Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ryvyl Inc (RVYL, Financial) reported a 134% increase in international revenue compared to the second quarter of 2023.
- The company successfully completed its first Visa Direct integration and is now live in 5 countries, with plans to expand to 80 countries.
- Ryvyl Inc (RVYL) has expanded its partnership with Visa, implementing the Visa payment enabler network to facilitate secure and efficient financial transactions.
- The company has seen strong growth in its European operations, particularly in high-risk verticals such as gaming, adult, and crypto businesses.
- Ryvyl Inc (RVYL) expects to achieve adjusted EBITDA profitability in Q4 2024, driven by strong international growth and strategic initiatives.
Negative Points
- North American revenue was negatively impacted by changes in U.S. banking regulations, affecting a significant niche industry customer base.
- The company's gross margin decreased to 39.9% in Q2 2024 from 41.2% in Q2 2023, reflecting a shift in product mix.
- Operating expenses increased to $15.6 million in Q2 2024, including $8.3 million in noncash charges for goodwill impairment, restructuring costs, and employee severance.
- Adjusted EBITDA was negative $1.6 million in Q2 2024, compared to negative $900,000 in Q2 2023.
- The company faces challenges in the U.S. market due to regulatory and compliance issues, leading to a decision to license technology to a third-party partner.
Q & A Highlights
Q: What are the areas in which you are focused to reach profitability?
A: George Oliva, CFO: We focused on reducing costs in the U.S., primarily with a reduction in payroll headcount by approximately 25%. We are also controlling discretionary costs and maximizing cash flow in Europe. Fredi Nisan, CEO: Our focus is on licensing opportunities in PayFac-as-a-Service and Banking-as-a-Service, and working directly with partner ISOs and banks to drive traffic onto our platforms.
Q: Can you provide some color on trends in verticals and what you believe are or will be the most attractive opportunities in the coming year?
A: Fredi Nisan, CEO: We see huge demand in real-time payments, international settlements, and crypto. These areas are expected to grow significantly. Additionally, licensing marketplaces looking for technology and services for compliance and regulatory needs present attractive opportunities.
Q: Why is Europe doing so well, and can you elaborate on your strategy and operations there?
A: Fredi Nisan, CEO: Europe has a huge demand for high-risk verticals like gaming, adult, and crypto. We have implemented partnerships with Visa and ACI to offer PayFac-as-a-Service and Banking-as-a-Service. Our registration with Visa and Mastercard as a high-risk provider supports our growth in these verticals.
Q: What are the data science points that you track and monitor to manage the health of the business?
A: George Oliva, CFO: We look at transaction volumes, residual rates of different segments, and gross margins. As the business mix shifts, we drill down into the residual rates of different verticals and types of revenue to forecast results.
Q: What's happening in the U.S. exactly, and how do you feel you're getting your arms around it?
A: Fredi Nisan, CEO: Due to regulatory and compliance challenges, we decided to license our technology to an entity with the necessary infrastructure. This approach reduces our compliance burden and provides stable revenue, although it may take longer to recover fully.
Q: Is the licensing agreement exclusive, or is there an opportunity to offer it to other players?
A: Fredi Nisan, CEO: The license is exclusive to our partner in the retail environment. We may consider expanding to B2B or other verticals depending on regulatory changes and market demand.
Q: How do you see the growth in Europe and your confidence in the $65 million to $70 million revenue guidance for this year?
A: George Oliva, CFO: We have a strong pipeline of business to onboard, especially in Q4. While execution is key, we are confident in our momentum leading into 2025.
Q: Can you talk about the visibility you have with Visa and the ramp-up of that program?
A: Fredi Nisan, CEO: Visa Direct is a new product, and we are one of the few companies with access. We are deploying it country by country, with significant demand in regions like Colombia, Romania, and Canada. Visa is working closely with us to ensure a smooth rollout.
Q: What have you learned about the closed-loop system, and how does coyni play a role in developing that type of program for high-risk customers?
A: Fredi Nisan, CEO: Coyni started as a stable coin platform for high-risk environments. We rebranded it in the U.S. due to regulatory changes but deployed it in Europe where we are fully licensed. The closed-loop system offers better risk and compliance oversight, which is crucial for high-risk verticals.
Q: What are your opportunities in South America, and how do the regulations compare to Europe and the U.S.?
A: Fredi Nisan, CEO: Each country has its own regulatory structure, but Visa handles the heavy lifting for compliance. This allows us to move money quickly and efficiently across borders, leveraging Visa's established network.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
