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spk07: Good afternoon, ladies and gentlemen, and welcome to the Rival Third Quarter 2022 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following management remarks, the conference will be open to questions. 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 Rival Chairman Ben Arez, Chief Financial Officer Drew Bielik, 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. The 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 Arez, the company's chairman. Ben, the floor is yours.
spk06: Hello, and thank you for joining our third quarter 2022 financial results conference call.
spk02: It is time of tremendous momentum and I'm delighted to share an update during this, our first earning call as Rival. 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 Rival 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 30% increase from the second quarter of 2022, an indication of our remarkable growth even during a challenging macro environment. Given the remarkable growth we've seen in the past two years with the continued advancement of our technology and payment solution, 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 approvals. to rename the company Rival. 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 Rival showcases the continued development of our payment solutions. remarkable stablecoins, 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 rival website, along with the new social media platform and heavy public relations activities, and with a number of other launch activities as we strive to drive awareness in the weeks ahead. Shifting gears now to the Territorial Bank of America, Samoa, Kibas. You may recall that in our second quarter commentary, we discussed a 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 solution. These cashless payment solutions reduce costs, 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 close-loop rival 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 Rival. October marked the launch of Coiny, our USB-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 Koine 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 Armonino, a top accounting, consulting and technology firm in the US. Now, what does that mean? Each COINI digital token held in a wallet on the platform is matched with one US dollar held in a custodial account with a federally insured financial institution. The dollars backing COINI are not tied up in investments and are not converted to other cryptocurrencies. Competing stablecoins that have not utilized these safety and compliance measures have failed. leading to severe market disruptions. Speaking of this and the heightened attention to company balance sheet and cash flow in the current market environment, Rival took the initiative to renegotiate and restructure the terms of our 100 million convertible note financing, which we originally entered into on November 2nd, 2021. Through cooperation with our note holders, we were able to come to terms to extend the maturity by one year to November of 2024, while also securing a 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 have looked to grow organically and with select acquisitions to accumulate processing volumes, such as Chalk Savvy, Sky Financial, and key licensing 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 Koini, our truly differentiated stable coin, our new brand identity, and increased global capabilities, 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 Bilek, our new Chief Financial Officer, whom we brought on board in the third quarter of 2022. Drew brings a tremendous depth and breadth of functional and industry experience with startup 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.
spk10: 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 10Q 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 the 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 nine months ended September 30, 2022 decreased $9.2 million from 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 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 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 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 reported 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 for 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 increases in research and development, interest in 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 the 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 the business operations and the outlook for the balance of 2022. Thank you, Drew.
spk08: 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 volume 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%. Charge Savvy is also approximately 14% higher than planned, 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. We 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 $50 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 Transat 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 rolled out to over 240 merchants, representing approximately 50% of the overall merchant target market. This phase one goal was achieved ahead of our schedule. 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 Corny, 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 rolled out the platform on both the iOS and Android apps on October 12th. As part of the Corny technology, we additionally designed the system to have foreign exchange and international payments capabilities. which we plan to be fully integrated into Corny 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 Corny with a second banking partner in Q4, which will allow us to accelerate the onboarding of domestic volume onto Corny We ask that you stay tuned for more to follow on this development next quarter. With a 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 to $1.3 billion in Q4, projecting a total 2022 volume around $4.2 to $4.4 billion. This is in line with our total year target of $46 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 to $35 million. For adjusted performer EBITDA, our Q3 adjusted EBITDA is a minus $0.1 million, which is just a tick below the break-even 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 operating and processing goals in Q3, launched the Corny 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 Harris, our chairman, to begin our Q&A.
spk02: So the folks listening to this call, thank you for your interest and commitment to RIVAL. We are genuinely grateful for your ongoing support. With that, I'd like to begin our Q&A session. In addition to Drew, Min, and myself, other members of our executive leadership team, including our CEO, Freddie Nissan, and CMO, Jacqueline Reynolds, are on hand to answer questions. Operator, please begin. Thank you so much.
spk07: Thank you, Ben. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
spk06: One moment, please, while we poll for questions. Thank you. Our first question is Howard Halpern with Taglik Brothers
spk07: Please proceed with your question.
