Q1 Revenues Increase 169% to a Quarterly Record $11.3 million
SAN DIEGO, CA, May 22, 2023 (GLOBE NEWSWIRE) -- RYVYL Inc. (NASDAQ: RVYL) ("RYVYL" or the "Company"), a company that leverages the security of the blockchain and USD-pegged stablecoin technology with near-real-time attestation to conduct payment transaction, has provided its financial results for the first quarter 2023.
Management Commentary by CEO Fredi Nisan:
First Quarter 2023 and Subsequent Operational Highlights:
- Record quarterly revenue of $11.3 million versus $4.2 million during the same time period in 2022, a 169% increase.
- Q1 processing volume of approximately $565 million, an increase of 381% increase from the prior year same period.
- Engaged Kingswood Capital Markets as a placement agent and advisor in connection with the planned spin-off of coyni and estimated public offering of approximately $40 million with a NASDAQ uplisting.
- Acquired Logicquest, a shell company, for the transfer of coyni's assets in order to facilitate the spin-off transaction.
- FX and international payments business, including Transact Europe, reported over $344 million in business volume during the quarter.
- Entered into a strategic partnership with global payment solutions leader, Intercash, to expand Banking-as-a-Service platform in Europe through card issuance collaboration for customers in the European Economic Area (EEA).
- Signed up 6 global financial institutions for the Banking-as-a-Service (BAAS) solution, expected to process over $100 million per month when fully ramped up.
- Appointed Mary Lay Hoitt, an accomplished financial executive with over 25 years in CFO and VP of Finance roles serving both public and private firms, as interim Chief Financial Officer.
- Completed the amendment and restatement of our audited consolidated financial statements and related disclosures for the year ended December 31, 2021, along with unaudited consolidated financial statements and related disclosures for the quarters ended March 31, 2021, June 30, 2021, September 30, 2021, March 31, 2022, June 30, 2022 and September 30, 2022.
Summary and Outlook
We are pleased to report a record first quarter 2023 of $11.3 million, outstanding growth from the prior year of 169%. The first quarter was not without its challenges. Uncertainty surrounding the banking sector, coupled with expectations for increased regulation of digital payments and general macroeconomic concerns were common themes. Yet, we delivered against this backdrop with our best quarter ever.
Our concentrated efforts on improving the bottom line, processing efficiency, workforce, and technology are bearing fruit as evidenced by the increase in our operating margins. While proud of our Q1 top-line growth, much of our time, energy and expenses for the quarter were related to completing the restatement of our financials, which we successfully achieved.
In addition to our strong financial results, we took meaningful strides towards our value creation strategy, engaging Kingwood Capital Markets as our placement and advisor in connection with the spin-off of coyni assets and related public offering expected to be in the range of $40 million with Nasdaq uplist. We also acquired the public shell to transfer the assets into. Furthermore, we continue to evaluate multiple strategic acquisitions and partnership opportunities to create synergies with the spin-off company. Ultimately, as a stand-alone publicly traded entity, we expect the growth trajectory of coyni to unlock significant shareholder value, which RYVYL and its shareholders will benefit from. We continue to plan to issue a Board approved special dividend upon completion of the spin-off transaction.
We continue to gain momentum on our Bank-as-a-Service (BaaS) initiative in early 2023 with growing demand for the service after signing six global financial institutions that are projected to process more than $100 million per month in transaction when fully ramped up. Additionally, we formed a strategic partnership with Intercash, a European global payments solutions provider to offer co-branded debit and pre-paid cards. We believe Banking-as-a-Service is the future of global banking, and we're excited to be an enabling service provider in a space that is rapidly emerging and reaching new customers every day.
Turning to 2023 and our outlook, we expect to meet our revenue commitment of $60 million and achieve $4 million adjusted EBITDA. We remain focused on executing towards the larger opportunity ahead of us in the lucrative digital payments landscape. Given the expansion and higher margin acquiring processing volume, both internationally and domestically, momentum in our banking-as-a-service solution, and steps towards coyni's spin-off, we are confident we are on the optimal path to create significant long-term value for our shareholders.
First Quarter Financial Summary
- Gross revenue increased by $7.1 million, or 169%, to $11.3 million for the three months ended March 31, 2023, from $4.2 million for the three months ended March 31, 2022. The change in net revenue reflected increases in processing volume and increases in revenues from our acquired businesses including Charge Savvy, RYVYL EU, and American Samoa.
