Nayax - Q4 2023

Transcript

Operator (participant)

Hello, everyone, and welcome to the Nayax Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the speaker's prepared remarks. As a reminder, this conference call is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press Star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing Star and zero. I would now like to turn the call over to Mr. Aaron Greenberg, Chief Strategy Officer. Please go ahead.

Aaron Greenberg (Chief Strategy Officer)

Thank you, operator, and everyone for joining us today on this conference call. With me on the call today are Yair Nechmad, Nayax Co-founder and Chief Executive Officer, and Sagit Manor, Chief Financial Officer. Following management's prepared remarks, we will open the call for the question and answer session. Our press release and supplementary investor presentation are available on our Investor Relations website at ir.nayax.com. As a reminder, during this call, we'll be making forward-looking statements. All forward-looking statements on our call today are based on assumptions, and therefore subject to risks and uncertainties that may cause results to differ materially from those projected. We have no obligation to update these statements, except as required by law. You can read about these risks and uncertainties in our supplementary investor presentation released earlier today in our regulatory filings. In addition, today's call will include a discussion of non-IFRS measures.

Management believes non-IFRS results are useful in order to enhance our understanding and our ongoing performance. However, these measures should be considered as a supplement to, and not as a substitute, for IFRS financial measures. A reconciliation between Nayax's non-IFRS to IFRS measures can be found in our earnings press release issued earlier today. All key performance indicators are intended to evaluate our business and properly measure factors in a macroeconomic environment to guide and support our decision-making. These key performance indicators may be calculated in a matter different from the industry standards. Finally, please note that all figures in today's call will be reported in U.S. dollars unless stated otherwise. Yair will start the call with key financial and operational highlights. Following that, Sagit will go through the details of financial results and discuss the outlook.

With that, I would like to turn the call over to Nayax's CEO, Yair Nechmad. Yair?

Yair Nechmad (Co-Founder and CEO)

Thank you, Aaron, and thank you everyone for joining us today to discuss our fourth quarter and full year 2023 earnings. 2023 was an outstanding year for us, and was a key inflection point in terms of profitability and the advancement of our strategy into the next stage. After years of heavy investment in R&D and operational growth, Nayax ended the year on a strong trajectory that will continue to accelerate for the years to come, both in terms of revenue growth and profitability. Revenues for the fiscal year 2023 ended at $235.5 million, up 36% over last year. Positive adjusted EBITDA reached $8.2 million versus a negative adjusted EBITDA of $12.7 million last year, a remarkable improvement of $20.9 million in our profitability.

When we presented at our Capital Market Day in early 2023, we shared our long-term target of hitting $1 billion in revenue by 2028, which represent a compound annual growth of 35% a year. In 2023, our results demonstrated that we are very much on track, reporting a 36% year-over-year growth. Furthermore, we are proud that our adjusted EBITDA for the fiscal year 2023 was ahead of our guidance range, eclipsing more than $8 million versus our estimated range of $4 million-$7 million. For those who are new to our story, Nayax is a SaaS-based company at its core, providing automated tools that allow retailers to offer their customers payment and loyalty program in a manner that is a plug-and-play.

When Nayax started its business as a payment processing company focused on solution for vending machine, Nayax now proudly cover over 45 self-service end segments and counting. Our vertically integrated platform seamlessly adapt our products and services to any new payment market opportunities via customization and without needing to do substantial R&D work. Our ability to provide payment and automation tools at a global level to so many end segments built on the same platform is a differentiator and competitive moat for Nayax, that competing payment companies have a difficult time to achieve. We will continue to innovate, with our goal being to provide a one-stop end-to-end solution for retailers for anything related to payment and loyalty, regardless of their end market.

Over the course of this call, I would like to focus your attention on the following topics: our investment in automation and improved operational efficiency, the positive trend in recurring revenue and margins, the Retail Pro acquisition and further strategic M&A goals, our growth in device and take rates, and our progress on our new growth engine, including our loyalty product, CoinBridge. First, I would like to talk about how investment in automation and improved operational efficiency is paying off faster than expected. Excluding employees joining us from the acquisition of Retail Pro, our headcount remains similar to that at the end of 2022 at around 800 employees. We believe that we have the foundational team in place to continue to scale in line with our long-term plan, without the need to significantly increase headcount.

