme or to acquirers really to accept a card according to the processing and the acquiring the same level. So the settlement and the processing the same currency. And this is quite a hard task that we're doing. And we're focusing also on the loyalty. We believe strongly the loyalty. We call it the idea of the consumer. If you know the idea of the consumers, then we can travel with this data around the platform and collect a lot of what we call interaction. Actually, when you're thinking about payment, the difference between cash, which is a transaction, and digital payment is huge because digital become to be data and data is traveling between the platform. And with this traveling of data, you can really serve the consumers according to each and every touch point that he has. That's a big difference. That's what is they are calling digitization of the market. Because the data has been moving around a lot of platform, not our own platform by itself, but also in the ecosystem of the platform. On the back-end side, all this trigger action that customers need to do, whether it is the accounting, the reporting, the ability of taking a decision and moving ahead to mitigate issues is part of our DNA because we are doing this 17 years. Regarding the IoT part, if an operator is coming to the machine and he knows what to bring to the machine and he knows what product to set in the machine and he knows how to collect the cash and we can reconcile this, this part of our business is what we're doing. And we believe that we have also the back end in our hands to serve the customer. There is a quote, a quote of a quote, that I saw Steve Jobs saying, if you're serious about software, you have to make your own hardware. And this is like what Apple was doing for many, many years. And that means you have to blend it together. You have to put it together and really to control the whole journey of customer and consumers together. If you just a SaaS, probably you're in a risk in some way. And what we built under the hood, what I just said is a full platform connecting between the payments, the telemetry, the integrated post and the loyalty. All of this is in one place. We have more than 700 employees or almost 700 employees dealing with end-to-end, serving their customers from all angles whether it is the billing, we are a payment facilitator. We are a merchant of record on behalf of the customer. It's critical to be a merchant of record. Again, I'm quoting David that he came just yesterday from Portugal from a convention of one of our competitors that we're working together. And they understand that they cannot really -- and they're bigger than Nayax. They're much bigger than Nayax. But they understand that they cannot get into this market because they actually -- they're not merchant of record, and they will be -- they will not be a merchant of record. They cannot go this direction. And the merchant of record is needed when you're dealing with what you call small merchants with moms and pops merchants. Because if you are a 20 machine, and you have to deal with accepting Visa and Mastercard, and you have to deal with accepting mobile app, and you have to deal with accepting alternative payment, you cannot really send this customer and saying, you have to sign over here, you have to sign over here, you have to sign over here. There is no -- that he can test in this way. He will never get it. And then when he has a problem and he has to call to someone, he will not wonder around and calling to each and every one of them. With Nayax, he's getting everything in one end. So one phone call and we're dealing with all of these angles behind this. So this is part of what we believe gives us a very strong trajectory into the future. And why, from our perspective, we believe a very strong outcome for the customer. The outcome of the customers is always looking about how can we increase the sales and you saw the quote of the video over here, what they're stating. It's really obvious for them. And now it's much easier because cashless is so strong. So it's like just put it and off you go. You can measure this immediately, you get 10%, 15%, 20% uplift and decrease the cost. And all of this with a lot of after service. And after service is not something that is a burden for Nayax because we're building everything digital and we're doing everything in the way that I believe or we believe that the self-service is the best service. So we're trying to push everything as much as we can into our platform as a self-service. So everything that you're touching and you have any question, there is something that there is a video. There is a university. There is -- just don't call us. Just let us give you everything as much as we can fully digitized. And this is part of the way that we can scale operational, getting these moms and pops customers and dealing with them in a scale business. So we're looking about 40,000 or 34,000 customers today, and we're looking at, what, million customers. We're building in this mindset. The outcome is quite nice because we started with, what we call, the small merchants. We looked about the small merchant. We designed our system into the small merchant, fully technology system. And now the big accounts are coming in, and you see quotes that Carly will show you over here, what's happened to the big account. They're all coming to Nayax in the U.S. And you can see why they're coming to us because it's easy to work with us. So there was a quote from Café+Co, it's a 44,000 machine. There is Canteen and a franchisee of Canteen. It's 0.5 billion machines in the market. Primo Water, I bet you know them. They have more than 20 -- 2,000 machines. They're all big, big accounts with a very similar needs for the small account and the scalability of Nayax can serve them. The churn and the net retention is the key pivot of what we're looking carefully about what we're doing. And I'm calling this the company. We are the one -- I have a picture in my office, it's Michael Jordan 1988 dunk slams that he has an MVP there. And I like this guy and I like this picture and I think he did a great job in all building the NBA, but the related of this is he was playing all the time offensive and defensive. He was always being the guy that he started maybe more offensive and then he became to be very strong defensive. I don't know if you saw the series of Michael Jordan. He was a [indiscernible] guy like this. And then one game, he gets such a, what we call, hit by Detroit. And then he built himself like Shaquille O'Neal. He came to be -- look like this. He's a [ fridge ]. And basically, Nayax is the same thing in the way that we are offensive in one way. We have a big asset of customer with a very stickiness business model, and we are very much offensive in the way that we are growing our business. So we're playing all over. So from our perspective, when we see the market today, the condition of the market today, we don't see something that really will hit us too much. And don't forget that we are from 2005, we had 2008 crisis, the 2011 crisis. I don't know which crisis is coming afterwards. We have -- the pandemic -- and the pandemic, we are private. We are not really backed with a big balance sheet. And today, we have a balance sheet. We have a strong balance sheet. So we believe that we have, what you call, ability and muscles to keep running the business very smoothly and very strongly against -- I think it's announced today that there is a bear market today. So okay, there is a bear market. But from a customer point of view, the customers that we are serving, they're open. The business is open and they're serving with cash. They need to switch to cashless. It's not a question. So from our perspective, that we are a very strong brand in the market, we are the one, the golden choice from this perspective on a global level. This, I like this slide. This is a very good slide. This is the cohort. If you look at the red line, 2018, and you go with your eyes to 2021, it's 4x bigger. This is 70%, 80% of our growth is coming within the customer. That's why we have such a strong trajectory of the 35% that we are saying that is what we are committing to. This growth is built in. So when you see that we grew the business with 4,000 customers, from our perspective, we calculate this and we say, okay, in the next 3, 4 years, these customers will be 3 or 4x bigger. So if David, myself and the rest of the team will not be and you replace us, you can be sure that the growth is built in, in the business. That's part of the thing that's nice about our model. I think the tailwind is quite clear. We always said and stated that the competition is with cash. Cash is really -- it's like Visa and Mastercard. They're always looking about cash. How they can really bring the cash to cashless. We see the same thing. But now you can see the numbers, that consumer is moving from cash to cashless. You can see the uplift of transaction. I think the last quarter that we have is 99% growth year-over-year in terms of cashless transaction in our system. So this is a really big tailwind that already happened. So consumers are way ahead of their merchants and they're pulling everybody in into the cashless society. We conduct also a research before we went to IPO in Israel. And you can see what we found out, and it was quite extensive and very hard research to reach out to this -- to the level of collecting the data. And we estimate that the market will go to EUR 123 billion in the next 5 years, and it will be all over the territories. And Nayax is really dominating the vending, the amusement, the laundromat, parking, we're all over. All of these verticals, we are playing globally. And we are playing all over the globe in terms of territory, whether it is in Australia, opening now in New Zealand, open the United Emirates, Europe, North America, South America. We're all over 62 countries around the globe. Competition. It's a very hard slide for me because I said there is no competition. But seriously, there is in the U.S., and you're all familiar with this -- with them. It's Cantaloupe. They started 15 years before we even been present in the U.S. They started around 2000. They didn't develop their own hardware in terms of the payment. So they're not really controlling the journeys. They started mainly for the big players. It's quite natural to go into the U.S. and have the big players, but there is a big problem around big players because they will squeeze you and the gross margin will be very low, and you cannot really take out yourself from this low gross margin. And that's what's happening now, to our belief, to Cantaloupe, which is a merge between Cantaloupe and USAT. CPI is a division of, I'm calling, the technology division of Coca-Cola and PepsiCo. That's how they build their business because they have a lot of merchant machines that they are producing. But that's not really out of the -- seriously out of the market of the U.S. The same thing as Cantaloupe. And Ingenico is -- actually, they split now from Worldline. They're under Apollo Venture Capital. And they're restarting themselves again. In the unattended, they are a very good company in terms of when you come into project with, let's say, ticketing that has to go to 5,000 unattended, 5,000 ticketing from the factory coming out or fuel coming out new. But in terms of retrofitting 40 million machine, they are not there. They don't have any merchant payment facility mode. All of this is not within their premises. So we think and we see this that we're taking market share. And we're moving very, very fast in terms of the unattended market globally. All of this is building a lot of moat because the more that we are cementing this small merchant and putting them together and keeping the churn very low and having the net retention very high is creating a lot of moat. And I think David will speak a little bit about the technology, the cover surrounding the customers and how it is really enjoyable to work with Nayax easily and to be served by any kind of issue that sometimes customers calling us and ask us to do something that they're pointing out tonight, but the diagnostic is -- that we're doing remotely is related to the machine or related to the [ coil maker ]. But still, this is what we're doing, and that's part of the services that we have been accelerating ourselves. We want to grow fast. We are very hungry. We are -- Israel is in the root of our origin. And we think that every day that we are progressing, we're seeing the opportunity more and more vivid and we're adjusting ourself. We're not really sticking to everything as it is. We're adjusting ourselves to culture, to needs of the market and it's part of, we believe, the DNA of founders that we have in the company. So today, we are a $190 million, but we're really aiming to keep this growth 35% year-over-year for the next decade. When we saw there's like another jump of our ambitions, when we saw what we're doing and we understand what we're doing and we talked with the customers and they start to say to us, yes, we are -- in food court, you are serving us outside. You have the coffee machine. Can you give us also other products or complementary product? And we started to talk regarding entering the retail market. And we found out that the retail market is also broken by payments, post and back end and online. Everything is broken by 4 or 5, what we call silos. And we said, okay, maybe we are the one coming last to the market. We'll not take the #1 position. But we do have a say in this market, and we opened a division of retail division, aiming not just for nano merchant SMBs, but also for the mid-tier business. And we already implement this in Israel. We gained some traction from big retailers in Israel and the post office in Israel. And we're moving very fast. Part of it will be with partnership that we're doing with others in order not to, in this case, not to produce everything in terms of the hardware, but relying on what we call Android platform. And basically, Android platform contain the payment and the ability of post altogether with online capabilities. So we're building all of this together. And also, we're doing the same thing in terms of our own device, which is also coming soon with Android. So this part of what we call building everything together under, what we call, the division of Android internally in the company that will deal with Android mobile app, Android in terms of deposit itself and connecting everything together. Strategy. I think the land and expand is a very prominent part of our business. We start with 4 or 5 machines and the customer is growing with our business. We are gaining a lot of traction from big enterprise, and Carly will talk about this. Continue to innovate. The innovation is not just the hardware. There's a lot of innovation -- there is mostly innovation in the software side and in the back end. Expanding international. We just opened UAE. And soon, we'll open the New Zealand market. Entering new emerging markets. There is a very focus from our perspective on another division that we opened 5 years ago or 4 years ago. It's the EV, the electrical vehicle chargers. Now everybody understand more because it's coming very soon or very strong into the U.S. market because of the bill that passed already. And all the infrastructure is going to build, whether it is a recession or not recession, the bill passed and it will be built, all this -- all the infrastructure of EV. We have 2 strategies on the EV. One strategy, and Carly will show you regarding partnership with OEM. Electrify America, EVgo, all the networks of the DC chargers are covered with Nayax open-loop solution. And we have the AC chargers, which are the one that will be at home, at offices, at parking. Not the fastest one, but semi-fast charging. And we have all the solution altogether. So we built also not just the harbor in terms of the payment, but also the charger itself in order to sell these to CPOs, to charge point operator that they will be the one that's selling the electricity, but it's off with one shot, he's getting everything together, including all the billing and all the connecting to the grid. And this is a very strong, I think, segment that will be bigger -- or bigger and faster in terms of 7 to 10 years from now, we'll have millions of stands of EV chargers, and we want to be a big player in this market. And we are pursuing M&A as well. So we are very strong in terms of looking at scattering the market to find more and more opportunities to buy and to increase our presence in the market. Everything has to go with values. And I believe that value is not something that you pick from a tree and you bring into your business and you say, okay, this is my values. Value is actually it's the values that I think David, Amir and myself represent and we want to multiple this. So the idea behind it is that if I'm -- if we're saying founders, and we want to say on it, this is the action of how we operate. We're seeing everything, we say, okay, I will do it. I will take it. I will be responsible, this. And that's what we're trying to build in terms of internally, the DNA of the company, that all the employees will act in a way that they are founders. And that's part of what we are testing into the business. The same thing in terms of listen. When I'm speaking to you, when I'm speaking to customers, when I'm speaking to consumers, I'm always trying to see what is the implication that I can do with this? How can I treat this? What is the thing that I have to change myself or change my behavior? And it's part of my DNA of trying to be the best in this in order to really to see that we are doing the best thing regarding the parameter. So I have to hold the data. I have to hold what I want to do. I have to hold the idea of financial data and listen. Based on this, I can have a benchmark of what I have to do. And third thing is act. Time is the worst enemy from our perspective. You have to fight the time. If you have 80% of the data, it's enough to move ahead. If you do a mistake, it's a learning mistake. If you can, of course, don't do a mistake that you cannot backwards. Do a mistake that you can do backwards and you can learn from this and you become better and the organization become better. So you have to ask yourself, what is the risk? Can I go backwards and act fast as you can. This is part of, I think, what is the new norm of the platform of technology. And honestly -- honesty is -- I'm looking at this as we want to walk straight all the time. Whatever I said, this is what I say, may be do a mistake, you can tell me. I can feel free to speak about what I want to do. I'm looking in some envy to [indiscernible] that has in his business a full transparency business. I don't know if you know how internally he is working. You're working -- every employee is working with this kind of a handheld and he's marking everything that you talk where it is relevant, not relevant. He doesn't care if you're CEO or VP. Everything is marked and you have points, red and green points. It's excellent, but it's really something that will kill you because you cannot really hide anything. And we're trying to be in this direction, not at that extent. But really, my door is always open. The office is always open. You can call me. Everyone can send me an e-mail. I should be very much attentive to answer to all of these emails because I don't have any PA or anything like this. It's all me, all on David. We are working like -- we're doing everything. We're doing our flights ourselves. So everything is like very much in terms of in the granular level, understanding everything but looking in terms of listening, seeing the data and taking action. And you can see we have more than 600 employees. And to grow the business to this level, you have to really to put the culture very vivid in the business. One of the things really to make a sense, you have to look for technology. You have to look for technology platform. We choose to work an OKR, objective and key result. This is a platform that's invented by Intel, adopted by Google. Many, many companies are working with this platform. And we are now practicing this level because we reach out to this level. So we are practicing on this objective and key results platform in order to align all the company and reduce all the silos in the company. Backwards looking. You can see that the growth is accelerating, where it is the managing connected, whether it is the transaction in millions. You can see the jump -- the high jump of demand of the tailwind of consumers and the revenue growth is growing very fast. We're very much in terms of looking about the recurring revenue. This is the business in terms of recurring business, SaaS business. It's 60% of our business. The churn that we talk less than 3% and the net retention, 137%. So we are growing with customer base without losing too much customer base. This is a very important part of what we call the engine of the flywheel of Nayax. Ending up. As we look at the market, we're looking at retail, and we're looking unattended in one hand and mastering this business, extending ourselves to retail, combining this with omnichannel with online. And we believe that we have ability to secure this growth on a global level, and we have a very promising market to conquer. So thank you.

