Nayax Ltd.

Hello, everyone, and welcome to NIACS's first quarter 2025 earnings conference call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Aaron Greenberg. Please go ahead, Aaron.

Thank you, operator, and everyone for joining us today on this conference call. With me on the call today are Zahir Nihmad, NIACS 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 .NIACS.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 and our regulatory filings. In addition, today's call will include a discussion of non-ISRS measures. Management believes non-IFRS results are useful in order to enhance our understanding of our ongoing performance. However, these measures should be considered as a supplement too and not as a substitute for IFRS financial measures. A reconciliation between NIACS'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 manner different from the industry standards. And 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, Tagit will go through the details of financial results and discuss the outlook. And with that, I would like to turn the call over to NIACS's CEO, Yair Nikhmad.

Yair? Thank you, Aaron. And thank you, everyone, for joining the call this morning as we share our results for the first quarter and highlight the progress we are making across the business. NIACS is off to an excellent start in 2025 as we continue to execute on driving profitable growth, improving our recurring revenue mix, increasing our market share, and expanding our geographic footprint. As a key milestone, we ended the quarter with more than 100,000 customers globally, which is a testament to both NIACS being trusted partner and leading payment company. I couldn't be more pleased with where we are today as an organization as we continue to scale the business for the long term. Revenue for the quarter saw a strong increase of 27% over Q1 2024, reaching $81 million and grew by 28% over Q1 2024 on a constant currency basis to $82 million, driven by continuing momentum from both new and existing customers. Most notably, recurring revenue grew by an impressive 35% over Q1 2024, representing 77% of total revenue in Q1 compared to 72% in the same quarter last year. This growing share of high margin recurring revenue continues to demonstrate the strength and resilience of our business model, a critical driver to our long term growth and profitability target. Terming to profitability, adjusted EBITDA came in at $9.7 million for the quarter, representing approximately 12% of total revenue. This underscores our discipline focused on delivering profitable growth while expanding our top line. I would now like to highlight three key performance indicators for the quarter that we consider primarily

