Ryvyl Inc (RVYL) 2022 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the RYVYL third-quarter 2022 earnings conference call. (Operator Instructions) The earnings press release accompanying this conference call was issued at the close of the market today. The quarterly report, which includes the company's results of operations for the three months ended September 30, 2022, was filed with the SEC today.

On our call today are RYVYL Chairman, Ben Errez; Chief Financial Officer, Drew Byelick; and Chief Operating Officer, Min Wei.

I'd like to remind everyone the statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's regulatory filings for a list of associated risks. A replay of this call and webcast will be available for the next 90 days on the company's website under the Events section.

At this time I'd like to turn the call over to Ben Errez, the company's Chairman. Ben, the floor is yours.

Hello, and thank you for joining our third-quarter 2022 financial results conference call. It is a time of tremendous momentum, and I'm delighted to share an update during this, our first earnings call as RYVYL. Earlier this year in our CEO letter, we noted that 2022 would be a year of repositioning for our company as we look to put in place the infrastructure necessary to disrupt the traditional financial payment landscape.

Today, I couldn't be more pleased to report to you our significant progress towards that transition and the key achievements we have accomplished during the third quarter. To begin, the core metric that we focus on at RYVYL is the growth of our processing volume. In the third quarter, we once again set a quarterly record processing volume of nearly $1.3 billion.

For the first nine months of 2022, we processed nearly double the transaction volume compared to the same period in 2021, highlighting our technology's potential, scalability, and incredibly successful internal sales and marketing team, driving the adoption of our leading-edge blockchain financial solutions. To note, this also represents an approximate 20% increase from the second quarter of 2022, an indication of our remarkable growth even during a challenging macro environment.

Given the remarkable growth we have seen in the past two years, with the continued advancement of our technology and payment solutions, the forming of new partnerships, expanding geographically, and the hiring of key personnel, we knew the time was right for the evolution of our brand and identity. To that end, at our recent annual general meeting, we received resounding shareholder approval to rename the company, RYVYL. This initiative was spearheaded by our Chief Marketing Officer, Jacqueline Reynolds, who worked tirelessly to deliver on high expectations to create a world-class brand that we believe is unparalleled in the fintech industry.

This process is vital to the next phase of our expansion, as RYVYL showcases the continued development of our payment solutions, remarkable stablecoin, and blockchain processes and offerings to a global audience that we have already begun to pursue aggressively. You can expect the launch of our new RYVYL website, along with a new social media platform and heavy public relations activities and with the number of other launch activities, as we strive to drive awareness in the weeks ahead.

Shifting gears now to the Territorial Bank of American Samoa, TBAS. You may recall that in our second-quarter commentary, we discussed the significant traction made with 13% market share as the island's exclusive payment technology provider. Now, at the end of the third quarter, we are ecstatic to report that we have achieved nearly 50% market share. This is extremely significant for the island territory as they look to modernize their economy with our innovative stablecoin- and blockchain-based payment solutions.

This cashless payment solution reduces cost, improve settlement times, and introduce new level of security for the residents of the island. The surge in market share over the short time since the deployment of our technology not only demonstrates the focus and diligence of our team, but also the appetite of developing economies for adopting our unique technology as a reliable and trusted solution. Our closed-loop RYVYL ecosystem in American Samoa will serve as an ideal case study for our solution and pave the way to take advantage of opportunities around the world.

This leads me to another keynote achievement during the third quarter that we expect to be a transformational growth driver for RYVYL. October marked the launch of coyni, our USD-pegged stablecoin, which is available for download on Google Play and the Apple App store. Businesses and individuals alike can now enjoy the speed and security of blockchain payment transactions, along with the stability of the US dollar, from the palm of their hands and on their desktop.

One of the most significant points of distinction is that coyni became one of the industry's few to ensure near-real-time custodial account attestation via a lengthy review of IT compliance and, specifically, SOC 2 compliance certification from Armanino, a top accounting, consulting, and technology firm in the US. Now what does that mean?