Hi, everyone, and thank you for coming. I'm excited to be here. I'm David. I'm the CEO and Co-Founder of Nayax. I have experience -- I have over 20 years of experience in technology field, hardware, software, design product. Prior to Nayax, I built start-ups and even sold one, all of them. Let's start. Okay. I will try to explain. I will discuss about our sophisticated and successful technology in the next slides. As you know, we are global. This is our technology. We developed our core business in-house. We have more than 30% R&D in the company. There is some buzzword here like security, reliability and redundancy. I will try to take one buzzword and explain, give an example. This device is communicate from 62 countries, installed inside the machine and there is a back-office site that this device should communicate. And this device, we save 3 access points, 3 addresses of our server. One is called primary, secondary and backup. Once there is a problem with one of the sites, or a third-party problem, or communication problem, or any problem, this device skips from the primary to the secondary and from the secondary to the backup. So each device have the mechanism -- the skipping mechanism to be all the time available. This is what we say high availability, okay? We are an agile organization. What it means? Yair mentioned that. Our DNA is very flexible. We have more than 35,000 customers worldwide. And there is a lot of customer. Most of them, the big ones, they want at least development, and then I would be your customer. So we develop -- we develop a lot of features in the system and the feature constantly expanding. You develop something for a customer in Japan, someone in the other side of the world benefit from it. So the system is growing and growing all the time. Since we are dealing with hardware, software, mobile certification, clearing BI, mass production of server. So we gain a lot of expertise in Nayax. And this is also growing, and we will talk about on the next slide. This slide actually showing the ecosystem. A consumer present is mobile, or is a credit card, or a Bluetooth, or scan the QR, there is many forms of cashless payment. He present it on our device, okay, that actually installed in one machine, but it can be a machine of -- today, we have about 42 machine type in our system. When you install the machine, you choose one of the 42 machines, 42 verticals, and the vertical can be a regular snack/soda machine. It can be EV charger machine. I want to talk about this point because I think this is a very strong entry barrier of Nayax. In the last 17 years, we learned about hundreds of machine models, machine protocols. I -- said there is no one standard. If there was one standard, Ingenico, Verifone could develop the hardware and sell it to every seller. But since there is no standard in the market, it's very difficult to come and install a device on a machine. You need to learn the machine, you need to learn the protocol. And sometimes, it takes 2 weeks to learn the protocol of the machine. Sometimes it took us like 2 years, the Japanese machine and its including certification. But at the end, it's all the time the same device with different cable and different parameter. When you install our device in our system, you actually install it and connect it to a machine, but you choose the machine model from the hundreds of manufacturer and machine model. You choose the machine model, low default, all the parameter download for here, and then it starts working. I think this is a very strong advantage of Nayax and everyone want to enter to this business. I don't see -- and even Google will decide to go in this business 1 day, they can do it, but it will take a lot of time. I will give another small example. Italian pizza machine called me and said, listen, I have 400 machines of pizza. I need to install your device, but I don't know how it works. It doesn't work. So he builds a simulator of his machine and he ship it to Nayax, 2, 3 developer build the protocol. And then we have another machine in our system. So this is one of the big barrier here. All of our device are communicating, 99% cellular, but we have the option of Internet and WiFi. Most of our resources concentrating this area, our cloud platform, back office, okay? So when someone presented his card, it goes through the device. We encrypt the data. We'll show an example later. It comes to here. There is about 80 parameter that we are checking if there is allowed to sell, which is the service and clearing provider, if there is extra charge, how many transactions that this card in the day. There is about 80 rules that exist. And from there, we are going to the payment gateway. This is the second barrier that I want to concentrate. We, as Nayax, we already integrate to about 80-plus payment/clearing provider worldwide. Yair mentioned 80-plus with 40 currencies. The barrier here, it's integrate to a bank, sometimes take between, let's say, 0.5 year to 4 years. Elavon took us 4 years to complete the integration. And it's not because of development. It's the part of the certification. It's the requirement of the EMV. You have to do the EMV level 3 to each of the product. And if you make any change, you have to do it again. You have to save the logs for Visa in both sides and send it to Visa and then they approve it and you have to do it brand by brand. And this is only the integration to banks. Nayax, today, I think, have more than 47 acquirers worldwide. If we want to grow, so we cannot do development for each customer, it's difficult. So during the years, we built APIs, we have the Lynx API, we have a Retail API, we have Cortina API, we have Marshall API. Let's just mention a little bit. If the pizza guy want to integrate to us, he doesn't need to be -- there is a protocol. He can download it. We should do onboarding, of course; onboarding KYC. And he can develop by himself the product -- by getting a sample of API, sample of codes for android, for Linux, for embedded PC and they can do the integration by themself, okay? So the same is Amazon is working. Amazon provide you like 150 API. They give a platform with a service. You should do the development. So for the hardware, we have the Marshall. For the Lynx, Lynx provide you the ability to collect all the data on the back office. There is big player that doesn't use Nayax server for telemetry. They actually using their server and they want to see -- they want to login only to their server. So we provide them the ability to collect any data they want. Of course, there is security, there is -- we've been something -- sometimes VPN tunnels. Cortina we start to see a lot of mobile payment worldwide expanding, like in each country there is 2, 3 mobile payment that dominate the country. And they are willing to use the legacy of the modern 0.5 million units that exists worldwide. They know that they will come with Verizon Up and pay on our machine. So instead we should do the integrations, they can get the Cortina API and they can do it by themself. I think it's enough for this page. Let's show a typical credit card transaction. Consumer present the card on Nayax device, okay? We encrypt the data and then forward it to our server. Till here, till this point, it's less than 300 millisecond, okay? From here, of course, we encrypt the data, there is like IP 6 tunnel necessarily depends into the requirement of the banks, the transaction goes to the acquirer, acquirer/bank from the acquirer, it go to the card scheme, card scheme, Visa, MasterCard, Discover, Diners and Amex or any alternative payment. The card can generate the authorization to the issuer and then we get processing transaction and then we get approved. It goes back to the acquirer and from the acquirer, we get this authorization approved to our server and I immediately forward to the device. Till this point, it take between 1 to 3 seconds, okay? This is -- if you present the card, like that, the card, you will wait between 1 to 3 seconds for all this process here. Once we get approved, there is -- the product, consumer receive the product and then we are sending the settlement to our server and from our server it's the acquirer, we can do it off-line or a batch, and then we close the transaction. Of course, in this piece -- by the way, in this piece here, when we vend a product, there is issue like [indiscernible], if the product didn't fail or there was a problem or we didn't dispatch the product, so we're taking care of all that issues. Okay. We mention the skipping mechanism solution, but here, what we are showing here it's a Nayax topology part of it, but the main part of it. We actually have 4 sites around the world, 3 big ones and 1 satellite site on AWS, all the rest is on-premises. All the sites are fully replicated. It means all the data that exists in each sites -- all the data that exists in all the sites and we have a site in Israel, we have a site in Germany, we have a site in U.S., and we have a site in Japan and Australia. We're using today the service of Route 53 of Amazon. This device, let's say, there is a device in the U.S., it's communicate to the server on the primary address, the Route 53 provide us the ability for geo DNS. So if it's a device in U.S., it will send the information to the U.S. site in New Jersey, okay? So the Route 53 provide us the ability to do the geo DNS. And also, it also provide the ability to do [ charting ]. So if we have [ 500 -- 1000 -- 500-plus ] units that communicate, it split the units between the sites and it decrease the overload on 1 site. But each site here can handle more than 1 million devices. So when we are doing maintenance, very easily, we closed that site. And still, we have 2 big sites and 1 small one, okay? This is a nice slide. Too much information, sorry. But what we are trying to show here is that we -- since we are a global company, since we are a mass production of IoT, since we are providing a card present solution, since we are dealing with fintech and iTech, we need for that a lot of tools to manage the company, and it's growing and growing all the time. And so we have a privacy department that taking care of GDPR and CCPA for California. And we have a security regulation and standard in the company. And we are maintaining every year the PCI DSS, and we're dealing with EMV certification. EMV certification, it's huge. We have a big department that is doing the certification and developing it. And we need to -- each product that Nayax is developing, you need that certification. This is a very strong part and one of the advantage that Yair mentioned before, it's not only software, it's software, together with hardware. We can bring the best consumer engagement to our customers. And each tool here, it's a third-party tool probably for the security, you have to pay like $5,000 a month and $10,000 a month. You need to have expertise inside to support it. And this is part of the tools, and there are much more that are not mentioned here, to support a big enterprise like Nayax. Thank you very much. Save all the questions for the Q&A. Thank you.

