RYVYL Inc. Q1 FY2023 earnings call

• Ben Errez noted Q1 2023 had challenges like banking sector uncertainties and digital payments regulation, but achieved record top line revenue. Efforts to improve bottom line, processing efficiency, workforce, and technology led to increasing operating margins. Completed financial restatement. - Strategic initiatives: Plan to spin-off coyni stable coin technology, engaged Kingswood Capital Partners as placement agent, acquired public shell company for coyni assets. Banking-as-a-Service initiative gained momentum with 6 global financial institutions projected to process over $100 million per month, and partnership with Intercash for co-branded debit and prepaid cards. Processing volume in Q1 across channels was $565 million, 37% higher than projection. American Samoa partnership sees over 280 merchants serviced with Q2 plan to roll out to 60% of merchant base. - Min Wei discussed processing volumes, targeting Q2 processing volume of $580 million to $610 million, Q2 revenue $12.5 million to $14 million, and full-year revenue target $60 million with adjusted EBITDA of $4 million.

Ryvyl's fiscal first quarter 2023 saw top line revenue of $11.3 million, a historic high for the company, representing a nearly 170% year-over-year growth. Gross revenue increased by $7.1 million or 169% from $4.2 million in Q1 2022. Gross profit in Q1 2023 was $5.1 million, 45.3% of total revenue, compared to $1.4 million or 34% of revenue in Q1 2022. Processing volume across all channels was $565 million in Q1 2023, approximately 37% higher than the projected $414 million for the quarter. The company ended the quarter with cash, cash equivalents, and restricted cash of $57.1 million as of March 31, 2023.

• Q2 processing volume targeted at $580 million to $610 million. - Q2 revenue expected to be in the range of $12.5 million to $14 million. - Q3 revenue estimated at $15 million to $17 million, Q4 at $19 million to $21 million. - Full-year revenue target $60 million plus adjusted EBITDA of $4 million.

• Uncertainties surrounding the banking sector. - Expectations for increased regulation of digital payments. - General macroeconomic concerns.

Q: Can you talk about sales hiring strategy and trends domestically and internationally for merchant acquiring?

A: Min Wei stated they continue to enjoy high growth momentum from their ISO and partner network. In the U.S. merchant services space, grew over 150% in new locations from end of Q1 2023 compared to second half of last year. In international markets, built further partnerships and are seeing double-digit new merchant location growth since end of last year.

Q: With back to back quarters of higher margins, is it reasonable to expect that to continue at approximately this level moving forward?

A: Min Wei said the management leadership aims to continue growing top line and keeping costs under control, expecting to continue driving margin improvement going forward into Q2, Q3, Q4 2023.

Q: Can you elaborate on the expected time frame for coyni's spin-off?

A: Ben Errez said coyni's spin-off process started with acquiring a launch vehicle, which is live and compliant. Engaged investment banker for potential raise at estimated $200 million valuation with goal of $40 million. Anticipate the process to take approximately 6 months, including completing asset transfer, filing for name and ticker change, and uplifting associated rates.

Q: How do you view the stable coin ecosystem, both from a regulatory front and competitive front?

A: Ben Errez said there's divergence between onshore and global markets, hopes regulators will enable the U.S. market in a safe and controlled manner, and is preparing for possibilities if not happening in the U.S. first, with other markets like Europe leading.

Q: With the new partnership with Intercash, are you going to be tweaking this closed loop system for Europe? Or how are you thinking about this from a strategic perspective?

A: Min Wei said in the near term, the closed loop system in American Samoa and the partnership with Intercash are not impacting each other directly. The Intercash partnership is more on the issuing side in Europe and U.S. for certain demographics, with plans to explore expanding the issuing program for American Samoa but focusing on better volumes in Continental Europe and U.S. in the near term.