RVYL - Earnings call transcript Q2 2024

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Operator

Good afternoon, everyone, and welcome to RYVYL Inc.

Second Quarter 2024 Conference Call. [Operator Instructions] The second quarter end results press release accompanying this conference call was issued at the close of the market today.

Our quarterly report, which includes the company's results of operations ended June 30, 2024, was filed with the SEC today. A replay of this call is available at the Investor Relations section of the RYVYL's website in the Events Quarterly Results session.

call recorded. this reminder, a is being As

based statements. Before that and cause statements today's SEC. the those any I future expectations differ Errez, affecting to would regarding statements from By will assumptions which, statements current result the remind you on currently like available or in to projections forward-looking RYVYL. are detail forward-looking Other company applicable a call These results matters laws. I over are from statement, now turn, discussed management future as of future otherwise, we results the forward-looking and future concerning undertakes financial company's subject information and beliefs, to update condition begin, our events. ahead. contain go Please on extent in the company materially to contains publicly are events, forward-looking of by the the Ben risk to to with or actual or certain company's based uncertainties. A filings factors in operations other state to call their events that revise required are whether factors information. variety or forward-looking of address events information, Chairman obligation expressed no hand could the in The company nature, or new the contemplated of except risks by and forward-looking of

Ben Errez

International in RYVYL banking as well continue new second by efforts XXX% our line to of our our bolstered and Good European joining growth today. as was XXXX, in broaden changes operations review applications, EU, afternoon, to us quarter America the expand product other total technology In and revenue compared with arrangements licensing quarter everyone, second in for I'll the developments. launched thank expectations, of our to address to revenue North you XXXX.

operations; we growth, Fredi generator in discuss and initiatives Nisan, be EU strong George largest will will XXXX. our Chief it discuss financials. RYVYL Executive Officer, and and Oliva, will expect product revenue Financial deliver our Chief Officer, of the Our to continues

ensure onboarding been we've customers, resources. In of our rapid leveraging fact, to EU U.S.

Banking-as-a-Service International of from well an customers first million XXXX. international quarter in transaction as which in increase increase an growth, as to in volume offering the $XXX $XXX in to of Our quarter second led increased the million XXXX

payment third growth initiative we've Our capabilities gain and and using Visa and electronic ensuring benefits enabler financial to upon and consumers This merchants the offering secure deliver by X foreign electronic new delivers enabling first the leverages and This we and to and network network. customers, with in acquiring, efficient potential. We out our transactions perform Visa additional proves capabilities Direct Building opportunity or growth now the customers for long-term we for expanded provide services to platform and integration will in banks, completed This and entities, customers, various system. fortifies this facilitate planned integration and quarter. countries live financial implementing are revenue infrastructure including includes are and API and XXX for widespread global offers our in of traction acceptance, Visa. Visa's exchange streamlining transactions with payment total XX. connection, real-time us partnership believe compliance our the fund a our integrations our deposits, processing of direct to our first Visa the Direct's countries And payments are Visa's quarter to continues operations. Banking-as-a-Service offering which in

in fully July. this to growth integration recent ACI completed We Our worldwide collaboration contributing with is also internationally.

in coordination is payment enhanced payment that available being us and software across facilitator. partner, our our a Data, other Now Coyni, makes features. transaction PayPal with active, Europe and First as services we offering processing to are deployed allowing security operate exclusively

Our the U.S., our strong a to well-defined we we've the strengthened our drive over expansion structure, licensing. further growth, verticals has pipeline launched built the quarters, of corporate in and several past fuel into EU white been furthered and region. In label private growth momentum new this in and opportunities to

As changes discussed it in quarter, one niche impacted U.S. the significant a base first banking customer had in as regulations industry been contributor.

was revenue into continued affected, American which North quarter. the second Our

us. We have began operations multilayered the U.S., better lower address volumes. experts. this processing our we U.S. hiring largely is situation, strategy a to implementing to by align strengthened leadership We fintech been with which believe in rightsizing We our behind

