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spk02: Good morning. Good morning, everyone, and welcome to the Banksa Holdings Earnings webinar. With me, my name is Dominic Crozer, founder and chairman of Banksa. With me today, I have Holger Arians, our CEO. and sham d-o-l-c-f-o what we'd like to do today is take you through because i i know there's a few newbies on this webinar we'd like to take you through just a quick overview of banks up talk about some of the product updates and some of the new revenue streams we're working on and then after that sham will take us through the numbers in a high level of detail As I mentioned, if you have questions, feel free to basically ask questions. There's a Q&A box or a chat box on the Zoom platform. Really, without further ado, just to give a sense of Banksa and why we're here, and maybe just to take a step back before we talk about it, what we've really seen over the last 10 or so years is really a growth in the digital asset space. When we first started, there were really only a handful of coins and it was really the early, early adopters getting involved in the space. And what we're really starting to see now is the whole industry is moving from the early adopter market to really being mass market. And we'll talk much more about Web3 and some of the utility around metaverse and gaming. If you were to put banks in a box, the best way to really look at what we do is we're like the PayPal of the crypto industry. And what we're doing is building a bridge between the fiat world. When I say fiat, I mean US, Euro, Canadian dollar world and the digital asset world, meaning Bitcoin, Ethereum and the hundreds and thousands of other coins out there. We're really the infrastructure that connects the two. Our business model is B2B focused. We are listed on the TSX-B with code BNXA and on the OTCQX code BNXAF. To date, we've got a market cap of around 70 million Canadian or just over 50 million US. And our TTM is roughly 52 million. So we're trading at about one times revenue at the moment. and cash and cash equivalents about 14.2 million. I know there'll be some questions around that as well. And insiders are very much aligned holding about 20% of the company. In terms of our mission, our mission ultimately is to onboard the next billion people to crypto and really by providing that infrastructure that connects the existing world where most people exist in to the digital asset world. And I know Holger is going to touch much more around some of the Web3 opportunities that we see in space. And Banksa really sits, in my view, at a really interesting juncture that connects not only centralized exchanges and banks and fintechs, but more importantly, the big growth that we're now starting to see in verticals such as DeFi, NFTs, gaming and the metaverse. It's a big new area. Frankly, in my view, this whole new Web3 space is much larger than the existing traditional centralized exchange, and I'm going to call it the standard coins, the Bitcoin and Ethereum world, where there's much more utility, much more usage around NFTs and gaming and DeFi.
spk00: Holger, over to you. Thanks very much, Dom. Hi, everyone. I'm Volga, the CEO of Banksa. I just want to go to the next level of detail of what we're actually doing and how we're doing it. So like Dom mentioned, we are onboarding the masses to cryptocurrency. We do that by providing them a familiar payment option to convert their local currency into cryptocurrency. And today we're offering the vast majority of cryptocurrencies and blockchains. And we do that so that there is a safe onboarding experience through a local trusted payment option. And we are taking care of all the regulation behind it, all the banking infrastructure that's required to do so. We're taking care of all the fraud and chargebacks so that people can onboard safely, they can get their cryptocurrency. And then they can do whatever they want to do in the crypto world with those digital assets. We do that through a model which is B2B2C, like Dom mentioned. We are integrating with major exchanges, and I'm going to touch on a few of them in one of the next slides, but we partner with those exchanges because those exchanges don't really want to deal with anything in the old world, which is the whole banking infrastructure regulation. The moment you touch anything in the fiat world, you really have to have those relationships. You have to have those licenses in various different countries. You have to have the local payment rails. That's what Banksa does. We do the end to end process for the users of our partners. And there are 100 million users in all of our partners. So we take care of this old world, connect them with the new world. We're building this bridge. We're taking all these headaches away from our partners so that they can innovate in the new world on the blockchain. Go to the next slide, please, Dom. I mentioned the local payments, and they're important. Obviously, we do have global payments, the known credit cards and Apple Pay, Google Pay, and we reach people in over 100 countries through that. But why are we going into those different geographies? Why is that part of our strategy? It's because local payments are much more trusted. They're cheaper than credit cards. They have much higher conversion rates. A bank transfer often goes through, while a credit card transaction, especially in a high-risk merchant category, doesn't always go through. You can make much larger transactions. And since we're also off-boarding users, people that want to convert their crypto back into a fiat currency, we can send that to their bank account. and to do that we have those local payment methods which require a lot of groundwork literally people on the ground as i mentioned the required licenses