Each coin and digital token held in a wallet on the platform is matched with USD1 held in a custodial account with a federally insured financial institution. The dollars back in coyni are not tied up in investments and are not converted to other cryptocurrencies. Competing stablecoins that have not utilized the safety and compliance measures have failed, leading to severe market disruptions.

Thinking of this and the heightened attention to company balance sheet and cash flow in the current market environment, RYVYL took the initiatives to renegotiate and restructure the terms of our $100 million convertible note financing, which we originally entered into on November 2, 2021. Through a cooperation with our note holder, we were able to come to terms to extend the maturity by one year to November of 2024, while also securing the highly valuable option to pay interest in stock, therefore reducing the cash interest expense burden and providing a significant improvement to our financials. Additionally, and again, in the context of today's market environment, I'd like to discuss our growth strategy.

Historically, we've looked to grow organically and with select acquisitions to accumulate processing volumes, such as ChargeSavvy; Sky Financial; and key license assets, like Transact Europe. In contrast, given the soaring cost of capital, raising funds to pursue acquisition no longer is as much of a focus. With the launch of coyni, our truly differentiated stablecoin; our new brand identity; and increased global capability, we believe the best path to continue to quickly scale is through relationships with well-established payment companies that benefit from our advanced infrastructure and technology.

In addition, we will continue to pursue select M&A strategies suitable for the current market conditions. As we continue to evolve our growth strategy, we will report more of the details of this shift. With this, I'd like to introduce Drew Byelick, our new Chief Financial Officer, whom we brought onboard in the third quarter of 2022.

Drew brings a tremendous depth and breadth of functional and industry experience with start-up and middle-market global software, technology, and other industries. We're truly thrilled to have his incredible experience on the team. Welcome, Drew. Please take a moment to walk us through the details of our financial results.

Thank you for your kind introduction, Ben. I'm excited to be part of the team. My portion will be limited to key results of our financials. A full breakdown is available in our 10-Q filing and in the press release that will be distributed at a later date.

Here, I'll be referring to adjusted EBITDA and other non-GAAP measures. For the calculation of the adjusted EBITDA and other non-GAAP measures, please refer to the 10-Q MD&A, which will be available on the company website under the SEC filings.

Our Q3 revenue grew to a new company quarterly record, increasing by $2.6 million, or 32%, to $10.6 million for the first three months ended September 30, 2022, from $8 million for the first three months ended September 30, 2021. Revenue for the nine months ended September 30, 2022, increased by $3.3 million, or 17%, to $22.5 million, from $19.2 million for the nine months ended September 30, 2021. The change in net revenue includes $2.9 million in penalties and fees charged to merchants in accordance with our standard service agreement for transaction fraud and minimum activity fees. Also contributing to the year-over-year growth were increases in processing volumes compared to the same three-month period in 2021, offset by lower commissions from a processing partner.

Gross profit for three months ended September 30, 2022 was $6.4 million, or 59.8% of total net revenue, compared to the gross profit of $5.6 million, or 69.9% of total net revenue, in the prior year's same period. Gross profit for the nine months ended September 30, 2022 was $11.5 million, or 51.2% of total net revenue, compared to gross profit of $13.8 million, or 72.2% of total net revenue, in the same quarter a year ago.

Our cost of net revenue gross margin will be primarily driven by our negotiated commission structure with ISOs, which are independent sales organizations, and gateway fees. The decrease in gross profit was primarily due to higher processing fees paid to gateways and commission payments to ISOs. Now, let's shift gears to our operating expenses.

Once again, I would like to point out that our operating expenses are not directly correlated with our net revenue, primarily because of our scalability of our revenue from a small number of employees due to our technology and the business we are in. We distinguish our operating expenses into two categories: ordinary operating expenses and non-cash operating expenses. Ordinary operating expenses include marketing, research and development, payroll, professional fees, and general expenses, while non-cash operating expenses include stock compensation expenses for employees and for service providers as well as including depreciation and amortization.

Ordinary operating expenses were $6.5 million and $3.9 million for Q3 2022 and 2021, respectively, an increase of $2.6 million. Our ordinary operating expenses were $21.9 million and $9.2 million for the nine months ended September 30, 2022, and 2021, respectively. The increase of $12.7 million was due primarily to software development, marketing expenses related to rebranding, and payroll and payroll taxes. Non-cash operating expenses for the nine months ended September 30, 2022 decreased $9.2 million for the prior-year nine months due primarily to lower employee stock compensation and stock issued for services.