Director of carries a as opportunities. Managing higher Revenue, newly created market building verticals processing we vertical We more banking expanded Merchant margins. VP roles include of successful high-risk Systems long-standing served and and been new VP of well both U.S. that a that Compliance, low relationship risk to moderate As Northeast as have

PayFac-as-a-Service call leverage on embedded customer focus have merchant score This Systems' offering [ business technology. aims expand into we to We our operation. our to Northeast proprietary ] our ] technology increase and to effort retention that our [ service and NEMS base score Merchant

us the both delivers leverage. labeling use enables improving partner our we their label our reduces partners customers, which banks, are and while transaction branding White our white pursuing own retain customized to we believe increases to processing. our and to We private licensing operating labeling regulatory challenges while access opportunities. Private for

to the legacy labeling, week, streams via label private licensed last private uses Payment-Processing-as-a-Service. technology high-risk core QuickCard which announced business As third-party to create a through revenue our we partner

higher expect under operational reduce costs transaction lower structure to our eliminate its than be achieve While private those will volume, and processing risk. fees based margins on operating label will gross per and we

and expect illustrative implementation in We applications other of a branded merchant as with a take details fourth stages to on and ancillary start elaborate are System a Merchant page and we the software support. assistance and along consumer hosting future the transactions provide quarter. I'll Management mobile as moment app, of landing to the e-wallet our fully agreement, with well website of implementation in this which final opportunities, are will the of

for We add-on partner our will for establish business and solution the of operate system, handle integration on will deployment purchases and RYVYL. to and of and and on ensure the its manage their merchants, will on payment and portfolio settlements maintenance implementation Payment-Processing-as-a-Service merchant and connectivity that the overrides of collaborate and banking system platform and and and the own work point the the ongoing all its integration. They collaborate consumer procure obligations banking operations of systems ACH RYVYL recruit also to interface timely audit rights grow manage any

who product initiatives Ferdi, CEO, August. I were Additional ahead. please product offerings and discuss which Fabric, will hand over Fredi the will RYVYL go our operations. Nisan, NanoKard in include call introduced now to and our

Fredi Nisan

ourselves capabilities our pride solutions features for on enhanced build our releases our clients. We proprietary customers delivering our for and product and functionality on with innovative and technology latest

Additionally, software Generation payment our Generation efficient is customizable, highly RYVYL into merchants. we incorporated solutions backbone businesses fintech latest X technology offers and advanced our solutions to X software our exclusively. RYVYL all and and

Our margin blockchain to alternatives and online cards merchants processing. RYVYL gift NanoKard deliver we these an Fabric app or we for and bringing a high processing are new convenience select these prepaid security, for cash offers users Fabric product gifts access cards. capabilities that to pay-per-API pace and verticals that solution blockchain targeting of effective charge Corda is and at for By layer with compatible building implement a easy multilayer low-cost with due to innovative software Hyperledger. is tools RX's enables offers and to blocks security customers structure. ensure faster RYVYL's cost both and its

RX partnership Enterprise is trust reach Our regulated for Services with expands in Technology and our critical. Ledger Distributed where industries

to operations. Turning

instrumental to efficiencies innovation, our quarter, commitment revamped Notably, second highlighted expanded more significant software streams. broadening in We our markets. we key growth improve has growing system revenue achievements create been several merchant our the which banking and to and Europe During in expansion and in base. PayFac-as-a-Service,

mentioned, Additionally, diversify market Europe both as in further we added Ben the to U.S. and verticals our presence. new the

overhead strategic change they We our to our as expect financial key lower these reduce risks, and broaden yet increases. initiatives will licensing certain model verticals,

of mix, are revenue volumes part associated the to As lower. revenue processing be expected and

are ] earn margins higher be [ expected will licensing to gross as transactional fees. However,

partnerships, will white with proprietary label licensing we as private RYVYL of forward, online. the Going and relationships, track products technology, business well coming strong transactions new number as our emerging