- Gross profit in the first quarter of 2023 was $5.1 million, or 45.3% of total revenue, compared to gross profit of $1.4 million, or 34.0% of total revenue, in the same quarter a year ago. The increase in gross profit was primarily due to increases in processing volume and processing volume margins in the three months ended March 31, 2023.
- Operating expenses increased by $0.3 million, or 3.4%, to $8.8 million for the three months ended March 31, 2023, from $8.5 million for the three months ended March 31, 2022. The increase was due primarily to higher payroll and payroll tax expenses and external professional expenses for legal and accounting services for the financial restatement and 2022 annual reporting. in addition, we encountered legal proceedings for the three months ended March 31, 2023, offset by decreases, in general and administrative, advertising and marketing, and stock based compensation expenses.
- Other expense decreased by $18.0 million, or 80.7%, to $4.3 million for the three months ended March 31, 2023, from $22.3 million for the three months ended March 31, 2022. Changes in the fair value of derivative liability amounted to a charge of $7.7 million for the three months ended March 31, 2022 and a credit of $168,000 in the three months ended March 31, 2023. Interest expense decreased by $5.0 million, primarily related to the $100 million convertible note issued in November 2021. Additionally, we incurred a charge of $4.1 million in the three months ended March 31, 2022, related to a loss on a partial extinguishment and conversion of debt.
- The company recorded a net loss in the first quarter of 2023 of $8.0 million, or 15 cents per basic and diluted share, compared to a net loss of $29.4 million, or 72 cents per basic and diluted share, in the same quarter a year ago. The decrease in net loss was due to increased revenue, gross profit and decrease other expenses mostly related interest expense and changes in derivative liability in the three months ended March 31, 2022.
- Cash, cash equivalents and restricted cash were $57.1 million as of March 31, 2023.
- First quarter 2023 Adjusted EBITDA loss, a non-GAAP measure, was $3.0 million.
Management will host a conference at 4:30 p.m. Eastern Time on Monday, May 22, 2023 to discuss first quarter 2023 financial results, provide a corporate update and conclude with a Q&A session. To participate, please use the following information:
Q1 2023 Conference Call and Webcast
Date: May 22, 2023
Time: 4:30 p.m. Eastern Time
US Dial In: 1-855-327-6837
International Dial In: 1-631-891-4304
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1613401&tp_key=c1081d6191
Please dial in at least 10 minutes before the start of the call to ensure timely participation.
To listen to a recording of the call available through July 22, 2023, dial 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally and enter access ID 10021850. A webcast will also be available for 90 days on the IR section of the RYVYL website or by clicking the webcast link above.
About RYVYL
RYVYL Inc. (NASDAQ: RVYL) was born from a passion for empowering a new way to conduct business-to-business, consumer-to-business, and peer-to-peer payment transactions around the globe. By leveraging unique blockchain security and USD-pegged stablecoin technology with near real-time attestation, RYVYL is reinventing the future of financial transactions using its coyni® stablecoin platform as a transactional foundation. Since its founding as GreenBox POS in 2017 in San Diego, RYVYL has developed applications enabling an end-to-end suite of turnkey financial products with enhanced security and data privacy, world-class identity theft protection, and rapid speed to settlement. As a result, the platform can log immense volumes of immutable transactional records at the speed of the internet for first-tier partners, merchants, and consumers around the globe. www.ryvyl.com
Use of Non-GAAP Financial Information
This earnings release discusses Adjusted EBITDA is a non-GAAP measure that represents our net loss before interest expense, amortization of debt discount, income tax expense, depreciation and amortization, stock-based compensation expense, acquisition-related expense and legal costs and settlement fees incurred in connection with non-ordinary course litigation and other disputes.
We exclude these items in calculating Adjusted EBITDA because we believe that the exclusion of these items will provide for more meaningful information about our financial performance, and do not consider the excluded items to be part of our ongoing results of operations. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.
See also Reconciliation of Net Income (Loss) attributable to RYVYL, Inc., to Adjusted EBITDA in the table below.*
Cautionary Note Regarding Forward-Looking Statements.
This press release includes information that constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on the Company's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to the Company. Such forward-looking statements include statements regarding the timing of the filing of the aforementioned periodic reports. By their nature, forward-looking statements address matters that are subject to risks and uncertainties. A variety of factors could cause actual events and results to differ materially from those expressed in or contemplated by the forward-looking statements, including the risk that the completion and filing of the aforementioned periodic reports will take longer than expected and that additional information may become known prior to the expected filing of the aforementioned periodic reports with the SEC. Other risk factors affecting the Company are discussed in detail in the Company's filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable laws.