measure

of growth. First, total transaction value increased by more than 18% over Q1 2024, reaching more than $1.3 billion, which combined with higher take rate of 2.75%, drove strong processing revenue growth for the quarter. Second, our customer base expanded by more than 30% since Q1 2024, reaching more than 100,000 customers at the end of Q1, up from 95,000 at the end of 2024. And third, our install base of managing connected devices grew by 20% since Q1 2024 to more than 1.3 million devices at the end of the quarter. These KPIs reflect not only the momentum in our business and the underlying strength of our platform, but also demonstrate the flywheel effect and the success of our -to-market strategy. I'd like now to share some customer success stories and key developments from the quarter that highlight our continuing expansion in the automated self-service space. In Q1, we launched our cloud-based food service kiosk solution in the Brazilian market, a key step in our retail strategy. This follow-up brings our modern cloud-based POS software to a market that is still dominated by legacy providers with limited automation and a population of over 200 million people. We are already seeing our solution deliver strong customer value, and we believe Brazil will present significant potential in this vertical. Looking ahead, Latin America remains a strategic growth region and one of our fastest growing markets. We also announced a strategic partnership with Enengroup to launch next-generation smart screens for OEMs features and high embedded payment capabilities. This collaboration is a strong testament to our commitment to delivering seamless embedded payment to our OEM partners, who typically bring high-volume deployment and enhance customer stickiness. In addition, we are seeing strong momentum in two high potential self-service verticals, micro-markets and smart coolers. Our -to-end control of hardware, software and payment processing sets us apart from competitors that rely on third-party systems or lack of infrastructure to operate as payment facilitators. This integrated approach delivers higher reliability, greater uptime and fewer operational issues for merchants. By managing the full payment flow, we eliminate the need for third-party onboarding and enable faster, more transparent transactions. We view these verticals as important drivers of our future growth. Finally, as part of our continued investment in the EV charging space, we deepen our presence in these key verticals by expanding our customer base and securing more strategic partnerships with leading OEMs, charge point operators and charging software platforms. For example, we expanded our partnership with BTC Power, one of the largest OEM providers of EV chargers in the US, who selected NIACS as their preferred cashless payment provider. Our partnership will provide BTC Power with the leading payment technology in the EV industry, giving their customers a -in-class combined platform. We also introduced a new feature for our EVKiosk product that enhances user experience by clearly separating car presence payments from mobile access to charging station details, simplifying the customer experience and reinforcing our role as leading provider of integrated payment solutions for the EV ecosystem. With each of these customer success stories and key developments, we continue to establish NIACS as leading provider of cashless payment and management solutions, driving innovation and growth across multiple industries and markets. Let me now turn to recent acquisitions. In February, we acquired AppPay, a leading digital payment and telemetry provider for automated self-service coffee machines in Brazil. This acquisition, combined with our 2024 purchase VM technology, expended our reach to more than 50,000 managed and connected devices across Brazil, strengthening our position in the Latin America market. During the quarter, we also completed the purchase of the majority of shares of Tigapo ETD, an associate company focused on family entertainment centers. We acquired an additional 30% of Tigapo's shares, increasing our ownership from 54% to 84%. In April, we acquired Inapropay, our long-standing distributor in the Benelux region. This move continues our strategy of consolidating distribution channels, improving operational efficiency, and bringing us closer to our European customers through the establishment of full-service NIACS offices in the Netherlands. Europe remains a core market accounting for approximately 36% of our global revenue in 2024, and this acquisition reinforced our commitment to growing in the region. Looking forward, we are excited about our near-term growth opportunities and our business fundamentals remain solid with a relatively low penetration of cashless solutions in both unattended and attended markets. Our tem is large and growing, driven by the shift from cash to digital payment. While we continue to pursue strategic M&A, organic growth remains our primary building block and will continue to be the main driver of our growth. With our expanding pipeline, we are well positioned to continue outpacing the broader payment industry and delivering exceptional value to our customers. With that, we are reaffirming our full year 2025 guidance. Furthermore, we are confident that we can consistently expand our revenue and margin over the coming years to achieve our 2028 annual target. With that, I'll turn it over to our CFO, Sagit Manor, who will review our financial results in greater detail. Sagit?