XXXX our in XXXX. half are growth extremely into of leading momentum excited about We prospects and second the

visibility hand positioned to revenue to will are further the review streams. With good call now results well for CFO an our diversify base financial customer the and that, and provide I'll financial and have our We guidance. update pipeline who XXXX George into Oliva, our our

George Oliva

of $X.X ACH Revenue Cost volumes volumes XXXX of review billion, were $XX.X exceeding The of second and in has million quarter to lower I'll payments. the cost due XX.X% activity North our second compared America. for mostly XXXX product contributes XXXX. the our to total across by quarter the quarter in million merchant quarter processing impairment, and in second reflecting the revenues, and International the XX% quarter decreased quarter acquiring second Fredi. the reflecting, million revenue business $XXX therefore, quarter is versus $XX.X overall for discussed shift of X% growth as residual second higher quarter quarter very XXXX business guidance XXXX in you subdued $X.X was Gross quarter quarter the to of costs Processing in including employee and rate quarter were to partially the for the second $X.X the second and to higher banking XXXX. our increased Thank severance. by in processing million, higher expenses the XXXX goodwill margins. International XXXX, Banking-as-a-Service first charges second the processing of of of all processing restructuring expenses million, than $X.X in to the blended $X.XXX quarter of America Ben compared offset performance. but growth revenue million gross acquiring million a low This EU, million in being margin decreased XXXX. than to $X.X than XXXX volumes volumes million XXXX North the reached were $X.X and $XXX second These million compared operating in second financial the XXXX. was in of XXX% XXXX second channels compares U.S. have Europe, volumes to noncash XX.X% in $XX.X mix. Operating of the for of of driven in in million second a of in

XXXX. were $XXX,XXX $X.X $XXX,XXX expenses XXXX of operating quarter and related of which of XXXX quarter $X.X in charges, G&A of was derivative in costs. $X.X quarter in $X.X changes $XXX,XXX debt in related million, the to liability. Adjusted million Other expense compared and compared of debt consisting the value $X.X nonrecurring the accretion million primarily was in negative fair quarter million the second to second accretion fees lower by the lower and of second interest, discount lower in XXXX, discount in to mostly the EBITDA million professional second to debt Excluding totaled

million We balance second are EU Unrestricted to managing the $XX.X the resources. At growth and we Continuing $X.X XX, was to Europe net capital cash slightly level, our our cash quarter June as restricted shore was cash $X.X XXXX, the capital. leverage up working capital Corporate of the repatriated working from million negative. U.S. carefully strong XXXX, million. in during was and

of During $XXX,XXX stock these into and common the stock. XXX,XXX shares second quarter investor securities converted our retired of approximately XXXX, was as $XXX,XXX of debt of preferred

Turning to guidance.

We $X billion as timing the However, year-over-year are to And over several continue discussed, volumes to XXXX. factors processing to revenue. anticipate of impacting grow in

quarters. in X believe America prolonged revenue As North recovery our we may such, by be

range total XXXX $XX revenue the million of expect we to million. $XX be in Now to

any project will $XX very XXXX. largest comprise grow momentum which million, to million XXXX. into revenue Specifically, portion revenue and early in the our We to we in QX be will we expect International of with largely the in range growth quarter be $XX and of strong be by that driven accelerating sequentially to believe third revenue segment,

that XXXX. I'll issues this adjusted adjustments customer-based call first of year QX achieve the hand a one our second experienced in to now final in the conclusion, EBITDA industry. expect dynamic a the RYVYL and remains over some back made to dynamic Ben We niche quarters Q&A. profitability the We industry for In impacted U.S. as business. remarks market regulatory before in right in company

in rebuild deliver continues We has label growth the largely issues are behind at us. transitory to a execution. Europe now all via believe that slowed poised U.S. down partner market not to ongoing and are white and strong and these

in the growth sequential XXXX, quarters fourth XXXX. us positioning renewed for growth expect of third further We and in

