Financial Performance - The company reported net losses of $15.9 million, $37.5 million, and $24.8 million for the years ended December 31, 2023, 2022, and 2021, respectively[47]. - The total revenue increased from $119 million in 2021 to $235 million in 2023, representing a compound annual growth rate (CAGR) of 41%[205]. - The company's gross profit rose from $48.1 million in 2021 to $88.3 million in 2023, achieving a CAGR of 35%[205]. - The dollar-based net retention rate was 144% as of December 31, 2023, compared to 131% in 2022 and 137% in 2021, indicating strong customer loyalty[204]. - The company has incurred and will continue to incur significant compliance costs due to U.S. and Israeli reporting requirements[152]. Customer Growth - The number of customers increased from approximately 14,000 in 2019 to approximately 72,000 as of December 31, 2023[49]. - As of December 31, 2023, the company served approximately 72,000 customers, up from 47,000 in 2022 and 30,000 in 2021, indicating significant growth in customer base[199]. Market Conditions and Competition - The company experienced significant revenue growth but faces uncertainties in sustaining or increasing this growth due to market conditions and competition[47]. - The company faces significant competition in the payment processing market, requiring constant updates to its services[41]. - Future revenue growth depends on the successful development and introduction of new solutions or technologies[55]. - The attractiveness of the company's payment processing services depends on its ability to integrate emerging payment technologies[56]. Operational Challenges - Operating expenses are expected to increase moderately over the next several years as the company hires additional personnel and expands its operations[48]. - The company relies on a limited number of suppliers for key components, exposing it to risks of shortages and price fluctuations[44]. - The global shortage of certain components has adversely affected gross profit rates from the sale of POS devices since Q3 2021[45]. - The company faces risks related to supply chain disruptions, including industrial accidents, natural disasters, and capacity constraints, which could negatively impact its financial condition and results of operations[60]. - The company relies on two manufacturers for the majority of its finished POS devices, and any disruption in these relationships could adversely affect customer demand and operational results[59]. Regulatory and Compliance Issues - The company is subject to substantial governmental and commercial regulations across its areas of activity, which could lead to significant regulatory consequences if not complied with[124]. - The company is licensed as an Electronic Money Institution (EMI) in the EU, requiring it to maintain initial capital of at least EUR 350,000 and comply with ongoing regulatory obligations[128]. - Compliance with evolving privacy and data protection regulations, such as the California Consumer Privacy Act (CCPA), may increase operational costs and legal risks[87]. - The company is currently under scrutiny from the ICA regarding its acquisition of OTI, which may result in material fines[125]. Cybersecurity and Data Protection - Information security failures could adversely affect the company’s reputation and financial condition, given its role in processing sensitive customer data[79]. - Cybersecurity threats include advanced persistent threats and sophisticated attacks, which may lead to unauthorized access to sensitive data[81]. - The company is exposed to risks from technical malfunctions and cyber-attacks that could disrupt its services and affect business results[101]. - The company operates under strict information security standards and employs advanced security technologies to protect sensitive information[80]. Strategic Initiatives and M&A - The company announced the acquisition of Retail Pro International for an implied enterprise value of $36.5 million, following a previous acquisition of On Track Innovation Ltd. for approximately $10 million[65]. - The company is actively engaged in M&A activities to expand its business, but such transactions may not achieve strategic objectives and could disrupt ongoing operations[64]. Economic and Geopolitical Factors - The company is currently affected by the ongoing war in Gaza, which may disrupt operations and financial results in material ways[176]. - The duration and implications of the war are uncertain, potentially impacting the company's business operations and financial condition[177]. - The war has led to negative macro-economic effects, including inflation and depreciation of the Shekel, which could materially impact business operations[179]. Intellectual Property and Legal Risks - Intellectual property protection is crucial for the company, as unauthorized use by competitors could harm its competitive position[109]. - The company may face significant financial and managerial resources expenditure in defending against intellectual property infringement claims[111]. - The company is exposed to potential liability for intellectual property infringement due to indemnity provisions in its agreements[123]. Future Outlook and Growth Potential - The total addressable market for software and payment processing solutions is estimated to be $3.6 billion by 2025, with potential growth to $9.0 billion in the long term[218][219]. - The global number of automated self-service machines is projected to grow at a CAGR of 6% from 2022 to 2025, with cashless penetration expected to increase from 24% in 2021 to approximately 41% by 2025[215]. - Micro market solutions are projected to see sales of $4.1 billion in 2022, an increase of 24.2% from 2021, highlighting growth in this segment[221].
Nayax .(NYAX) - 2023 Q4 - Annual Report