Thank you, Yehir, and good morning, good evening, everyone. I'll start by reviewing our solid financial performance for the first quarter and then discuss our outlook for the full year 2025, which as Yehir mentioned, we are reaffirming. Revenue for the first quarter was $81 million on a reported basis, an increase of 27% over Q1 2024, as we continue to gain market share, adding nearly 5,000 customers this quarter. On a constant currency basis, revenue was $82 million, representing a 28% increase over Q1 2024, with an impact of approximately $700,000 due to foreign currency volatility in the quarter. Organic revenue growth for the quarter was 18%, which is consistent with our prior year's first quarter performance and the seasonality of the business. We expect organic revenue growth to accelerate throughout the remainder of the year and are confident with our guidance of at least 25% organic growth for the full year. Recurring revenue, which includes payment processing fees and SAS subscription revenues, increased by 35% compared to last year's first quarter to approximately $62 million and represented 77% of our total revenue in Q1. The favorably improving recurring revenue mix was driven by strong expansion in the US, European and the Brazilian markets. Most specifically, processing revenue grew by 30% to $37 million in Q1, driven by three main factors. First, an impressive 20% increase in our installed base of Manitou Connected devices. Second, a strong nearly 18% increase in dollar transaction value. And third, a higher take rate of 2.75%. This processing revenue growth continues to demonstrate our success as a scalable and valued payment partner to our diverse customers base as the market continues its cash to cash conversion. On a sequential basis, Q1 processing revenue was in line with Q4 2024. Historically, processing revenue growth is seasonally slower in the months of January and February with greater acceleration in March and the remainder of the year. As we look to Q2, processing revenue growth to date is in line with prior year growth rates and is within our internal expectations. Hardware revenue in the quarter was $19 million with strong demand for products, solutions and technology supporting both the unattended and attended markets. This represents a 6% increase over Q1 2024. In the quarter, we added more than 69,000 Manitou Connected devices to our installed app rates, which includes 44,000 devices organically and 25,000 associated with our acquisition of AppA. Manitou Connected devices increased 20% over Q1 2024, reaching more than 1.3 million devices at the end of the first quarter. Moving now to profitability and margins for the quarter. The gross margin was 49% compared to 44% in the last year's first quarter. More specifically, our carrying margin increased to 52% from 50% in the prior year quarter as we renegotiated key contracts with several bank acquirers and improved our smart routing capabilities. On the hardware side, our margin increased significantly to .5% compared to .3% in Q1 2024 and 30% for the full year 2024. While Q1 was an extraordinary quarter for our hardware margin, it was driven by customer seismics, the continuing optimization of our supply chain infrastructure and better component sourcing and cost. For the full year, we currently expect hardware margins to be higher than last year and within the range of 30% to 35%. With respect to tariffs, as previously disclosed, we are holding our current hardware pricing for U.S. customers steady despite new tariffs being imposed on imports to the United States. This decision underscores NIAC's commitment to our customer growth and their operational excellence while showcasing the strengths of our global operations. As for the rest of the world, we will continue to actively monitor its impact on our business to ensure we adapt and thrive positively. While total revenue grew by 27% over Q1 of last year, total gross profit grew significantly more by 43% to nearly $40 million. Adjusted OPEX of $30.5 million was 38% of revenue, better than last year's first quarter and a testament to our disciplined cost management. Adjusted EBITDA increased to $9.7 million representing 12% of revenue compared to 6% of revenue, a solid improvement of more than $6 million compared to last year's first quarter and demonstrating the continuing scaling and operating leverage of the business. Other income was $6.1 million which includes a one-time gain from obtaining control of TIGAPO. Operating profit was $7.9 million for the first quarter, excluding the one-time gain associated with TIGAPO. Operating profit would have been $1.8 million, a significant improvement from an operating loss of $2.8 million in last year's first quarter. Net income for the quarter was $7.2 million or an EPS of $19.5. Excluding the one-time gain related to the share purchase of TIGAPO, net income would have been $1.1 million, a significant improvement of $6.1 million compared to a net loss of $5 million in the prior year period. Turning to our balance sheet. In March, we completed a note and warrant offering, raising net proceeds of approximately $133 million. We used some of those proceeds to repay higher costs of short-term and long-term debt, optimizing our leverage ratio. At March 31, 2025, -in-cash equivalents and short-term deposits totaled $176.8 million while short- and long-term debt was $142.2 million, maintaining a solid balance sheet and net cash position. Looking at cash flow, we generated $1.3 million from operating activities. Free cash flow for the quarter was negative $5.7 million mainly due to the timing of cash settlement from processing activities. Turning now to our outlook and referring to our forward-looking information disclosure in our press release. For the full year 2025, we are re-filming our financial outlook of revenue growth of between 30% to 35%, representing a revenue range of $410 to $425 million on a constant currency basis. This includes an organic revenue growth of at least 25%. Consistent with prior years and reflecting the seasonal nature of our business, we expect stronger performance in the second half of the year, driven by continued revenue growth across both tier 1 and SMB customers. Our guidance for adjusted EBITDA remains unchanged at between $65 to $70 million, driven by continued revenue growth, market expansion, the full integration of recent acquisitions, and continuous operational optimization. We also expect at least 50% free cash flow conversion from adjusted EBITDA for the full year 2025. As Yair reiterated, for 2028 targets, we continue to project an annual revenue growth of approximately 35%, driven by a combination of organic growth and strategic M&A. We also continue to target a growth margin of 50% and an adjusted EBITDA margin of 30%, as we continue to drive high margin fast revenues and operational efficiency. In closing, we are extremely well positioned for future growth in 2025 and beyond, as we continue to grow our install base globally and capture market share. We'll also continue to focus on scaling our recurring revenue streams, in particular our payment processing capabilities, which benefit from the conversion trend of cash to cash transactions. I'll now turn the call over to the operator for our Q&A session. Operator?

