Nayax: Steady Progress Toward 2028 Profit Targets

Nayax's Q2 results reinforce a positive investment thesis, demonstrating robust customer engagement with 123% Net Revenue Retention and 24% customer growth to 105,000, alongside a 320 basis point sequential improvement in gross margin signaling operational leverage. Strategic initiatives, including embedding 100,000 UNO Mini readers via a partnership with Autel Energy, are expanding its sticky recurring revenue streams. The company projects significant long-term growth, targeting $1 billion in revenue and $150 million in free cash flow by 2028, leading the author to maintain a Buy rating with a $48.50 price target, based on a 12x-20x free cash flow multiple implying a 2028 valuation range of $1.8 billion to $3 billion.

Analysis

Nayax's Q2 2025 results demonstrate strong underlying business fundamentals, reinforcing a bullish thesis centered on customer loyalty and expanding profitability. Customer growth remains robust, increasing 24% to approximately 105,000, while a low churn rate of under 3% highlights the stickiness of its services. Critically, a Net Revenue Retention (NRR) of 123% indicates that the existing customer base is significantly increasing its spending, providing a powerful organic growth engine. The company is also showing signs of operating leverage, evidenced by a 320 basis point sequential improvement in gross margin, which supports the plausibility of its long-term target of a 30% Adjusted EBITDA margin by 2028. Strategically, Nayax is successfully executing a dual-pronged growth approach, complementing its direct sales with top-down OEM partnerships, such as the agreement with Autel Energy to embed 100,000 readers by 2026. This integration strategy creates high switching costs and secures long-term recurring revenue streams from software and payment processing. The valuation case is built on management's 2028 guidance for $1 billion in revenue and $150 million in free cash flow, justifying a 12x-20x FCF multiple that positions the company's future enterprise value between $1.8 billion and $3 billion.

Key Decisions for Investors

• Investors could consider a long position based on the strong customer metrics and clear path to profitability, viewing it as a multi-year holding contingent on management executing its 2028 financial targets.
• It is critical to monitor sequential gross margin expansion and Net Revenue Retention figures in subsequent quarters as primary indicators of sustained operating leverage and the health of the install base.
• Pay close attention to announcements of new OEM partnerships, as the success of this top-down integration strategy is a key catalyst for accelerating market penetration and locking in future recurring revenue.
• Investors should recognize that the valuation is forward-looking and benchmark Nayax's P/FCF multiple against peers like PayPal and Adyen to gauge if execution risk is appropriately priced in as margins develop.