Ryvyl Inc.

Good afternoon, everyone, and welcome to Rival Inc.' 's fourth quarter and full year 2023 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. The earnings press release accompanying this conference call was issued at the close of the market today. The annual report, which includes the company's results of operations, ended December 31st, 2023, was filed with the SEC today. A replay of this call is available at the investor relations section of the Rivals website in the events quarterly earnings section. As a reminder, this call is being recorded. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management concerning future events. These forward-looking statements are based on the company's current beliefs, assumptions, and expectations regarding future events, which in turn are based on information currently available to the company and contain projections of future results of operations or financial condition or state other forward-looking information. By their nature, forward-looking statements address matters that are subject to risk, and uncertainties. A variety of factors could cause actual events and results to differ materially from those expressed in our contemplated by the forward-looking statements. Other risk factors affecting the company are discussed in detail in the company's filings with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events, or otherwise except to the extent required by applicable laws. I will now hand the call over to Ben Erz, Chairman of Rival. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us today. I'm proud to bring you our fourth quarter and fiscal year 2023 financial results. 2023 was a momentous year for Rival, our best year yet, with strong growth in our business volume, leading to record company revenues. For the full year 2023, we delivered revenue of approximately $66 million, a remarkable 100% increase over 2022. Our fourth quarter 2023 revenue increased 100% year-over-year to $22.3 million, exceeding our guidance range of $19 to $21 million while setting a company record for the fifth consecutive quarter. This also reflects a 27% sequential increase from $17.5 million in the third quarter 2023. This tremendous revenue growth was derived from processing volume, which totaled approximately 3.1 billion dollars, a company record, and an 82% increase from 2022. We continue to bear fruit from our 2022 acquisition of Transact Europe. The company is now rebranded as Rival EU and experienced exponential revenue growth in 2023, increasing 294% to nearly 17 million dollars. At the same time, our North America business revenue also grew an impressive 71% to $48 million. Our Chief Operating Officer, Min Wei, will once again provide a full breakdown of the various processing channels' performance later during this call. Overall, we are very pleased with our operating performance and strong growth trajectory. Now to discuss some of our key growth initiatives. During the quarter, we announced a collaboration with R3 to offer businesses a groundbreaking blockchain as a service solution that enables streamlined and secure digital transformation. R3 is a leading provider of enterprise distributed ledger technology software and services for the financial services sector. The new platform, RivalBlock, is designed to be an innovative and cost-effective solution, simplifying the adoption of blockchain technology for businesses in banking, payments, and high-volume processing environments. RivalBlock streamlines blockchain integration and will offer business customers effortless access to the essential tools and building blocks required to develop a secure distributed ledger infrastructure. RivalBlock further features rich business APIs and rapid implementation. By merging Rival's expertise with R3's leading distributed ledger technology, we're setting a new standard for accessible, secure, and transformative blockchain services. turning to rival EU where we are seeing strong growth momentum. We are now CIPA enabled and targeting more than 2,000 payment service providers across 36 countries in the Eurozone with incoming and outgoing instant transfers. We progress towards completing integration with Visa Direct, which is now in testing. The service allows rival EU to leverage its capabilities and provide a superior banking as a service offering. Once enabled, we will be able to better serve our customers, retain their loyalty, and create new revenue streams. We continue to expect integration to be complete by mid-2024. What makes us so excited about being a Visa Direct partner is that we believe the collaboration in the Eastern European region will revolutionize the way funds are transferred between accounts, offering fast, convenient, and secure transactions. Our customers expect the opportunity to send money to authorized accounts, e-wallets, and and debit cards in over 80 countries across multiple currencies. We accomplished that using Visa's extensive network of local banking partners. Visa affords the benefits of faster access to funds with money becoming available, in many cases, within minutes instead of days. We remain quite optimistic about the opportunity in Europe and beyond. We continue to work with our large institutional partners on our banking as a service platform. and have ramped up to over $200 million per month in transaction volume. As a reminder, our 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 deposit. In addition, The service allows for the ability to readily trace transactions and reduce fraud, all while maintaining strict compliance requirements. We continue to view this as a long-term potential growth driver in a lucrative market that our technology is well-suited to tap into. During the fourth quarter, we made the strategic decision to retain Koine as a wholly-owned subsidiary and not spin off into a new publicly traded entity. This allows us to optimize