Ryvyl Inc.

Good afternoon, ladies and gentlemen, and welcome to the RYVYL First Quarter Earnings Conference Call. During today's presentation, all parties will be in 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 and operations for the three months ended March 31, 2023, was filed with the SEC today. On our call today are RYVYL Chairman Ben Erez, Interim Chief Financial Officer Mary Leigh Hoyt, and Chief Operating Officer Min Wei. I'd like to remind everyone that 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 Arras, the company's chairman. Ben, the floor is yours.

Thank you for joining us today. Further to the success of using AI in our previous call, this call is entirely edited and produced using this exciting technology. Our fiscal first quarter 2023 was not without its challenges. Uncertainty surrounding the banking sector coupled with expectation for increased regulation of digital payments and general macroeconomic concerns were common themes. Yet Rival's financial performance has never been better as we deliver top-line revenue of $11.3 million, the most in our company's history for a quarter. and growth of nearly 170% year-over-year. As I stated during our recent fourth quarter conference call, we have concentrated our efforts on improving our bottom line, improving our processing efficiency, improving the workforce, and improving technology. All of these things work in concert, and consequently we're seeing our operating margins increase. While proud of our Q1 top-line growth, much of our time, energy, and expenses for the quarter were related to completing the restatement of our financials, which we successfully completed. While Min will break down our various processing volume channel performance in a few minutes, at a high level, we processed $565 million during the quarter. Removing non-income producing volumes proved to be material in causing an increase in operating margins and corporate efficiencies. Now to review some of our major strategic initiatives that are underway, the first of which is our plans to spin off Koini, our stablecoin technology. Subsequent to the end of Q1, we announced the initiation of this process as part of a broad value creation strategy. We have made great strides with our payment processing business. We believe now that we have identified the best path forward to create value for our shareholders through the spinoff of Coiny as a public company towards establishing it as the premier stablecoin in the market as a necessary step in the objective. We engaged Kingswood Capital Partners as our placement agent and advisor in connection with the spinoff and related public offering, which we expect to be in the range of $40 million with the NASDAQ up list. Furthermore, we also acquired a public shell company to transfer Koine assets in order to facilitate the transaction. Strategic acquisitions and partnerships will also play a role in Koine's growth. And to that end, we are evaluating multiple opportunities. We'll provide more updates on this front as they come about. Ultimately, as a stand-alone entity, we expect the growth trajectory of COINI to unlock significant shareholder value. Vival and its shareholders will benefit from the spin-off as we continue to plan to issue a board-approved special dividend upon completion of the spin-off, turning now to our banking as a service. We continue to gain momentum on this initiative in early 2023 with growing demand for the service. After signing six global financial institutions that are projected to process more than $100 million per month in transaction when fully ramped up, we also recently announced a strategic partnership with Intercash, a Europe-based global payment solutions provider. Through the collaboration, business customers can now offer co-branded debit transactions and prepaid cards to untapped consumer markets leveraging Rival's new banking-as-a-service platform as the infrastructure. White-label cards can be issued as virtual or physical, allowing businesses enhanced flexibility into cash, which currently has over 1 million cards issued, has already initiated the first phase of the process by moving more than 50,000 cards to the Rival card program, and plans to continue with the migration in phases based on card issuance. Rivals Banking as a service solution offers API integrations and foreign exchange capabilities in more than 40 different currencies with local settlements. The service authorizes transactions 24 hours per day on business days and enables payouts by way of approved methods such as real-time payment or direct deposits. In addition, the service allows for the ability to readily trace transactions and reduce fraud, all while maintaining strict compliance requirements. By the end of the year, we expect to have a full global payments platform covering over 100 local currencies and local settlements. We believe banking as a service is the future of global banking, and we're excited to be an enabling service provider in a space that is rapidly emerging. and reaching new customers every day. While we continue to see increased adoption of our solutions in American Samoa through our partnership with TBAS, which Min will provide an update on shortly. As a reminder, this is great demonstration of our capabilities to create a closed-loop ecosystem and modernize payments infrastructure. Our success on the island has helped generate interest from a variety of potential customers, including other islands. businesses, and governments around the world that we continue to explore collaboration opportunities with. We see great potential stemming from the TBAS partnership, not only because we treated that as a digital transformation for banking services, but because the COINI platform can provide the foundation for us to convert payment services, expanding a massive universe of opportunity for us. To sum up, we're very encouraged to deliver record Q1 top-line results. Yet we remain focused on executing towards the larger opportunity ahead of us in the lucrative digital payments landscape. We are thrilled with the expansion and higher margin-acquiring processing volume, both internationally and domestically. We enjoy the momentum in our banking-as-a-service solution and the initiation of Coinie's spin-off strategy. We remain confident we are on the path to create significant long-term value for our shareholders. And now to discuss the details of our financial results. I'd like to turn the call over to our Interim Chief Financial Officer, Mary Lahoyt. Mary, the floor is yours.

Thank you, Ben. As a note, I'll be referring to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to our 10-Q filing, which will be available on the company website under SEC Filing. Now turning to the company's first quarter 2023 financial results. Our gross revenue increased by $7.1 million, or 169%, to $11.3 million for the three months ended March 31, 2023, from $4.2 million for the three months ended March 31, 2022. The change in net revenue reflected the following. Increases in processing volume in the three months ended March 31, 2023, compared to the three months ended March 31, 2022. Increase in revenues from our acquired businesses, including Charge Savvy, Rival EU, and American Samoa. Gross profit in the first quarter of 2023 was $5.1 million, or 45.3% of total revenue, compared to gross profit of $1.4 million, or 33.3% of total revenue in the same quarter a year ago. The increase in gross profit was primarily due to increases in processing volume and processing volume margins in the three months ended March 31st, 2023. Operating expenses had increased by $0.3 million or 3.4% to $8.8 million for the three months ended March 31st, 2023 from $8.5 million for the three months ended March 31st, 2022. The increase was due primarily to higher payroll, and payroll tax expenses and external professional expenses for legal and accounting services for the financial restatement and 2022 annual reporting. In addition, we encountered legal proceedings for the three months ended March 31, 2023 offset by decreases in general and administrative advertising and marketing and stock-based compensation expenses. Other expense decreased by $18 million or 80.0% to $4.3 million for the three months ended March 31st, 2023 from $22.3 million for the three months ended March 31st, 2022. Changes in the fair value of derivative liability amounted to a charge of $7.7 million for the three months ended March 31st, 2022 and a credit of $168,000 in the three months ended March 31st, 2023. interest expense decreased by $5 million, primarily related to the $100 million convertible note issued in November 2021. Additionally, we incurred a charge of $4.1 million in the three months ended March 31st, 2022, related to a loss on a partial extinguishment and conversion of debt. The company recorded a net loss in the first quarter of 2023 of $8 million, or 15 cents per basic and diluted share, compared to a net loss of $29.3 million, or 72 cents per basic and diluted share, in the same quarter a year ago. The decrease in net loss was due to increased revenue, gross profit, and decreased other expenses, mostly related interest expense and changes in derivative liability in the three months ended March 31st, 2022. We ended the quarter with cash, cash equivalents, and restricted cash of $57.1 million as of March 31st, 2023. I'll now turn the call over to Min Wei, our Chief Operating Officer, to provide a review of business operations and our outlook.