RYVYL Reports First Quarter 2023 Financial Results

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	)