We ended Q3 2022 with a loss from operations of $3.1 million compared to a loss of approximately $2.8 million in the same quarter of the prior year. For the nine months ended September 30, 2022, we culminated with a loss from operations of $18 million compared to $12.2 million in the same period of the prior year. The increase in net loss from operations is due to increased operating expenses. Other expenses of $8 million for the nine months ended September 30, 2022 increased by $4 million over the same period of the prior year.

Interest expense related to the $100 million convertible note issued in November of 2021, amortization of discount fees associated with the note, and the derecognition expense on conversion of the convertible debt were offset by favorable changes in the fair value of derivative liability of $14.6 million for the nine months ended September 30, 2022, and none in the previous-year same quarter. The company sustained a net loss for the nine months ended September 30, 2022, of $26.1 million, or $0.59 per basic and diluted share, compared to a net loss of $19.4 million, or $0.49 per basic and diluted share, in the same period the prior year.

The company recorded a net loss in the third quarter of 2022 of $15.2 million, or $0.32 per basic and diluted share, compared to a net loss of $6 million, or $0.14 per basic and diluted share, in the same quarter a year ago. The increase in net loss for the nine months and Q3 ended September 30, 2022, was primarily due to the increases in research and development, interest and other expenses related to the $100 million note, general and administrative, payroll and payroll taxes, and professional fees as we continue to add staff and infrastructure related to our growth, offset by the favorable change in the fair value of derivative liability.

Adjusted EBITDA for the third quarter was a loss of $0.1 million, just short of breakeven. We ended the quarter with cash and cash equivalents of $37.6 million as of September 30, 2022. And in summary, our financial position remains strong and we remain well positioned for future growth and profitability.

So, with that, I'll turn the call over to Min Wei, our Chief Operating Officer, to provide a review of our business operations and the outlook for the balance of 2022.

Thank you, Drew. As I have done in prior conference calls, I would like to take this time to walk us through the material revenue contributors and provide an update first before turning to our outlook for the remainder of the year.

Q3 volume across all channels is about $1.3 billion, about 35% ahead of our processing target for the time period. On a year-to-date basis, our processing volumes hit nearly $3.1 billion, which is approximately 38% higher than our processing projection. While compared to the volume for the same nine months of 2021, we are looking at a 98% improvement.

Our acquiring business Q3 volume, including the Sky Financial portfolio, is $685 million, which exceeded our expectations by about 12%. ChargeSavvy is also approximately 14% higher than plan, processing $64 million in Q3. When compared to the same period in 2021, this quarter's volume is 42% more favorable.

In our ACH business, we saw a 47% increase over Q2, with volume at $25 million in Q3. We're currently in the process of moving our service to a new processing channel to increase processing capacity. As a result, we are behind the targeted monthly volume of $15 million. When the new platform is ready in Q4, we expect processing to pick up steam.

For our FX and international payments business line, including Transact Europe, we reported over $500 million in business volume, of which $480 million is attributable to FX conversion and international payments transactions. This volume is 53% higher than our original budget estimate for the quarter. Now, let's update on American Samoa.

We are incredibly pleased to share that our services have been brought out to over 240 merchants, representing approximately 50% of the overall merchant target market. This phase-one goal was achieved ahead of our schedule. And in Q3, we were able to process nearly $17 million for the businesses and residents on the island. This is an amazing accomplishment as we literally launched from a zero baseline at the beginning of Q2.

Getting back to coyni, our development, marketing, and operations teams worked days, nights, and weekends to launch the platform on time and, as promised, before the end of Q3. Since the initial launch, we've rolled out the platform on both the iOS and Android apps on October 12. As part of the coyni technology, we additionally designed the system to have foreign exchange and international payments capabilities, which we plan to be fully integrated into coyni as an FX module.