spk03: 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 in that we'll start seeing it creep into the low 60s from where you are in the third quarter?
spk02: I will direct this question to Min. This is part of the projections for Q4 and next year. Min, go ahead.
spk08: Thank you, Dan. Thank you for the great question. I would say yes, indeed. For Q3, we brought that About $1.3 billion of volume, you know, we actually overachieved and hit beyond the 60 basis points, as you referenced. As a result of that, we were able to, you know, get to pretty much a break-even, adjust the EBITDA number for the quarter, right? So, you know, we expect to see further improved gross margin contribution coming up.
spk03: And that's from a reduction in expenses related to ISOs and gateways, and you're able to do it more or less more on your own?
spk08: 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 the cost control side, we continue to monitor closely. As we launch the Koine platform, we are licensing the continuing R&D product development efforts as well as other costs for operations.
spk03: Okay. And now, in terms of Koine... 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?
spk06: I will take that question, Howard.
spk02: So Coiny, 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.
spk03: 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 them? your operations there.
spk06: I will direct that question again to Amin. Sure, it is a great question.
spk08: However, 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 payment processing business on the island has grown from basically zero to close to $8 million on a monthly basis, just within a number of months. We've been collecting feedbacks from the merchants, including restaurants, like McDonald's, Carl's Jr., as well as collecting feedbacks directly through our banking partner, Territorium Bank of America Samoa, You know, it's what we see so far. You know, our partner expects to, you know, receive, you know, further volume coming up in the next quarter or two. So, all is going well.
spk03: Okay. And I guess since you're sort of almost like, you know, kind of halfway into the American Samoa, are there others now that are developing in the pipeline that might occur soon? next year, or are you waiting to develop that pipeline until American Samoa is fully deployed?
spk02: Thanks again for a thoughtful question, Howard. This is Ben. Yes, we do see a potential and already inquiries by other similar systems. Close-loop systems are all over the world. We have been approached by several to duplicate the success and 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.
spk03: Okay, and then one technical financial question I see. With, you know, the change, I guess, in the convertible debt and interest expense debt 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?
spk06: I will direct that question to our Chief Financial Officer, Druf. He might be on mute. Sorry, he's on mute.
spk10: With the conversion of parts of the debt to stock, we have taken the discounts and derivative values down and recognized an expense related to 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 point in time.
spk03: Right, but the debt discount part of it, that should stay now because you've already assumed that in the loss on debt. You've already taken most of that.
spk10: The discount was reduced by the – by the reduction in the debt in the quarter.
spk03: Okay. Okay. That sounds great, and you guys just keep up the great work.
spk06: Thanks, Howard. Operator, who's next?
spk07: Our next question is from Kevin Didi with HC Wainwright. Please proceed with your question.
spk09: Hi, Ben. Maybe sort of too 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 Koini is self-funded?
spk02: I will direct this question to CEO Freddie Nissen.
spk05: Hey, Howard. How are you? Thank you for the question. Kevin, sorry. For me, I tried. Sorry about that. So, Koine in the B2B space, the way transactions are coming in is B2B, our business will fund his Koine wallet with the amount he wants and then request to do certain things, for example, effects, send money, invoices, everything related to his business or pay out vendors or other different businesses. He will fund his own wallet. When it comes from a critical 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 happen.
spk09: 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'd expect How do you expect vendors to come to your platform versus using one that was offered by the Fed?
spk02: Kevin, thanks for this question. So this is my view. I think that development is a great thing for Koine. The future is 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 sets up the regulatory oversight. COINI can provide the same or superior technology as an equalizing agent so that smaller banks can have the same capabilities as these major players. COINI'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.
spk09: Okay. You're sort of 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 in 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, you know, given sort of the general reset and valuations, you could give us your perspective on how that market looks and, you know, what type of currency you would use to pull the trigger on a new deal?
spk02: And again, thanks for this insight. So obviously, as we are all interfacing dry powder in the capital market, standard debt and equity raises are less likely. This does not mean that M&A activity is halt to 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 accreted 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.
