RVYL RYVYL Inc

RYVYL Inc. (NASDAQ: RVYL) ("RYVYL” or the "Company"), a leading innovator of payment transaction solutions leveraging proprietary blockchain ledger and electronic payment technology for the diverse international markets, reported its financial results for the quarter ended June 30, 2024.

“RYVYL delivered second quarter 2024 revenue in line with expectations, as lower revenue in North America was partially offset by revenue generated from international operations, which grew 134% year-over-year,” said RYVYL Co-founder and CEO Fredi Nisan. “During the second quarter, we aligned our U.S. operations to manage the impact of banking regulations affecting certain niche customer bases, which we believe is largely behind us. To rebuild that business and expand into new verticals, we extended a longstanding U.S. banking relationship to include high-risk processing and are launching private and white label licensing solutions. As a result, we are growing our pipeline in sectors like insurance and online businesses and are aggressively pursuing multiple prospects.”

New Solutions Highlights

“We believe our new private and white-label licensing, which integrates our proprietary technology will attract new customers, lower certain processing costs and operational risks, and expand gross margins. We are enthusiastic about the potential of developing this high-margin business and have made it a strategic focus in North America. To bolster our team and drive this strategy, we have appointed a fintech expert as our Managing Director of Northeast Merchant Systems (NEMS), as well as a VP of Compliance and a VP of Revenue,” Nisan continued.

• Under a private label arrangement, partners will use their own banks, while RYVYL will benefit from increased customer access, reduced regulatory challenges, and enhanced operating leverage.
• With white-label licensing, customers apply their own branding to our technology, while RYVYL retains control of processing and bank servicing operations.

“RYVYL remains at the forefront of delivering innovative technology and solutions to our customers. Our latest Gen 4 software employs RYVYL’s solutions, provides businesses and merchants with highly customizable, advanced, and efficient fintech payment solutions,” Nisan concluded.

• The NanoKard app offers users an alternative to cash and charge cards while also enabling merchants to process transactions securely and more efficiently. We provide cutting-edge solutions tailored to businesses of all types, bridging the gap between businesses and customers. By transforming traditional payment processing with innovative methods, we streamline payment acceptance and checkout processes. By focusing on specific verticals with these convenient and secure solutions, RYVYL is introducing a new product designed for high-margin processing.
• RYVYL Fabric offers tools and building blocks to ensure easy blockchain access with multi-layer security compatible with both R3’s Corda and Hyperledger, allowing customers to implement blockchain faster with a low-cost pay-per-API structure. RYVYL’s partnership with R3 expands its reach in enterprise via its distributed ledger technology and services in regulated industries where trust is critical.

Financial Summary for the Second Quarter Ended June 30, 2024

• Revenue in the second quarter of 2024 was $11.9 million, including $8.9 million in RYVYL EU. This compared to $14.8 million in the second quarter of 2023, which included $3.8 million of revenue generated from RYVYL EU.
• Processing volume increased 55% to 1,055 million in the second quarter of 2024, compared to $679 million in the second quarter of 2023. Revenue from international operations contributed $902 million in the second quarter of 2024, up from $317 million in the second quarter of 2023, which was driven mostly by growth in banking volumes. Revenue from North American operations contributed $153 million in the second quarter of 2024, down from $362 million in the second quarter of 2023 due to the impact of the changes in one niche industry customer base that reduced processing volume of acquiring business in February 2024.
• Cost of revenue was $7.2 million in the second quarter ended 2024, compared to $8.7 million in the second quarter 2023, which was due to decreased processing volumes of acquiring business in the US.
• Gross margin was 39.9% in the second quarter of 2024, compared to, 41.2% in the second quarter of 2023, reflecting the shift in product mix.
• Operating expenses were $15.6 million in the second quarter of 2024, including $8.3 million of mostly noncash charges for goodwill impairment, restructuring costs, and employee severance. This compares to $9.6 million in operating expenses in the second quarter of 2023. Excluding the nonrecurring charges, operating expenses were lower by $2.3 million in the second quarter of 2024, compared to the second quarter of 2024, primarily as a result of $1.3 million in lower professional fees and $0.7 million in lower G&A costs.
• Other expense totaled $0.8 million in the second quarter of 2024, and mostly related to debt discount accretion, compared to $8.5 million in the second quarter of 2023, of which $5.0 million was related to debt interest, debt discount accretion and changes in fair value of the derivative liability.
• Adjusted EBITDA was negative $1.6 million for the second quarter of 2024, compared to negative $0.9 million for the second quarter 2023.
• During the second quarter of 2024, $0.2 million of debt principal and $0.9 million of preferred stock was retired, and the due date of an outstanding 8% Senior Convertible Note repayment obligation was extended by one year to April 5, 2026.
• As of June 30, 2024, cash and restricted cash totaled $75.2 million, and unrestricted cash was $6.4 million, compared to $73.3 million and $12.2 million, respectively at December 31, 2023.

