GBOX - Earnings call transcript Q2 2022

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Operator

Good afternoon, ladies and gentlemen. And welcome to the GreenBox POS Second Quarter 2022 Earnings Conference Call.

During today’s presentation, all parties will be in a listen-only mode.

Following management’s remarks, the conference will be open to questions. The earnings press release accompanying this conference call was issued at the close of the market today. includes ended results filed June SEC which the operations with report, today. months three XX, quarterly the of company’s for the The XXXX was Financial POS call Min Officer, Ben are our Chung; GreenBox On Errez; Chief today Wei. Chief Officer, Operating Ben and Chairman, remind actual statements number and forward-looking cause like that to including to today’s a webcast, risks from in made maybe call and those could are to the I’d regarding industry future prospects, on differ materially call. and of uncertainties those results financial everyone that results and described subject for Please list refer to the company’s associated regulatory filings the risks. of The next and XX call site webcast the the on available company’s Web for section. replay of days Events under will this the be over At this time, I would conference Mr. to like the to turn Ben Chairman. Errez, company’s the is Ben, yours. floor the

Ben Errez

thank call. quarter joining for us Hello, all for conference today XXXX results and our you financial second

our to further with was financial by delighted excellent ago. announce are an several fintech We versus initiatives quarter on quarter billion, landscape. record yet company that GreenBox at over another as of marked of our standing a progress key along volume processing than the XXXX force results, second steady establish quarter year same double the more on the We volume achieved emerging $X that

others to industry, we in to as predict As addition the results. volume many digital proxy believe, transactions financial too processing our best in the processing consider global growth trajectory amazing volume

objectives, number operational partner of as a customer accomplished critical as also well enhancements. We and strategic

the for territories, to American and as on global and We Transact Coyni, focused functions, continue material within in the payment. business M&A, such hyper further exchange volume the in to sales, execution balance we Despite platform. domains, of and challenging foreign certain second while look recent of scale progress during marketing quarter, including infrastructure methodologies use Europe from as business the of development processing and the operational turmoil Samoa, on select international stablecoin capabilities strategies. our service integrated variety business in several strengthened offerings or year the plan algorithmic marketplace like investment introducing order [macro] the as excellent ACH, to of [tag] additionally launch in a risky our our US we our XXXX. business core the made products quarter model, of growing During Market we non-liquid stablecoin dollar environment, remain share severely to that second currencies and exposed such

that and we consistently that XXX% We review term a firm. X real account the compliance accounting offer, not the industry's deem processes, stablecoin that's quarter, that to any are via Here under from reserves our is to in users have to want account time available. structures the to existing being stablecoin first important became second Armanino, fund station SOC something industry a long IT, the at means available specifically and essential This Coyni stablecoin for industry’s to US and and should time. At custodial challenge attest has very any consulting lengthy at distinction, ensure many do process time compliance as improved we this we account that exit GreenBox, Coyni in real top assets custodial note. liquidity anyone of elements assurance the the scenario, but of of of proof one ensure custodial to certification And always vital secure dollar-for-dollar of two in success. their technology

our term a driver So a Coiny growth while outstanding diverse of set for business. view our has as significant differentiator, because payment solutions, of critical we company this long technology

in being named XXXX, we with we Territorial Samoa, this technology provider the is major Bank deploying solutions territory. payment of TBAS. QX exclusive Another in of have American now seen US providing partnership are in our After plan in payment which digital progress the

mostly transactions that speed a GreenBox Here, catapulted ecosystem on solutions processing more. of reliant have transactions, art secure, and being and cash debit loop transmission tech state and the that tracking pencil closed card offers delivering into high we money services, driven is merchants and these paper and credit with

Given the exit allowing the is in the of GreenBx recent island, greater for only remaining institution bank growth. TBAS now second a American Samoa, banking on

second needs. be XX% our our unique our We We and showcases market ability model island agility to achieved to platform implement to close to to loop gained will all share TBAS other believe the similar about geographies. same technology ideal firmly serve types for offering the prove of now have this for customer Coyni quarter. territory, during use This the all market

discussed, begin market. of and technology the the UK to previously piece and transaction completed Asian processing. a to plan, of solutions European Europe deliver customers’ the also acquisition It a or end enabling Transact merchants, TEU we've QX, foreign As TEU. of growth our into us the serves advantages at we of payment vital exchange as our is gateway effectively

the second the start significant of quarter, processing a at the QX, This, to building on key Several strategic the opportunities. on half with and portfolio available the of offerings revenue of purchase packaging initiatives are balance immediately the this acquisition and we are year. generate coupled infrastructure track will drive produce key have XXXX. from portfolio Sky deployed business During growth volume the second growth being our Financial focused in to to the of maximize for

grown of BDO. our turn growth the we've an anticipation future. the respected you important recent Alliance and experienced material quarter. to provides to company practices, contributor our and to we and so securities our and during compliance Edward, of proven Chung, continued to of Financial our Adele This plans of details lawyer. I'll auditors will dividend be governance M&A QX, of appointment Officer, us our any overview also & already and a our financial has our now the acquisitions member have evolution of the well of over our continued highly the successes, has in results. Hogan, public transactions As Directors, Board Simon in with second commitment and walk of Adele indicative strong Chief transitioned Ben an to an to accomplishments through In