Thank you. We'll now be conducting the question and answer session. If you'd like to ask a question at this time, you may press star 1 from your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please while we poll for questions. Thank you. Thank you and our first question comes from the line of Hans Leitner with Jeffries. Please proceed with your questions.

Yes, thanks for letting me on. I've got a couple of questions. You mentioned a couple of comments around the growth acceleration. Maybe you can just break that down into the end markets where you see that. Also your comment around EV, that you shipped some cheaper things. How will that add to the whole thing? Then the second question is on the cost optimization. You talked about 30 to 35% hardware margins for this year. That's still a very good improvement. Maybe you can talk then what is the next step to get to improve that. On the hardware side, it looks like you had lower priced items if you look at the average cost per hardware device. Then maybe just like one thing on your transaction volume, it looks like the third quarter in the flat dish. Maybe you can talk there a little bit about the underlying trends and what kind of impact is there, the growth in payment processing. Thank you.

Hi, Hans. Thank you for the questions. I'll start and Sagit will continue. Regarding the growth of the future growth of NARC, I think I can mention first from the ground. I just came back from the NAMA show. I've been in a few shows and the teams are all over the world in terms of show, even right now in China show, in OEM shows. We are very, very confident regarding the OEM part coming from what we see now very clearly regarding machines that need to be equipped with the NARC devices connecting as we call it the Pulse device. We see this is a very strong part of the future growth of NARC which we actually didn't touch it as we are doing today. We get a very good confirmation for this. The second thing is personally I've been in the NAMA show. The vending industry shows in the US is the largest show in the North American market. We do have in our hands T1 customers showing high intention to put the orders this year. It's a major number of orders that they are going to put this year and the relationships that we have with them gave us a lot of confidence regarding the needs and it's a must have from their perspective. And third from the shows coming from Europe from the EV that just finished last week we are seeing our fit into the market as the best solution for the market. As you know we developed a kiosk solution. We have a fully integrated solution in terms of telemetry and management and the ability of us to have a retrofit solution for payments. So if I summarize this OEM is a very strong part that will come to life. EV is a very strong part that we think the products fit to the market and during a T1 customers order give us a very high confidence that this year will be an excellent year.

And thank you Anis for your question about the gross margin. Generally speaking yes it was an excellent quarter from continuing margin expansion as we've shown in previous quarters and specifically for the hardware margins we continue to improve our supply chain infrastructure and cost optimization continue the integration of recent acquisition that also helps with the hardware margins. You also asked about the cost yes both the product cost we saw a continued reduction and improvement as well as a higher ASP and a selling price this quarter because Q1 is usually higher and you can see that from our distribution on the customers that 76% of revenue came from small businesses usually showing a higher ASP. There are questions about the transaction value as historically Q3 is very high, Q4 is more or less the same as Q3 and Q1 as well is slowly starting to yield. January and February specifically was lower but as we've mentioned before March looked great, April as well and as I said the quarter to date we see as expected the transaction value going on.

Thank

you. Our next question is from the line of Josh Nichols with B. Riley. Please introduce your questions.

Yeah thanks for taking my question. Just to dig a little bit deeper some gross margin expansion when you look particularly at like the recurring piece. Overall I know you've made some good progress on some of the transactions or new agreements that you have with the banks. Given that you expect the recurring piece of the revenue to ramp up and be particularly stronger in the second half of this year, do you expect that gross margins are going to see some expansion as we move throughout the year or what do you think of the cadence for gross margins for the rest of the year from where they are today?

Thank you Josh. So first thank you for highlighting that indeed the margins are not only improved because of the hardware margins but also from the recurring revenue standpoint. The recurring margins improved from 50% to 52% and it's exactly as you said our ability to renegotiate with the acquirers because of our growing purchasing power. Again 650 million of transactions went through our devices in Q1 so definitely that helps to improve the margin as well as the smart outing from our side, the ability to control where the transaction is going which again give us the ability to control and to improve the cost of the transaction and the margins as well. When I look at the remainder of the year, I see margins of the recurring revenue stay around where they are. So if I open the recurring revenue from a service perspective and SAS it's going to be in the regular range that we know between 76 to 78%. If we look at the margins on the processing revenue and the revenue that we know that improved significantly from five quarters ago that it was around -28% to the 35% that we see right now, I'm expecting that to stay in the around the 35-36%. Add to that the hardware margins that we expect to be between -35% as I just mentioned, I see a solid margin execution and as we said continue the margin expansion as we continue in 2025.

