Nayax Ltd. Ordinary Shares M&A announcement

Hi, everyone. Welcome to the call today. With me is Yair Nechmad and Sagit Manor, the CEO and CFO of Nayax. We are really excited today to talk about the proposed acquisition of IPS Group, which is part of a strategy that we've been working on for a while now. I've been talking about this, as well as Yair and Sagit, on how we want to transition and move more into, and accelerate more into the mobility space as one of the divisions. The purpose of this call is to give some key highlights in terms of the proposed acquisition, why we're doing this, what the strategy looks like going forward for Nayax, and what it means for us from a financial point of view. With that, I'm going to start with Sagit, and let's begin.

Just one second. Okay. Can you see my screen?

Yes. Okay. Good morning, good afternoon, everyone.

We are excited to share about the acquisition or the definitive agreement that we've entered into with IPS. I'll share a little bit about the transaction summary. IPS is a known company in the parking space, in the mobility parking space, we should say. The technology goes, and their customers are municipalities, private operators, and universities. They founded in 2000. They're in San Diego, where Yair and I are currently here as well. They have more than 550 customers. They have more than 250,000 parking space. Most of their operation is in the U.S., around 80%. However, they were able to expand into the U.K., Ireland, and Canada. A little bit about their financials. The expected revenue for 2026 is over $90 million.

They have a very strong recurring revenue mix, over 60%, representing 20% organic revenue growth, which is really nice, and we like that, compared to obviously 2025. They have an adjusted EBITDA or expected adjusted EBITDA of $21 million. They have a very strong free cash flow generation and around 80% conversion rate. A little bit about the transaction. The price will be $350 million on a cash-free, debt-free basis. It represents a 17x multiplier on 2026 adjusted EBITDA. However, if we take into account the really high and nice synergies that we've come into, when we did the analysis and we came into the realization, we believe that there's a 12x multiplier, and I'll talk about the synergies later. Transaction will be mostly funded by cash on hand. However, there's $150 million new committed debt that we're going to take for it.

The leverage is expected to be, at the time of the acquisition, around 3.8x. However, we're expecting to improve it significantly by the end of 2027. IPS management is planned to continue to manage the company and the business together with us, obviously after the closing, and we expect that the closing will be around Q4.

Yair? Hi. Can you hear me?

Yes. As Sagit said, we're very excited about these acquisitions, and still it is signing but not closing, but we believe that everything will be on track.

The thing that Aaron and we thought, which is reasonable to take this acquisition, is mostly because we're seeing a great TAM of $85 billion in terms of potential. In strategy, to my opinion, there are always two layers. One is, I'm calling this, the right to play, and the other is the right to win. I think Nayax as a platform has what you call a lot of access to right to play, but to become what you call right to win, you have to really hold something very strong and to scale with this.

I think this deal or this transaction help us a lot to build ourself into a position that will be one of the leaders in the parking industry, starting from the U.S. and then moving onwards to the rest of the world. I think as we see ourself as a payment company and we see ourself as a payment platform, plugging in a company like this makes a lot of sense to our belief regarding the ability of us exercising payment within this customer base. Taking from the other side of the equation, taking the customer motivation, we see a lot of customer motivation to have a one-stop solution, putting a lot of services into one position. I think this is a very strong position for Nayax to have the right to play with the right to win and take a front seat in this market.

It is, to my opinion, not a very high complicated in synergies because it is payment synergies, and payment synergies are the core of our business. We actually were lucky that IPS was not really flying on what you call total ownership of payment. So adding up a payment from Nayax side and adding up the IPS customer base make a lot of sense that this one plus one will be much more than three and four. This is, I think, the summaries of what I believe make a lot of sense to this acquisition.

Maybe just one thing to add here is that, first of all, this is aligned with our progress towards the $2 billion revenue company we are inspired to build with 50% margin and 30% adjusted EBITDA. Their financials and their strong financials are creative to our gross margin, to our adjusted EBITDA margin, to the adjusted EPS, and to the free cash flow conversion. So very strong financial profile and creative to ours.

I think this is, again, a summary of what we see it is and how we see the market. It is always important for us to see that we are having what you call a strong position and a long-term view on the TAM, and that we are coming to play in one of the leaders in the market. You can see over here that we are now growing to a TAM of $342 billion, which is amazing to my opinion. The ability of us to accelerate the growth of the company with the 20% organic growth that they have and the 25% organic growth that we have, and the extra mile that we are looking to unorganic growth, it fits to our strategy and to make this business very strong and successful from our perspective. I want to add one more thing that important to emphasize.

In the payment, we all see what is going on regarding the cash conversion to cashless and the cashless and mobile. We believe that the combination of what we have in terms of cashless card present and cashless card-not-present on top of their customers will be very prominent in their business.