This is due to the substantial automation we added to our operation, including onboarding and our sales cycle. Additionally, in 2023, we worked diligently to improve our efficiency and lower the time needed to successfully handle customer service requests. We saw large success in reducing customer service time, largely due to creating a dedicated service center in Romania, which has improved our efficiency. Over the coming years, we will continue to build automation features, including leveraging some of the latest AI technology, that will eventually make it only necessary to call for our customer support in a small fraction of more complex situations. Now, I would like to talk about positive direction of our recurring revenue and margins. It's important to highlight that our net retention rate continue to remain high, which is a strong tailwind for our continuing profitable growth.

Our Dollar-Based Net Retention Rate was 144% in Q4 2023, which is holding similar to the previous quarter. With a large percentage of our growth coming from expanding businesses with existing customers, we see flywheel effect from our investment over the past several years, while also bringing substantial new customer growth. The current revenue from SaaS and processing fee grew 44% year-over-year and continue to grow as a percentage of our total revenue to 64%. As for margins, both margins are improving in both hardware and software. This is due to automation processes improvement in our supply chain and other operational efficiencies. Sagit will go into greater detail regarding that later on.

Now, I would like to provide an M&A update and focus initially on the acquisition of Retail Pro International, a retail point-of-sale software company that closed at the end of last year. This acquisition solidified our strategy of growing our end-to-end payment and loyalty solutions in the retail space, working on adding automated products such as self-checkout line. Only a small fraction of Retail Pro customers utilize payment or loyalty through its platform, and therefore we see significant synergies as we vertically tie the two platform together. The 7,500 active customer added through the acquisition will not only be targets of our payment and loyalty platform, but we will also focus on cross-selling other solution of our platform, such as EV charging and parking.

While Retail Pro International did not bring a material impact in 2023 due to the closing near year-end, we expect the company to contribute meaningfully to our financial results in the coming years. Looking ahead, we expect to continue to make targeted strategic acquisitions where it makes sense for the company. Our M&A strategy is focused on three pillars: regional expansion into new markets, consolidation of channels when it strategically makes sense, and acquiring technology that will bring significant synergies. I would now like to move to our growth in device count and take rate. At the end of 2023, we managed to break the 1 million managed and connected devices milestone, which is a big achievement for our team. This is a growth of 171,000 devices, or 44% year-over-year, which includes both organic and inorganic growth.

Additionally, our total transaction value rose by 43% between Q4 2023 and Q4 2022 to $975 million, and we continue to see an increase to our take rate throughout the year. We increased it to 2.66% in Q4 2023, versus 2.47% in Q4 2022. Nayax is a fast-growing global financial institution with high pricing power, and our increased scale is providing an ability to negotiate better processing fees. As we continue to scale, we expect to improve our processing cost while providing us with additional sales channel through acquiring partners. Lastly, I'd like to provide our progress on our new product initiative. We have spent significant amount of time over the past couple of years highlighting new product where we see rapid growth potential, and I'm pleased to say that they are where we expect them to be.

One of the fastest growing unattended segments for Nayax is the EV charging space. Payment solution for the EV charging space is a strategic end market in our self-service business, where we see a significant total addressable market growing over the next several years. EV charging is a complex market, where Nayax thrives, being one of the only global supplier that can easily integrate its card-present payment solution in this segment. Nayax investment in the development of payment infrastructure on EV charging and related protocol over the past several years paid off in 2023, with year-over-year growth in payment devices in this segment growing rapidly. Nayax is jumping on the opportunity to play in the clean energy transition and expect to capitalize on it.

To date, several dozens of OEM manufacturers in the EV charging segment are integrated with Nayax payment devices, and that number will continue to grow due to our strong reputation in this space. I would now like to provide an update on CoinBridge, our patented platform developed to seamlessly convert loyalty assets such as points, miles, stars, vouchers, and gift cards, and other non-fiat currency into a real transaction at any shop worldwide. CoinBridge has been developing on the R&D side at a rapid pace. As promised, CoinBridge generated some initial revenue in Q4 2023, and we expect to see this solution as a significant asset for our company and an important revenue generator in the future.

As a reminder, CoinBridge is a technology platform that Nayax built from ground up, allowing loyalty clubs and retailers to offer their customers a greater freedom of choice by redeeming their loyalty assets anywhere outside of the brand, as a seamless payment method anywhere. CoinBridge technology is seamlessly implemented into existing loyalty app, turning those into a loyalty e-wallet, providing retailers with a new tool to better engage customers, increase loyalty, basket size, and their revenue. Coupled with new transactional data outside their brand, they now can enjoy new insight and optimize on customers' behavior and needs. We have already managed to announce a strategic partnership with Giift, a global leader in loyalty technology solution, as a major distribution channel and expect to have exciting development over the coming quarters. In summary, we highlighted many important drivers of profitable growth for Nayax.