and regulations and the banking infrastructure the transaction monitoring and reporting and so on. And on this slide, you can just see that we are going global. We are already global. We're pushing forward with our geo-expansion. We just recently launched PIX, which is a bank transfer in Brazil that over 100 million people are using. And we're coming out with Turkey very soon as well. And just continuing to offer new geographies to our partners so that they can onboard users locally. Next slide, please, Dom. Dom touched already on Web3. Today, many of our partners are centralized exchanges, but we have seen over the last six months a shift to Web3 decentralized platforms. That's DeFi, that's NFT, that's going into gaming, which is going to be huge as well. And we really believe we are today where the internet was in 1995. The best is yet to come. And we're just scratching the surface. And those partners are really the who is who of the digital asset space. And they trust us. They want to work with us because of the value we provide to them. Next slide, please. Just very high level, a couple of recent product highlights. I think really important is the NFT checkout, which we're now offering to many of those NFT marketplaces. And today, NFT marketplaces or NFTs in general are mostly connected to or related to art and collectibles. But eventually, we do believe that there is a massive opportunity in gaming. There is an opportunity around the tokenization of Many, many things we know from the real world. And what we provide to those platforms is that we just offer their users a direct purchase of an NFT, whatever that is, if it's an in-game asset or a JPEG file, with a bank transfer or credit card payment. so that users can, without all the technical expertise, directly buy an NFT. And I think that is a major step towards mass adoption. We've launched it with a launch partner. We're going to be at a number of conferences in the US over the coming weeks to showcase our product. The other really important point here is a product we're offering is the stablecoin offer ramping, especially in markets where the prices are dropping, people are selling their digital assets again. Our partners have asked for an off-ramping solution as well, so that their users can Whenever they want to go in crypto, they can use Bankza. And when they want to cash in again into the fiat world, they can do that through our off-ramping solution as well. And again, that's where the local bank accounts and entities and licenses come in. We are, from the competitive landscape, the only ones that have this reach in terms of geographies with local bank accounts. The last point here, corporate onboarding means that banks are also able to onboard companies. If your company, your family trust, your family office or institution wants to buy cryptocurrency, small or large amounts, banks can do that. And we know from a number of our partners that they have large amounts of trading volumes from corporate customers. So that is going to be a major differentiator for us to be able to offer the onboarding of those entities and do the required checks and just add a lot more volume because these are usually big ticket items. Next slide, please, Dom. Going forward, what we're really already doing is really the geo-expansion, pushing into more markets, currently a big push into Asia. We're going to get new licenses and registrations around the world, obviously, with those local offerings we do have. We're pushing hard into other segments of the market. So far, I mentioned centralized exchanges. We're going into gaming, certainly, NFT marketplaces, and a lot more that's going to come. and again we're just scratching the surface of a massive massive market so i'm very excited about how far we got how agile we are how fast we are in delivering and adapting and growing with a growing market and i'm just very very confident although we've seen crypto prices a little bit under pressure this year. I just see so many people building so many great things coming out. NFTs are really going to get us to the next thing. And I'm just very excited about this space in our business. With that, over to you, Sham, for an overview of our financials. Great.
spk01: Thank you, Holger. And I'm delighted to be here today to speak to you about Banks' March quarter financial results. To begin with, I think we want to talk about really the top line performance and the charts here represent that. It looks at the total transaction volume, TTV, and revenue. And I think the team has maintained a strong focus on strategy and execution, which both Dom and Holger have alluded to already, to achieve some of these financial outcomes, despite the subdued nature of the current market conditions. Banks' TTV remains highly correlated with the market volume. And with regards to that, we can immediately look at the March quarter results. And taking that into account, despite the reduction compared to the December quarter, I think it's worth noting that this is the second highest quarterly result in the history of banks' trading at $357 million. That then positively translates into the chart on the right hand side, which looks at the year to date revenue at 57 million or approximately 25% on financial year 21. And with the remainder of the financial year yet to be played out, we're positive in expanding that revenue base further in the coming three months. Moving on to the financial highlights. Looking at this, the year to date TTV at 1.2 billion, and this represents a 200% growth period on period. Our liquid assets are 19 million. It comprises of cash deposits and digital assets that we hold with various exchanges, et cetera, to fulfill our liquidity needs. And finally, on this slide, the statutory loss of 8.5 million. This includes