So I'm Keren. I'm the Chief Marketing Officer. I've been Nayax for 8 years and counting.

And I'm Carly, I'm CEO of Nayax North America, also with Nayax with for 8 years and counting. So before I kind of dive into the platform that both Yair and David have spoken about, we're going to show a quick video that really kind of captures the ethos of who Nayax is and the people behind the scenes who make it happen. [Presentation]

So I'm going to dive a little deeper today into the Nayax platform. So as Yair had mentioned earlier in the discussion today, so our payments technology platform really is based on 4 pillars. And these pillars -- each pillar effectively helps our operators lift revenue and/or decrease operational costs through scaling and efficiencies. And really also what makes the platform unique is the ability for it to be used and applicable to really all machine types, all protocols and all verticals. So like we've touched on and I'll touch on further later in the discussion with case studies: EV charging, kiosk, food and vend, the massage chairs, laundry. And the 4 pillars that make up our platform are the payment suite and our loyalty and marketing suite. So those really are big drivers of revenue increases for our operators. And we're looking kind of at the efficiency, scaling and the decrease in operational costs that we're able to provide is to the telemetry management suite and also the integrated POS. So the first of these pillars that we're mentioning really -- and again, David and both Yair has talked about it, but this is really what kind of gives us the edge in the market and also makes it difficult for a barrier for entry for our competition. So Nayax devices are in over 60 countries around the world currently, accepting over 40 currencies and we're integrated with over 80 payment methods. So again, as we've mentioned, it takes 6 months to 4 years, I don't know, as they really actually been a 6-month payment integration, I think that kind of debatable. But -- and we're directly integrated with the card schemes, the card brands, the acquirers, the issuers, accepting all alternative payment methods from wallets, both open and closed as well as QR code payments like dynamic QR code to accept Venmo, PayPal, Alipay on the devices. And this card-present EMV L3 certification is what really makes us be able to scale as well as also makes it difficult for other payment solution providers to enter the marketplace and create the kind of scale that we've been able to achieve. Additionally, our payment facilitator and merchant on record capabilities globally allow us to quite seamlessly and efficiently onboard our end customers to allow them to actually accept payments quickly. We also are taking away all the burdens of the EMV certifications and handling PCI as well as also allowing them, especially our SMB customers, to be very competitive in the marketplace since we're able to bundle all of our transactions to give them a blended and competitive rate. So the next pillar is our integrated POS, right? And this is particularly applicable now from both a supply chain standpoint, as obviously manufacturing constraints have really been impacting a lot of our competitors, which we have been lucky to not have that in kind of the impact of, as well as also as a real differentiator of Nayax. So our hardware and software is designed and developed in-house. And it also that really allows us to move very quickly into the market. So we are an incredibly agile company. Like Yair mentioned, time is really the biggest killer here. So we're able to quickly be able to adapt using our R&D resources and create features and functionality that our consumers and their end customers really need to stay competitive in the marketplace. Additionally, our flagship devices, which are the VPOS Touch family of devices, so the Onyx, which is the hockey puck one and the VPOS Touch, which is the square one that also David was showing, which does allow EMV insert, contactless EMV payments, legacy swipe as well QR code acceptance on the screen. The touchscreen on the devices allows for engagement, marketing potential and really creates the foundation of our solution to allow over-the-air updates and create scalability and innovative -- innovations. So the third pillar is our telemetry and management suite. And I think when you really actually delve into what our operators day-to-day looks like, right? Of course, payment acceptance is crucial for being able to accept any and all methods of payment that their end consumers want to pay with. But when you also think from the operational side, right? When you're an unattended operator, you don't have feet on the street to let you know if you're out of product or if your POS isn't working. So the Nayax management suite allows full transparency into our operators' operations through a host of customizable alerts that have customized thresholds. So for instance, you could have your machine set so that if you have no power for x amount of time without a power up, you get a notification by alert or e-mail or via any of our data dissemination tools. Additionally, it's used for product optimization, so -- especially as we're hearing that 1 day, you can get 1 product and then next, we can't get another. You could really know what is selling well, what you should be selling at different locations, be able to swiftly and remotely change also what you're selling using remote price-changing capabilities. Additionally, we allow for inventory management. And I think we're talking about product optimization. This is really crucial, right? So you could really see what are top sellers and have that full transparency into your operations. And so finally, the fourth pillar of our platform is our loyalty and marketing suite. And this is really what's also helping us drive revenue for our end operators and their consumers. So we call our e-wallet Monyx, and this allows for multiple payments to be stored in app and allow for topping up and declining balance sales. Additionally, and this is really where I think we have some of the most power when we're talking about our offering to our end consumers and -- or end consumers and our operators, is the promotion and loyalty functionality that we provide with Monyx. So for instance, we can do a loyalty program: buy 5, get 1 free. And 1 of the case studies I'm going to talk about later on with Five Star, this was actually 1 of the main drivers for them to actually leave our competitor and fully commit to Nayax, and that was because they're able to now leverage supplier side discounts to then offer these amazing loyalty campaigns, which they can manage themselves on the fly in the Nayax management back-office suite. Additionally, there are discount campaigns. So you could do 20% off x product from 2 to 4 p.m. on Friday, if you know that you're going to have a product that's going to be expiring. So that kind of flexibility is allowing for a lot of repeat customer sales. We're seeing an increase in average ticket price for our -- for the end consumers. And it's creating that engagement and the store next door feeling in an unattended environment that is creating the stickiness. So at the end of the day, what our platform achieves is a very strong push-pull from both, an increasing in revenue and decreasing in operational costs that is really impacting the bottom line of our operators, right? We're seeing decreased costs, we're seeing better economies of scale as well as reoccurring customers with higher average ticket prices. Now I'll hand it over to Keren to do to our emerging markets.