Ben Chung

adjusted results was note I non-GAAP XX-Q Ben. my to financials. is in you, and portion limit measures. be market the our after of A that and will referring Thank in that filing our key today. other full closed press breakdown release available I'll to EBITDA Please distributed

SEC calculation our you website which XX-Q EBITDA For measures, available please adjusted in which other can filings. non-GAAP is the to filings, on our of under MD&A, and the refer find

growth to revenue processing volume throughout solid with have see due will to our year. net to we in increased merchants our the volume continued growth processing and We continue

by same or months for X.X% increased revenue prior period. ended Our XXXX from XX, the million to million net the in $XX.X June year $XX.X $X.X six million

by June net gateways Our quarter six higher The but XX, million to prior million or ISOs. to and X.X% was revenue $X.X same the the net for Gross $X quarter XXXX $X.X increased increase of increase the XXXX $X.X from revenue was by the fees ended in profit to offset million in months volume year. compared or total due XXXX in second net profit was in in quarter the XX.X% ago. million gross net net total same revenue net period. XX.X% total profit million year compared of year’s same gross in of the XX.X% prior revenue revenue $X.X or $X.X the of in a to revenue total of Gross XX.X% or profit of to million $X.X of million second the or processing quarter

We paid of organizations processing primarily driven our will cost net be like primarily profit payments of that margin ordinary compensation which of I operating operating employees expenses operating to non-cash now non-cash and gateway small operating expenses and from due expenses. and ISOs, Once out I revenue are Ordinary from decrease professional like with our for increased our correlated and development, of marketing, our including payroll, was operating and of commission into structure by to independent categories: The the ISOs. stock not for would gross we services because two gateways operating in. operating are revenue, the number and sales revenue distinguish net in to directly due scalability our cost and the expenses our a our technology to research employees while business revenue to resulting fees. with expenses, Our depreciation. expenses commission negotiated expenses expenses. again, our gross include fees point higher would expenses to and discuss include are general primarily

$XX.X and of six were the June million XX, million $X.X million. operating an ordinary increase XXXX and for respectively, expenses XXXX months $XX.X Our ended

general and to sales overall headcount Our R&D XXXX increase improve of and expenses ordinary $X.X primarily to $X.X growth, related due QX in as an technology. operations heavy $X.X and million were well and expenses respectively, to increase an in XXXX investment to as support The our million increase was operating million. increased administrative for

Our non-cash other XX, for are prior to to XXXX Other million $X $XX the increased XXXX million $X XXXX. stock the expenses. million primarily for year. $X the employees million in compensation the prior months amortization of XX, year notes period and to with of and ended $XXX the convertible in June and November in June operating a a operations same services expenses the decreased depreciation period ended as of compared ended for loss expenses $X.X expense XX, period months net expense income to by ended year. same other for the the from We six to XXXX due expenses the from net related a months significantly six million prior June compared million in net six same issued the Interest

primarily or to or the million and taxes the of expense November of changes a share liability for the and XXXX. year’s year $XX.X $XX.X $XX.X and or also a the research increased liability million cash in six $X.XX six XXXX, basic growth and net convertible a of XXXX amount negative strong and a derivative an and per the add the we million prior nil as of infrastructure the million year. of income financial value in positioned and year. for Comparing in change period basic associated Amortization $XX.X sustained for expenses an cash $XX.X per ended and The from derivative basic increases future equivalents cents flat Furthermore, staff XXXX. general net XXXX. balance net the loss or believe basic QX well none in payroll recorded share in and the same second a end significantly our increase was remain ended none and restricted XXXX million in diluted for related the profitability. were at same notes notes in income of million Overall, loss fair the a compared fees compared diluted million period changes compared June payroll company factors. also $XX.X fees XX, and to for offset our previous of and and $X.XX issued to the income share company in value XXXX in XXXX to million QX recorded to by share $XX.X development, for administrative, other million fair loss as from we expense company June negative QX value other XXXX ended versus cash of XXXX XX, the professional liability in contributing income QX ago. by and net six per derivative $XX.X QX The net the same decrease and as in in the due QX fair quarter of in decreased of million QX recorded We fair continue to QX $XXX the XX, of with months liability same and diluted for Interest to XXXX and The income value of decrease of our a due in diluted balance XXXX quarter $XX.X prior XXXX $X.XX to net net a of is from and position months a quarter. we discount, XX, months income June per for We in of June XXXX of zero growth.