a number of cash items, but it's largely comprising of some of the factors that Rupert Clayton, continue banks has continued to invest into the business by way of product and technology and talent which which was mentioned earlier, and all of these elements combined together will help and support the strategy execution in the existing period, as well as in the future period. Rupert Clayton, So, moving forward, I wanted to take the audience through the financial the key financial statements commencing with the profit and loss. And looking at the profit and loss, I'd really want to talk to this with regards to performance and what it's underpinning some of these performance metrics. So TTV, as we mentioned earlier, has continued to expand even in this subdued market condition. And this is largely driven by our partners and our partner conversion and user base expansion. This then translates into our gross take rate and the gross take rate is really just expressing the revenue as a percentage of our transaction volume. And if you look on the table on the right hand side in the red outline, the gross take rate for year to date has held steady at 4.7 compared to prior quarter. It's worth noting at this point that the comparative of 7.2 includes a principal revenue mix change and various non-recurring items. which once adjusted and normalized will baseline back to comparative periods. And from a background perspective, principal revenue, Banksa maintains a principal versus agency mix. The principal revenue is where Banksa holds ownership of the coin, it recognizes the revenue on a gross basis in contrast to agency where Banksa purely is deemed to be providing a service. And as such, our sales are recognized on a net basis of spread and various other factors that make up our revenue component. That said, moving on to the net take rate, which is expressed in terms of gross profit as a percentage of TTV. Again, this has remained considerably steady at 1.9%. But that said, I think the focus for the business remains on cost optimization within this category and thus leading to margin enhancement, particularly being cognizant of the current market condition. Operating overheads by way of operating expense has continued to expand and in year to date it's at 25 million and large component of this is driven by the headcount expansion that banks has been able to achieve in a very short period of time. Now that said, I think it's worth taking a step back and looking at operating expense as a steady state when expressed as a percentage of our transaction volume and we've always held a benchmark of roughly about 2% of transaction volume. And finally, the adjusted EBITDA loss of 6.6 million. And this is really represented after various non-cash items and one-off items. This number is also negatively impacted by our FX losses that we incurred year to date at 6 million. Worth noting at this point that of that 6 million, 3 million remains unrealised as part of our FX calculations. I think, as part of some of the initiatives going into this quarter banks has taken a lot of initiative in terms of investing into the Treasury functions to then further enhance and the effects components and outcomes in the future period. Moving on to the the balance sheet, the strength and stability and. Jan-Willem Wasmann, focus here has been really on the working capital management and building out that Treasury offering that I alluded to earlier. Jan-Willem Wasmann, This included establishing appropriate funding structures which i'll speak to also and the key feature of this balance sheet is really the liquidity strength, based on where banks are is today liquid assets totaling to 19 million. We maintain continue to maintain a strong networking capital position of 15 million and a quick ratio of three times compared to industry benchmarks. there's a positive collection terms that we continue to obtain which looks at inward cash flows of within two days, in contrast to a standard payable terms of 30 days. And, and finally here the the Treasury function that we are referring to has looked at establishing. Rupert Clayton, Funding structures to the tune of approximately 2020 million to support future trading activities of banks, however, that said, as at March, the facilities remain undrawn and thus the balance sheet remains debt free at this as at the March reporting period. Rupert Clayton, Next slide is then looking at cash flows and really looking at the usage and the sources of some of this liquidity. Rupert Clayton, Now liquid assets, as I mentioned, is 19 million cash is a subset of this at 10.8 million the key driver of our cash flow. Rupert Clayton, In this in this period is really the operating operating cash outflow of 7.8 million it's worth noting here that. Rupert Clayton, deposits that we hold with exchanges are not classified as cash so post reclassification of deposits circa 5 million. to correlate back to cash and cash equivalent, would result in an adjusted operating cash outflow or reduced operating outflow of 2.8 million. Now, all of this, our attention is very strongly on operational cash flows, particularly in the current market condition. And to achieve this, we're balancing this out by strategy and execution risk. optimising some of our cost structures, as I mentioned earlier, and thus increasing or trying to gain on our margin position. We're going to continue to focus on the working capital management and build out our treasury functionality. Bringing all of this together, I think this will provide banks with that stable financial foundation on which it can continue to realise some of its strategies that the team has spoken to. So that concludes the financial narrative, and I just want to pass it back to the team to discuss the investment highlights.