Thanks for providing a little bit more color. Just curious, how should we think about the split between hardware for these device sales and their recurring piece? You did mention that there's some interesting opportunities in smart stores, micro markets, presumably those are much higher value than just selling like a reader. So when you look at the expectations for growth this year, 25 organic with total revenue, 410 million, how should we be thinking about the growth in the device sales versus the recurring piece overall?

Yeah, maybe you would like to start with the success we had recently in various trade shows including NAMA.

Again, regarding the growth, most of the growth is coming in terms of the hardware is coming from the people's touch units which is the main flagship of SNIVES growth. Although the lower price in terms of the fridge or against the micro market, it is still the volume that creates most of the growth. I have to admit that even the show that just came back two days ago, we had two fridges in the show and they both sold immediately from the trade show. We have a very good demand now that we built around mostly that we invest in the fridge product which we have good partners with the fridge producers and the technology behind this. Of course it is a trend but it is a number of hundreds or maybe thousands and we are talking about tens of thousands. So based on this we see the retrofit business of the unattended hardware, this is the growth. Regarding the growth of the services, we have the payment will be the leader in terms of the growth and you can see this in the report that we have published for the last few quarters.

Maybe to add to that is that as we have mentioned right now, the second half of the year will be stronger. There are several distribution channels that have not been impacted our finances yet. Through our interactions with our companies, we have seen the growth of the service. We have seen the growth of our customers. We have seen confirmations for tens of thousands of devices that are coming in the next few weeks to a few months. That gives us the confidence and that is the reason why we have reiterated the guidance of 410 to 425 million dollars of revenue. With respect to your question about the growth in general, we believe that despite the fact that Q1 was around 20% of the revenue on the lower range, the acceleration will start in Q2 and of course Q3 and Q4 and represent the growth of the service. The guidance that we have provided.

Appreciate it. Thank you.

Next question is from the line of Chris Kennedy with William Blair. Please

continue with your questions. Thanks for taking the question. I just wanted to go back to micro markets and smart coolers. Can you talk a little bit about the dynamics associated with that business relative to your core business today?

Hi Chris. Thank you for the question. We look at the market as a general as retail market. The micro market is already established in mostly the North American market. It's reached out to some extent to some ceiling to what we see in the market. We are coming to the existing customers that we are working with that want to move to micro markets with a product which is a plug and play from their perspective. We are not dealing with all the ecosystem behind this. It's quite easy to scale with this product, the micro market product of NAICS. We see great potential and a little bit more of the security regarding the smart coolers. It took some time to reach out to some technology which are based on weight sensors or some cameras. We are supporting both

technologies

and we have partners around this. Now it's becoming to be a very ready to market product from our perspective. We got very good feedback from the last show last week. We believe this is the right momentum that we are going to push the pedal to push this product. We are aiming to this product because it is a cross continent. It can cross also to Europe and South America and other markets while the micro market is not catching up to what we see in other markets. Since we are serving more than 100 markets, we want to see that everything that we are doing can be really go all the way to the global market. We believe the smart cooler is more fit to what we are holding in our hands in terms of customer base globally.

Great. Thanks for that. Then just as a follow up, can you provide an update on kind of what you are seeing on the M&A front? How is the pipeline looking? How are the valuations looking? Thank you.

Hi Chris. This is Aaron. So as I said, essentially in the Q4 earnings, I believe everything is still on plan in terms of what we are expecting for this year. We have done the acquisition of UpPay and the acquisition of Inapro this year, so two M&As and then we consolidated the majority of Tegapo earlier this year. I still expect that the inorganic growth is going to be in line with what we have said in the Q4 earnings and we are on track with that, likely to close one to two additional deals this year in order to

make that revenue gap. Great. Thanks for taking the questions.