A significant investment in automation and improving our operational efficiency is paying off faster than expected. Margins in both our hardware and software side of the business continue to improve, with strong operational leverage in our business. We are at that key inflection point for strong and profitable growth into the years ahead. Our technology platform allows us to not only expand within the regions we already operate in, but also expand to new regions with limited additional investment. In 2024, we expect to make a concerted effort to expand into new regions such as Latin America, where we see tremendous opportunity for cashless solutions. Our strong operational leverage allows us to continue to expand profitably, with our ability to utilize our technology on a global platform being a differentiator that will carry our company into the years ahead.

I would like to now turn it over to our CFO, Sagit Manor, who will go into greater detail on the businesses' 2023 financials and 2024 outlook. Sagit?

Sagit Manor (CFO)

Thank you, Yair, and good morning, good evening, everyone. It's a pleasure to welcome shareholders, analysts, and member of the Nayax community to our earnings call today. As we reflect on the past year and look forward to the future, it's clear that 2023 has been a pivotal year for Nayax. Our journey through the year has been characterized by our vast growth, strategic expansion, and a strong focus on innovation, which have collectively propelled our company forward. We ended the year with revenue growth of 36% over last year, and with an exciting beat on Adjusted EBITDA for the fiscal year 2023 of $8.2 million, versus our guidance of $4 million-$7 million. We are focused on profitable growth as we move forward with reaching our long-term annual revenue growth target of at least 35%, while improving the bottom line.

I'm going to walk you through some key financial highlights, and then share some color on our financial outlook. Starting with an overview of our annual performance, 2023 has been a remarkable year for our company. Our total revenue for fiscal year 2023 reached $235.5 million, an increase of 36% from 2022, with high dollar net retention rates of 144%, showcasing the strength and scalability of our SaaS-based business model. This reflects our deeper penetration into existing markets and successful entry into new ones for the self-service or unattended industry. Our expansion of our core business line and our growth engine allowed us to tap into new revenue streams and bolster our market position. Recurring revenue, a critical component of our business model, saw a significant increase, reaching $161 million, an increase of 44% year-over-year.

As a reminder, recurring revenue is comprised of our SaaS subscription and payment processing fees, both the bedrock of our platform. This represents 64% of our total revenue as we continue to drive a larger percentage of our business from SaaS and payment. Our Q4 2023 recurring revenue were $42.2 million, compared to $29.6 million in Q4 2022, over 42.6% increase. The increase in the recurring revenue is a testament to the high dollar net retention rate of 144%, as well as the compounding effect of continuing to add new connected and managed devices. We also saw a high increase in transaction value, growing to $975 million in Q4 2023, from $681 million in Q4 2022, a 43.2% increase into margin.

Over the past year, we have made significant improvements to our hardware margins and supply chain infrastructure. As a result, overall gross margins continued to improve. In Q4 2023, gross margins were 40% compared to last quarter of 38% and 33% in Q4 of 2022. In Q4 2023, we saw another increase in our hardware margin, reaching 24% compared to last quarter of 21%, with our 2023 full year hardware gross margin at 19%, which was above the annual target range of mid-teens communicated earlier this year. Our recurring revenue margin stayed high at 49% in Q4 2023.

Looking past the gross margin, the high operating leverage in our SaaS-based business model demonstrated its power, with Q4 2023 OpEx as a percentage of revenue, improving significantly, down to 41% of revenue, compared to 47% in Q4 2022. We expect this ratio to continue to improve in 2024 as we continue to automate processes and scale our SaaS and processing revenue. As mentioned, our adjusted EBITDA for 2023 was $8.2 million, marking a $20.9 million improvement from 2022. It also represents 34% in adjusted EBITDA on the new revenues in 2023, which exemplifies the direction we are heading, which is to hit 30% adjusted EBITDA by 2028.