spk02: Thank you. Thanks, Holger, and thank you, Shyam. Just a couple of sort of keynotes. As of our next financial year, which starts on the 1st of July 2022, we'll actually be moving our reporting to a quarterly basis. both in terms of TTV as well as revenue, more in line with what companies on NASDAQ will typically report. Having said that, when we do have updates, new product initiatives or material customers, we'll obviously announce them to the market over time. So really at a high level, as we mentioned, we're actually the world's first stock exchange listed fintech payment service provider, regtech company servicing the digital asset industry. There is significant opportunity in Web3, and I'm sure there'll be some questions specifically around Web3. where banks have taken a regulatory first approach. In fact, we have more licenses and registrations around the world than most of our competitors put together. And the reason that is really important, as we know, the industry is becoming much more regulated. And so over time, the value of these licenses will actually become significantly more valuable because you will not be able to trade as an organization without having licenses, whether they're VASPs, virtual asset service provider licenses, or in the US equivalent, MTLs, Money Transmitter Licenses. And then really, you know, A, we've got a fantastic team, a growing team, and we're going to continue building out our partner network in terms of you could, you know, relate partners back to customers. And then at the same time, you know, the thing that gets me the most excited is, you know, there is a significant amount of leverage in the model. Now, whether we're doing 300 million TTB or, or 3 billion TTV, or for that fact, moving forward, 30 billion in TTV, the technology ultimately does the heavy lifting. So there is significant leverage in this business model. And this is why we've really been investing into the future. So that's really the, let's call it the formal part of the presentation where we're 23 minutes in. What I'll maybe do at this point is take some questions. I do have some questions and thank you very much for the people that have sent through. Frank asks, can we please get an update on the NASDAQ application? Frank, thank you for your question. So the NASDAQ process, as we announced to the market earlier this year, we put in our application, we've jumped through a number of hoops with NASDAQ. Right now, we've got a couple more hurdles. One of those hurdles being price. We need to have a price of at least two US dollars for 90 days or three US dollars for five days. And unfortunately, with the movement or decline of the equity markets earlier this year, I think we were at day number 75. We were almost there. And then we've slipped below $2 and then that stopwatch started all over again. So right now, it's really a wait and see approach. And I think it's later on this calendar year if you're looking towards NASDAQ. Michael asks, what is banks are doing in terms of its spending habits, specifically the exponential increase in salaries this quarter. It's affecting its gross margin to an unhealthy 39%. I'm not sure, Shyam, if you can maybe sort of touch on that. I'm not sure where that 39% number is coming from.
spk01: Yeah, sure. Happy to address that, Tom. I think that 39% is perhaps expressing the margin Georg Thomas, by way of dividing it by revenue, so I think to address michael's query, certainly, I think there's a strong focus in the current market. Georg Thomas, As I alluded to earlier, with regards to cost optimization now and and margin improvement so we're certainly taking a strong focus on this. Georg Thomas, And we'll continue to do this and realize some of those optimization initiatives in the coming. Dr Cameron Wolfe, M.D.: : Months if not quarters as well, and I think this will become a strong feature of banks are going forward in terms of the. Dr Cameron Wolfe, M.D.: : gross profit margin banks that we typically look at this as a gross take rate, as I mentioned earlier, and that's expressing the revenue as a percentage of TV. Dr Cameron Wolfe, M.D.: : And that you know, despite looking at where the market conditions currently sit if you look at our gross take rate compared to. last quarter, where we experienced significant uplift in volume, to current quarter, where of course the market volumes are a lot more subdued, that gross take rate has remained largely consistent at 4.7%. So again, to close that question out, certainly our focus is on cost and margin optimisation going forward.
spk02: Yeah, and I think that I've had a couple other questions specifically around the cash burn for last quarter and from, well, I don't know the name other than Anonymous. And I think you touched on that already, Sham. We are going through a cost optimisation and review process, as you've mentioned. There are a number of initiatives that we are working working on in order to, because Matt asks another question around, what are we doing to increase our net take rates in terms of the margins? And so there are a number of key initiatives already underway with regards to increasing our net take rate. And some of those things are, for example, today, the way that we charge our customers is that we will bake in and effectively not on charge all of the gas or blockchain related fees to customers. What you're going to see over the next four to six weeks is that we're going to be changing our pricing model where it will be the price of the coin plus whatever the blockchain or gas fee will be. um at that particular point in time as you know that that can change literally hour by hour and so just by doing that little change we believe that will have a material impact on our net margin now that's that's one of a number uh secondly We are continuing to acquire licences in other parts of the world, which means that there will be less reliance on third parties for the use of their licences, which ultimately means that we will be able to increase our margins. Rather than paying them a percentage, we're able to keep that percentage ourselves. So hopefully, Anon, that provides a bit more clarity around the cash burn.
spk00: If I can just add one quick thing. We founded the business back in 2014. And over time, we've seen difficult markets, especially in crypto, very volatile. And we've navigated through this. I've never been more confident and excited about this space. This time around, it's very different to the crypto winter we've seen in 2018-19. I really believe that we're now having much more validation of what we're doing and we've positioned banks are really at this intersection where we are onboarding many more Web3 companies, traditional finance companies that are exploring this space and are building in this space. And they're building exciting things. They don't really want to do all the work that needs to be done with the regulators, with the local banking infrastructure and so on. That's where Banksa really fits in and is able to plug in to whatever they're doing. And as mentioned, we're doing a cooperation with Hendrix Gin, for example, launching an exclusive NFT series and banks allow them to purchase those NFTs directly. And we see many, many more brands of luxury brands, Web3, Web2 brands coming into this space. That doesn't need to be cryptocurrency. It can be really anything. And that's where banks are. It's just a plug and play solution for them so that they can offer their followers whatever they want to do in Web3. I think we're just a very, very important part of the Web3 ecosystem.
