Nayax Ltd.

Hello, everyone, and welcome to NIACS' first quarter 2026 earnings conference call. All participants at present are 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 Yair Nechmad, NIACS co-founder and chief executive officer, and Sigeet Manohar, 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.niacs.com. As a reminder, during this call, we will 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 of 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 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 matter 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, Sigeet will go through the details of financial results and discuss the outlook. And with that, I would like to turn over the call to NIACS' CEO, Yair Nekhmad. Yair?

Thank you, Aaron, and thank you, everyone, for joining us today to discuss our results for the first quarter and the progress we are making across the business. We had an excellent start to 2026 with strong operational and financial results across the business. Revenue grew 32% to $107 million, with organic revenue growth of 26%. Adjusted EBITDA margin expanded to 13%, The quarter results reflect the continued confidence and execution of our strategy, and we are reaffirming our financial guidance for the year. This quarter, our install base surpassed 1.5 million devices, an important milestone that drives our recurring revenue model. Our customer base reached 120,000, which is truly exciting and reflecting continuing opportunities in the market. The more customers we onboard, the more devices they buy, the more transactions flow through our platform, and the more our recurring revenue compounds. It is clear that our growth algorithm is working. To this end, let me highlight a couple of KPIs. First, total transaction value grew 33%, with average transaction value continue to expand as we shift further into higher-value verticals such as EV charging, amusement, and car wash. Second, our output is growing, reflecting both the trend in cash-to-cashless conversion with our existing customer base and our deeper presence in this high-value segment. Hardware sales were strong this quarter, with growth of 46%, driven by strong demand for our product across all markets. In the unattended space, the rollers of our pin-on-glass VPOS media devices draw significant hardware demand in Europe and is unlocking higher ATV verticals, where local regulation requires pin verification for transactions. In the EV charging vertical, we made our first joint appearance as the Combined Max and LinkWheel brand at the EVCS conference, which is the largest conference in the EV space and received strong customer receptions. Our pipeline of mid-sized network moving on to Linkwell's white-label platform continue to grow. With respect to geographic extension, in Brazil, we continue to invest and are making significant strides in the region. Following the successful integration of VM technology and AppPay, we have fully rebranded its operation to the NICE brand, which is now operating as NICE Brazil. In addition, we have started onboarding newer customers as payment facilitator in the country, and we will soon be bringing the Vipos Media to the Brazilian market, which will allow us to address the market with a unified pin-on-glass product.

We are also making great progress with our platform expansion initiatives.

As stated last quarter, our Yellow Account, our embedded banking offering for the U.S. market in partnership with Adyen, is in pilot phase and advancing well. We believe embedded banking can become an important additional monetization layer across our platform, leveraging our existing customer relationship and transactions data. This is a long-term strategic initiative that can strengthen customer engagement and increase revenue per customer over time. We expect to have more to share in Q2 about our embedded banking initiatives. Not surprisingly, AI is becoming an increasingly more meaningful driver across our business as we are embedding AI across our platform as well as throughout the entire organization. For example, R&D is advancing faster with AI system development. On the product side, we are launching in Q2 a new AI intelligence layer in MoMA, our mobile management app. This will give operators a conversation assistance for business insight, AI-driven shared strategy suggestion, and rapid merchandising plan setup using visual recognition. These initiatives and many more reinforce both our OPEX discipline and our long-term margin expansion strategy. On M&A, our pipeline is active and growing, and we are engaging on several opportunities in what is becoming a biomarker. We are disciplined about finding the right opportunity for NIACs, those that fit our strategy, our culture, and our long-term growth profile. Our strong balance sheet positions us to act decisively when we find them. In summary, our growing installed base of connected devices, the strength of our recurring revenue model, and the disciplined execution of our team continue to position us well for sustained profitable growth. With 1.5 million devices on the platform and with the flywheel accelerating, we are well positioned to capture the opportunities ahead. I want to thank our employees for their continued dedication and our customers, partners, and shareholders for your trust. With that, I'll turn it over to our CFO, Sagit Manon, who will review our financial results in greater detail and walk through the outlook. Sadiq.