Q4 2023 Adjusted EBITDA was $4 million, compared to -$2.5 million in Q4 2022, which represents a $6.5 million improvement. This achievement is particularly noteworthy as it reflects our commitment to operational efficiency and cost management, even as we continue to invest in growth opportunities. Our customer base has grown significantly, reaching more than 72,000 customers at the end of 2023. In Q4 2023, total customers grew by 53% compared to Q4 2022. The number of customers includes 7,500 Retail Pro customers, included for the first time in Q4 2023. This growth displays our expanding footprint and the trust that the new customers place in our platform.

As Yair mentioned earlier, we have put an emphasis on customer success with investment in customer support and success teams to ensure our customers can maximize the value they derive from our solution. The number of Managed and Connected Devices is a testament to our scale and the robustness of our platform. By the end of 2023, we managed over 1,044,000 devices, marking a 44% increase year-over-year. The number of devices includes 130,000 generated by Retail Pro, included for the first time in Q4 2023. This metric is crucial as it directly correlates with our ability to generate transaction-based revenue and underscores the scalability of our infrastructure. Our financial health remains sound. Operating cash flow generated $8.8 million in 2023.

Our cash and cash equivalents stood at $38.4 million at the end of 2023, with overall debt ending the year at $62.8 million, out of which approximately $20 million were used to acquire Retail Pro International. Looking ahead, we plan to continue our disciplined investment in R&D, marketing, and sales to fuel our long-term revenue growth target of at least 35% a year, while continuing to improve our adjusted EBITDA margin. Let me finish with our outlook for 2024. As we look to 2024, we are excited about the opportunities that lie ahead. We anticipate revenue to grow at least 38% and be in the range of $325 million-$335 million, reflecting our confidence in the underlying strength of our business and the efficacy of our growth strategy.

Focus will remain on increasing our market share, driving innovation, and enhancing our operational efficiency. We expect our gross margin to improve as we continue to benefit from economies of scale, pricing strategies, and cost optimization initiatives. Our improvement in hardware gross margin back to the pre-pandemic time, in the range of 25%-27%, will support the overall margins improvement. Our goal is to achieve an Adjusted EBITDA of $30 million-$35 million as we continue to scale business with strong operational leverage. Finally, we expect to be free cash flow positive for the 2024 year as a whole. As for long-term outlook, we are reaffirming our outlook and remain confident about reaching these targets. We expect our revenue to continue to grow at least 35% CAGR, as we target $1 billion of revenues in 2028.

Our gross margin in the long-term target is expected to reach 50%, which we aim to reach through operational leverage in the business by providing leasing and rental options for hardware, increasing software offerings, and adding embedded finance services to our product suite. Our long-term Adjusted EBITDA margin guidance target is set around 30%. In closing, I would like to express my sincere gratitude to our employees, whose dedication and hard work have been instrumental to our success. To our customers and partners, thank you for your trust and collaboration, which inspire us to continue innovating and striving for excellence. And to our shareholders, thank you for your continued support and confidence in our vision and strategy. 2023 has been an extraordinary year for Nayax, and we believe it's just the beginning.

We are well positioned to capitalize on the opportunities ahead, and we remain committed to delivering long-term value to all of our stakeholders. Thank you for joining today's call. We look forward to sharing our continued progress in the quarters to come. I would like now to turn the call to the operator, so we can take your questions. Operator?

Operator (participant)

Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. Our first question comes from Dominick Gabriele of Oppenheimer. Please go ahead.

Dominick Gabriele (Executive Director, Senior Analyst, Fintech & Specialty Finance)

Hey, good morning, everybody, and obviously great results with really strong guidance here. I wanted to talk to you about. It looks like the incremental revenue that you are seeing versus at least what we were forecasting in 2024 is actually moving right down to Adjusted EBITDA, which is excellent. Basically a $10 million increase across the board. Is there something specific that you're seeing on the revenue growth leading you to 38% versus 35%? Is that the acquisition? How should we think about that extra kind of outperformance in the revenue growth versus your long-term target? And then I just have a follow-up. Thanks.

Sagit Manor (CFO)

Hey, Dominic, and thank you for the question and for joining us. So regarding the 38% increase year-over-year as in overall, yes, it is organic and inorganic. Inorganic will be still a small portion of it, yet, helps us to increase our guidance from a revenue perspective. On the recurring revenue, or in general, the growth in the revenue and how that's being cascaded to the bottom line, you're absolutely right. I mean, we've also showed that in 2023, how the incremental revenue of $60 million compared to last year, right, showing a $20 million improvement in the adjusted EBITDA, around the 30% adjusted EBITDA that we are aiming to achieve, as we grow to a billion-dollar revenue company.