spk02: Yeah, no, good, very good point. And Anon also asks, why doesn't the company conduct a share buyback to bring the price back to the NASDAQ requirements? Very good question. And one of the other questions from Tony is around, you know, why hasn't management and the board actually acquired shares or been on market buying shares? And I'm going to be careful what I say here, other than, Right now, we are in a blackout, a trading blackout. And what that basically means is that as officers of the company, we are not able to buy or sell shares because we're in a blackout. And the reason we're in the blackout is that there are certain corporate activities that are going on that preclude us from doing so. And that's answering a question around the NASDAQ. So that rule applies to the directors and the officers. And at the same time, that rule also applies to the company. So the company, as in Banksa, is not permitted to go out there and actually buy its own shares because that is a question that has been discussed at the board and with our investment banks, bankers already, with regards to Banksa embarking on a share buyback, but we're just not in a position to do so because as offices and as a company, we are in a blackout. When will that end? We don't know. We're just working with our own investment bank through a number of let's call it, you know, corporate initiatives. And that's really all I can say on this particular matter. Matt and Justin, and this is one for you, Sham, asks, you know, when would shareholders expect a positive net earnings per share return? And Justin also comments, rather than explaining wages as 2% of TTV, can police split the wages into growth, establishment of new regions and products, and cash cows? It's unclear what the product... potential profit of the businesses, so maybe you can touch on those two questions.
spk01: yeah sure I think just looking at the the mixture of. I guess the employee costs just touching on that first. Georg Thomas, is more around the fact that we have certainly gone and invested into the growth segments of it by way of headcount and this largely. Georg Thomas, looks at investment into our product teams, our technology team and then also being consistent to where banks is heritage has come from, largely from a red tech type structure, so the compliance team. that also then underpins the expansion into all the different geographic regions that we're exploring. Those are perhaps the key growth areas within the business that the headcount has been established. And of course, to support the growing, I guess, the operational and the TTV expansion that we've seen, and you've got to look at it on a year to year basis as well, not just on a quarterly component. where Banksy is showing significant growth in TTV year on year. And that's really then required further investment into our operations team around customer services, customer success, et cetera. And of course, the final component, the growth component that this question was really seeking for is that sales component. And we're going to continue to invest into the sales piece as well. So hopefully that gives you a bit more of a breakdown of, yes, we've had a strong, uh expansion in our headcount and and hence there's a strong increase in operating expenditure but this is all about investing in the business to then be able to support some of the strategic Aspirations and the journey that Banksy wants to achieve going forward in the coming months, quarters and years.
spk02: Thanks, Sharm and Holger. David asks, why do you need so many licenses and what's the cost? And I'll just sort of maybe just quickly touch on this. First and foremost, and this is sometimes a question I get is, can you just turn up to a country and acquire a license or registration? And to a degree, I wish it was that easy. It is a big investment in terms of acquiring licenses. You know, sometimes, you know, some of our recent, let's call it our Dutch license, you know, that was a 12 month plus process. And we have a number and the licenses are kind of broken down into what you call, you know, exchange or transactional type licenses. And then there are custody licenses that allow us to effectively hold custody of coins. And we own licenses in a number of countries that allow us to do both. Our view is that licensing is absolutely critical as the industry becomes much more regulated and just to give sort of you a sense of a leading indicator, give you a sense of where we believe the industry is going to be over the next five years, which kind of tells you why we're doing the things that we're doing today. If you take the US. and the Netherlands. Take the Netherlands. The Dutch National Bank came out earlier this year and said that if you're an exchange or a DeFi platform, if you are targeting or servicing a customer in the Netherlands or using a payment method that's used in the Netherlands, you have to be licensed. Otherwise, you're breaking the law. And the same goes for the US. You cannot service a US customer without having the appropriate MSB, MTLs, and if you're doing custody, trust charter license. This is where we see countries around the world starting to implement these rules because it all comes from FATFA, which is basically the global organization, and it filters to the countries, and then they implement these rules. And ultimately, what it will mean is that if you want to target a customer in Germany, you need to have a German license. If you want to target a customer in the US or Canada, you need to have a US or Canadian license, which is why we have spent a lot of time, energy and investment in acquiring these licenses because they are ultimately an asset on the balance sheet. And from a pure financial perspective, we expense all of our development, we expense all of our licenses because it's ultimately the most conservative thing to do. But the way to look at a bunch of our expenditure, particularly from a regulatory perspective, is it is an investment into the future. And we've already started saying, you only need to go Google crypto regulations to know that they are starting to become much, much more important all around the world. Did anyone want to make any sort of further comment on that?