So what you see in this 4 pillars are applicable to the way that we do our go-to-market. So this is -- this is retail. So we saw that the same pains that unattended retail experienced is the same pains that regular retailers have. They also need to accept payments, they also need to manage their operation, manage inventory, everything that Carly mentioned, and of course, create loyalty. With that, we purchased a few companies, we built on top and created a complete retail platform with the same pillars in mind. We are constantly developing more value-added services for even like smaller customers like service providers that need to pay for an appointment, then we have that. We keep building on top of our solution, again, with the idea of the 4 pillars to decrease operational costs and increase revenue. And we launched, actually, in 2021 in Israel with such a great success, and we covered a lot of the market really quickly. The next growth engine is Weezmo. So we call it the Google analytics of the store. Why? So it's basically the retailers most innovated marketing platform. What it does is we have the ability now for retailers to connect their online marketing efforts with their offline store purchases. So as a marketing executive, we all know -- the most important thing right now is data. What Weezmo provides marketing executives is the ability to see their data streamline to our back-office system. So when a customer makes the purchase in a store, in the online, someone actually worked as -- created a campaign, found the customer, and then they don't see kind of the closed loop of it because the closed loop happened in store. With Weezmo, they can close that loop. And they can actually offer the next best offer, everything is relied on the data. They're using an e-receipt sent to your phone. The e-receipt is basically managed by the retailer. They can have everything from next best offer, surveys, connection to social, anything that the retailer needs to kind of interact with that customer. And we took out that barrier of joining the loyalty program, right? We were asked constantly, do you want to join our loyalty program? Do you want to join our loyalty program? We had enough of it as consumers. Now everything is seamless. So we integrate to the printer, which is easy and fast. We don't rely on any hard integration. And then as a consumer, you just need to basically accept the SMS and you have your receipt, you can manage your purchases and have the ability to actually do an exchange everything from your phone. So that is Weezmo. The next thing that Yair mentioned as well is the EV meter, electric vehicle charger. So that is our own solution for electric vehicles. Again, with the 4 pillars in mind. We have a way to accept payment for charge for operators or facility managers or apartment complex. They want to be able to accept any form of cashless payments, manage their operation and again, create that loyalty if needed. So it's our own solution, and we manage it from end to end. And lastly, Tigapo. So family entertainment centers, even bars now offer kind of arcade gaming. So Tigapo actually has, again, a complete solution from accepting cashless payments to an AI to manage their operations see alerts and also to increase revenue. So the idea with Tigapo is you have everything covered. So you can reduce the amount of employees you have on site. If it's accepting the payment and actually offering the kind of the price after. They're actually interacting with the players to make sure that you spend more time in their establishment if it's kind of a leaderboard or your own group -- interact with your own group to make sure that you are at the top of the leaderboard. Everything is done so that the platform answers all of the FECs needs. Okay. Go-to-market strategy. So we keep saying we have all these different retailers. But if you think about it, we have a complete ecosystem to answer omnichannel retailers. So imagine this, you're going into a football game. And you have your EV meters in the parking lot charging your cars when you go and enjoy the game. You're entering that football stadium and you have your vendors selling hotdogs or in my case, as a vegan, nachos. You have the ability to go to a vending machine, purchase your coke, David told me to stop some water. And then you go and you sit in the game and you're watching the game and you all of a sudden got the urge to get something sweet, you order ahead and you go and you pick it up at the vendor. Everything I just mentioned, including maybe a kiddie ride outside so you can actually use Tigapo, everything that I mentioned is part of the Nayax ecosystem. So we're able to answer everything, including whether it's Giants, Jets, I don't want to get into it in New York. So if you have their app and you want to integrate to a loyalty and you want to answer -- basically pay with the app, we have, like David mentioned before, an SDK with our Monyx so you can actually pay in their app for your purchases. So that is our go-to-market. That's covering every single touch point for the customer. I think Carly touched on it before, we're -- this is part of the deck, by the way, that's how we sell to a customer, okay? We're saying we got you covered. This is part of their daily task as an operator, unattended operator. They have to go to their back office, see what they have to pick, we call it a picklist, they have to pick it up, and that costs money and that takes time. The whole idea, as you saw before, we keep repeating it, decreased operational costs, increase revenue. Every touch point that they have to do throughout the day is something that we take care of. That's why we were saying we've got you covered. Okay. Go-to-market. So the market -- the unattended market is built up a lot, a lot of micro operators. Those are the mom and pops in the middle of nowhere with 2 to 4 machines. We got them covered with the same end-to-end solution that we provide for the big enterprise customer. And how do we do that? So with the smaller customers, we actually have a lot of marketing campaigns, obviously, to find them and to bring them to Nayax. Nayax right now for the unattended is a really known brand, so they actually come to us. Then we have our bigger customers that are covered by the sales team. And we also have inside sales to kind of talk to the customers, warm them up, close the smaller ones and then bring those leads to the inside sales. Now we talked about distributors. The idea in Nayax is that we want to make sure that we're highly efficient. So in the bigger markets, we have our own offices, and then elsewhere, we have distributors. So the distributors are selling the product in their own region and providing first level support. We also have an e-commerce that we launched in the U.S. and now we're taking globally. And 1 last thing, as you can see on the slide, is that we have an OEM reseller. So the OEM is a regional equipment manufacturer. A great example for that is the Chinese office. Obviously, a lot of the machines are manufactured in China. We have an office there. Their main goal is to make sure that the Nayax device is on every single machine. And when they ship the machine to a customer that bought them, we have them covered because we have the foot on the ground to basically get them on board with Nayax. And when I say get them on board, we want to make sure that we manage the cost properly, the customer acquisition costs and how do we do that? So we spoke about campaigns, gathering leads, obviously, we onboard them seamlessly. We have a university online. We have FAQs. We have a video showing how easy and fast it is to get the device on the machine. And then obviously, we're taking care of the growth. Yair mentioned it, the land and expand. So what do we do? With the bigger customers, we have a CSM talking to them regularly. And then for the smaller ones, we're taking care of them by contacting them at all times, e-mail marketing, social, we do a lot of webinars, everything we can in order to make sure that we continue that stickiness because they're on board, they're utilizing the system. And then, of course, they grow with us. Carly?

All right. So let me give some actual testimonials today from our U.S. market. And I think this is, to me, at least the most powerful messaging that we can provide, right? Because it's not what we are saying we can do. It's what our customers are actually saying we are doing for them. So a little bit, and I'm going to have to put my glasses on there. It's no way I can see that. So a little bit about how the U.S. market, our U.S. office has done in the past 12 months. It's been fantastic. And I really believe this is just the tip of the iceberg. This is showing the trajectory that we are on, and we really have the infrastructure right now to keep this path going. So just in the past 12 months, we have seen a 68% increase in our customers. We've seen a 42% increase in our managed and connected devices and a 98% increase in our transaction volume. We also have seen a lift in our average transaction value as well. So we're really seeing just that incremental growth. And how we're doing it? So how we've been doing this is through our sales approach, and this really leverages what Keren was saying. But we have a lot of direct strategic partnerships. So with the card brands, whether it's Visa, also all of our acquirers and processors as well as our communication providers. So this allows us not only to, of course, leverage efficiencies for our own bottom line, but also allows us to really react in an agile manner to our end customers' needs and develop solutions with these partnerships that actually solve their pain points. We're also the experts in the unattended market. So I personally believe in a slightly different sales approach than some of our competitors, right? It's more education based because they think we have the confidence of the product and the solution. We don't have to rely on pricing strategies alone, right? We are actually able to be seen as the leaders in the market with our education-based approach, we are providing the knowledge, we're providing the expertise and we're giving that confidence that we actually have our operators back as a payment solution provider. And it's been really interesting in the past 12 months, probably actually 18 to 12 -- 18 to 12 months or 12 to 18 months, which is the -- there's been a seismic shift in our actual operator portfolio in the U.S. So 1 of the things that gives us a lot of security at Nayax is the fact that we are not dependent on only a few big customers, right? We have the foundation of SMB and micro operators. But to get that kind of growth that we've seen, right, 68% of new customers in a 12-month period as well as the type of growth we saw 48% of actual managed and connected devices, that's also from our enterprise and VIP customers. And I'm going to touch on that in a few case studies that really show that now we have the name recognition, our education-based approach and that we're actually getting the repeat business from these VIP and enterprise customers that allows us to scale in a very efficient and fast manner. So the first case study is with innovative vending solutions or IVS. And they are a leader in the massage chair industry. And -- so they came to us actually, it was -- I think it was about 2018-or-so. And they were using a competitor in the U.S. for their 9,000 or 10,000 machines, but they needed a solution for Israel. So they came to us and they said, we need international presence for 16 massage chairs. And so that's kind of how the relationship started. And once we kind of went down this path, they realized that what they were getting with our competitor was actually just a payment solution. But what they were getting with Nayax was a true technology partner. And they ended up moving all of their 10,000 U.S. locations that, I will say, were fully paid off and amortized as well as -- we're already 4G to Nayax. And we have worked with them to design a proprietary app so that they actually have stickiness with their consumer base as well as giving them a lot more transparency into their operations with our third-party data transfer systems. So in this quote from Matt Marino, who is their CEO, I think, really sums it up, right? That Nayax increased our sales by over 30%. Nayax is not just the cashless supplier, but our true technology partner. And they feel that they have made the most secure investment in their cashless technology by going all-in with Nayax. So our next case study is Five Star Foods. And they are the largest Canteen franchise. So those that are not familiar, Canteen is a subsidiary of Compass Foods. They have about 0.5 million machines in the U.S. alone. So we are a preferred supplier of Canteen, which also means that we are eligible to sell to the Canteen franchises. And Five Star Foods is the largest of these Canteen franchises, and they have a very aggressive acquisition strategy right now. So -- at the moment, they run 75,000 locations. And they started with us -- we kind of forced ourselves on them, but with the pilot. And I don't really think they have the intention initially of converting over from also our competitor. But one of the main things, and I touched on this when I was talking about our Monyx loyalty and engagement suite, is that they have a lot of relationships, especially because of their scale with Pepsi and Coke. And one of the things they were not able to get besides the fact that they weren't actually taking EMV contactless payments, which is going away at the end of the year here in the U.S., which has been a real catalyst for growth. But besides the need for EMV was they were not able to offer supplier side discount campaigns, right? So they could actually kind of play between Pepsi and Coke, get the best discounts and then push those discount and loyalty campaigns to the end consumers. So we were actually able to show them in a pilot that we could do SKU-based loyalty campaigns. And this was really the catalyst for them to decide to go all-in for Nayax. And by all-in, it was supposed to only be for their 3G upgrades as the 3G network is going away. I actually had the privilege of meeting with their executive team on Tuesday, they're based in Chattanooga, Tennessee, and they announced that they are actually going to be going completely in for their entire fleet, including their acquisitions, going forward with Nayax. Additionally, they use VendSys. So our ERP management suite for very large operators. And they just did an additional RFP to ensure that VendSys was the correct solution for them going forward and they re-awarded that RFP to Nayax. And then I'll -- and then -- so their CRO, Greg McCall, his quote that he told me just as Tuesday when I met with him was that we actually also help them increase their average transaction price and revenue. And again, this is not going from no cash or no cashless to cashless. This is a competitor of Nayax to installing Nayax. So with Nayax, we saw an increase in the cashless percent of sales as well as an overall lift in revenue, showing that cashless increase didn't actually cannibalize cashless sales. And then our final case study, is EV charging. We're talking about EV charging in this application. It's about the DC fast charging network. So we have partnered with all of the major OEMs, ABB, BTC, Signet that are based globally. And we have really become the go-to cashless payment solution provider of the fast-charging network. And what makes us so fascinating is that not only do we have over 10,000 Nayax devices deployed on chargers across the U.S. currently, which you know is growing rapidly based on the different infrastructure bills and of course, the fact that 2025, we're saying that 30% of all car sales are going to be EV. But we really have cemented our place as this go to cashless services provider for this EV market. And the reason is, is because when you're looking at the total machine here, this is fully certified, right, including the Nayax devices, so in this case, our flagship device is yellow, but we do have a black, if we have to. So these are all different Nayax devices, of course, on the EA and the EV go chargers. But this is fully certified, right? So we are -- this is not like easy to just rip us out and put someone else in. So that kind of stickiness is there. As well as to integrate with a smart machine like an EV charger, including we are having different fluctuations in the grid, the power grades and all of the different vehicle charging requirements and also just the data transfer that has to happen between the chargers and the devices, that kind of integrating power and the R&D behind that, really is making us the go to. And a lot of people have asked, they actually had the privilege of speaking at the Payments Network forum with Visa on EV charging about a month ago. And one of the things that was discussed is, well, we hear about plug and charge, right, and we hear about all these payment subscription services for EV charging. Is there really a need for open payments on EV charging? 100%, especially as we're looking at right now, the early adopters of EV charging, we're comfortable with paying with wallet apps and having different wallets and plug and charge. But as we're going to be going beyond the early adopters, people want a payment experience that's anonymous what they're used to paying with, which is being able to take your credit card and fill your car. So being able to offer open payments on EV charging is really not only helping for the current driver base, but it's actually a catalyst to allow the next phase of EV drivers to feel comfortable with choosing an EV car for a long drive. So this is -- I'm very excited about the EV space and Nayax position to kind of help propel us into this phase for a greener. So I think with that, right, we take a break?