Dominick Gabriele (Executive Director, Senior Analyst, Fintech & Specialty Finance)

Great. Great. And, you know, just maybe some more detail on, Retail Pro. It looks like it added 130,000 devices, which is pretty great, and congrats on the over 1 million. I know that's been a really big target for you guys over the last few number of years. Maybe just talk to us about, you know, if there's any different economics that come with the Retail Pro platform, or does it pretty much match the long-term, you know, profitability metrics that you're targeting within the total business? Thank you.

Aaron Greenberg (Chief Strategy Officer)

Thank you, Dominic. This is Aaron Greenberg, speaking. Thank you for the question. So with regards to Retail Pro, we see Retail Pro as a similar business model in the sense of a POS-based platform. It's a software-driven business that charges a monthly subscription fee, similar to our business model. The key differentiator, at least historically, prior to the acquisition, is that Retail Pro did not do their own payments platform. While they had a partnership in the United States, for a, you know, referral-based partnership, essentially for payments, they never did payments themselves as a company, and that's where we see the most synergies coming from this relationship as we go forward.

And should see some significant synergies over the coming years as we are able to move our payments platform across their 130,000 POS systems and the thousands of customers that they have.

Dominick Gabriele (Executive Director, Senior Analyst, Fintech & Specialty Finance)

Perfect. Thanks so much for taking my questions.

Operator (participant)

Our next question comes from Cris Kennedy of William Blair. Please go ahead.

Cris Kennedy (Equity Research Analyst)

Good morning. Thanks for taking the question. Yair, you talked about expanding into Latin America. Can you give any details on the competitive environment there? And then, I guess, how much can it move the needle as you think about the business towards your billion-dollar goal?

Yair Nechmad (Co-Founder and CEO)

Hi, Chris. Thank you for the, for the question. You know, when you're looking at the world and, we have a footprint in Europe, North America, Middle East, we are, trying to strengthen ourselves in two region, into the future. One is, Latin America, and in the future, more to the future is APAC. We think that, Latin America is more of a, opportunity for what we see right now. And we're seeing the market in terms of, movement, movement from cashless and, with our business model of one-stop solution, end-to-end, has been, one of the key drivers for the SMB market in, in Latin America.

We do have some visibility into the market because it is a huge market beyond the what do you call Mid-America, which is Mexico, which we operate. All the South America is huge market, and we see the opportunity there in multiple countries. We have some good visibility that we can succeed in the next 3-4 years, that this can be meaningful. It will not be just, I believe, a negligible number. It should be a very strong part of our growth.

Cris Kennedy (Equity Research Analyst)

Great. Thank you for that. And then it's great to see revenue from CoinBridge. Is there any way to think about how material that could be this year or over the next couple of years? Thanks for taking the questions.

Yair Nechmad (Co-Founder and CEO)

I think the question over here is the TAM. We're starting with a very, very big TAM on this business. So in terms of really potential of the market, we're talking about hundreds of billions of dollars. Since it is a novelty patent solution of Nayax, and we are in some cases educating some of the customers how to treat this product and what is the benefit from this, we'll have to go for the first few customers that are really succeeding with this and creating a lot of value. And then we can project what the potential of this to carry out big, big numbers for Nayax.

As you know me, I'm always optimistic, and this is a very, very strong potential growth of the company. And I think the scale of this business, because it's not just a software business, it is also onboarding software business, very easy to do with. I think once we get into a few big customers that are rolling in, it can fly very fast.

Cris Kennedy (Equity Research Analyst)

Thanks for taking the questions.

Operator (participant)

Our next question comes from Joseph Vafi of Canaccord Genuity. Please go ahead.

Joseph Vafi (Managing Director and Senior Analyst covering Fintech, Payments and Digital Assets)

Hi, good evening, guys, and terrific 2023. I thought maybe we drill down on finance and lease a little bit and how that played out in 2023, and how you see that contributing in 2024, and then I'll have a follow-up.

Sagit Manor (CFO)

Hi, Joe, and great to hear you. So yes, indeed, the great results for 2023. You know, with recurring revenue growing significantly, as you know, basically as we've shown for the last few years. Revenue from our leasing, or you know, our Nayax Capital, as we call it, are growing, continue to grow. We're not disclosing exactly how much that is, but they are growing and pretty much where we're expecting them to be.