Thank you, Yair, and good morning, good evening, everyone. We appreciate having our shareholders, analysts, and the entire NAICS team with us today as we review our financial performance. We are very pleased with our results for the first quarter as we continue to scale our platform, expand our installed base, and drive transaction activity all of which reinforces the more predictable and profitable recurring revenue contribution to our business. As Yair stated, revenue grew 32% to approximately $107 million, including 26% organic revenue growth over the prior year's quarter. Recurring revenue grew 27% and represented approximately 74% of total revenue. We ended the quarter with an installed base of more than 1.5 million managed and connected devices while serving 120,000 customers globally. As a result, total dollar transaction value grew an impressive 33% to approximately $1.8 billion. Consistent with more recent quarters, we continue to see a favorable mix shift towards higher value verticals. Everett transaction value, or ATV, increased to $2.36 from $2.06, while take rate remained strong at 2.66%. Combined, these indicators show that growth is coming from deeper engagement and higher value usage across the platform, which is a leading contributor to our success. We also saw a continued increase in the revenue generated from each connected device. Average revenue per unit, or ARPU, increased to $247, up 14% year over year, which again demonstrates improved unit economics and deeper engagement of customers with our platform. This increase continues to be driven by two main factors. First, the ongoing conversion, of existing machines from cash-to-cash transactions, and second, our strategic expansion into higher value verticals such as EV charging, amusement, and car wash. Coming now to hardware revenue. We saw a significant increase of 46% over the prior year's quarter to approximately $28 million, driven by strong demand for products across all markets. Importantly, we continued taking market share, adding over 5,500 new customers and 41,000 managed and connected devices, proving that our gross algorithm is working. Moving now to profitability and margin for the quarter. Gross margin was impressive and in line with the prior year's quarter at 49%, driven by higher processing and SaaS margins, slightly offset by lower hardware margin in the quarter, primarily because of product mix. More specifically, our recurring margin increased to 54% from 52% in the prior year's quarter, driven by additional improvement in processing margin that reached nearly 40% from 36% in the prior year quarter, reflecting the ongoing benefits of renegotiated contracts with several bank acquirers, and the company's improved smart routing capabilities. SaaS margin improved as well to 76.5% from 75.9%. Both processing and SaaS margins reflect the company's growing scale and increasing transaction volume. Power margin was 33.1% compared to 39.5% in Q1 2025, due to marketing promotions for newly released peel-on-glass VPOS media devices in Europe. Adjusted OPEX of $39 million with 36% of revenue and improvement over the prior year period and included a full quarter of liquid expenses. Adjusted OPEX had an unfavorable impact of $1.2 million in the quarter compared sequentially to Q4 2025 due to foreign currency volatility. Adjusted EBITDA increased 43% to $14 million, representing 13% of revenue compared to 12% in Q1 2025, and again demonstrating the operating leverage of the business. Operating profit was $4 million compared to $1.8 million in prior year period, excluding a one-time gain of approximately $6.1 million related to NIAC's share repurchase of Tigapo in Q1 2025. Financial expenses net for the quarter increased by $2.9 million as a result of interest expenses related to the two bonds offering completed in 2025 at the Tel Aviv Stock Exchange, which raised a total of nearly 1 billion shekels. Net income for the quarter was $1.3 million compared to net income of $1.1 million in the prior year period, excluding the one-time gain associated with TGAPO. Turning now to our balance sheet. On March 31, 2026, cash and cash equivalents and short-term deposits totaled $306 million, while short- and long-term debt were $325 million, maintaining a solid balance sheet. Looking at cash flow, we generated $3.6 million from operating activities. Free cash flow for the quarter was negative at $6 million, mainly due to increased infrastructure investment and 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. As Yair mentioned, we are reaffirming our financial outlook for 2026. Our revenue guidance for the year remains $510 to $520 million, inclusive of organic revenue growth of 22 to 25%. We expect an adjusted EBITDA margin of approximately 17%, which represents a range of $85 to $90 million. Turning to free cash flow, we continue to expect free cash flow conversion from adjusted EBITDA of approximately 40% for the year. In closing, we are well positioned for future growth in 2026 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 want to thank all of our NAICS colleagues for their hard work. And with that, I will now turn the call over to the operator for our Q&A session. Operator?

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Thank you, and our first question is from the line of Raina Kumar with Oppenheimer. Please proceed with your questions.