While the module is not fully integrated, the starting volume of $480 million in the quarter gave us confidence about its full potential in the international payments business. In addition, we are scheduled to enable coyni with a second banking partner in Q4, which will allow us to accelerate the onboarding of domestic volume onto coyni. We ask that you stay tuned for more to follow on this development next quarter.

With the strong performance thus far, I'd like to share our current estimates for the remaining year. For processing volume, we closed the first three quarters at $3.1 billion, and expect to process $1.1 billion to $1.3 billion in Q4, projecting a total 2022 volume of around $4.2 billion to $4.4 billion. This is in line with our total year target of $4 billion to $6 billion.

Revenue from processing in Q3 is $10.6 million, including regular processing revenue of $7.8 million and a one-time fee of $2.9 million from legacy accounts. We expect to see a solid Q4 and project a total-year revenue at $32 million to $35 million.

For adjusted pro-forma EBITDA, our Q3 adjusted EBITDA is a minus $0.1 million, which is just a tick below the breakeven target for the quarter. We're very proud to have accomplished this major improvement from last quarter's negative $4.9 million. Our updated Q4 projection for adjusted EBITDA is around zero to a positive $3 million.

Overall, we hit the vast majority of our operating and processing goals in Q3, launched the coyni platform as scheduled, and remain truly optimistic about our near-term growth trajectory. With this, I would like to now turn the call back over to Ben Errez, our Chairman, to begin our Q&A.

For the folks listening to this call, thank you for your interest and commitment to RYVYL. We are genuinely grateful for your ongoing support. With that, I would like to begin our Q&A session. In addition to Drew, Min, and myself, other members of our executive leadership team, including our CEO, Fredi Nisan; and CMO, Jacqueline Reynolds, are on hand to answer questions.

Operator, please begin. Thank you so much.

Thank you, Ben. (Operator Instructions) Howard Halpern, Taglich Brothers.

Congratulations, guys, on achieving a lot during the quarter.

Thanks, Howard.

Based on Q3 results that we see out there, have we really reached, in this year, an inflection point in the gross margin trajectory and that we'll start seeing it creep into the low 60s from the way you are in the third quarter?

I will direct this question to Min. This is part of the projections for Q4 and next year. Min, go ahead.

Thank you, Ben. Howard, thank you for the great question. I would say yes, indeed. For Q3, we bought back about $1.3 billion of volume. We actually overachieved and hit beyond the 60 basis points that you referenced.

Right.

As a result of that, we were able to get to pretty much a breakeven adjusted EBITDA number for the quarter. So we expect to see further improved gross margin contribution coming up.

And that's from a reduction in the expenses related to ISOs and gateways -- and you're able to do it more or less more on your own.

Well, it's a combination of a few things. It's comprised of further improved gross margin because we're able to process more and continue to drive gross margin out of the high-risk acquiring space of the business. But obviously, on a cost control side, we continue to monitor closely. As we launch the coyni platform, we are rightsizing the continuing R&D product development efforts as well as other cost from operations.

Okay. And now, in terms of coyni, I don't know if you've officially disclosed. How much funding have you put in to at least your initial bank? And are you looking for partners to put money in escrow for the second partner?

I will take that question, Howard. So coyni, moving forward, is focused on a B2B vertical. And as such, it is self funding. Therefore, we would not be seeking additional funding for it at this time.

Okay, that sounds really good. And in terms of how you've gained momentum with American Samoa, what have you been receiving -- or what kind of feedback have you been receiving from the merchants? I don't know whether you've received it from the customers. But what is the reception so far that you are receiving from your operations there?

I will direct that question again to Min.

Sure. That's a great question, Howard. As mentioned on the call earlier, we achieved basically 50% of the targeted merchant base on the island. The experience so far has been fantastic. The volume of the payment processing business on the island has grown from basically zero to close to $8 million on a monthly basis, just within the number of months.

We have been collecting feedbacks from the merchants, including restaurants like (technical difficulty), as well as collection feedback directly through our banking partner, Territorial Bank of American Samoa. It's well received so far. Our partner expect to receive further volume coming up in the next quarter or two. So, all is going well.

Okay. And I guess since you're almost of halfway into the American Samoa, are there others now that are developing in the pipeline that might occur next year? Or are you waiting to develop that pipeline until American Samoa's fully deployed?