back So turn with Operating Wei, provide the over the review for year. Min Chief our that, the and to business a Officer, call to of now operations of I'll outlook half

Min Wei

before revenue Thank generating turning half an in to letter to you, contributors us Ben. recent CEO of our this the provide update and June. the the the time for We material channels at highlighted several through second I'd end our to revenue take take year. of like outlook

volume across is staggering portfolio, billion, of XX% over our million, all Sky including which is projection. channels recently compared the $XXX QX This $XXX processing volume increase volume to outpaced $X million. the internal XX% about when North business, of acquiring our XX%. added our of QX ahead our Our a QX by expectations In Financial was

expect year. line of continue targets We the through processing business of our exceeding balance the acquiring to volume

contributed ChargeSavvy total processing quarter’s better. to in in higher and plan. is Next, When tracking XXXX, same it over QX, compared to the X% XX% our at XX% this period than currently volume is the

monthly this to Our predict will XX% quarter of volume live since the volume it QX. This great part in business business. expectation elevated. $XX of of in the X% and the business reported XXXX towards total for was represent $XX.X We went ACH be our million demonstrates later the service progress ahead our

Our has momentum $XXX attributable quarter. the volume volume, more payment the business $XXX million Transact in line, estimates significant is double conversion than FX for same the and FX quarter international million Europe, The is of actual including and of with payments international transaction. in to business which

we mentioned, launched business quarter. service Samoa in American Errez Ben merchant past this As our

end the on the services quarter, merchants the island. [command] have number target with of XX% of of we of As about the total

by track base. to on roll end our one out the currently October, are XX% to servicing We XX% phase complete of merchant of

the public successfully in me X.X development to and our pipeline Coyni of roll complete an is on development with version back out [earlier], on QX, In progress. roadmap version identified which update Turning and core X.X allow in data the QX. customers schedule to Coyni, provide already to of we deployed the

end at quarter. a We that expect internationally the begin volume good amount of to of

XX% to see fourth results. ramping to for strong volume moderate up approximately Coyni volume profile expect XXXX, to driving and We volume quarter contributing significantly, our with domestically for QX international while begin financial in

see forward subsequent Looking almost double with XXXX. $X we date to billion we For the now volume six that in a ahead another KPI, XXXX our expect to this in year total brings half at to volume the quarter; we the at of look quarter year processing the XX, QX remain over is confident to million XX% our XXXX processing saw set QX. our ended ever, volume, during year, compared second half QX billion; of for months will of processing to of second Revenue as records record we $X quarter continuation the June the about increase each about new trend year new least following: as process the the which the best year from we by volume to during for margin $X.X

Coyni to QX, for previously a during to planning ramp and revenues. in solid As we and continue up QX are revenue processing in as ACH addition traditional payment grow business mentioned, volumes our

$X.X QX $X million. to be now we negative QX’s minimum as EBITDA, positive improvement to forma a we million. will QX, And of pro adjusted a believe which significant breakeven in compared is For project

positive operating of turn terms flow, expect we in starting cash In QX. to

a operationally over call from I'd landscape and very is to our we begin growth Errez turn like promising. before to the standpoint, So the Q&A. Ben now back trajectory

Ben Errez

you, Min. Thank

flow. moving Before $XXX the costs weighing the and the pertaining date [notes] company like address the cash Q&A, I'd any to on to as million to outstanding, maturity coupon concern such the

and that report We to staff that We to the been of tuned terms have notes Directors. pleased and you stay we principle ask executive in to the the the for Board and in are modify ongoing negotiations agreed of like satisfaction to being reiterate SEC to in filing. have are CEO that will the from disclosure is points worth letter some full issued a shared our recently be I'd a amendments to of Also, that key prepared highlighting. separate note currently the

competitive cognizant monitor industry business We the the continuously environment. of are and overall development, and of implications the landscape

infrastructure, technology on deploy While been ability remain it industry in partnership, objectives. there long building financial create focus business cryptocurrency significant We year, customized the our technology the and technology differentiated, term confident a highly remain transaction has and to disruption achieve GreenBox's and communication financial the our in the we to shareholders. value as GreenBox sustainable And reflected at depressed to you scale. price, Despite continue into in we disruptive unwavering. is financial envision a will it long your build our to Thank shareholders believe force, be for for ultimately we GreenBox. commitment rewarding a stock to this term commitment our

truly to grateful are With We our your support. for like ongoing Q&A session. that, I'd begin

our please Operator, executive team, question-and-answer and session. Nisan; so CMO, you Min answer our In of and other questions. through including your addition Fredi myself, Jacqueline the hands Thank guide much. are leadership to Ben, Reynolds, on us CEO, to members