Investor Relations Contact
Mark Schwalenberg
MZ Group - MZ North America
312-261-6430
RVYL@mzgroup.us
www.mzgroup.us
RYVYL Inc.
Consolidated Balance Sheets
March 31, 2023 and March 31, 2022
(unaudited)
| March 31, 2023 (Unaudited) | December 31, 2022 | |||||||
| ASSETS | (dollars in thousands) | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 17,742 | $ | 13,961 | ||||
| Restricted cash | 39,396 | 26,873 | ||||||
| Accounts receivable, net of allowance for bad debt of $28 and $82, respectively | 859 | 1,156 | ||||||
| Cash due from gateways, net of allowance of $9,326 and $9,326, respectively | 7,309 | 7,427 | ||||||
| Prepaid and other current assets | 4,061 | 9,798 | ||||||
| Total current assets | 69,367 | 59,215 | ||||||
| Non-current Assets: | ||||||||
| Property and equipment, net | 1,676 | 1,696 | ||||||
| Other assets | 2,214 | 197 | ||||||
| Goodwill | 26,753 | 26,753 | ||||||
| Intangible assets, net | 6,156 | 6,739 | ||||||
| Operating lease right-of-use assets, net | 1,363 | 1,533 | ||||||
| Investments - assets | 687 | 1,524 | ||||||
| Total non-current assets | 38,849 | 38,442 | ||||||
| Total Assets | 108,216 | 97,657 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 9,775 | 1,630 | |||||
| Other current liabilities | 2,852 | 3,662 | ||||||
| Accrued interest | 2,437 | 1,728 | ||||||
| Payment processing liabilities, net | 37,013 | 28,912 | ||||||
| Short-term notes payable | 15 | 14 | ||||||
| Derivative liability | 87 | 255 | ||||||
| Current portion of operating lease liabilities | 353 | 534 | ||||||
| Total current liabilities | 52,532 | 36,735 | ||||||
| Long term debt, net of debt discount | 64,353 | 61,735 | ||||||
| Operating lease liabilities, less current portion | 965 | 1,109 | ||||||
| Total liabilities | 117,850 | 99,579 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity: | ||||||||
| Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and outstanding of 51,335,650 and 49,727,355, respectively | 51 | 49 | ||||||
| Common stock issuable, par value $0.001 | - | 2 | ||||||
| Additional paid-in capital | 96,234 | 96,271 | ||||||
| Accumulated other comprehensive income | 1,538 | 1,596 | ||||||
| Accumulated deficit | (107,457 | ) | (99,772 | ) | ||||
| Less: Shares to be returned | - | (68 | ) | |||||
| Total stockholders' equity | (9,634 | ) | (1,922 | ) | ||||
| Total liabilities and stockholders' equity | $ | 108,216 | $ | 97,657 | ||||
RYVYL, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2023 and 2022
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 (as restated) | |||||||
| (dollars in thousands, except per share data) | ||||||||
| Revenue | $ | 11,291 | $ | 4,210 | ||||
| Cost of revenue | 6,178 | 2,780 | ||||||
| Gross profit | 5,113 | 1,430 | ||||||
| Operating expenses: | ||||||||
| Advertising and marketing | 75 | 141 | ||||||
| Research and development | 1,936 | 1,938 | ||||||
| General and administrative | 1,452 | 1,792 | ||||||
| Payroll and payroll taxes | 2,714 | 2,384 | ||||||
| Professional fees | 1,803 | 1,505 | ||||||
| Stock compensation expense | 193 | 293 | ||||||
| Depreciation and amortization | 620 | 454 | ||||||
| Total operating expenses | 8,793 | 8,507 | ||||||
| Loss from operations | (3,680 | ) | (7,077 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (1,729 | ) | (3,830 | ) | ||||
| Interest expense - debt discount | (2,622 | ) | (5,521 | ) | ||||
| Loss on settlement of debt | - | (900 | ) | |||||
| Changes in fair value of derivative liability | 168 | (7,700 | ) | |||||
| Merchant fines and penalty income | - | 45 | ||||||
| Other income or expense | (111 | ) | (4,364 | ) | ||||
| Total other expense, net | (4,294 | ) | (22,270 | ) | ||||
| Loss before provision for income taxes | (7,974 | ) | (29,347 | ) | ||||
| Income tax provision | 5 | 80 | ||||||
| Net loss | $ | (7,979 | ) | $ | (29,427 | ) | ||
| Comprehensive income statement: | ||||||||
| Net loss | $ | (7,979 | ) | $ | (29,427 | ) | ||
| Foreign currency translation loss | (58 | ) | - | |||||