Yes, yes. We have a 15-minute break. We'll turn around at 10:25. Thank you, Carly.

Thank you. [Break]

Let's get started, please. We're going to get started with Sagit. If everyone can take their seat, please. As we said, we save the best for last. He's going to give us a financial overview and -- it's a wonderful business model, right, Sagit.

So great to see you all. It's nice to see everyone as the year-end David said. And if you don't know me, Sagit Manor, the CFO. I joined almost a year ago, been in the payment industry, most of my professional life, I was in Lipman and before -- and after that in Verifone. The last 4 years, they did something completely different. They actually manage the cybersecurity start-up. So did that for a while, successfully sold that last March and joined in Nayax last June. So I want to start with our business model. We've talked about it and we talked to most of you extensively over the last few months. And -- but I think it's always nice to say again how the business model works. So we start with the hardware, which is the integrated POS device that is being sold. It's a onetime sale, but we'd like to call it the Enabler. This is really locking into the recurring revenue model that we have. And then we have 2 elements in the recurring revenue. One is the SaaS, it's a monthly dollar fixed price that customers are paying for connecting or the connectivity into our telemetry and software management suite. And then we have the payment processing that we charge as a percent of the transaction value. So if you think about that, the rapid recurring revenue model creates a very strong economic of 2.5%-2.6% take rate, which I'll talk about that later, as well as the recurring revenue piece is around 60% of our total revenue, and I'm expecting that -- we're expecting that to stay for the next few years as we increase our customer base, as we increase the number of managed and connected devices that we have. So if you think about our revenue side, you will see that we're just starting the journey around the world. And I'll talk about that in a second. You can see that quarter-over-quarter, we increased the revenue by 50%. If you think about that year-over-year 2020 versus '21, it was 51% growth. If I go to the recurring revenue side, as you mentioned, very strong growth. There, we grew 67% quarter-over-quarter. And if I look at year-over-year, it was 61%. If we look at the distribution, right, and the global reach that we've talked about that as well, you can see the beautiful increase in every region that we play: 26% in Europe, 54% in North America, 60% in Australia and other, I think I have to start breaking that down as well, 300% there. So what do we see, right? We see that this is the transaction value presented that went through our devices as well as the take rate. And what it shows? It really shows the tailwind. It really show how global cashless payment trends are driving transactions. So when you think about that, think about the customer behavior change, right? If you think 6, 7 years ago, 25% were cashless transactions. Today, we see in our devices as Yair mentioned and Carly, around 65% of the transaction are cashless transactions. Also, we grew significantly our number of managed and connected devices. So now more transactions go through our 553,000 devices. On the right side, you can see the strong gross margin that we are able to deliver. So looking at that, right, you can see that there's a 60% each gross margin on the recurring revenue side. And on the hardware, we used to have historically around 25%, obviously, with the global shortage in components, we see that gross margin -- pressure on the gross margin. However, as I've mentioned many times in the past, we've put many mitigating steps in order to control the cost by adding a contract manufacturer in Asia by literally redeveloping our electric board to accept available and different components, being the network agent out there collecting and many, many more. I also wanted to mention on the left side, the strong take rate that we see. So this is a result of us directly connecting with the acquirer and basically being able to provide better economics to everyone, including ourselves. So on the operating expenses, the most important thing is to remember is that we started at the investment in the second half of 2021, and we will continue to invest in 2022. We've done the IPO not to keep the money in our bank accounts and keep it strong. We did the IPO in order to be able to have the capacity to invest, invest in talent acquisition, product innovation, automation, infrastructure, go-to-market strategy, as Keren mentioned, in order to take the company from the $119 million revenue to the $1 billion revenue company that we aspire to be. And that well, I want to talk about -- more about the growth that we see and the growth that we are committed to as well as the path to profitability. So being profitable is not something that we are unfamiliar with. The company existed 17 years as a private company with always the balance between top line revenue and profit. As we've mentioned, we are doing these investments right now in order to be able to grow even faster, and we are growing faster than the industry. So 35% is a commitment to grow annually year-over-year-over-year. We are going to accomplish that both from our core business as well as from all the engines that Keren and the rest of the team showed you. Most of them are software oriented with a very high gross margin, something that has enabled us to commit also for the long run to 50% gross margin and 30% adjusted EBITDA. And we also mentioned in our annual earnings call that we are committing to reach breakeven by 2023 and to show profitability by '24 and that can be achieved by 3 -- for 3 reasons: one, the beautiful growth that we're going to continue to show in the revenue line, going back to profitability on the hardware with everything that I just mentioned. So keep the gross margin or reach gross margin to 50%. And then as we talked about, a more moderate expenditure after 2023 when we are done with the investment. So I'd like to summarize what we've seen today, and I really want to keep some time for questions. Dominik promised me a lot of questions. So a few key takeaways. I think that we've shown you how fast we grow, right, faster than the industry bringing ourselves or showing ourselves as the industry expert in the unattended and beyond. We're showing -- we've shown great margins and as well as the pat for profitability. We've shown the innovation and how innovative technology or our technology is innovative and top notch. And then as well as how we scale our business, right? How do we grow our customer base, the number of managed and connected devices, et cetera. And I'd like to end with 2 stories. One story is about scale and 1 story is about growth. So the first story is about scale. I joined Nayax last June, and then I've traveled with my spouse to our family at the 4th of July to Ohio. And we land in Cleveland, thank you. In the Cleveland airport as soon as we go out, I see this pharmacy vending machine. And of course, it's the Nayax VPOS device. And then I walk literally 30 feet and then this huge LEGO vending machine with a Nayax device, that was the VPOS Touch. So I call Carly and I say, "Hey, I just landed in Cleveland airport, and I've seen all of that." And she's like, "Seriously? Go further, you'll see the massage chair that we have in the corner." So that's scaling. Then the second story is about growth. It's like a month later, we as a family went to camping. And really, it was hot days in this summer in California and we're thirsty, and we went to the restroom. And next to the restroom, there was a vending machine. And I look at the vending and look, "Yes, I'm going to buy myself like this great bottle of water." And I go to the machine and it's only accept cash. And of course, I don't have any coins on me. So I looked at the vending machine, the vending machine looked at me and I walked away. Of course, I call Carly. "Hey, Carly." And she asked I was forced to take a picture of that vending machine, so she can call the operator and make sure that's going to be a cashless transaction. But when we talked about the 30% increase in sales for those operator and the 30 -- nevermind and the 20% reduction of operating costs, that's what I'm talking about. That operator has no idea how many people like me went to the vending machine and looked at it and walk away until a cashless solution was installed. Thank you.

Okay. So now we're going to move to our Q&A session. So Nayax management team. Would you guys stand in the presentation area. So you want to go ahead Joe? You want to go with your first question?

I'm close to the mic, so I'll start. Thanks, everyone, for the presentation. It was nice and in depth, and I think we all got a nice view of the business. Maybe I'll just start with a couple that kind of that came out of the slide deck while I was looking at it. First, maybe you could kind of talk about that trend in take rate and generally your pricing power in the market? It sounds like there's some leverage in the business as you get more scale and being able to get more leverage with some of the acquirers and the like? But just you could also talk about pricing power with your customers that own the vending machines, it does seem like you've got a good ROI and your ability to pass on price to them. And then secondly, just going back to the -- just a smaller question on the cohorts. I saw that 2017 cohort is stable but not growing. I assume that probably sets a lot of maybe customers in Israel, and they are just not in as much growth mode as perhaps some of the newer customers you're adding. And if we could drill down on that a little bit more, looking at some of those newer cohorts and the geos there in and their potential to keep growing from here.

Yair, do you want to start with the...

So I will start maybe with the pricing power. I think it's built in by design of our customer base because the customer base is very small merchants. And the service that we are providing them as a full solution and merchant of record enable us to blend this and simplify this. Don't forget that we're doing also what we call the virtual reconcile for him. So we're saving what we call all the issues to the one that really don't know how merchants receive the money really from the bank. It could be a weekly. And then sometimes the week is testing between the months. So sometimes they have to put ladies accounting in order to really to cut it according to the first of the month and the end of the month and to reconcile their end of money. So it's a cost and by Onyx, he's just plug into -- to log into the system of Onyx, and you can see exactly from the first of the month, the end of the month, that's what he's deserved to get and that's it. It's not dealing with the banking behind this, and we all know banking through the 50, 60 years, we are struggling with this. They are very sophisticated in the way that they charge in terms of the interchange plus, plus and the amount under whether they're passing the money into the bank what it's receiving not in terms of deliberately, but there is a lot of the issues regarding the collection from the banks and you have to really pay attention to this kind of things. We are expert on this. We have a team behind this. But the customer is enjoying for whatever you saw in the system, you got it. So the 2 parameters of the size of the customers and the service behind this is very powerful that we will not have to really -- to our belief really to give any kind of extra -- to be squeezed into the margin. It's different when you go to the big one. They are much more sophisticated in some cases. But even this, we know how to really to find a way on the volume to have what we call a few basis points behind this as a margin. So it's not the same margin for the big one. But still, the big one choose to be merchant of record under Onyx, not to go directly to JPMorgan or to the big acquirers because it's very comfortable from their perspective where we are like 20 depots and you have to really to see what's going on in each depot and you have a P&L in each -- every one of them, and we can serve them by the design of the tree inside of Onyx system. It's quite easy for operational management for Onyx.

And then the next question was around cohorts in 2017.

Cohorts.

Yes, it's definitely -- it's the small businesses towards the 2018 and the global expansion that we see where you have the -- it's between in 20, let's say, but go to 100 versus the 5 that goes to 10.

Okay. Great. Did you want to go ahead. I'm sorry if I don't know your first name. Just don't drop it.

Exactly. And I'll echo Joe's comment. It was a terrific presentation. A couple of questions. One, just at a high level because I'm trying to understand sort of the -- ultimately, the value-added services and what you're able to offer in terms of loyalty, marketing and so forth. Can you describe what exactly the data you're capturing is and who owns it? Because a typical point-of-sale transaction, there's an authorization code in the dollar amount. There's not much else flowing through the Visa network, ultimately to the acquirer and the issuer. Are you actually capturing SKU-level data? Are you integrating into ERP, inventory management systems? Just trying to get a better understanding of kind of how the ecosystem actually aggregates data and whether you own that or if you're dependent on an ERP vendor and so forth?