spk00: Maybe just one comment. The B2B partners we're targeting, they can be just two dreamers in a garage building the next big thing in Web3. And again, the sentiment today is very much around where the internet was in its early days. And they don't want to deal with all that. It's hard to get all these licenses, like you said, Dom, and also the infrastructure behind it. And that's what we do. That's what we take away from them. And again, it's a plug and play solution that we provide so that they can onboard users around the globe with local regulation and local currencies and trusted payment options. That's really what we're all about. So hope that helps clarifying it.
spk02: And Matt asks, there was no mention with regards to when do we expect positive EPS or profitability, or should we expect this company to be perpetually not profitable? Shyam, I'll sort of let you touch on this, but just to sort of take a step back into the history, the first three years of operation of Banksa, the company was actually profitable. We know how to run a profitable organisation effectively. We have lived through three crypto winters. If we're going into another one, it will be the fourth. We've got experience on how to basically survive and prosper. The reason that we've made these significant investments into the business is because licensing and local payment methods and Web3, they are all important and they're all growth areas. And I sometimes get this question, what happens if we go into a recession or a major, major bear market? I can't tell you exactly what we're going to do in the future, but what I can tell you what we've done in the past. We've adjusted our cost base. We've adjusted our margin. And very, very quickly, we've moved the company back into profitability. So we're effectively washing our own face. That's how we've survived the last three crypto winters. If we need to do it again, we have those tools at our disposal. And we will do whatever is required. So in terms of answering your question, obviously, we can't make any predictions. We can't provide any forecasts on this. But suffice to say, we do have a canine profitability. And it's very much, as you can see in the financials, We've got our TTV, which converts into revenue, sort of high fours. Then we've got our net take rate, which is basically a GP, just under 2%. And then under that, what have you got? You've got employee costs and SG&A. And so it's just by tweaking those last two expenses that will basically adjust what comes out of that bottom line. Sean, did you want to make any sort of comments around that and maybe sort of elaborate on some of the optimisation both at the margin level as well as the expense level that we're currently working on?
spk01: Sure. Thanks, Dom. And I think you've pretty much covered bulk of it. But to address Matt's query, I think the margin optimisation is a real key focus. There's a number of identified areas. which we spoke to earlier, that banks can continue to work on in a very short period of time to be able to extract greater net take rates to a certain extent. And I think we've already mentioned the fact around the network fees component that can be charged, which is a normal industry practice that can be charged on to the end user. Now, that's probably at a direct cost level. And there's a number of other factors that we can Rupert Clayton, M.D.: : continue to optimize there in terms of an operating overhead level, we are certainly taking a closer look at all the categories within it. Rupert Clayton, M.D.: : Within the operating overhead, but then they we there's elements in there with regards to managing our charge backs and our provisioning with regards to, as we mentioned the employee costs as well. contractor usage, et cetera. So there's many categories there that we can certainly look at from a cost optimization point. But I think I'm very conscious of the fact that we've invested into the business for the growth of the business. And we continue to optimize some of the margins ahead of optimizing a huge amount of our operating overheads.
spk02: Yeah. Yeah. Thanks, Shyam. I mean, frankly, we could be profitable tomorrow. just by enacting a few things, which we don't need to really get into this call. But just once again, just want to reassure investors, we've survived three crypto winters. We have effectively a key set of actions that we can push the button on at any point in time. And the three of us as executives in the organization are very conscious of what they are and what we need to do and how we need to do it. um maxwell asks we know you can't give guidance but can you give investors any idea on how ttv has trended throughout the current quarter um and yeah would you say similar to similar to the March quarter. We've already released some numbers for April. May is in the process of completion, so we can't really comment until we've announced it. Suffice to say, and sometimes I get asked with investors, what are some of the key drivers with regards to TTV? And there's a number of key drivers. One is obviously the Bitcoin price. The higher the Bitcoin price, the better. I think that's fairly obvious. The other one is, what is the volatility of the Bitcoin price? If what we've seen in the last 18 months, if the Bitcoin price trades in a very narrow band, so there's hence not a lot of volatility, that's actually not that great for us. Like in equity markets, when do the exchanges make money is when there's actually high volatility. And we've seen significant volatility, particularly in the last four weeks. And then the third factor is what is the volume, the transactional volume at the exchanges? So if the liquidity reduces, then obviously the requirement for onboarding reduces as well, which is why as an organization, we've now really accelerated our push in terms of the fiat off ramps, the self-functionality where you can go from Bitcoin, Ethereum or stablecoin into cash. And so as we move into potentially our crypto winter or bear market, we believe, and we've already seen this, if you go back the last six or 12 months, most of the volume was fiat on ramping. I think off ramping was literally single digits. What we're starting to see, and correct me if I'm wrong, the percentage now is now into you know, still low compared to, you know, I'm going to say double digits. It's like low double digits, but we're starting to see an increase in people off ramping as there's, let's call it some more uncertainty in the market. So the best way to kind of look at the banks of businesses, as you're driving on the freeway or you're driving off the crypto freeway, we click the ticket. And that's why we've really accelerated what we're doing in terms of feed off ramps. Gents, would you like to add anything to that?