Thanks, again, for the thoughtful question, Howard. This is Ben. Yes, we do see a potential and, already, enquiries by other similar systems.

Closed-loop pay systems are all over the world. We have been approached by several to duplicate the success in technology platforms for American Samoa. We will discuss those in due course. They are not yet at the point where we would disclose any of that. But definitely, we have several opportunities on the table.

Okay. And then one technical financial question. I see, with the change, I guess, in the convertible debt and interest expense, that discount, dropping significantly in this quarter. I haven't looked at the Q yet, but could we see that basically diminishing towards zero from the $437,000 that we recorded in the third quarter?

I will direct that question to our Chief Financial Officer, Drew.

He might be on mute.

Sorry, I was on mute. With the conversion of parts of the debt to stock, we have taken the discounts and derivatives values down and recognized an expense related to those, the reduction in debt. The interest rate, obviously, is affected by the reduction in the debt, but the conversion is not -- we can't predict the rate of conversion from the debt holders at this particular in time.

Right. But the debt discount part of it, that should stay now because you've already assumed that in the -- or from debt. You've already taken most of that --

The discount was reduced by the reduction in the debt in the quarter.

Okay. Okay, that sounds great. And you guys just keep up the great work.

Thanks, Howard. Operator, who's next?

Kevin Dede, H.C. Wainwright.

Hi, Ben. Maybe two high level for this call -- you can kick it if you don't want to deal with it. But could you just run through a transaction example that illustrates how coyni is self funded?

I will direct this question to CEO, Fredi Nisan.

Hey, Howard. How are you? Thank you for the question. Kevin, sorry, from H. Wright (sic - H.C. Wainwright). Sorry about that.

Coyni, in the B2B space, the way transactions are coming in is B2B, our business, will fund this coyni wallet with the amount he wants, and then request to do certain things, for example, FX, send money, invoices, everything related to his business or payout, vendors, or other different businesses. He will fund his own wallet.

When it comes from a credit card processing, we basically hold the money for 24 hours and then release when we get the funds. So the ecosystem is funding itself. We do have instant funding if needed, and then we can access a liquidity if needed. But at this point, we don't see it happening.

The New York Fed, and I'm sure you've seen this, has recently started testing not just a central bank digital coin, but also a tokenized, blockchain-backed transaction processing engine that seemed to me to be very similar to the one that you folks have developed. Can you help me understand how -- should their test be successful, how you would expect vendors to come to your platform versus using one that was offered by the Fed?

Kevin, thanks for this question. So this is my view. I think that development is a great thing for coyni. The feature is a necessary next step for the industry in general, and we'll continue to grab legitimacy traction as larger players enter the space and the government steps up the regulatory oversight.

Coyni can provide the same or superior technology as an equalizing agent so that smaller banks can have the same capability as these major players. Coyni's infrastructure is built to be able to integrate with the pilot or the larger banks down the track. We expect this trend to continue as this pilot program takes place.

Okay. Taking a step back and looking at your objectives this year, you're basing your -- I mean, obviously, right, we're halfway through the quarter. But you're not expecting to close any acquisitions through the balance of this year.

Could you characterize -- I mean, I know in your prepared remarks, Ben, you spoke to the opportunity. I'm just hoping, given sort of the general reset in valuations, you could give us your perspective on how that market looks and what type of currency you would use to pull the trigger on a new deal.

Again, thanks for this insight. So obviously, as we are all interfacing dry powder in the capital markets, standard debt and equity raises are less likely. This does not mean that M&A activity is halt to a stop. We are still looking at several opportunities. Obviously, these opportunities will need to be in the context of both the $100 million existing note on our books and an opportunity to reset market cap when we join forces with other accretive businesses.

Although you are correct in saying that it is highly unlikely that Q4 will see a completion of such activity, we do think that the days when this will happen are nearing. And I do expect that to happen in the near future, maybe in the next couple of quarters.