Good morning. Can you discuss your EV strategy and the EV contribution in the quarter, just given the rise in fuel prices? Thank you.

Your lines are open for questions. Please stand by for one moment. Your line is open for questions. Please stand by.

We're experiencing technical difficulties. Please remain on the line. We'll resume momentarily.

Okay, I see that everyone has a technicality, so I'll take it. Is it working?

It sounds like we could hear you now. Please try again and see if I can hear you now.

Can you hear me?

Yes, I can hear you, Aaron, yes. Okay. Sorry for the technical difficulties. I can take the question. Raina, thank you for the question. This is Aaron. So with regards to the EV strategy, obviously we bought Linkwell at the end of last year, after eight years of investing in the EV industry. And that was us doubling down on our strategy of really trying to penetrate this industry and both on the software and the payment side. And as we see over the last few months, the gas price is rising. We see this as a potential secular tailwind for the EV penetration, particularly in the US, because, you know, as it's not going to necessarily impact the number of EV drivers today, it should impact, as long as this continues, the number of EV drivers in the future, people buying or switching from ICE vehicles over to EV, which should increase the utilization of EV chargers, you know, in the US. As we look at this, our EV strategy right now is to be connected to as many public DC fast chargers as possible, which is where these new EV drivers are going to be charging their car. And with the purchase of Linkwell, we have a better opportunity to go after a lot of these mid-sized networks with a full end-to-end solution, expanding our payment business. And we believe the strategy is already working. We signed the partnership with ChargeSmart before the link well acquisition. We signed the partnership with ePlug after the link well acquisition, and we expect to sign more networks on over the coming quarters.

extremely helpful, Erin. And then just one more follow-up. Can you talk a little bit about what you're seeing in terms of hardware costs and how we should think of hardware growth margin potential for the remainder of the year? Thank you.

Hi, Rena. So, And how it's supposed to stay as we've guided, which again, I remind that we've just reaffirmed the guidance of 510 to 520 million dollars of revenue and adjusted EBITDA of 85 to 90. Q1 specifically had lower hardware margins as a result of promotion that we have done in Europe with bringing into the market the VPOS media, our new pin-on-glass products that are very relevant to Europe as well as Latin America and Australia's regions. However, I'm expecting that to stay around that level the remaining of the year, a little bit higher, with beautiful margins, a gross margin overall of around 49%, as we've shown in Q1.

Appreciate all the color. Thank you.

Thank you. Our next question is from the line of Josh Nichols with B Riley Securities. Please proceed with your question.

Yeah, thanks for taking my question. I mean, great to see the processing margins. They're nearly 40%, a record for the company. Can you just give us a little bit more detail, walk us through, like, what's driving that expansion, and how should we think about, you know, what the ceiling is for processing margins because they continue to go higher over the last few years by a pretty significant amount?

Hi, Josh. Thank you. So, yes, we're very proud of the processing margins that continue to improve to nearly 40% compared to 36% last quarter or even around 38.5% in Q4. There's two main reasons for processing margins to improve as we've continued to explain that last year is a couple of things that we have done. One is the renegotiation with every major acquirer that we work with in order to improve the fees and therefore our margin, as well as the smart routing capabilities that we've implemented. So we know where to send any transactions that comes in to the acquirers that make sense from us, but still, the customer gets its Coke or the service on the massage chair in a nanosecond. Specifically this quarter, it's a matter of geographical mix. that you can also see that the take rates went down uh whether from 275 last quarter to uh or previous quarters to 266 it's a geographical mix what do i mean by that the higher the transactions are in europe the take rate is a little bit lower than the us but the margins are higher so We're continuing to push everything we can in order to improve margins in all aspects, both in processing as well as in the improved margins that we saw this quarter in the SAS area and Q1 margins. I just spoke about that as well.

Thanks. And then just one follow-up for me. Nice to see the ARPU growth accelerated from 11% over your last quarter to 14%. We've talked about mix before. How much of that is being driven by EV and amusement, and is there still room to continue to scale that up pretty significantly as those verticals become bigger over time?