So we have all the data. We collect all the data. We bring the data from the machine, and we save it in our server, we back up the data. And we built, of course, SKUs on the data. We built many rules. But some of the data belongs to our customers. And -- some of our big customers we forward the data straight to them. And regarding the data, there is a lot of rules and regulation, what you can use, what you cannot use. So I think there is a lot to do in this case, and it's growing and growing. We have a department of BI in the company, more than 4 or 5 years, that's growing also, and we start to do AI in the last 2 years. That's all on the data. You want to add on that?

No, I think the data in the terms of vending machines -- sorry to say, but not all of the operators are disciplined in terms of managing the plan of the machine. So it's not really all-time relevant from perspective of using this data. What we're trying to take from the data is to move it to the mobile app and from the mobile app, we have the idea of the consumers. From our perspective, the embedded payment is person for most ID, know the consumers, associate the transaction and the location. And based on this, we are creating what we call -- immediately, what we call loyalty program behind this. And this is what we're aiming in terms of the easy way because it's -- the end of the day, it's a machine that is standing along the strategies. It's more of a test through consumers and less of what we call loyal consumers. But if it's around a hospital or around location, which is repeat consumers, you can create loyalty, you can move this loyalty. The back-end data will not help the customer to grow this business if it's not having any kind of mobile app or some platform to really to engage with the consumers. So we have built the platform in a way that you can use our platform. You can use his own prepaid card, you can use our prepaid card or directly payment with a credit card. And that creates ability to communicate with consumers repeat buying in terms of using this. The data by itself, every user globally that present his card is creating a user in our system. So I don't know you, but I know exactly this is a user that being bought -- buying a few times over here, a few times over there. This is what we're doing in terms of BI to trying to see the trends on anonymous way to see how can we work with this data. So every consumer that bought in the system is created immediately automatic user. And if you buy more, we have accumulated the transaction. When we're moving to retail, it's a different story. That's why we bought Weezmo. And there, we're going to all in, in terms of data. And that's a really different game and Weezmo is a platform of AI and a platform that we enable them to do marketing in order to really to create the ROI, the best ROI for the customer when he's doing a promotion online, you can see the offline transaction as well. By the way, in terms of Weezmo, there is a big trick regarding the Weezmo implementation. We don't need the help of any kind of a post -- usually the post provider. It was surprising to me as well, although I know retail for many years. But the post provider are really holding a very hard grip on the customer. It's amazing. They want -- the customer want to do something, the post provider say, pay me or something. It's really, very crazy to my opinion. But we can go directly with the DLL into the -- listening to the printer, and we create what we call the ability of us to extract the data as a full SKU, not OCR, a full SKU regarding the each SKU, regarding the printers, if you have a receipt, you see the receipt as if it was from the printer, it's not been OCR. It has not been camera algorithm and that's a very, very advantage of what we're doing. And then we're building the platform. They noted that this will be a center of gravity for customers in retail really to put their activity. We saw the receipt that we put H&M. It's H&M Israel. They are relying mainly on Weezmo regarding all the -- marketing activity. If they want to have a foot in the store, they'll open a new store. They have all the ability to take the look alike of what's happening between the online and offline, create a campaign on Facebook and Google, whatever they like, and they have foot in the store. It's quite amazing how fast it's operating, and you have a very effective way to increase new stores or loyalty consumers coming back because I can know by SKU, I can know you bought a white T-shirt, and I'm similar to you, and I'm not buying white T-shirt, and I can really trigger this. First, an anonymous way by the media, Facebook, Google, et cetera, or if you get us the allowances as GDPR, so we can directly address this.

No. No, it's very helpful. I mean, it's 99.9% of transactions don't have SKU data. And just as a quick follow-up to that. Maybe it's for Sagit, related to the software revenue component kind of the monthly fee. Is there a menu -- a pricing menu, meaning if you're offering certain loyalty services, if you're able to design a certain reward program, you're charging more? Or is it pretty much just sort of a fixed rate at this point. I'm wondering if there's an opportunity to actually charge more to leverage the data you're able to collect?

So usually, we try to keep it simple at the beginning, starting at the beginning, we're starting in a way that the vending operators usually doing $500, $600 per month. We're not really changing anything in the model of pricing, there are 2 tier pricing usually. One is if you just want telemetry it used to be more in the past, but now these days is less and the cashless. So the cashless and telemetry coming together -- and this is like a fixed fee, very easy to understand and very easy to charge for this. And we are encouraging the consumers -- the customer is more and more using more of this. We have a plan regarding all the pricing, what's going on because we have, I think, 25% of our transactions are prepaid transaction. And there is a lot of prepaid transactions that actually come most of the time free but touching the network. So it costs us some money regarding this. But for now, we're just letting everything go pass through the system. And when we get to the scale and relevance timing, we have a lot of vertical room to change our pricing and to increase our margin to keep our margins.

The last thing about data, also we're using data for internal and external. For internal, for example, we have a big department of monitoring, we recognize trends all the time. And if we see there is a fail over or a decrease on transaction, so we alert immediately. We have [indiscernible] 24/7 sitting in our office to recognize this trend and to monitor. Also for the operator, for the small vending machine operator, there is a lot of rules that we built during the last 17 years regarding data, such as no sales 24 hours, 48 hours of no sales and cashless data that is collected when we call it from the machine or to build a pick list according to the data. So this is some example of how we are using the data and it's increasing all the time.

Okay. Great. Next question in the back. If you guys can have to pass.

Dominick wants to ask...

Dominick Gabriele from Oppenheimer. I was just wondering about the TAM, you had some slides on TAM and obviously, cashless machines are really growing in popularity. Is there any way to provide us the amount of penetration that the industry saw of cashless machines into the total number of machines, both cashless and noncashless over the pandemic ended today?

It's very hard to collect this data. We know this from industry. So we're tracking, let's say, counter log we're tracking CPI, where the big players that already started before us, and we know approximately -- it's a catalog we all know, CPI we approximately now. And then in Europe, you don't have any kind of really public data showing what is it means in terms of open look. And there are not big players on this area. So the estimation by the research that we did is I think we'll reach out to around 6 million to 7 million totally, including prepaid when you extract -- when you exclude the prepaid, you reach around 3 million to 4 million machines, which are really clearing cashless open-loop solution. And it's based on Coca-Cola usage, Pepsi usage continue usually and the big players over here in the U.S. But I remember that we started in Europe in 2008. It was only prepaid. You can never find anyone that has this kind of cashless open loop solution. And it still is that we are really dominating this market.

Yes, what Yair is mentioning a 3 million to 4 million devices today accept cashless transaction out of probably 40 million growing into 54 million. So that's really the ratio. So it is, as we say, it's really cash is the real competitor over here and adding cashless into the cash or replacing.

Excellent. And then maybe just on the retail product side, I would imagine that the low-hanging fruit for Nayax's vendors that have Nayax machines within their retail establishment, you can cross-sell them the retail service because they already know the brand, they know who you are and what you represent. Maybe you could just talk about the eventual rollout across geographies where you are now in retail and where the types of merchants you plan to target first? And then maybe just one more here, if I may. On the loyalty business or the loyalty piece of the business rather, can you provide any additional information on the sales uplift among merchants that really see a lot of loyalty spend versus the ones that don't have any loyalty spend or very little?

So the last question is a bit hard one. I don't know if you have data around this using the loyalty spend and compare this to unloyalty user -- customers that use the loyalty is very hard. I think it's coming more -- if we want to compare this coming more when the brand is coming in, like Coca-Cola, Israel came into this and say, okay, we want to have this kind of from a brand perspective, and they utilized this in all the Coca-Cola machines. So you can see the uplift immediately in the machine. But as an operator, usually, they're using this in 2 forms, maybe, 1 is for really consumers on the go that are trying to seduce them and many time, they're using the consumers that are within the premises like in the hospital or the university and they're using this as part of what we call the ease of use for this platform. So it's not always what you call consumers like you and me, they're passing through and be seduced because it is not destination vending. It is a FMCG product usually that you're not coming too much back. But still, we can have them, what we call ready for any kind of opportunity they have. I think we have, from the Far East, a big jump that...

We have also from the U.K. There are a few case studies, you can see on our website on YouTube, you saw about 20% fluctuates. As Yair said, it's mostly for the closed environment because it's a captured audience. So what they do is they actually increase the return in consumers increase their kind of basket with that 5 plus 1 with the loyalty option. So they did -- they do see an increase. It fluctuates.

And the first question?

Was about the retail?

The retail go-to-market is, of course, what we're doing is first and try to build something that is as a platform is ready to work and testing the water, testing this in Israel. And we did test this, and we are succeeding with this. Actually, to our surprise, we almost took 25% or 20% of the market in Israel, very, very fast and we have more than 20,000 outlets that accept [indiscernible] you can see old version, you're not seeing maybe the yellow readers, but you can see [indiscernible] lot of the software that behind this is Nayax. We won the post authority in Israel with more than 2,000 devices with the small one that you can see over here called Nova 55 with a payment embedded with this. And we won the Golf, which is an apparel company with almost 300 outlets, which is a heavy one. And we have what we call a solution, which is carry also under the PC computing in terms of the CPU that runs tens of thousands of SKUs in the same place off-line or online. It's very important to be able to really to work with this with a lot of abilities of engaging with the loyalty clubs and a lot of it. Out of this learning that we have and we're still having and building what I call the cloud-based computing behind this, we're intending to go to U.K. We intend to go to Australia. We're testing this very, very light now in U.K., and we're going to go also to the U.S. Over there, we need to have partners, and that's part of the meeting that we're having with some kind of a competitor. You can imagine who, which is seeing us as a saver for them in one way because we are coming with a lot of platform solution, and they're coming with a hardware solution certified, and it's all based on Android. So this combination of these 2 companies, us and them can be a very nice go-to-market, but it's not the only one. We're looking -- today, I think if we sit over here in the next 5 years or 10 years, you'll see that most of the retailers will switch their post to android post. That's our belief in terms of what we call the SMB market. The big market will stay with PC, but the SMB will move to android post because they have to put the online, the payment, the post, the loyalty altogether in one place. And this will be either a station or could be mobile in the store or can be what we call pay ahead. All of this is a very blended territory. What we intend to do is segment by segment because in each segment, you have to have a specialty. So if we start with apparel, we'll be specialized in apparel first, and we see everything is okay. And then we'll develop what we call the segment of consumer journey, let's say, in grocery, our consumer journey is in QSR or in fine dining. All of this not as quick in terms of one software because you have to be special on this and the go to market with partners. It could be with ISO. It could be with a hardware provider. It could be with many, many of them. Since we have a nice brand and nice recognition, I don't -- we don't see any reason in this huge market of trillions of dollars and a 10 of a $50 billion just in post 10 that we don't have article opportunity to really to serve them in a better way than there used to be.

