Banxa Hldgs Inc

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.

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.

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.