Yeah, so thank you for asking about that because this is the first quarter that we're actually showing ARPU on a quarterly basis. Again, it's a 12-month trade, but we saw that after showing it for 24 and 25 and have enough kind of historical quarters to continue to show that now on a quarterly basis. There's two main reasons for the ARPU to go down or up. One is about our existing machines and how much you can see there the shift from cash to cashless. So this is one impact. And the second thing is obviously the entrance into higher transactional verticals like EV, exactly as you said, like car wash and amusement. So as long as we continue, and that's the plan, to invest in higher transactional verticals, ARPU should continue to improve.

Josh, I just want to add, this is Aaron, that on the ARPU, as you've seen over the last several quarters, the processing growth, as Sigeet mentioned, has been the main driver of the ARPU growth, and we expect this to continue to grow as it has. I want to flag, though, that this has been, as I said, predominantly from the processing side. The SaaS side we've kept relatively the same across the business. As we look forward over the coming years, this is where I think that the embedded banking and some of these other services that we're bringing to the table really have the opportunity as a catalyst to grow the ARPU even further, which, you know, we'll talk about here over the coming quarters. But adding additional services like lending, issuing, and e-commerce to our existing customers should continue to accelerate the ARPU growth.

Appreciate it. Thank you.

The next questions are from the line of Chris Kennedy with William Blair. Please proceed with your questions.

Great. Thanks for taking the questions. Just wanted to follow up on the pilot of Yellow. I know it's very early and we'll get additional information, but any initial learnings or kind of use cases that are resonating with your customers?

Yes. Hi, Chris. This is Aaron again. Yeah, so we've started the pilots on the Yellow account. We've I launched the marketing of it at the NAMA conference back last month. And so far, things are going well. We're learning a lot along the way with it. But I would say that the general perception that we see is that customers want to have this product. And I think there's a few reasons and many reasons. I think the most important thing is ease of getting the payout at the end of the day. So one of the things that we're marketing is getting a faster payout into their account. They get to see it right away as opposed to having to wait that extra, you know, potentially a couple of days in order to go and get it transferred from our account into an external account. So this is huge for businesses that, you know, live day to day on cashflow, which a lot of these nano merchants do. The other part, though, that is really important for us is this is the foundation for being able to add the other services over time. So the first step is to get people onto the Yellow account. The second step here is once they have the application and they're using on a daily basis, the fund flows are happening, so they get the pay-ins and payouts from this account and all the processing is coming through us, then we can start layering in the other services and provide curated offers to them which really personalizes what the customer needs are, which we don't believe it can be served by external parties as easily because an external bank that is going and working with these customers, they don't get the daily payment flows that are happening with these customers. We're seeing by the minute how their flows are happening, which allows us to either accelerate or decelerate the offers to these individual customers, which is a win-win for both of us.

Great. Very clear. Thank you for that. And then just a quick update on Brazil. It sounds like you had a lot of momentum there. Can you just remind us of what the opportunity is in that market? Thanks for taking the questions.

Yeah, this is Aaron again. Brazil has been amazing for us so far over the last couple of years since we bought VMTechnologia and then last year buying UpPay. This is a couple hundred million person country, larger than most of the rest of Latin America combined. And You know, we see a huge opportunity there, especially for the unattended industry, and we're expanding into many different verticals there right now. As we speak, we've aligned the branding now with NIAX, and we've moved and are continuing to move the infrastructure over to unified NIAX infrastructure. We'll be bringing the B-Post media there over the coming months as well, the pin-on-glass device. Uh, and we see a huge opportunity, uh, from a, uh, penetration side of, uh, you know, some of these industries that historically didn't really have a cashless unattended and unattended is relatively newer there in the last 10, 15 years. So there weren't really incumbents, uh, prior to, uh, you know, VM technologia entering and now obviously us, uh, you know, inheriting VM technologia. I think that, you know, there's still a lot of opportunity to penetrate there. And we're seeing a lot of, you know, it's mostly a rental business there with regards to the devices, which is amazing for us because, you know, this is, you know, a gross margin that is more comparable to our SAS gross margin today. You know, and generally you're seeing five, seven plus years of life on the devices. So, yeah. a lot to come there in Brazil, and we intend to continue to invest there and in the rest of Latin America. You know, we talked about the integral vending acquisition and really making our penetration on both sides of Latin America and then moving to the rest of the countries.