The next questions are from the line of John Coffey with Barclays. Please just use your questions.

Great. Thank you very much. So this question is a little bit of a follow up to the last one on M&A. I was wondering, you seem very excited about Latin America. When it comes to expanding more there, is it just that you are, I guess for one, is it that there is a bottleneck that there is a lack of companies you want to invest in or B, are they there but valuation is an issue right now or you are maybe focusing on Latin but also a lot of other acquisitions or integrations in other parts of the world right now. So I am just wondering why we are not seeing more there. I am just wondering how you think about that. And secondly, the other question I will ask is right up front is just from the take rate. You had a pretty good increase in take rate year over year. I was wondering, is this fairly stable at 2.75 or should we expect some ups and downs in that as the year progresses?

Thanks. Thank you, John. I will start and then Aaron will continue. The way that we see markets, it is not just Latin America. It is any market that we are going. We are seeing what is the relevance of how to progress in the market. So we found ourselves in Brazil that we want to acquire a company because it is much more easier to scale with a company that we can put our hands on. In the rest of Latin America, we do have a subsidiary company or franchise partner in Mexico that we can work with them and extend their relationship. And most importantly is the relationship with the banks. Latin America is not the same as Europe and the U.S. that you can potentially have two, three or four requires and you can close the market. Latin America you have to close deals and agreements with each and every country and acquire locally. We are doing this in the last year. This will be the acceleration of Latin America. When we say we are concentrating Latin America, it is not just acquisition. It is also that we are creating partnerships with acquirers. It is important to focus on the way that we are growing and in this case, the acquirers are really a major part of the Latin

America. I will continue on the M&A front. We are very prudent when it comes to what we end up acquiring and the valuations that we end up accepting in terms of the market right now. I believe it is a buyer's market still today. M&A has been very weak on the private side, especially in the lower middle market space, which has allowed us to get very attractive valuations over the last several deals. I do expect that to continue. I think that most of the opportunity that I have seen to date has been outside of the United States. There is a lot of opportunity still in the Latin American market, mostly in Brazil still. I would not see any slowdown there or elsewhere in terms of the potential opportunities. We do balance that and we have to set a prioritization for the year because there is only a certain amount of M&As that we can do on an annual basis, generally plus or minus three and feel comfortable with it. We are working with the M&A to make sure that we have the proper integration, post merge integration, and make sure that we see the synergies and also are able to maintain the core business that we have at the same time.

Great. Thank you. Any comments on the take rate? It is stability throughout the rest of the year.

Yes, thank you. Take rate is continuing to expand and to grow as in previous quarters. It is now 2.75%. As you know, that is a combination of both the geography where the transaction is going as well as the other. There are various verticals that we are now going in more and more that have higher transaction value like parking or charging and whatnot. As I said before, we see a constant improvement in the take rate. It is not

going to Our next question is from the line of Sanjay Sekharani with KVW. Please see with your questions.

Thank you. I wanted to go back to the volume growth. I know, Sagit, you mentioned seasonality. I am just curious if that de-cell, it just seemed a little extreme. I am just wondering, is there anything else inside of that? Did you see any macro impacts or such or tariff related impacts? As we think about the re-excel over the remainder of the year, what kind of re-exceleration can we see?

I will start, Sanjay. Thank you for the question. What we are seeing in terms of the volume is something that potentially is repeating itself. Every time that we come into Q4, Q1, the difference is that the numbers are not so big. It is starting with January, February, a little bit flat. Sometimes, February is better. Sometimes, it is less. What we can say is that while we are sitting over here now, it is the middle of May and we know what is happening in April and we know how we stand today. We are seeing in terms of the trends in the right projection that we had in the beginning of the year when we put the budget. We are not really feeling any kind of change because of consumer behavior or any kind of tariff issues or any kind of macroeconomic issues that are affecting our business. We are quite confident that the volume will catch up and as we see it right now, it has actually reached out to the level that we expected.