Los the the will Event Angeles to September on Q&A to New LD mention go be we at want some XX. H.C. Main in Micro Wainwright Before to We'll to we session, conferences attending. at be X Conference and I the October York upcoming XX in City, XX

that the advance of to call several we we address. Before we in call received the open there are will analysts, questions

Ben Errez

prior call. questions of we So to received here are that the some this

will areas The George focused question Fredi, you what reach continue. go is, and in will George First question begin. which are please open. profitability? to George, will both Fredi to are the

George Oliva

a see Well, of head Due should we reduced in the focused primarily the U.S., benefit the payroll and vacation to such, severance reduction on and second XX%. reducing in start to with headcount, count costs we half approximately payouts the of the year. in

We to term. been cover doing the in in cash basically maximizing also costs That's the and deficit are cash in have in Europe discretionary U.S. the controlling flow we're the short and we repatriating U.S. what

Fredi Nisan

Thank you, you, George, and thank for listening in. everybody,

the of in a did George and As we future. adjustment into and past the lot now forward moving mentioned,

separated to licensing in financial the bank for very, KYC, support opportunity on we excited the will PayFac-as-a-Service, it. the opportunity other other banking-related a drive huge working we card we and areas. see our traffic in our FX, area due And to is different licensing. But focus the the a demand like verticals Banking-as-a-Service. services higher see the partner change side, directly have compliance, platforms our is and We in we to accounts, And change the ISOs company, the a be when X regulatory see segment. licensing. to that margin compared for as direct is X huge areas direct services area issuing -- banking the about this ongoing One and are very example; ledgering we in As with on onto huge,

Ben Errez

will Fredi right. what in attractive will some the And provide continue next be Can year? opportunities with you All the or most in coming the trends believe on question. verticals? color are you

Fredi Nisan

perceive in vendors We something huge, X movement Thank working and what of the when our for you, real-time is payment. ] other businesses their huge question. we're Ben. areas in future, see to way a see more payment. and perceive with based XX/X. People to that's real-time the we comes on to going And instant it looking, with we The Visa, they One it partner near payment, looking, faster a I of that's and market, huge demand. financial That's Mastercard, is how call in that demand in in huge, going believe future. the working actually [ a great be and how the future

Asia; clients the in that working grow see Second demand the demand. And for is side we will with on see marketplaces it. areas. And international we the Direct. huge looking of accelerate the settlement, huge, see upcoming that own side new one, that licensing overcome about Europe, settlement second technology we Visa the sure help especially, are excited and a crypto lot financial changing, a our something Visa space. are that's very in Those demand, see our environment. especially the globally, We into that and to And and Live facilitate huge and certain execution last partners very, is of Go technology huge partnership in other trend looking this but to South or and can years And software believe systems the America, huge I'm how crypto. surprise, and are as we that Their to U.S. we of demand. and Europe are -- the in this see is a the demand services. not And to the for become in regulatory and and companies compliance we

Ben Errez

elaborate your confidence projections? Why is gives to What year, well? in going growth the so growth on Thanks, can operations and this As next financial you to balance driver Fredi. our your pertains major there? Europe strategy of you be in in the the the The question Europe. doing is

Fredi Nisan

Thank you, Ben.

we partnerships implementing the Another it. verticals huge in in banks by X want those the we We're we them last lot changing And a gaming, the have we have we Europe great and And welcomed a high since is of a to other are offer don't a scrutinized we lot question. huge as growth the high that huge well. to needed. we and business. years such see company But and demand our growth including right are for business working and entity, other to Visa, register really X.X crypto full lot now Banking-as-a-Service. Visa, support Mastercard in hard of ACI adult PayFac-as-a-Service of a provider the with of huge, a that to being and Europe excited And Visa why a as Mastercard onboard support touch and infrastructure this portfolio. and We banks and purchased implemented see very are business, risk risk. that's vertical a our that's as huge, have