the Koine technology platform to complement Koine's and expand payment processing and banking as a service solution. By maintaining a consolidated product roadmap, we expect to leverage CoinAid in both existing and targeted new vertical markets for better operating efficiencies and enhanced profitability. In the second half of 2023, we made great strides in bolstering our balance sheet through the restructuring of our debt. This was accomplished through two exchange agreements with the holder of a rival issued convertible note, initially in the principal amount of $100 million. The execution of these agreements reduced the principal balance of our convertible note by $66.3 million, lowering the total indebtedness to $19.2 million as of December 31, 2023. It also evidences the noteholder's ongoing support. and belief in our core mission. In addition to cash flow from operations, in late December, we sold our Chicago office building for $2.6 million in gross proceeds. Taken together, these steps have produced a much stronger balance sheet and significantly increased net shareholder equity, ultimately helping us to regain NASDAQ compliance by satisfying NASDAQ stockholders' equity requirements. Operationally, in the fourth quarter, we fortified our management team, appointing George Oliver as chief financial officer of the company. George brings vast experience as a senior finance professional with a background in corporate finance, treasury, financial planning, and analysis, international tax, and strategic planning. George has been instrumental already for us during our debt reduction initiatives. and will play a vital role in the future development of the company. In summary, Rival continues to be a growing force in shaping the future of financial transactions. In 2023, we delivered meaningful operational execution and revenue growth while setting the foundation to rapidly scale our process in volume, number of transactions, partnerships, and banking as a service platform. Looking ahead, in addition to the underlying momentum in our processing volume, we're excited about our partnership with R3 and the future of RivalBlock to provide a scalable platform for businesses seeking agile and secure blockchain solutions. By retaining Koine as a wholly owned Rival subsidiary and improved efficiencies, we believe we can accelerate business volume growth. We are well on our way towards being a revolutionary force in the digital payments landscape. and expect another year of strong revenue growth leading to profitability in 2024. And now to discuss the details of our financial results, I'd like to turn the call over to our Chief Financial Officer, George Oliver. George, the floor is yours.

Thank you, Ben. I will be referring to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA, please refer to the reconciliation of this non-GAAP metric in our earnings release issued before this call, which can be accessed on the company's IR website in the press release or quarterly earnings sections. I'll first review our fourth quarter 2023 financial performance. Revenue for the fourth quarter increased 100% to $22.3 million compared to $11.1 million in the fourth quarter 2022, reflecting our continued expansion of our independent sales organization known as an ISO, and partnership network and growth in our acquired businesses and rival EU. North America fourth quarter revenue increased 85% to $16.6 million for fourth quarter 2023 compared to the fourth quarter 2022. International fourth quarter revenue increased 165% to $5.6 million the fourth quarter 2023 compared to fourth quarter 2022. Cost of revenue was $14.5 million for the fourth quarter 2023 compared to $5.4 million in fourth quarter 2022. The increase is primarily attributable to growth in transaction volume, which resulted in higher processing fees paid to gateways and commission payments to ISOs in both North America and international segments. Operating expenses decreased by $13.8 million to $10.6 million for the fourth quarter 2023 compared to $24.4 million in the fourth quarter 2022 reflecting lower depreciation and amortization expenses related to the write-off of the contracted acquisition of the Sky Financial Portfolio during 2022. Other expense totaled $27.0 million for fourth quarter 2023 compared to other income of $2.7 million for the fourth quarter 2022. The increase was primarily attributable to non-cash derecognition charge of $23.5 million associated with the conversion of convertible debt to equity. Adjusted EBITDA improved to a positive $0.1 million in the fourth quarter 2023, compared to negative $2.9 million in the fourth quarter 2022. Turning to our full year 2023, revenue also doubled to $65.9 million compared to $32.9 million in 2022. This reflects significant growth in processing volume, which increased from $1.7 billion in 2022 to $3.14 billion in 2023 driven by our ISO and partnership network expansion and growth in our global payment processing businesses banking as a service offering. 2023 adjusted EBITDA loss improved to $3.9 million compared to adjusted EBITDA loss of $14.4 million in 2022. At December 31, 2023, cash and restricted cash was $73.3 million with $12.2 million of that being unrestricted cash and working capital of $4.3 million. Continuing to enhance our liquidity is a top priority for us. Our ability to fund working capital and other expenditures depends on cash generation from our two operating segments activities, short-term borrowings in the US, and capital raises. As shareholders ourselves, we're committed to achieving positive cash flow While minimizing the dilutive effects in connection with any financing transaction consistent with our commitment to execute on our long term strategy and continue our growth trajectory. I will now turn the call over to men way our chief operating officer to provide a review of business operations and our outlook.