Operator

comes [Operator Taglich Instructions] Halpern Brothers. of from question first with the line Howard Our

Howard Halpern

job ISO driven these and that's Great to the was about But and to and in had move driving how this waters quarter that end How first the what reduced and to from to now. gateway then you navigating going regards is profile model EBITDA breakeven, breakeven positive. going third my right to about in costs, towards How is tough just we quarter question talked that G&A by reduced what happen? expense? should to be and

Ben Errez

of Wei, go take Chief Operating your continued question. all, Min thanks Officer, ahead. will support. Howard Min, First this for our

Min Wei

So as revenue channels, see momentum volume expect to in ACH the acquiring the as continue main build channels. channels, all as across and we well we FX increasing international major to business, payments

to and able expect rising see sustain control we being revenue, cost. while to So

Howard Halpern

and of you you should you've as at there? year with market ramp the into in the how of look is in to half What it terms gain XX% in terms should Samoa, year half be share. momentum And the going next of expect now, say, of American we got how the we launch the first second right

Min Wei

with a work leadership relationship senior at So deep TBAS, a with closely very great bank. have we a we

the charted bank already the on have out We island. merchant

earlier base TBAS October, end only beyond have phase up, exclusive indicated banking that to get we As even one only island. with merchant to have -- because XX% to already plan we the on to actually is island. of by the relationship can expect go of ramp bank continue we And the XX% only to the on

do revenue margin to we ramp up from particular improve expect business and So project. that see contribution

Ben Errez

to of distances. over working in scale a close the already other such to XX% they and quarter should in to of to major anticipating American the Samoa anticipate The company activities monitoring we [hitting] the there. additional share Samoa add systems capitalize considered amazing for third are will one market achievement. large I the quarter can. as that minimum to test growing is are and a who extent success opportunity that for XX% Within and case we on largest it year intend the closely be American on And we that is we our an that

Howard Halpern

pipeline And by up said, monitoring able actually that you American interested from of activities more And tight. projects understanding it's closed locked my green a second to make proven, to many Samoa growing of once have parties the you'll year? what in of everything hopefully -- sure light next the are you be loop, your is half

Ben Errez

case, the exactly That's that. anticipate exactly we

Howard Halpern

to and you've acquisition ways through talk Do one the the on get into infrastructure. a about sales to break to that team, Asia, building but it the have of try being deploy still you you Asia one go Pacific a before been market? you to or And infrastructure gateway last when building TEU,

Ben Errez

Go that. ahead. I'll Wei again, let Min take

Min Wei

take a strategic accordance additional the be our and business can implied we process. ramp realization is those we do sales partnerships. very mature layout build identify with And and and channels we as business development peripheral opportunities will in and executed the in pipeline, a we we of and up, we kind what sales Howard, business approach,

we Pacific momentum North licensing. a lot the started in market, both seeing in leveraging Europe, in rising the Asia as So well trends America, and having European of interest platform business as

So that's it. how we approach

Ben Errez

the in well. to M&A that, Europe in Asia are [offer], in add at the opportunities we calls regards to opportunities pipeline and waiting very designed that great we the questions Pacific. -- will looking for and us Pacific. Asia looking over to both company own with I closely other in your Most and at in there. operate this [plans], there other already those that state I but are Asia on to the opportunities earlier gateway call are think on for we is Pacific the as to Europe And through of that

Howard Halpern

even one, more One are have you this out end M&A are year last you gotten year, the of the they seeing the reasonable? compared multiples mentioned since terms there What maybe what last of in potential. or time to

Ben Errez

know answer. It that the I asking for because could you that down cost We channels and increase the We We see as question, situation. shrinking global do see such that efforts. following reacted of redoubled is already and to the capital we're lead capital, think come multiples the landscape with that you're accommodating true. market and opportunities, has actually have think significantly. current

Howard Halpern

Well, congratulations forward. blocking keep on navigating this and tough environment, moving keep and tackling and

Operator

[Operator Errez in back further are Mr. no to like over questions There the remarks. Instructions] the to closing hand I'd for queue. call

Ben Errez

Thank operator. you,

in to Before like a to this will last Ben's the conference months future us. This thanks that call, Ben the he's be wish us, I special all best and with earnings XX endeavors. contributed final appreciate him We would over concluding with call Chung. give

to ongoing growth. on assist. of press all our any joining Thank tomorrow morning earnings our before look forthcoming a and call Additional you release than answer reach site to in we be your happy to filings please information to to If continuing will market IR and associated and Web DMZ forward today. starting you unable Group, be directly We SEC were firm, questions, for more on or us we opens. would our progress update our

Operator

conclude gentlemen, participation. your you teleconference. Thank this and for Ladies today's does

disconnect at have wonderful this your day. time, may a and line You

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