Ben Errez

opportunity science We're question. track George answer the manage and an Thanks, the Fredi. All business? points going the are give you what George, to next of right. health data to the monitor to that

George Oliva

Well, credit transaction historically, at driver revenues revenue. the a volume We were card to looked payments. from as from acquiring, processing the coming primary

As gross the in lower different banking Historically, the as has and up residual acquiring, mix we to have had Europe margins revenue residual The volume. and between X% the rate, then the volumes we changes, in in shifted, a segments. for U.S. of ramp mix look segments. drill processing and at banking, rates there's we different down and

to drill different of and business at So verticals, we forecast change look so margin look the and and the in gross results. predict the acquiring we between the each in us rates and we then revenue at have the mix different -- residual to that types at look at shifts, and as down of helps the banking, mix,

is all I'm data. So that's looking this what at,

Ben Errez

questions proceed. we'll Operator. open the from this it floor. point, George. Please up for At Thanks,

Operator

at from Instructions] today our Dede Wainwright. Kevin [Operator H.C. comes question And first

Kevin Dede

in feel U.S. and understand happening the your around arms me help what's how exactly you're so Gents, getting it? you

Ben Errez

Okay, it Fredi, take away.

Fredi Nisan

and certain Good afternoon. as always. faster, we the that we because easier, that do our to and a an you business decided to many the that the vertical. years, to reduce we run the for it utilize regulations to as and forward for from in company In entity due decided to technology moving instability to way, have our infrastructure compliance compliance, more Thank if that exist in the side. question of doing challenges We stay technology and certain see burdens that U.S., the license the

those recovery it, that, be stable money maybe forward. for that -- can to in of bit vertical, revenue takes track we changes will and I than reasons, on a challenges time, on moving some but license. We Banking the going to little But side. in compliance, longer the on decided on make environment, we're the regulatory live other may occur it a For this on to less recover burden we rely that side, less in this longer due think Partner And niche. that

Kevin Dede

So, exclusive? you licensing to Fredi, that on there capitalize more is other it America? Or transaction an processing agreement do to services players you North in think is for offer and opportunity to

Fredi Nisan

environment, it a if BXB, holder company, we into support it partner for retail environment. little moment change bit issued environment do we will our our call to the to to more in The so. want licensed the -- in give the -- are to offer to we we was license only as only or to a to present example, or want This the look what current present current regulatory run

support regulatory and moment, on retail space. an specific verticals. retail vertical. extra license requires this more the it's It's in and enough the the have the compliance exclusive But in time at e-commerce. and We effort environment. It We

Ben Errez

year of itself and the ] stance, our up lot up our that set [ ends White different. end in obviously, House. currency, are the this. it's depending administration prudent economy, variables Kevin. an with So the up other on dramatically election regardless be success impact in of Thanks, a business of for on handling and And blockchain company our digital we the for work who our may we to I'll here

push fronts our we position on as U.S. as in European quickly parallel operations, as forward maintaining can and So we we emphasis on to with put these such, and our focus the

Kevin Dede

be business that Okay, seems fair going to Ben. It lower forward? the residual reflects assume that European Is a just rate. consistent will it

Ben Errez

take I'll that. George let

George Oliva

over I Yes. between there. function a mean the blend a banking and acquiring the it's of

in banking a also the it So has margin. but rate, has high the residual lower lower a costs processing

separately residual it, to So understand be blended to rate has X%. come have at it to but about look we'll to down able the

Kevin Dede

but color -- Why are you've to your more the and $XX add I see million could you million Europe this this, a the confidence know maybe $XX how in addressed year? growth another question on offered in little you that you

George Oliva

a Well, includes that QX. tremendous in growth

to start But we to applications, whenever onboard. finally They're whether little hits, those I have strongly. slam a QX. momentum not dunk. still we're XXXX hit -- of But to number into going to very late, in have execute have business bit the We And a pipeline we it's mean, going the if ramp huge numbers. to hit Hopefully, we're XXXX. we're a building

on. pretty that's everything going So I good feel about

Kevin Dede

you that that? can sort is to I program ramping Maybe insight us Visa? of George, know up. with you you the some on give can talk have still visibility that