Can you just give us an idea of how you see the target environment? Do you just think there are, I guess, privately held companies that have investors that are looking for an exit? Or maybe the management teams there realize that there's a better opportunity and scale and --

The second is more likely. We will not be looking to provide an exit to anybody. That business, potential business, that we're discussing here will have to be something that is extremely accretive to our business model, our business lines, and perhaps, provide traction in a vertical that we don't have today. Also, it has to be accretive to scaling for both GreenBox and RYVYL and this potential partner.

Also, as I look into this opportunity, obviously, I'm looking at a rebalancing of equity through a true-up event. Meaning, some metrics to value will have to be revisited down the road, maybe 12 months, maybe 24 months, such that the accretive additions to both businesses will have to be realized in the future. We anticipate the current equity markets to remain stagnant as they are now for some duration, maybe four or five quarters down the road, and we will act accordingly. We would seek to do a rebalancing true-up after that.

Okay. Could you offer just a high-level view on your sales and marketing approach given where coyni is now, where your processing business is here in the US, the opportunity to engage further both with credit cards and on the forex side, and obviously the touch on businesses you have in Europe?

Okay. I will direct that question to Min.

Hey, Kevin. That's a great question. I'll put it this way. So the way we look at how we go to market and pursue further sales flow for coyni, is that we have a strong foundational business that's covering both high-risk and low-risk merchant space. But in addition to that, with the launched platform, we see additional verticals being opened up in our near-term business plan that we see that, domestically, we will have one or two new market verticals through strong partnerships we can bring to the table. And in addition to that, through the B2B partners, we see transaction processing for the end users, for the business customers, for both on-ramp and off-ramp capabilities.

As you mentioned also, given that we have a unique business presence in the European market already, leveraging the various business licensees we have, we can look at how to do on ramp, off ramp for both sides of the Atlantic Ocean. But in addition to that, for the FX and international payments space, we also see that being very complementary as well. So I'm very optimistic to see the volume growth across multiple verticals as well as the geographics between the two sides of the Atlantic Ocean.

Kevin, I'm going to allow for another point of view from Chief Marketing, Jacqueline. Jacqueline, go ahead.

Appreciate that, Ben. Thank you.

Jacqueline Reynolds

Well, it's not necessarily another point of view. Hi Kevin. It's just to augment and piggyback on what Min was saying from a sales standpoint. From a marketing standpoint, we've done quite a bit of work to really understand who the target customer is.

And in this case, we named them the progressive pragmatic. I have a ton of information and research that supports who it is that we are really going for and who has the biggest disposition to adopt the coyni brand. But we see a lot of potential, and we will be using platforms, such as public relations, social media, to really engage with this progressive pragmatic B2B customer to drive awareness.

Obviously, we're in the very nascent stages of launch and we want to make sure people know who coyni is. So that gives you a little bit of background on the marketing side.

Could you, Jackie, help me understand how -- I mean, maybe how to quantify that target customer in terms of the entire transaction market and maybe the amount of volume that they're processing on a -- if you were able to generalize, on a per-customer basis. And then, also, help us understand how you're able to rationalize two brands in the market.

You've got the ex-GreenBox. Now that's gone. That's water under the bridge. But you're still offering both RYVYL and coyni. So help me understand how you're going to communicate both of those brands and their advantages.

Absolutely. And I'm going to tackle the second question first, Kevin. So, tackling two brands launching in the marketplace is not any different from what the Clorox company does with their stable of brands or what the Coca-Cola company does with their stable of brands. RYVYL, to us, is the mother brand. It's the brand that is the umbrella for all the other products that we offer on our roster.

And so obviously, we want to drive the awareness and we want to drive a sense of trust and security with our mother brand. But coyni is really going to be our workhorse. And for that reason, we are investing in coyni to ensure that we are truly laser focused on this target that I just mentioned.

So each one has their own brand positioning and their own messaging, et cetera. But we will make sure that those two are differentiated. And if you'll notice on some of our communications, our tag line is provoke possibilities. So RYVYL is the one that provokes those possibilities for all others.

The second question, I'm going to actually turn it over to Min in one second But we're working very, very closely with our sales team to distinguish exactly who our target customers are, what channels, and to really put a number to that to quantify that volume opportunity. So, Min, if you'll take the sales conversation with you.