spk09: 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 in scale?
spk02: 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 Rival 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 through-up after that.
spk09: Okay. Could you... Offer just a high-level view on your sales and marketing approach given where Koine is now, where you're processing businesses here in the U.S., the opportunity to engage further both with credit cards and on the Forex side, and obviously the touch on businesses you have in Europe.
spk06: Okay.
spk02: I will direct that question to Min.
spk08: Hey, Kevin. It's a great question. You know, I'll put it this way, right? So the way we look at, you know, how we go to market and pursue for the sales flow for Quanti is that we have a strong foundational business that covering both high risk and no risk, you know, merchant space. But in addition to that, You know, with the launch platform, we see additional verticals being opened up. You know, in our near-term business plan that we see that domestically we will have, you know, one or two new market verticals through strong partnerships we can bring to the table. In addition to that, you know, through the B2B partners, we see, you know, 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 licenses 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 payment 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.
spk02: Kevin, I'm going to allow for another point of view from Chief Marketing, Jacqueline. Jacqueline, go ahead.
spk09: I appreciate that, Ben. Thank you.
spk01: 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 sort of named them the progressive pragmatic. I have a ton of information and research that sort of supports who it is that we are really going for and who has the biggest disposition to adopt the Koine 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 CoinE is. So that gives you a little bit of background on the marketing side.
spk09: 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, you know, 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, right? You've got the X green box. Now that's gone, that's water under the bridge, but you're still offering both rival and coiny. So help me understand how are you going to communicate both of those brands and their advantages.
spk01: 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 brand or what the Coca-Cola company does with their stable brand. Rival to us is the mother brand. It's the brand that sort of 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 Koine is really going to be our workhorse. And for that reason, we are investing in Koine 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 communication, Our tagline is provoke possibilities, so Rival is the one that provokes those possibilities for all our brands. 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 from here.
spk08: Thank you, Jacqueline. And Kevin, just to help, you know, really, you know, a couple ways to look at the metrics, right? You know, one of the metrics pretty exceptional for us, we see this every day, and we're very comfortable with it, is, you know, the number of merchant locations and the, you know, monthly processing volume per location, right? That's a pretty reliable metric for us. Now, the other point I'd like to, you know, share with you is that we have hundreds of you know, agents and ISOs. You know, we've been, you know, 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 volume through, right? So, you know, you can just think verticals. We have good metrics already for the new verticals. You know, we plan to, you know, bring over on board. You know, we are working, you know, diligently on that. You know, obviously, you know, as we finalize our business plan for 2023, And sadly, you know, metrics, you know, with the new verticals, we'll be able to articulate and share, you know, in this particular core as part of the ongoing guidance. So I think that's probably the quick way to, you know, answer the question. Hopefully that's okay with you.
spk09: Yeah, no, I appreciate it, man. Thank you. Thank you for entertaining it. I appreciate it. One last one for me, and I think maybe you, Gent, 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 kind of wanted to understand 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?
spk06: Kevin has an open-ended question.
spk08: I'll put it this way, right?
spk09: If you find it that way, Min, then I've done my job.
spk08: 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 strategy. 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 signs, we'll continue to articulate volume and correspondent, you know, revenue and margin. As such, analysts will be able to, you know, look at the math and, you know, be able to model it up, right?
spk09: So, Min, if I was to distill that for my simple mind, we could expect that Rival will start to break down business lines and give us a little more insight on an operating segment basis?
spk08: That's correct. You can see that even during the earnings calls, you know, especially in my operating highlights area, I tend to, you know, break them down by each of the business lines and give you the data points.
spk09: Okay. Are those figures in the queue or will they be in the queue? No.
spk08: They're currently not in the queue. Obviously, we will be compliant as we continue to grow and hit a certain scale. We'll be looking at the proper time to break them down and articulate in the queue, too. Okay?
spk09: That sounds great. Thank you so much, everyone, for entertaining my question. I really, really appreciate it. Apologies that so many of them were not necessarily quarter-related, but sort of business-related. strategic business perspectives. I definitely appreciate the time and attention. Thank you very much.