Joseph Vafi (Managing Director and Senior Analyst covering Fintech, Payments and Digital Assets)

Great. And then, obviously, the leasing and finance solutions help revenue in other ways also, obviously, because your customers are buying more devices, right?

Sagit Manor (CFO)

That's exactly the idea, right?

Joseph Vafi (Managing Director and Senior Analyst covering Fintech, Payments and Digital Assets)

Yeah.

Sagit Manor (CFO)

To help them-

Joseph Vafi (Managing Director and Senior Analyst covering Fintech, Payments and Digital Assets)

Got it.

Sagit Manor (CFO)

monetize it earlier in the game than later, and instead of the pace of buying five and then another five in six months, et cetera, to buy that in advance, as they have that opportunity to pay in installments.

Joseph Vafi (Managing Director and Senior Analyst covering Fintech, Payments and Digital Assets)

Sure. And then maybe we drill down a little bit on EV. Is EV like, you know, any metrics you could perhaps provide there? Is it growing faster than the rest of payment volume? And, you know, obviously, you know, the per transaction, you know, charge is gonna be probably higher than some of, you know, your other verticals. Just trying to get a feel for growth and, you know, perhaps take rate there, and how it, you know, how that mix contributes in 2024 and beyond? Thanks a lot.

Aaron Greenberg (Chief Strategy Officer)

Absolutely. Thank you for the question. With regards to EV, we see the EV side of our business as one of the core, future, current and future, drivers of growth for our business. There's a huge total addressable market, as everyone knows. EV is growing at a very fast rate in some of our core markets, like the U.S. and Europe. Overall, we're seeing significant tailwinds over the last couple of years in the EV payment side, specifically related to two things.

One is the number of EV chargers that are hitting the market and are being deployed, and the other is regulation, which over the last couple of years, there's been more regulation in the EU and the United States, and grants that are contingent on having a physical credit card reader at the location, which has been a tailwind for us as we've gone through the 2023 year and as we look ahead. With regards to, as we look forward, EV has a higher ATV than the rest of our business currently. We're not, we don't disclose the number, but it is significantly higher on an ATV basis than the, you know, traditional unattended business that we have.

The take rate is roughly similar, currently to the rest of the unattended segments that we have.

Yair Nechmad (Co-Founder and CEO)

Great. That's great color. And once again, terrific 2023. Thanks for the questions.

Operator (participant)

Thank you.

Once again, if you have a question, please press star, then one. Our next question comes from Trevor Williams of Jefferies. Please go ahead.

Spencer James (Vice President and Equity Research Analyst)

Hi, good morning. This is Spencer James on for Trevor Williams. Thank you for taking the question. It was good to hear about the expectations for gross margin improvement in 2024. I was wondering if you could provide some more color on your expectations for cadence of gross margin in 2024.

Sagit Manor (CFO)

Of course, and hi, thank you for the question. So, throughout 2023, we actually spoke about our hardware margins, how in 2023, they're gonna reach to the mid-teens. However, in 2024, we are expecting it to go back to the pre-pandemic time, which is 25%-27%. So that's one of the significant reasons why gross margin will improve in 2024. As we continue and even improve our margins on the recurring revenue, which are high already. So, the reason for the hardware improvement is a few things. One is component cost reduction and many initiatives that we have in the supply chain area to continue to improve our margins.

Spencer James (Vice President and Equity Research Analyst)

That's great, thank you. Then maybe as a follow-up, I was wondering if you could provide any expectations you have for growth in 2024 coming from new customer go lives versus your existing customer base, maybe relative to 2023.

Sagit Manor (CFO)

So we do not provide this guidance from, you know, from that perspective. But, you know, as we've shown in the past a few years, with a very high net retention rate of between 135%-145%, we are expecting to see the same level of net retention rate continue to be in 2024, because of our very strong business model that is based on those recurring revenue and expansion with our existing customers.

Spencer James (Vice President and Equity Research Analyst)

Great, thank you for taking the questions.

Operator (participant)

This concludes the question and answer session. I would like to turn the conference back over to Yair Nechmad for any closing remarks.

Yair Nechmad (Co-Founder and CEO)

Thank you very much to everyone for joining us on the call. I'd like to thank the Nayax team for their unique commitment to executing our long vision and mission, and to our partners and customers, who continue to be important part of our success as a leading integrated payment company. We are very, very proud of what we achieved in 2023 and looking forward to continuing our expansion in 2024. Thank you.

Operator (participant)

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.