And maybe to add a little bit to it, that if you're given an example in the U.S. market, right? So if you are a small, tiny nano-merchant business, you're going to probably use the square and the cover of the world, right, on the payment processing. If you are a large customer like Walmart or Target, probably, you're going to buy from Verifone or Ingenico because you're going to write the software and the management suite. But before the pandemic, we all know that 70% of the businesses in the United States were small businesses and small can be 50 to 500 to 2,000 where in order to have a full visibility to your business, you really need to buy now 4 different software. You need to buy the hardware, the POS, and then you need -- and that comes usually just with the payment processing, so then you need the management suite and then you need the telemetry. And that's something that as we build that through the unattended business, we can now take that to the retail business. And we are agnostic to the hardware, and that's what Yair mentioned, that we can actually have some partnerships in order for them to provide the hardware on the retail business, and we provide everything else. That's the beauty of it.

Go ahead.

Trevor Williams from Jefferies. Good to finally see you guys in person. Sagit, maybe this one's for you. Just within the 35% revenue growth CAGR. Can you just give us some sense of kind of the assumptions underpinning whether that's growth from existing customers, new customers, how much you have embedded from the new verticals, retail, EVs and then any inorganic contribution that's assumed?

Yes. So thank you, Trevor. Of course, it takes into account -- the 35% takes into account everything that we've shown today. So from the 140% retention rate that we see, and that's kind of looking at the recurring revenue piece and how the customers are growing and we grow with them. The low churn rate that we see less than 3% for the last several years. Also, we grow, as I've mentioned, with the net retention rate, we really see that our existing customers is the driver, but we're also seeing new customers coming in. So if you take that into account only in the unattended and then add to that all of the new engines that we are developing that -- from the retail business to the electric vehicle to Weezmo and many more that we haven't even revealed yet that 35%, we feel very comfortable with that. So it is taking into account the combination of both. You like to say that if we don't go at least 25%, we're actually losing market share the way the business is growing today. And the numbers are showing, it's not something that happened the last year. If you show we, in purpose, show the last 5 years to show the consistent growth. Now we are growing even faster because of our ability to invest in the places -- invest faster, I would call. But our commitment is for at least 35% year-over-year.

Okay. And then just as a follow-up to that, the geographic mix, it looks like just over-year, you're growing faster in North America. So as we look to '27 and '28, is there any expectation just around what the geographic mix looks like and if that has any impact on take rates or by geography, there's any major difference in the go-to-market. And so just thinking of how that evolves as the mix changes over time?

Yes. So Carly is on fire. As you can say, yes, well, as we know, the largest market that exists out there is the U.S. market, and we feel like we're just at the beginning of the journey. It takes time to create the brand and the brand recognition for contain that has 0.5 million of devices to trust and start with you, and we see that coming all along. Carly has some beautiful other deals that she's working on as we speak. So yes, I believe that North America will grow faster than the rest. And -- but having said that, with everything that we talked about on some initiation that we can initiate on the cost structure on one hand and the selling price on the other end, we believe that it's not going to change what I've shared, that again, growing 35% and in the long term, 50% gross margin and adjusted EBITDA of 30%. Yes. Hi, Chris..

I have the mic.

Yes. You got this.

I wanted to ask a question Ramsey from Barclays, by the way. I wanted to ask a question if you could elaborate a little more on your distribution mix trying to figure out how much is indirect versus direct and also the OEM partnerships? How many of your customers have that pre-installed situation? Because I'm also trying to understand if they don't, who actually installs the hardware at that point of purchase.

Keren, do you want to?

Yes, you'll talk about the right? So installation is really easy. It doesn't matter. I mean, the OEM basically takes that on them to have your store ready for you, right? If it's the fridge that we make it to be a smart fridge with our device and they ship it and it's ready to go. In the cases when it's not for an OEM, it's literally 1.5 minutes. You can see it here. It's basically so simple. It's 2 plugs, you connect them and you're done. So it's easy. There's no installation. But in some cases, and David will probably also -- when I joined, I remember, David explained to me, you know a little bit of like what is the pulse. In some cases, only laundry, we see a bit more kind of tricky, but it's also -- we made it simpler for them to install it. So David touched on it in his presentation, get simpler and simpler because we know the majority of the machines out there. So it's not hard even when you're not through an OEM. For the mix, I think Carly showed that in her slide, I think it was like 50% enterprise and then 30% for OEMs and 20% kind of SMBs like really tiny micro and the larger think in global, you can touch on the spread. But I think we -- it's another go-to-market for us through the OEMs, but it's so simple to install that they all do it themselves. Do you want to talk. I think about installation.

No. What I'd like to say about the indirect press is actually, we're not revealing this information to the public. However, if you remember my story about the Cleveland airport, it doesn't mean -- it means that whether Carly actually contacted the airport and through the output, we got that all of the vending machines are Nayax or it was the pharmacy, the LEGO company that through that or even through a Chinese office, right, they made sure that all of those devices will come already with the specific Nayax's box. So I'd like to say we're all over the place in a good way. So everywhere you go in trying to decide what you will be your payment solution, what will be our system of choice with regard to the unattended pace, it's going to be Nayax.

Maybe just to add to this, the idea of direct undirect is, I think it's an excellent question, and we have to dig into this more and more. But what we are concerned is more of controlling the data of customers. So if it's direct, not direct he's signing with Nayax in any case. So distributors, all the payments are signed with Nayax. You can sign the services, you can sign the agreement with one hand under the local partners of Nayax, but the customer itself is always directly with Nayax. So all the customers around the globe, whether it's going direct or indirect are signing with Nayax. Everything has been legal by the payment -- by after the financial institution has to sign with us. So we are not too much concerned regarding this. It's a matter of really spreading a lot of seeds and putting this as quick as possible. And you cannot really project everything directly, but you can really say, okay, go, and there is what we call built-in margin that we split between our partners and we feel good with this. So this is a good business model. If they can take the support and they take the sales and they're doing their shows and the exhibition on their behalf, we know how much it costs. And they deserve what you call to earn this. If we do it directly with ourselves, then it will cost us more. So we're always looking at this because we know how to work direct, and we know how to work undirect. From our perspective, the more the customers -- the more distributors, more resellers, we have the business built in, and it saved us to not to go to be 5,000 employees to stay as much as we can in terms of the technology and partners while we are keeping all the relationship directly with the customers through the what you call what you call [ payment facility ]. So we're not losing sight from customers. That's the beauty about the models, so we can be agnostic to channels that will come live, which we -- maybe we don't know them.

[ Chris ] here, one more quick one for me. You mentioned early on that you had lived through some economic cycles and that the model sort of battle tested. Can you talk to us about the cyclical sensitivities in the model? Is it particularly resilient? Or are these what you're buying in these machines? Is it -- you just discretionary or nondiscretionary, how should we think about the resilience of your model?

Excellent question. Yair, do you want to take it?

I will start maybe saying that we feel so good regarding this model that is keep running against any pressure or what you call headwinds coming from the economy. Of course, when we are very much smaller, and the trends of consumers in terms of digital, in terms of cash was much less than what it is right now, it was really slowing down in terms of -- it was very hard really to sell, very hard really to succeed in terms of going further. But the more now that the cashless is prominent, and it's taking 65%, 70% and sometimes 100%, there is no -- if all of us were operator of a vending machine and each and every one of us has 20 machine or 50 machines and maybe 5 of them 10 of them are just operating in terms of cashless and the rest are cash. We all know that the time we are losing money without putting cashless. So it's just a matter of CapEx, how can -- how fast we can do it. And actually, I spoke I think in the break, I told that we also have an initiative with IoT Capital, which is company together with Bank Hapoalim , which is the largest bank in Israel to do a merchant cash in advance to help customers to really move the CapEx to OpEx basically on a way that we can do it on a global level. So we feel that we are in a way that consumers which are dictating the tailwind is with us and all the rest will happen.

And maybe to add to that. One, does a few tectonic changes that are happening, right, with EMV that if you're a customer -- if you are an operator in the United States, if you're not going to have an EMV by the summer, right, then you can't operate your business. So this is like you have to implement something otherwise, you're going to -- you're just not going to be able to -- you can close your business basically. So that's a tectonic change, right? We've seen that also when there was a 3G to 4G. That's [indiscernible] change that you must change that. And when they do that, they rethink about who do they want to change, what each of their competitors are providing from a telemetry management suite, loyalty, payment and of course, the actual device and the proprietary that comes with it. So that's one reason that we see that it's actually the battery is increasing rather than not. The second thing -- and that's obviously driven by the customer behavior change, not just EMV compliance. And the second thing is the transaction value, right? If you are now in a recession and going to a restaurant, instead of costing $40 and not cost $70, you're going to think twice if you go into the restaurant. But if you need your coke and the coke cost $1.95, you're going to probably buy that $1.95. You are not going to think twice oh, I can't afford it. The value of the transaction does drive the decision of whether you're going to do it or not. Having said that, if 15% of the workforce will be let go, then as if you have 15% less people going downstairs and buying coke. The nice part about our business is that we left there. We're actually in the semi-public as you like to call it, with more in the malls and in airports and schools and other locations. So it's very spread from that perspective, not just 1 vertical, in 1 business section that actually drives that. I will also say that even at the pandemic, right, the heart of the pandemic, what we've seen is that our retention rate didn't go there, it actually was 102. So it never went down below the 100. They kept doing their business with us. They didn't grow their business, so we didn't grow with them. But it never went down to this, and that's a great -- and the churn rate was less than 4%. So it's showing you that even with the -- everyone was in the house, this is like never been that life, right? It's something that we've never seen before. Still the strong business model that we've showed paid-off.

I also think when you're looking at the labor market, right? So when -- right now, it's been a particularly top hiring market, particularly top hiring market we've seen actually a big increase for the demand of Nayax because the more that you can have unattended, the less you're going to have to rely on employees in the field. I think we can also say that we're going to see that same kind of increase even as the economy could potentially start to tighten and you're looking at ways to increase efficiencies and increase cost is actually to then use more unattended machine as a way to actually then have to limit your extra hiring costs and labor costs.

One last comment is that a great question. It's a funny, lot of thinking -- so what else -- what another trend that we saw in the pandemic is they basically, the human mind kind of works all the time. So they reinvented themselves. People didn't go and buy -- bought coke outside, they did need to buy masks, so what we saw many times is that our operators were smart enough to kind of adopt quickly, and they started to sell masks or sell whatever they need.

Hand sanitizer and more...