spk01: Tim Fawnsworth, Norcal PTAC, yeah I think Tom just just a quick thing to add there from my side, we certainly seeing that trend in the financial data and then it does fluctuate month on month. Tim Fawnsworth, Norcal PTAC, As you've mentioned on it is a smaller percentage, but as a percentage in its mix it's actually increased two to three times on prior month, but again. Gareth J. As as the market stabilizes I expect that to start coming back again, and I think we shouldn't lose focus on the significant part of the business is the on ramping exercise as well. Gareth J. And we've continued to optimize that area going forward, but certainly in the volatile markets situations we are seeing higher off ramping activity.
spk02: Yeah. Matt asks, what are the barriers to growth in the US market? And I think Matt, you know, it comes back to licensing. As we announced to the market earlier in May, we are now effectively moving into a number of new territories, including the US. We are already well down the process of our MSB, our MTLs, which is done not at a country level, but very much at a state by state level. plus the state trust charter licence, which basically allows us to hold custody of coins. We haven't released to date any kind of custody services. We have acquired a number of licences related to custody, which once again is really an asset that should be sitting on our balance sheet because it's not easy to acquire and maintain those particular licences. But we see significant growth and opportunity in the U.S. market. Frankly, it's the biggest or one of the biggest markets in the world, which is why we've now been investing heavily over the last nine months in terms of acquiring those licenses as we move full force later on this calendar year into that market.
spk00: Holger or Sean? Sure. Just to add to that, that's exactly right on the infrastructure that we're building out with licenses and banking, but also on the sales side. Many great projects are coming out of the US and we are hiring salespeople, already have a few in the US and focusing on marketing much more around the US. and attending those conferences where we're exhibiting and consensus next week and then nft in new york as well so that's where people can see the banks a product live buying an nft directly and the us is already one of the biggest markets for us and we believe there's going to be much much more coming from this so we're also intensifying our activities there
spk02: George asks, did you see any impact from UST and Luna unwind? The answer is no. And just to sort of clarify, I'm not going to get into UST and Luna and what happened there. You can very easily Google that yourself. You know, suffice to say, we as Bankta, we do not hold coins on our balance sheet. So we actually don't take risk when it comes to, you know, the coins. All we're doing is really passing through from, you know, upstream providers directly to the customer, whether it's on-chain or off-chain. And ultimately, we're just providing the coins to the customers. And Dan asked, you know, can you walk us through the use case for protocols like Polygon and Arbitrum and others? Ultimately, when we first started this business many, many years ago, what did we offer? Fiat to Bitcoin. That was basically the number one coin. Now, as we know, there are thousands of coins out there. We support roughly 80 coins and blockchains. And I guess part of the, once again, and I don't want to get into too much of the technical details, but just to kind of illustrate the value that we provide to our partners and some of the proprietary technology that we've created, you can effectively get a coin like USDC. It's a stable coin minted by a group out of the US called Circle. Now, USDC, you can actually send that across the Ethereum network. or the Polygon network or the Hedera network. So the whole industry is becoming much, much more complex these days where you have multiple coins running on multiple chains. And that's, once again, part of the value proposition that we've created is that we're able to support not just one, but multitude of chains and a multitude of coins. And so, for example, Polygon, why do people use Polygon or Tron? or some of the others, as opposed to Ethereum. And that's just purely because the gas fees, the transactional costs are much less on Polygon than they are on other networks. And this is why as banks, we take an agnostic view when it comes to the coins that we support. Ultimately, we speak to our partners, we speak to our customers, And we get a sense of the market. You can go on to coinmarketcap.com and you'll see that out of the top 50, we support a very, very large percentage of coins because ultimately that's where the volume is. And that's the volume that we want to basically pick up as an organization.