| Total comprehensive loss | $ | (8,037 | ) | $ | (29,427 | ) | ||
| Net loss per share: | ||||||||
| Basic and diluted | $ | (0.15 | ) | $ | (0.72 | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and diluted | 52,210,597 | 40,708,304 | ||||||
RYVYL, Inc
Unaudited Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2023 and 2022
| Three Months Ended March 31 | |||||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Cash flows from operating activities: | (dollars in thousands) | ||||||||||||||||
| Net loss | $ | (7,979 | ) | $ | (29,347 | ) | |||||||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||||
| Depreciation and amortization expense | 620 | 454 | |||||||||||||||
| Noncash lease expense | 913 | - | |||||||||||||||
| Stock compensation expense | 193 | 167 | |||||||||||||||
| Restricted stock issued for services | - | 126 | |||||||||||||||
| Interest expense - debt discount | 2,622 | 4,262 | |||||||||||||||
| Derivative expense (benefit) | (168 | ) | 7,700 | ||||||||||||||
| Other, net | - | (79 | ) | ||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
| Accounts receivable | 296 | 13 | |||||||||||||||
| Prepaid and other current assets | 5,741 | (80 | ) | ||||||||||||||
| Cash due from gateways, net | 119 | (5,962 | ) | ||||||||||||||
| Other assets | (2,017 | ) | 18 | ||||||||||||||
| Accounts payable | 8,144 | 153 | |||||||||||||||
| Other current liabilities | (915 | ) | 109 | ||||||||||||||
| Accrued interest | 709 | 2,490 | |||||||||||||||
| Payment processing liabilities, net | 8,101 | 5,507 | |||||||||||||||
| Net cash provided by (used in) operating activities | 16,379 | (14,469 | ) | ||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Purchases of property and equipment | (17 | ) | (66 | ) | |||||||||||||
| Cash provided for Transact Europe Holdings OOD Acquisition | - | (28,811 | ) | ||||||||||||||
| Cash provided for Sky Financial & Intelligence asset acquisition | - | (16,000 | ) | ||||||||||||||
| Net cash used in investing activities | (17 | ) | (44,877 | ) | |||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Treasury stock purchases | - | (3,540 | ) | ||||||||||||||
| Proceeds from stock option exercises | - | 5 | |||||||||||||||
| Borrowings (repayments) from convertible debt | - | (6,000 | ) | ||||||||||||||
| Net cash provided by financing activities | - | (9,535 | ) | ||||||||||||||
| Effect of exchange rate changes on cash | (58 | ) | - | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 16,304 | (68,881 | ) | ||||||||||||||
| Cash, cash equivalents, and restricted cash - beginning of period | 40,834 | 89,560 | |||||||||||||||
| Cash, cash equivalents, and restricted cash - end of period | $ | 57,138 | $ | 20,679 | |||||||||||||
| Supplemental disclosures of cash flow information | |||||||||||||||||
| Cash paid during the period for: | |||||||||||||||||
| Interest | $ | 1,000 | $ | 4,891 | |||||||||||||
| Income taxes | - | - | |||||||||||||||
| Non-cash financing and investing activities: | |||||||||||||||||
| Common stock issued for acquisition of Sky Financial | - | 2,110 | |||||||||||||||
Reconciliation of Net Income (Loss) attributable to RYVYL, Inc., to Adjusted EBITDA* for the Three Months Ended March 31, 2023 and 2022
| Three Month Periods Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| (dollars in thousands) | ||||||||
| Net loss | $ | (7,979 | ) | $ | (29,427 | ) | ||
| Interest expense, excluding amortization of debt discount | 1,729 | 3,830 | ||||||
| Amortization of debt discount | 2,622 | 5,521 | ||||||
| Income tax expense | 5 | 80 | ||||||
| Depreciation and amortization | 620 | 454 | ||||||
| EBITDA | (3,003 | ) | (19,542 | ) | ||||
| Other non-cash adjustments: | ||||||||
| Changes in fair value of derivative liability | (168 | ) | 7,700 | |||||
| Stock compensation expense | 193 | 293 | ||||||
| Adjusted EBITDA | $ | (2,978 | ) | $ | (11,549 | ) | ||
| Loss from operations | $ | (3,680 | ) | $ | (7,077 | ) | ||