Thank you, Jacqueline. Kevin, to help -- really, a couple of ways to look at the metrics. One of the metric's pretty established for us already. We see this everyday and we're very comfortable with it. It is the number of merchant locations and the monthly processing volume per location. That's a true, reliable metric for us.

Now the other point I'd like to share with you is that we have hundreds of agents and ISOs. We've been basically putting them on standby until now. We've launched the platform. We'll be able to work with the ISOs and partners to bring the volumes through. So, in the existing verticals, we have good metrics already. For the new verticals we plan to bring over on board, we are working diligently on that.

Obviously, as we finalize our business plan for 2023 and set the metrics with the new verticals, we'll be able to articulate and share this particular core as part of the ongoing guidance. So I think that's probably the quick way to answer the question. Hopefully, that's okay with you.

Kevin Dede

Yeah. No, I appreciate it, Min. Thank you. Thank you for entertaining it. I appreciate it. One last one for me. And I think maybe you, gents, and Jackie addressed this for Howard already. And that's the sequential change, the sequential increase, in percent of processing volume that was revenue. And I just wanted to understand those.

There's a nicely sequentially positive trend from March this year. And I get that what you've said, right, it's based on both your internal improvement and also increases in scale. But I'm wondering how you think we should look at it going forward. How much more can that improve?

Kevin, that's an open-ended question. I'll put it this way.

If you find it that way, Min, then I've done my job.

You're doing a great job. So I'll put it this way. Really, we continue to expect growth for the targeted business verticals we have. For the ones we have visibility in our sales pipeline, we know they will generate higher than the average residual percentage right now. We know that. Because we have pricing strategies, we know what our cost base is. So we do that.

Going forward for the longer term, as we get into new verticals, we'll be working closely with our CFO to ensure that we segment business. So that way, for each of the major business lines, we'll continue to articulate volume and corresponding revenue and margin. As such, analysts will be able to look at the math and be able to model it out.

So, Min, if I was to distil that for my simple mind, we could expect that RYVYL will start to break down business lines and give us a little more insight on an operating segment basis.

That's correct. You can see that even during the earnings calls, especially in my operating highlights area, I tend to break them down by each of the business lines and give you the data points.

Okay. Are those figures in the Q? Or will they be in the Q?

They currently are not in the Q. Obviously, we will be compliant as we continue to drive growth and hit a sort of scale. We will be looking at the proper time to break them down and articulate in Q2. Okay?

That sounds great. Thank you so much, everyone, for entertaining my questions. I really, really appreciate it. Apologies that so many of them were not necessarily quarter related, but business, strategic business perspectives. I definitely appreciate the time and attention. Thank you very much.

Thanks Kevin. Going back to your point with Min, if you go through the transcript of this call or just listen to Min's section, you'll see the breakdown by verticals as a contributor to overall earnings. So we already have that and we began doing that. But as we grow bigger and as we scale in market cap and equity appreciation, we will obviously need to provide further breakdown and further clarity. So we expect and anticipate that.

We don't have a lot of time and I do want to get to some of the questions that were submitted ahead of time. And in particular, one that-actually, as I was traveling last week, I received three calls from different analysts and stakeholders about one particular issue. And I wanted to address it on this call.

And then we'll continue and have questions until time runs out. Operator, please keep us honest on this.

So, the matter that I wanted to discuss and that I received calls about was the issue of the FTX bankruptcy and how it impacts our business. So the direct answer to that is that the FTX collapse has no negative impact on RYVYL, not whatsoever.

The price of crypto is a multifaceted question, and this would be my personal opinion here. Bitcoin and all related alt coins have no intrinsic value, and their main advantage is the detachment from government. As oversight increases and stablecoin matures, there will be less need for it and decreasing values.

Stablecoin that is properly pegged to fiat, both in coverage and compliance reporting, is equivalent to fiat and will eventually be better than fiat, as it has the potential of being adjusted or hedged by commodity. Regulation space will increase for the remainder of the current administration. The Department of Treasury will likely push the space oversight as fast as they can and will have bipartisan support for it.

Operator, I assume there are no further calls, so I can continue with the written --

We have one question --

Sorry, go ahead.