2024 Financial Outlook

The company expects full year 2024 revenue to be in the range of $65 million to $70 million and processing volumes to exceed $4 billion, with its international segment expected to comprise the largest portion of revenue in 2024. Third quarter 2024 revenue is expected to be in the range of $14 million to $15 million, followed by strong sequential revenue growth and Adjusted EBITDA profitability in the fourth quarter of 2024.

Investor Conference Call

RYVYL management will host a conference call at 4:30 p.m. Eastern Time on Tuesday, August 13, 2024, to discuss the Company's financial results for the second quarter ended June 30, 2024, provide a corporate update and end with a question-and-answer session. To participate, please use the following information and submit your questions in writing prior to the call at RYVYL@lhai.com.

Q2 2024 Conference Call and Webcast Date: Tuesday, August 13, 2024Time: 4:30 p.m. Eastern Time US Dial In: 1-833-816-1437International Dial In: 1-412-317-0529Webcast: Q2 2024 Webcast Call me: Link

Participants can use Guest dial-in #s above and be answered by an operator OR click the Call me link for instant telephone access to the event and enter pass code 1713018. The Call me link will be made active 15 minutes prior to scheduled start time.

A replay of the call will be available through October 13, 2024, by calling 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally and entering access ID 10191677. An archived version of the 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 proprietary blockchain ledger and electronic token technology for the diverse international markets, RYVYL is a leading innovator of payment transaction solutions reinventing the future of financial transactions. 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

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 and are characterized by future or conditional words such as "may," "will," "expect," "intend," "anticipate," “believe," "estimate" and "continue" or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information.

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 Securities and Exchange Commission (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.

IR Contact: David Barnard, LHA Investor Relations, 415-433-3777, RYVYL@lhai.com

RYVYL INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share and per share data)

		June 30, 2024				December 31, 2023
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	6,387			$	12,180
Restricted cash			68,773				61,138
Accounts receivable, net of allowance for credit losses of $80 and $23, respectively			793				859
Cash due from gateways, net of allowance of $0 and $2,636, respectively			1,136				12,834
Prepaid and other current assets			2,408				2,854
Total current assets			79,497				89,865
Non-current Assets:
Property and equipment, net			792				306
Goodwill			19,468				26,753
Intangible assets, net			4,071				5,059
Operating lease right-of-use assets, net			3,824				4,279
Other assets			1,381				2,403
Total non-current assets			29,536				38,800
Total assets		$	109,033			$	128,665
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	3,156			$	1,819
Accrued liabilities			4,780				5,755
Payment processing liabilities, net			70,575				76,772
Current portion of operating lease liabilities			787				692
Other current liabilities			358				504
Total current liabilities			79,656				85,542
Long term debt, net of debt discount			17,437				15,912
Operating lease liabilities, less current portion			3,311				3,720
Total liabilities			100,404				105,174
Commitments and contingencies
Stockholders' Equity:
Preferred stock, Series B, par value $0.01, 5,000,000 shares authorized; shares issued and outstanding 54,125 and 55,000 at June 30, 2024 and December 31, 2023, respectively			1				1
Common stock, par value $0.001, 100,000,000 shares authorized, shares issued and outstanding of 6,750,100 and 5,996,948 at June 30, 2024 and December 31, 2023, respectively			7				6
Additional paid-in capital			176,220				175,664
Accumulated other comprehensive (loss) income			(218	)			401
Accumulated deficit			(167,381	)			(152,581	)
Total stockholders' equity			8,629				23,491
Total liabilities and stockholders’ equity		$	109,033			$	128,665

RYVYL INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(Dollars in thousands, except share and per share data)(Unaudited)

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue		$	11,900			$	14,849			$	28,674			$	26,140
Cost of revenue			7,151				8,725				16,894				14,903
Gross profit			4,749				6,124				11,780				11,237
Operating expenses:
Advertising and marketing			17				33				33				108
Research and development			819				1,184				2,212				3,119
General and administrative			1,621				2,317				3,665				3,669
Payroll and payroll taxes			2,850				2,913				6,419				5,627
Professional fees			1,261				2,614				2,295				4,417
Stock compensation expense			182				(32	)			406				161
Depreciation and amortization			578				623				1,235				1,242
Impairment of goodwill			6,675				-				6,675				-
Restructuring charges			1,636				-				1,636				-
Total operating expenses			15,639				9,652				24,576				18,343
Loss from operations			(10,890	)			(3,528	)			(12,796	)			(7,106	)
Other income (expense):
Interest expense			(125	)			(1,517	)			(153	)			(3,246	)
Accretion of debt discount			(797	)			(2,821	)			(1,705	)			(5,443	)
Changes in fair value of derivative liability			14				(497	)			14				(329	)
Derecognition expense on conversion of convertible debt			(69	)			(188	)			(69	)			(188	)
Legal settlement expense			-				(2,113	)							(2,214	)
Other income (expense)			195				(1,337	)			537				(1,447	)
Total other expense, net			(782	)			(8,473	)			(1,376	)			(12,867	)
Loss before provision for income taxes			(11,672	)			(12,001	)			(14,172	)			(19,973	)
Income tax provision			439				4				629				9
Net loss		$	(12,111	)		$	(12,005	)		$	(14,801	)		$	(19,982	)
Comprehensive income statement:
Net loss		$	(12,111	)		$	(12,005	)		$	(14,801	)		$	(19,982	)
Foreign currency translation loss			(174	)			(13	)			(619	)			(71	)
Total comprehensive loss		$	(12,285	)		$	(12,018	)		$	(15,420	)		$	(20,053	)
Net loss per share:
Basic and diluted		$	(1.88	)		$	(2.33	)		$	(2.39	)		$	(3.90	)
Weighted average number of common shares outstanding:
Basic and diluted			6,438,409				5,141,710				6,205,492				5,128,790