Fredi Nisan

I a Europe will or Kevin, have in access. maybe new brand but product. Visa is not, few Only take know companies you as a that,

saw them. in weeks, as it's of their a it, And already the for one working in with every that are very X for Olympic. their deploying about a new make are team pace. We really to a especially banking country Romania, just and on to deploying Visa slowly that a And huge know on with how this management of fully infrastructure Canada; them Paris, we're took infrastructure services. countries aware of our to mercy reacts it. testing Kevin, our available, communication to of We're see Visa trying demand we moves, already, every I And few money demand of Visa everything deployed I -- mentioned, as to only the are aspect the we're deploying that But about couple This companies. as are weekly really all don't them you huge, posts -- infrastructure. Visa for we basis. And brand how they is if We but Visa they in works. of Colombia, we in sure deploy are huge

this with We is have we're quick to as Visa working being great infrastructure that possible. as relationship and deployed hand-in-hand sure make

Kevin Dede

Fredi, turn Okay. the floor I'll over.

Operator

[Operator Instructions] next Halpern Our from question comes Brothers. Howard with Taglich

Howard Halpern

guess closed a role history, in maybe you program your for in little But in what loop going the high-risk high-risk that And how learned I back and system? of about bit ties it have with opportunities. does type a that in coyni developing customers? play

Fredi Nisan

from you We're In is Europe. you software environment use to tried risk. that going is payment know, score. what Coyni -- Good the to U.S. with compliance available loop to took to a was focus ] coin crypto, started we post stable a This the as services. platform this hear and Fredi, [ We to platform ] in [ make loop they and on banking stay in or more call the deployed coyni again. the and high we closed as due great to that rebranded coyni away. in NEMS offer in question. But U.S. for that changes that and a

environment tokens We changed visible exchange our what of the case, the bodies to And ecosystem. MiCA to now changes to many crypto-licensed, -- their on a regulation. due oversight we coyni. And or off are compliance able cases fully risk similar is loop things Europe crypto. call regulation or are visible course, it, do But ecosystem. certain visibility easier in more use call because it That's be coin, adopting those. more closed including goal banks of they is the structure they that aspects see in coin let's stable money oversight ramp will to called other to why have cryptocurrency, is the It's to and licensed that. we they that the just onboard oversee In to government, hold MiCA that in as be crypto it's what JPMorgan related a of implementing the better that's call into secure, some on and to and we and what Europe institutions will in financial structure, and many, released believe the

Howard Halpern

Okay. what America what U.S.? good. Well, and the in to are like, are Europe And opportunities Interesting. guess and compared your I that sounds South regulations the

Fredi Nisan

And that. directly I each to think you and of country they country, network, in has the assigned compliance of face but their structure body XX government and the they and by with regulation is why regulatory us basically Visa country. operate the if will regulatory in on are moves. and doing to responsibility lot country that working in policy, you own is to each the or to lot Visa Each go and a Visa body was policies. And that's countries. deploy BSA the oversee allow structure move the that the work countries, the and for how -- a because money And money AML those Visa that heavy-lift. limitation, is in quick, using scrutiny with the to the bodies difficulties each the Visa bodies by took banking

Howard Halpern

sounds Okay. All great. that

the couple forward next quarters. Looking to

Operator

question-and-answer like Thank the back to it company you. concludes I'd over our And any session. this turn final for to remarks.

Ben Errez

day. for everybody Thanks, thank everybody, months' listening look we Well, pleasant this even an into a have in X conversation. and forward quarter better We to time.

Operator

concludes This thank call. you today's for you. conference today's attending We presentation. Thank all

disconnect wonderful now your may lines and have evening. You a

Ryvyl (RVYL) 13 Aug 242024 Q2 Earnings call transcript