We have one question in queue.

Go ahead.

Chris Sakai, Singular Research.

Hey, Chris.

Hi, Ben. I just had a question on your cash burn. It looks like cash burn for the quarter was about $18 million. How comfortable are you with this? And what's it going to look like next quarter?

Chris, I will direct this question to Drew, Chief Financial Officer.

Well, most of the cash is obviously used by operations in the quarter. We do see an improvement in operating -- or project improvement in operating results in Q4, given the completion of the coyni development project and then going into more of a maintenance and supportive role there. We've also made deposits for small acquisitions in the quarter related to licenses in the UK as well as some technology, also supported in Europe.

Okay, thanks for that. And then did I hear this right? So coyni had $480 million processing volumes for the quarter? What was that Min said?

I will send that Min.

Hey, Chris. So in the FX and international payment space, we have $480 million of processing volume. That's what we consider the FX module. We intend to -- we plan to integrate that with coyni. It's not fully connected yet, but it's the starting foundation for that module and for that business, just to be very clear about it. So, for example, every time we'll do a --

And then...

So, for example, every time we do a foreign exchange conversion, we earn a fee for each of the spot conversions. Each time we do a corporate payout for international payment space, we're entitled to a bit of revenues. Okay?

Right. Okay, thanks. And then for the year, what you're forecasting, $4.2 billion to $4.4 billion. How much of this coming from coyni?

We didn't necessarily -- I don't have the data in front of me. But we do -- we have started seeing the volume showing up on coyni. $480 million is the FX, which eventually will be the coyni FX module. I'm going to have to get back to you, Chris. I know we maintain communication with you, so I'd probably get back to you to make sure I give you the right number rather than giving you an incorrect number on the phone here.

Okay. And last for me, can you provide any color as far as what processing volume you'll see from the second banking partner?

Min Wei

Well, very good question, Chris. Okay. Actually, Fredi Nisan would like to help address the question. Over to Fredi.

Hey Chris. Pleasure hearing from you. Regarding the banking relationship, what's important for us, to grow with volume and profit, is to have as many partnerships as possible to support the volume in different countries. So we have the relationship in the US, in Europe that we engage and working on to support the global growth and expansion of coyni.

In Q4, as part of our business expansion, of course, we have different channels. And one of them, you're going to hear very soon. But in the end of it, it's not about the volume. It's about the support of the volume that we want to put on coyni. And for that reason, you need more banking partnerships.

Okay, yeah. And then I forgot to ask about Cross River. How is that going? Can you mention anything there?

Yeah, absolutely. Cross River and RYVYL are working together on creating the product. We already have a contract with them, as we mentioned in the PR, but it's taken longer as banking related partnerships takes some time, longer than expected.

So, at this time of the year, just for your knowledge, Chris, and everybody on the call, usually in November, all of the banks require coyni to a freeze until the beginning of January. So some of those things will be delayed for first quarter of next year. But other than that, we have a great progress and hopefully we can announce some of it soon.

Okay. Thanks for that, Fredi.

Thank you, Chris.

Thank you. There are no further questions in the queue.

Okay. I'll assume that Chris is done. Sorry, Operator, did you want to add anything?

No. I'll turn it back to you, Ben, for any written questions.

Okay. Okay. So one last question that was submitted beforehand in writing and I would like the team to address is, can you elaborate on the R&D expense for coyni and the company strategy to scale it? Is the wallet necessary if you're focused in B2B? And I will direct that question to Min.

Thank you, Ben. This year, we invested in our R&D efforts and, as a result, successfully launched our coyni platform. Future development will continue to focus on product roadmap work and functionality to support our growth in payment solutions, acquiring business, foreign exchange and international payments business, bi-label platform, and API work. And yes, as we transition merchant business volume onto coyni, we expect to see an increase in B2B volume in the ecosystem accordingly.

Thank you, Min. And with that, we are concluding today's call. Thanks everybody for your continued support and great questions submitted during this call and before it.

Operator, you are okay to complete.

Thank you for joining us today. You may now disconnect your lines. Have a nice day.

Thank you, all.