RYVYL INC.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(Dollars in thousands)(Unaudited)

		Six Months Ended June 30,
		2024				2023
Cash flows from operating activities:
Net loss		$	(14,800	)		$	(19,982	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense			1,235				1,242
Noncash lease expense			141				67
Stock compensation expense			406				161
Accretion of debt discount			1,705				5,443
Derecognition upon conversion of convertible debt			68				188
Changes in fair value of derivative liability			(14	)			329
Impairment of goodwill			6,675				-
Restructuring charges			1,636				-
Changes in assets and liabilities:
Accounts receivable, net			66				507
Prepaid and other current assets			445				7,366
Cash due from gateways, net			11,699				445
Other assets			(299	)			(1,781	)
Accounts payable			1,337				11,161
Accrued and other current liabilities			(1,408	)			782
Accrued interest			-				506
Payment processing liabilities, net			(6,197	)			16,695
Net cash provided by operating activities			2,695				23,129
Cash flows from investing activities:
Purchases of property and equipment			(7	)			(17	)
Capitalized software development costs			(546	)			-
Purchases of intangible assets			(92	)			-
Net cash used in investing activities			(645	)			(17	)
Cash flows from financing activities:
Repayments on long-term debt			(9	)			(7	)
Treasury stock purchases			(190	)			-
Net cash used in financing activities			(199	)			(7	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			(9	)			(13	)
Net increase in cash, cash equivalents, and restricted cash			1,842				23,092
Cash, cash equivalents, and restricted cash – beginning of period			73,318				40,834
Cash, cash equivalents, and restricted cash – end of period		$	75,160			$	63,926
Supplemental cash flow disclosures
Cash paid during the period for:
Interest		$	-			$	2,709
Income taxes		$	-			$	-
Non-cash financing and investing activities:
Convertible debt conversion to common stock		$	200			$	300
Interest accrual from convertible debt converted to common stock		$	380			$	3

Use of Non-GAAP Financial Information

Adjusted earnings before interest, taxes, depreciation, and amortization (“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, changes in the fair value of derivative liabilities, losses on the extinguishment and derecognition expenses on the conversion of convertible debt, non-cash stock-based compensation expense, acquisition-related expense, non-recurring provisions for credit losses on legacy matters, accounting fees related to the restatement of prior period financial statements, non-recurring costs related to the spin-off of a subsidiary, 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.

Because of these and other limitations, you should consider Adjusted EBITDA alongside our other GAAP-based financial performance measures, net income (loss) and our other GAAP financial results. The following table presents a reconciliation of Adjusted EBITDA from net loss, the most directly comparable GAAP measure, for the periods indicated:

Reconciliation of Net Loss attributable to RYVYL, Inc., to Adjusted EBITDA for theThree and Six Months Ended June 30, 2024 and 2023(in thousands, except share and per share data)(Unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net loss	$	(12,111	)		$	(12,005	)		$	(14,801	)		$	(19,982	)
Interest expense		125				1,517				153				3,246
Accretion of debt discount		797				2,821				1,705				5,443
Income tax expense		439				4				629				9
Depreciation and amortization		578				623				1,235				1,242
EBITDA		(10,172	)			(7,040	)			(11,079	)			(10,042	)
Other non-cash adjustments:
Change in fair value of derivative liability		(14	)			497				(14	)			329
Derecognition expense on conversion of convertible debt		68				188				68				188
Stock compensation expense		182				(32	)			406				161
Impairment of goodwill		6,675				-				6,675				-
Restructuring charges		1,636				-				1,636				-
Special items:
Non-recurring legal settlements and ongoing matters and related legal fees		-				3,279				-				3,279
Carryover effects of financial statement restatements in prior periods		-				1,222				-				1,222
Non-recurring provision for credit losses on legacy matters		-				625				-				625
Accounting fees related to the restatement of prior period financial statements		-				237				-				237
Non-recurring impairment of right of use asset		-				100				-				100
Non-recurring costs of spin-off		-				29				-				29
Adjusted EBITDA	$	(1,625	)		$	(895	)		$	(2,308	)		$	(3,872	)
Loss from operations	$	(10,890	)		$	(3,528	)		$	(12,796	)		$	(7,106	)