And also to add, Preet, is that this is a great example of an acquisition that we have done in the past that now translates into strong organic growth that we also showed in Q1, 32% growth on the revenue, 26% organic revenue growth. So that's, again, another example of translation into our day-to-day and create the growth machine.

Thank you. The next questions are from the line of Hans Leitner with Jefferies.

Please proceed with your questions.

Yes, thanks for letting me on. I've got a couple of questions. The first one would be if you could talk about the FX impact for Q1. I think there was quite some movement in the US dollar and the Israeli shekel. And then maybe just like, you know, based on your definition, organic growth trends ahead of your annual guidance. So maybe you can just talk a little bit about how you see the rest of the year shaping up. And then just in the backdrop of the hardware contribution, which was quite healthy, Q4 has a quite tough comp in hardware sales, so maybe you can just give there a little bit of context. Thank you.

Thanks, Hannes. So with regard to FX, actually, I'll give ourselves a compliment that we're doing a great job of monitoring all of the currencies that we work with, not just the Israeli shekels, but the euro and the pounds and As you know, we're selling our product in more than 120 countries. So FX is part of our day-to-day. We're doing a great job on hedging, whether it's a natural hedging or actually working with the banks to do that. Typically, this quarter, we had a 1.2 negative effect on the OPEX. But as we said, we are reaffirming our guidance, which takes into account a lot of things, including some of the unknown of the effects. So I don't foresee... There is an effect, but I don't foresee a significant effect when it comes to currency volatility, again, with the current information that we have right now. On the organic growth, you're absolutely right, a beautiful organic growth in the quarter. we did guide last year on 22 to 25 percent overall and that will come from a lot of other things that are happening in the next quarter so we're not trying changing the guidance but we are different from last year that we have a very hockey stick towards the second half of 2025 especially in q4 this quarter this year i'm expecting a better split between the quarters that will impact both the growth, as we talked about, as well as the organic. From the hardware contribution to your question, yes, very proud of 46% hardware revenue growth. As I said, this is exactly what I just said about, you know, kind of better split between the quarters rather than... a hockey stick in the next, in the Q4 numbers. Having said that, H1 is always around 45% of our revenue. H2 is around 55. So our quarterly, you know, we have a very common cycle because of the predictability of the business, the high recurring revenue that we have that this quarter were 74%. So, with that, you know, we kind of know what's the rhythm of the quarters and the ability to predict gets easier as we go along.

Thank you. Our next question is from the line of Sanjay Sakharani with KBW.

Please proceed with your question.

Hi, this is Yvonge on for Sanjay. Thanks for taking my question. With regards to the question earlier on hardware gross margins, are you seeing any impact to hardware costs from the conflicts in the Middle East? And how are you managing inventory levels as a result? Thank you.

Hi, Yvonne. Thank you for the question. We actually don't see a margin impact as a result of the conflict. You know, we have a very strong operational team that's working on from a component cost standpoint to improvement in the supply chain infrastructure and processes. So I don't see any impact necessarily on that. Inventory levels are really good, and as we've intended to have, basically flat from last quarter to this quarter, despite the 46% increase on the revenue for the hardware industry. As we continue the year, we're expecting that to see around those level of gross margin a little bit, maybe a little bit higher on the hardware.

Okay, thank you. That's really helpful. And just to follow up on M&A, can you provide any color on how the pipeline is shaping up and whether we should expect any activity in the near term? Thank you.

Yes, this is Aaron. The pipeline has been great, and we're seeing, you know, this is really in the last, especially the last six to 12 months, and I've been mentioning this last few quarters, but there's really a pickup of this becoming a buyer's market. You know, with AI disruption happening, it's freaked out the markets in a lot of different ways. And, you know, private companies especially have been having trouble getting liquidity for multiple years now, basically since 2022. And a lot of these companies, you know, need growth capital to continue, even if they're very profitable businesses. And, you know, they're in a conundrum of what do they want to do going forward? And, you know, we're having many bilateral conversations now with companies and companies that have started, uh, you know, sell processes, uh, you know, with that in mind of, you know, they need to sell the company, uh, or want to sell the company. Uh, and we can get much more favorable terms, uh, than what a competitive process might've been, you know, three or four years ago. Uh, you know, as I've said, uh, you know, previously, you know, we're generally targeting founder led or founder owned businesses. And there are many opportunities that are on the table. We're actively in processes with several companies. And I still expect that we will complete, you know, the roughly few acquisitions that we, you know, have been projecting, you know, on our long-term cycle on a year-to-year basis. So more to come there over the coming months. But there definitely will be contribution from inorganic growth this year. And, you know, as we go towards the 2028 target of getting a billion dollars of revenue, I remind that, you know, we still expect to see a couple hundred million of inorganic contribution to that. And this year will be a part of that.