spk00: Yeah, not just from a commercial angle. We're also trying to establish those relationships with those layer 2s or layer 1 ecosystems. As an example, Hedera, which is an enterprise blockchain, we're the first on and off-ramp that is offering USDC the stable coin on Hedera. And that has helped us to get into the Hedera ecosystem, which has many, many large corporations as followers, as users. And they have, for example, introduced us to their key wallet, which we're integrating with, to the corporation with Hendrix Gin that we're working on right now. So there are a number of opportunities that are coming from really partnering very deeply with different ecosystems. We're not only going after segments in the market like NFT collectible marketplaces, for example, in-game assets and so on on DeFi marketplaces. We're also going into those ecosystems of different blockchains and coins where we can play a vital role in just plugging Bangsa in to connect them to onboard users. So there are many, many angles. And maybe I just wanted to mention another point. Given that we are working on We're doing all the heavy lifting of entering new countries, getting all the banking infrastructure up and running and the regulation. There is a lot happening every day, and we're trying to move on that front as fast as possible. But in this crypto and Web3 space, this is also just... really pacing extremely fast and we've set up the organization so that we can adjust and that we can anticipate what's coming. And I think that's just very important that everyone knows that we are really trying to stay on top of this wave and innovating heavily while we are really building this strong foundation, which we need to execute on our business model. And that's why you might not always hear from us with product updates all the time. We're doing a lot of heavy lifting. But at the same time, there are many, many opportunities that we are assessing, identifying and then executing on. And we'll certainly keep everyone updated with those. And again, I just remain extremely excited about what's to come. I think we're still just at the beginning. We're growing with this market. Yes, it's a bit depressed at the moment. But if we just zoom out, crypto has been going up and up. And we've been doing it for eight years. And we'll do it for many, many more years. And that's what gets me out of bed every day.
spk02: Thank you. Thanks, Holger. Matt, it's actually a suggestion. Consider providing a turnkey NFT solution for brands, not just payments, but the ability to create NFTs soon so they don't need to hire engineers. I, the Shopify of NFT stores.
spk00: Yeah, maybe I can quickly respond to that. We're already exploring this. There are certainly already services that are offering this. What's really important for banks is just to be the standard fiat on and off ramp in those services and then partnering with them so that they can actually resell us. But we're also able to offer those services ourselves in the future. So I guess it's a combination of whatever the market is looking for. Banksa can offer a variety of those services to its partners. And for us, it's just a product extension, really. Again, the heavy lifting is what will eventually allow users to onboard from Fiat to crypto and do that conversion.
spk02: Thank you. Thanks for that. I think we've maybe got time for one or two more questions. So feel free to dial them in. And just on NFTs, because I've had some questions from investors. We came out earlier in May and announced the fiat NFT product. And they're asking, what's so special about that? Why is that important? And the answer to that question is, right now, if you want to buy an NFT, you've got to go and buy some Bitcoin or Ethereum. Work out if you need to convert it into Polygon or Solana or one of the other blockchains, depending upon the NFT that you want to buy. Then you've got to basically use a wallet like Metamask, a non-custodial wallet. So you need to be able to go from a centralized exchange to something like a non-custodial wallet. Then you need to be able to link it up to a website like OpenSea and only then you can transact. And you need to make sure you've got enough Ethereum, Polygon or Solana basically to pay for those gas fees as well. So the whole process, I won't say you need a computer science engineering degree, but you need something pretty close to it. And so what we've done at banks are, once again, taking a step back and saying, we're now trying to build our company around the mass market. And the next billion people that are going to move into this space aren't going to be the tech nerds or the finance nerds, they're going to be ordinary people that want to just be able to make a few clicks and buy their NFT or their gaming product or buy some Bitcoin. And so what we've done as part of that technology, that launch, is you go from fiat to NFT, and there's all this technology behind the scenes. There's all these hops. We take care of all of that behind the scenes. So it's really, really simple for the customer to be able to execute. And that's very much part of our vision on onboarding the next billion people. It's about making it simple to onboard and ultimately providing a really good experience for our customers. And we've maybe got one more question. Justin asks, when do you expect banks and percentage revenue split to be in 23 between CeFi on-ramping, CeFi off-ramping and Web3, which includes gaming and NFTs?
spk00: Good question, Justin. Hi again. Look, I believe CeFi on-ramping is really the cash cow. There is a lot of volume coming through and it will continue to be so, but over the next few years, we'll certainly see much more off-ramping happening as well as we are not just servicing the centralized exchanges, but as crypto is really moving across many, many more use cases. But Web3 with gaming, which is a huge opportunity. Andresen Horowitz just raised another, I think, 4.5 billion fund to invest in Web3 and gaming projects. We believe there's going to be much, much more coming from that, actually much bigger than the centralized exchange volumes. And in my view, the reason is that the everyday use cases are just much more in Web3, in gaming, NFTs. They're just much more consumer friendly than traditional centralized exchanges that largely offer crypto to crypto trading these days. And that is very special in finance and tech. while NFT is much more consumer focused. So I believe we see a lot more traffic coming from this in the future. Fantastic.
spk02: All right. I think that's basically a wrap. I'd like to thank everyone for their time and all the participants and their questions. We will make this recording available on YouTube in the next 24 hours. And if you have any further questions, feel free. There's plenty of ways of reaching out to us on the banks.com website. And once again, thank you for your time, everyone. And have a great day. Cheers.
spk00: Thanks, everyone. Thank you all.
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