Okay.

I'll just remind him -- it's an excellent story. Listen carefully, because the change of operators basically, they built like -- because of scarce of employees, it's really issue, big issues, and some of them find tricks regarding how to build satellite with inventory and serve this with the local student coming every day and filling the machine.

So you already explained that. So, yes, we have nice vending operator in Netherlands, and he operates about 1,200 vending machines. Most of them are in the gym. And we built like a battery of like 4 machines, 3 machine operate with 1 cashless device and it was surprising. And this -- it can do this thing only if you buy new machines, machine that can support doing something like that. And the last machine, it was a cabinet. It was cabinet storage that he put inventory inside. And instead of coming once a week and bring within -- with this car bring all the inventory, he actually did a deal with a student or with a gym that they're coming collecting from the storage and putting it inside the machine. So they actually save a lot of money regarding hiring more people. By the way, we heard about that also in Japan. In Japan, they try to bring more -- to help the old people. So all the ladies that living around Japan, so they do deal with them to come and fix and clean the machine and they save time and money to come twice a week if it's a coffee machine or -- it was even a key derived machine. So we're becoming creative more and more in the situation.

This has been a great day. It's a follow-up to Trevor's question. As you think about the business, you mentioned $1 billion is kind of your target. Can you talk about the business mix when you get to that $1 billion between retail and your traditional vending machines business.

Look, I think what we're saying is that we take out the 2 engines okay? I strongly believe that 40 million machines with us serving less than 600,000 machines and the tailwind that we're having and the brand that we have we should succeed because it's a huge market, okay? We're seeing the market. We're living the market 17 years, know to secure whatever we say, there is the 2 engines, okay? And actually, they are more than this in terms of what we're seeing. So I cannot say the blending what will happen. I don't know if we will be succeeding in such a fast way that will overcome the unattended. We still believe that the unattended is the core business. It's more than 90% or 90% of our business. It will be a little bit maybe less in the future. But still, this is holding us in terms of secure regarding what we aspire to do. And we don't see a reason why not to take this challenge and say, okay, we love what we're doing. We want to challenge ourselves, and we are sharing this with you. It's okay, from my perspective, because I think that we can meet this kind of a challenge and be, what we call a very, very big company in terms of the retail environment.

Okay. Any other questions? Dominick.

I just wanted to ask, there's actually an investment slide. I think it's R&D because it might be R&D expense 54 million -- 54 billion sorry, not million. So I was just curious about what those incremental investments are really focused on -- thank you -- really focused on in your business and how you plan to allocate that capital and perhaps talk about the payback periods that you think about when you make an investment in your business, how long it takes for it to pay off. That would be great.

Maybe I will start and then Sagit. There is a high-level decision. We try to put it over here that you can see there is a lot of friction regarding putting customer in the center and serving him from the onboarding through the KYC and AML through the ability of any kind of ticketing behind this and putting this in the right place that he will not feel anything regarding the whole journey we're now starting from day 1 and ending up with after a year or 2 that he has an issue. There is a layer of Tier 1, and then there is a lot of Tier 2. So imagine that you open a ticket in the business. It's running through one of the ticket systems that we're having, okay? And it has to have some policy regarding this ticket because we have like 34,000 customers. So either it is something automatically that you have to deal with? Or it is something that someone has to ready to push something regarding this or it has to be escalated. So every piece of data that you bring into the system has to be really designed where it's going and the ownership behind his who is taking care of this and the time until he will answer if he's not answering internally in this case, and he's not answering, it will jump and it will alert. All of this movement of data is a huge part of what we're calling scaling up the business. We will not cope -- if we will not do this kind of a really tight ability of us meeting the expectation between the customers and the internal employee that's serving them, okay? This is the major, what I call, big picture. Behind this, there is a lot of investment that we're doing regarding extra employees, expertise and platform. This is really the main thing. If you look about the return on this, if we keep on growing 4,000 customers quarter after quarter, it's built in. It's really built in if we not really put ourselves into a position that we'll have to have an army of support team, this is what we're trying to say because every minute of the support team is $0.95 and we know what it costs to deal with it. So if in 1 call will come to us and it'll take 3 minutes, we lost our margin in this 1 machine. We have to be very careful about the margin that we're managing and how we manage this to make it like very seamless, Amazon way if you can look at it, but not in the way that you distance from the customer. Because on the other hand, you have to keep the customer that they are really feeling that we are close to them, we solve the problem as quick as possible. I think this is a major part of the picture that we see as growing the business. And then it will ease up. '23, we are in the middle of this intense investment putting this together. You want to add to this?

No.

Okay. So we still have -- go ahead, Joe. Please go ahead with your question.

Just a couple of quick follow-ups. I was just curious, there was some commentary about that Australian acquisition that you did, the distributor and then it grew several fold after that. Maybe if you could go into a little detail on why it grew so much after you acquired it and if distributors are a good M&A vehicle, why perhaps you're not out there buying a lot more right now? And then maybe just a quick follow-up after.

It's an excellent question because actually, we are entrepreneur and the way that we start sometime is opportunistic. And to reach out to Australia was very hard to us. We know that this is what you call we look about Australia, U.K., U.S. language is the same, maybe culture is different. But from our perspective, Australia is affected more from the U.S. So we have to run to Australia. We feel that this is the right way to find a person to deal with this business at the stage that we are growing with the time and adjusting ourselves is a big burden. It was very, very hard to deal. And we took some friends that build the business, started what we call seeding the seed in Australia. But it was a one man too much old. He was 60-something age. He cannot really cope with all of this. So he came to us after, I think, 3, 4 years, and he said to us, year, David, please take me off the hook. It's too much from our business. I'm not -- I want to go to pension. I don't want to stay because after we bought them with a very friendly way, it's not really something he asked and we paid some multiple. It was very, very fair deal. We grew, I think now we are -- how many people in Australia 20?

25.

25 People. And this is because we are serving more than 35,000 devices. When we bought it, it was like 3,000 to 2,000 devices. So this is a -- we know that this is a business that can grow. But you -- of course, you have to invest, you have to -- if you want to be serious in. We have the same thing in the opposite thing in Poland. He's a great guy in. I don't want to buy him. He is having everything he invests everything fine with me, because every transaction and every service that he's doing, we're sharing, it's okay. But he is investing, and we know we always say that the mechanism we're ready to buy, not to buy the distributor is whether he's growing, not growing because growing will really say what is investing. And they find a way they say, okay, they all know, by the way, I think the essence of this, they all know that we will buy them. They are really building their business and the exit will be directly with not. And we're not abuse this. We'll be very fair on these kind of things.

Maybe to mention, Carly, that the U.S. business was built the same. We've bought the...

Yes.

Yes, the U.S. business we bought in 2014, we thought that we had a home run with combination of a second partner -- second leader in the coin mechanism, competing with CPI. But we found out very fast that this is not going to work. We did a very bad distribution agreement, and we had to really pay a lot according to our measurement and we paid almost $5 million, and we were private. We raised the mezzanine loan for this kind of -- for the deal, and we bought them and then Carly stepped in. And the rest is history.

And then maybe just one follow-up. There's a growing number of stocks that trade in the U.S. now that are a combination of payment volume and recurring software revenue. And so it would be helpful if we could see a little bit more granularly or in a little more detail into each of those 2 buckets because that's really where your valuation is going to come from, right, not necessarily from hardware sales. So if we looked at software and if we looked at software and if we looked at payment volume, is there any other metrics you can provide us on which one is growing faster? Potential margins in each of those and perhaps how each of those contributes to net revenue retention?

So -- good point, Joe. So we do provide this information more on the MD&A and the financials. We'll continue to provide more as time progress. From a revenue -- from a recurring revenue mix, today is around 50-50. It might be -- it's around 50-50 from processing and from the SaaS subscription base. It used to be higher on the connectivity on the SaaS. But now as you can see, the growth that we've -- that we see in the number of transactions going through our devices and the value of the transaction growing also the processing side of it is growing. The processing fee today is growing faster than the connectivity because the connectivity is per device, right? So if we have 553, that's the number of is the per device that we that we charge. When it comes to processing, it's the higher the processing we do, right? The processing fee that we take is higher as well. If you ask me how it's going to be in the future, I believe this processing will continue to grow faster than connectivity and -- but having said that, there are a few significant deals that we are cooking right now that might keep the percentage the same for the next couple of years. From a gross margin perspective, we always talked about that. It's definitely there. On the connectivity, we have around 80% gross margin. And on the process fee, it's in the mid-30s and working all the time to increase both.

Yes. We still have time for more questions if don't feel shy. Please in the front.

That we're on track in vision and I was wondering where the $5.5 million loan was on your balance sheet in the first quarter?

Yes. So it's on track. On track innovation is on track. And the acquisition is on track. We've announced it in January. We've provided a $5.5 million loan, it's in our balance sheet as an asset. And I think it calls -- in IFRS, it calls something for associate or something weird like that. I'll show you in a second. And then in April, we gave another $1 million. That money was used both for paying their debts as well as continue their operation. And then once the acquisition is complete with all the regulation and statutory requirement, which is supposed to be on June 10, we will pay the shareholders $4.5 million and thank you. And then that will be completed. So that's from that perspective. We believe that this acquisition is important for us, especially in geographies we are less familiar with or successful like Japan. It also has a very strong R&D and actually support resources, but also the petroleum business that is very strong in South Africa. Yes, Chris.

[indiscernible]

Yes. So this is where -- Yair, usually speak, but I'll be happy to speak on his behalf that on the unattended side, we believe that we have the technology that we need. So most of the acquisitions that we've done recently all thinking about is to increase our customer base and number of connected devices. We are looking -- unfortunately, there's not a lot of players in the field. However, we are looking at that all the time. There's a few conversations that not necessarily will mature from small players in countries in Europe or even in Asia, et cetera. When it comes to the other engines, as you saw, we will buy the feature of the functionality that we need, we actually hear in every situation, we decide whether it makes sense to make or buy. And also if there's available and a great solution like when we did when we bought Weezmo or Tigapo or other places that we've invested, we will make the investment and buy rapid than develop it ourselves. So this is a little bit on that front.

Any other questions?

Thank you so much.

Thank you. So...

Go ahead.

Okay. So that wraps up the formal presentation you expect -- that wraps up the formal presentation. We'll now move to lunch. And as I said earlier, lunch is to the right, whichever door you go out to, it's the boardroom, and we'll be there until 12:30, and we've got management at different tables. So please feel free to rotate and enjoy lunch and ask lots of questions. Again, the presentation as well as the replay of this -- the formal presentation and Q&A will be on the ir site ir.nayax.com, probably about an hour after we conclude here. Thank you again for your time and really appreciate you guys coming out given the busy week. Thank you.