Okay. Thank you for the color.

Thank you.

The next question is from the line of Chris Zhang with UBS. Let's just see if there are questions.

Hi, thanks for taking our question. So I wanted to ask about the potential for a rental or installment-based model, and then you were asked about Brazil, so I guess it was a pretty good intro to that topic. Just wanted to get your thoughts or updates on the potential introduction of a rental or lease-based model elsewhere outside of the Brazil market, and what do you think the opportunities and some of the unlocks are there This is my first question. I have a quick follow-up. Thank you.

Hey, Chris. Thanks for the question. So maybe I'll start with a little bit, you know, on the margin side, and then Erin can take kind of the strategic view of rental in general. So, yes, margins are amazingly better when it comes to the rental business. because you kind of bundle the hardware, the processing, and the services to $20 a month, $25 a month. And if you analyze it over time, usually those customers, as a regular customer, stay for the 5, for the 10, for the 15 years and continue to pay that, which brings the margins overall to around 80%. from everything, right? And while now we have hardware margin 40% and recurring revenue of 54%, overall, it's an amazing margin. Having said that, one, it takes time to transition, right, from hardware sales to, you know, kind of a rental model standpoint. And it's sometimes relevant to some geographies versus others. It's also more relevant, in my opinion, to the small businesses, need to small and not necessarily to the large customers that like to buy the hardware and manage it in a way themselves. a few specific rent to the rental market, but we are very excited about it. I also say, you know, it's not just the transition, it's also the infrastructure investment, right? It's basically a fixed asset that you need to make. So you, you know, the cost is on us today, the revenue will come over time. But we all understand that now, obviously, with the strong balance sheet we have, we can afford that to make the transitions, as I said, over time.

Chris, yeah, so I'll add on the strategy side. As we look at the rental business, I see it as two different things. That's the end customers, actually. So the best way to think about it is, you know, the customers that we're purchasing are probably still going to purchase the hardware up front. I think that it opens up a new segment, a new serviceable market for people that want unattended devices. And people that might want to swap out from existing devices, but don't necessarily have the CapEx to go and make the flip out so easily. So it accelerates their transition over to our products. So if anything, we're seeing that this increase is the same over time. And for some markets, like in Brazil, we see it being the dominant market opportunity to do rental overselling. Yeah, more to come there, but we're definitely seeing a pickup in rental, and we expect that over the coming years that rental will continue to be a larger portion of the overall sales.

All right. Thank you so much again, Aaron. And my follow-up is just look at the pre-cash flow conversion and trying to think where that should be. or where you see that to be in 2027 and beyond from the 40% level this year?

Thank you. So first, maybe to talk about that operating cash flow improved year over year. And it's kind of the normal first quarter cycle that we have. that the free cash flow was negative $6 million. We made a lot of infrastructure investments, and it's always the processing settlement timing that impacts the Q1 free cash flow. As I said, we're still expecting that with the unit economics improved and with our ability to to increase significantly the adjusted EBITDA this year, right, from the, to around 17%, that's our guidance, that it will translate into cash and into cash flow and obviously to a free cash flow. We haven't provided guidance for 2027 and beyond about cash flow and free cash flow, but I would love to think about it if it's something that we would like to provide for the market in the future.

All right. Thanks a lot and appreciate it and look forward to catching up on the call back in the next quarter. Thank you.

Thank you.

Thank you. At this time, I'd like to turn the floor back over to Yair for closing comments.

Thank you for joining us today and for your interest in NIEX.

Q1 was a strong start to 2026. We grew our customer base at an accelerating pace and continue to compound profitability across the business. I want to thank our employees for their hard work

dedication and our customers partners and shareholders for your continuing trust thank you very much this concludes today's conference you may disconnect your lines at this time thank you for your participation have a wonderful day