Maybe just to add that as you know, the processing revenue, first of all, grew 30% quarter over quarter, which is the comparison period. But also, the impact on processing revenue comes from three areas. One, the active units that we are able to put in and there was a significant increase of 69,000 devices this quarter, 20% increase quarter over quarter, which 44,000 of them came organically. It is the OVSD and also the take rate, of course, that is part of the higher the vertical transaction is. The higher the take rate is. So January and February were slower. However, we saw already the March and the April and even the May until today and quarter to date, we see that volumes are going back to its normal and even accelerating.

Okay, wonderful. That is encouraging. Maybe just one on the tariffs. I think I heard you guys say you are not going to pass on the higher costs. I guess when we think about the blended impact then of the tariff increases in prices, I know you are working off a very strong margin right now. I am just curious, is that factored into that reduction in the margin that you might absorb some of those higher costs or how should we think about it? Thank you.

So let's start with tariffs in general. As you know, we have disclosed quickly after the new administration spoke about tariffs that we are going to hold our current hardware pricing for US customers steady. I remind you that we are manufacturing our products both in Israel and the Philippines. I think this is 17% right now. It is 10%. So it is one of the lowest tariffs that were announced by the administration. When we did the calculation, taking into account that the US is around 40% of our revenue, taking into account other supply chain improvements in the supply chain infrastructure, improvement in processes and whatnot, we are able to show even this year we were able to keep that pricing steady. And I believe as we talked about previously, this is really showing NIAC's commitment to its customers, both from their growth and both from their operational excellence and also showing the strength of our global operations. Now, with respect to the hardware margins, it doesn't have a significant impact as I said. This is the reason why we are talking about 30% to 35% hardware for the entire year is simply because the difference of sales mix, it may impact one quarter versus the other, but the overall is an amazing improvement in hardware margins and as we have shown by the way in the last four years.

Great. Thank

you. Thank you. Our final question is from the line of Raina Kumar with Oppenheimer. Please just use your question.

Good morning. Thanks for taking my question. So it sounds like you're not really seeing any change changes in consumer behavior. So I'm just trying to understand, does your 2025 guidance include some buffer as consumer spending does change later this year? And then just a quick modeling question, how should we think about the impact of FX on revenue for this year? Thank you.

So, no, we die, Raina. And no, we don't see any consumer behavior change from a macroeconomic perspective. We do see a significant change from a consumer that, as we've seen many in the last several years, the cash to cashless conversion. That's for sure there and is here to stay. You know, from the market, from the town of the market of how many devices are out there. If you remember, we're speaking about 45 million devices growing into 60 million devices and we have 1.3 million of them. So blue ocean, great opportunity to continue to grow. In addition, the consumer behavior change in a sense to continue to move from cash to cashless. So that's there and that will stay. And to a question about FX, I wish I knew, right? That would be the million dollar question about how FX will be done. We are, as you know, the only global company in the unattended space. The benefit of that is to be able really to enjoy 40% from the US with around 40, 35% from Europe and whatnot. But it comes also with FX impact. This quarter specifically, it came from the Australian market for, you know, just as an example. In previous quarter, it might have been Europe, or might have been, you know, Europe, generally speaking, or UK. So that's the reason why when we do the guidance of the revenue specifically, I'm always talking about constant currency. And that's where we'll continue to speak about it, which in this quarter was 82 million dollars of revenue with 28% increase of revenue quarter over quarter.

Thanks for the call.

Thank you. Thank you. At this time, we've reached the end of our question and answer session and I'll turn the floor back to Yair for closing remarks.

Thank you for being with us today. Entering 2025, we are proud to have the SUFAS, 100,000 customers, a clear reflection of our team's dedication and the trust we've built across our customers and partners. Moving forward, our priority remains sustainable growth and long-term value creation. I'm grateful to our employees and partners for making this possible. The role ahead is full of opportunities and we are ready to continue capitalizing on this momentum. Thank you very much.

This will conclude today's conference. May disconnect your lines this time. Thank you for your participation. Have a wonderful day.