spk02: Thanks, Kevin. Going back to your point with Min, if you go through the transcript for 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. And operator, please keep us honest on this. So the matter that I wanted to discuss and that I've 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 Rivals. not whatsoever. The price of crypto is a multifaceted question, and this would be my personal opinion here. Bitcoin and all related altcoins 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. Tablecoin 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 through 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.
spk06: Operator, I assume there are no further calls.
spk02: So I can continue with the written.
spk07: We have one question in queue. Go ahead. Our next question is from Chris Sakai with Singular Research. Please proceed with your question. Thanks, Chris.
spk04: Hi, Ben. I just had a question about 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?
spk06: Chris, I will direct this question to Drew, Chief Financial Officer.
spk10: 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 COINI development project and then going into more of a maintenance and supportive role. there we've also made deposits for for small acquisitions in the quarter related to licensing fee 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 coiny had 480 million
spk04: processing volume for the quarter? What was that Min said?
spk02: I will send that to Min.
spk08: Hey, Chris. So in the FX 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 Corny. It's not fully connected yet, but it's the starting foundation for that module and for that business, uh, just to be very clear about it. So for example, anytime we do a, so for example, every time we do a, you know, a foreign exchange conversion, you know, we, we, we earn a fee, uh, for each of the spot conversion. Uh, each time we do a corporate, you know, payout, uh, for international payments space, we're entitled to, you know, a fee for the revenue. Okay.
spk04: Right. Okay. Thanks. And then for the year, what you're forecasting, $4.2 to $4.4 billion, how much of that is coming from COINI?
spk08: You know, we didn't necessarily, you know, I don't have the data you can find on me, but we do have a stock. We have start seeing the volume, uh, showing up on corny, um, you know, 480 million is the FX, you know, which eventually will be the corny FX module. Um, I might have to get back to you, Chris. I know we, you know, we, we maintain communication with you. So I have to get, probably get back to you to make sure I give you the right number rather than giving you the incorrect number on the phone here.
spk04: Okay. And last for me, um, Can you provide any color as far as what sort of processing volume you'll, you'll see from the second banking partner?
spk06: Well, uh, very good question, Chris. Um, okay.
spk08: Um, actually Freddie needs, I would like to, you know, help address the question over to Freddie.
spk05: Hey Chris, pleasure hearing from you. Um, in regarding to a banking relationship, What is 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 a relationship in the U.S., in Europe that we engage in working on to support the global growth and expansion of Corny. In Q4, as part of our business expansion, of course, we have different channels, and one of them we'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 coining. And for that reason, you need more banking partnerships.
spk04: Okay, yeah. And then I forgot to ask about CrossRiver. How is that going? Can you mention anything there?
spk05: Yeah, absolutely. CrossRiver and Rival are working together on creating the product we already have. a contract with them, as we mentioned in PR. But it takes longer as banking-related partnerships take some time longer than expected. So this time of the year, just for your knowledge, Chris, and everybody on the call, usually in November, all of the banks acquires going into a freeze until the beginning of January. So some of those things will delay for first quarter of next year. But other than that, we have a great progress, and hopefully we can announce some of it soon.
spk06: Okay. Thanks for that, Freddie. Thank you, Chris. Thank you.
spk02: Okay.
spk06: I'll assume that Chris is done.
spk02: I'm sorry, operator, did you want to add anything?
spk07: No, I'll turn it back to you, Ben, for any write-in questions.
spk02: 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 Koine and the company's strategy to scale it? Is the wallet necessary if you're focused in B2B?
spk06: And I will direct that question to Min.
spk08: Thank you, Ben. This year we invested in our R&D efforts and as a result successfully launched our Corning platform. Our 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, my label platform and API work. And yes, as we transition much in business volume on the corny, we expect to see a increasing B2B volume in the ecosystem accordingly.
spk06: Thank you, Ben.
spk02: And with that, we are concluding today's call. Thanks, everybody, for your continued support. And a great question submitted during this call and before it. Operator, you are okay to complete.
spk07: Thank you for joining us today. You may now disconnect your lines. Have a nice day.
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