RYVYL Inc. (NASDAQ: RVYL) ("RYVYL” or the "Company"), a leading
innovator of payment transaction solutions leveraging proprietary
blockchain ledger and electronic token technology for the diverse
international markets, has provided its financial results for the
third quarter ended September 30, 2023.
Management Commentary by CEO Fredi Nisan:
Third Quarter 2023 and Subsequent Operational Highlights:
-
Record quarterly revenue of $17.5 million versus $10.6 million
during the same time period in 2022, a 64% increase.
-
Q3 processing volume of approximately $861 million, ahead of
guidance range of $720 to $800 million for the quarter, and an
increase of 24% from the prior year same period when excluding the
sky financial portfolio volume.
-
RYVYL EU business including its new Banking-as-a-Service (BAAS)
offering, processed $517 million in the third quarter compared to
$425 million in business volume in Q2, an increase of over 21%.
This is a 52% increase from Q3 of 2022’s $340 million.
-
North America acquiring business volume was $171 million, 17%
higher than the second quarter 2023 volume $146 million volume and
108% higher than the same period prior year.
-
Launched the coyni Mobile Point of Sale (mPOS) app, providing
merchants with a secure and convenient way to quickly add mPOS
devices and users through a straightforward registration process to
begin accepting payments, transforming iOS and Android devices into
a payment terminal for secure, efficient transactions.
-
Appointed George Oliva as Chief Financial Officer, a senior finance
professional with over 30 years of experience with a background in
corporate finance, treasury, financial planning and analysis,
international tax, and strategic planning replacing former Interim
CFO Gene Jones.
-
Entered into an exchange agreement with the holder of a RYVYL
issued convertible note, initially in the principal amount of $100
million and exchanged a portion of the outstanding principal and
interest of such convertible note resulting in a $6 million debt
reduction and an increase in cash flow.
Summary and Outlook
During the third quarter of 2023 we continued to
build on our rapid growth with record quarterly revenue for the 4th
consecutive quarter of $17.5 million, an increase of 64% year over
year, at the high end of our guidance of $16 to $18 million. Third
quarter revenue was driven by processing volume of $861 million, an
increase of
27% from the second quarter 2023 and
above our guidance range of $720 to $800 million.
Strong growth in our international business,
RYVYL EU, as well as growth in our North America acquiring business
resulting from the establishment of additional processing channels
in the U.S. for retail and online businesses paved the way for the
record results. Against the backdrop of regulatory and banking
uncertainty in the United States, we see our subsidiary in Europe,
RYVYL EU, as a crucial growth driver for us. During Q3, RYVYL EU
representing our international business, generated remarkable
revenue growth of over 100% to $5.0 million.
We view Banking-as-a-Service as the future of
global banking and are excited to be an enabling service provider
in a space that is rapidly emerging and reaching new customers
every day. Being a Visa Direct partner has allowed us to leverage
their capabilities and provide a superior banking as a service
offering. We are working tirelessly on this initiative which will
enable us to better serve our customers, retain their loyalty, and
create new revenue streams. By mid-year 2024, we expect RYVYL,
along with its subsidiaries and other affiliates, to have a full
global payments platform covering over one hundred local currencies
with authorized accounts in the markets we operate in.
In further developments after our acquisition of
Logicquest in April of this year, we continue to work towards the
merger of Logicquest into coyni and obtain requisite regulatory
approval to achieve an OTC entity for the coyni business – which
will enable us to deploy the coyni business and executing on our
value creation strategy in the U.S. and abroad. Recently, we
launched the coyni Mobile Point of Sale (mPOS) app, transforming
iOS and Android devices into a payment terminal for secure,
efficient transactions. The coyni mPOS app provides merchants with
a secure and convenient way to quickly add mPOS devices and users
through a straightforward registration process to begin accepting
payments. By integrating mPOS capabilities with the coyni platform,
businesses and merchants can benefit from a comprehensive and
user-friendly payment system. We remain firmly committed to
executing our coyni business strategy.
Operationally, we appointed George Oliva as our
Chief Financial Officer, replacing former Interim CFO, Gene Jones.
George has over 30 years of experience as a senior finance
professional, and we are privileged to have someone of his caliber
and financial skill set to serve as our CFO.
During the third quarter we entered into an
exchange agreement with the holder of RYVYL issued convertible
note, initially in the principal amount of $100 million. To date,
we have exchanged a portion of outstanding principal and interest
of such convertible note resulting in a $6 million debt reduction
and an increase in cash flow. We believe that this type of
institutional level commitment is a major win for all our
shareholders and illustrates the conviction we share in our mission
as a disruptive force in digital payments landscape. During the
third quarter, we also completed a 1-for-10 reverse stock split to
increase the market price per share in an effort to ensure we
maintain Nasdaq’s minimum bid compliance requirement for continued
listing.
Looking ahead, we believe that we are well
positioned to close out 2023 on a strong note and are projecting Q4
revenues to be in the range of $19.0 to $21.0 million on processing
volume of $900 million to $1.0 billion. With steady growth in our
core processing business and the ongoing implementation of key
strategic growth initiatives with coyni and Banking-as-a-Service
progressing, we believe that we are in the best position we have
ever been to generate long-term sustainable value for our
shareholders.
Third Quarter Financial
Summary
-
Revenue increased by $6.9 million, or 64%, to $17.5 million for the
quarter ended September 30, 2023, from $10.6 million for the
year-earlier quarter. The change in net revenue was primarily
attributable to significant growth in processing volume from our
acquired business, RYVYL EU and American Samoa. North America Q3
revenue increased 47% from $8.5 million in Q3 2022, to $12.5
million for the quarter ended September 30, 2023. EU Q3 revenue was
$5.0 million, an increase of 100% from $2.2 million for the
year-earlier quarter.
-
Cost of revenue increased by $6.5 million, or 149%, to $10.8
million for the quarter ended September 30, 2023, from $4.3 million
for the year earlier quarter. Payment processing consists of
various processing fees paid to Gateways, as well as commission
payments to the Independent Sales Organizations (“ISO”) responsible
for establishing and maintaining merchant relationships, from which
the processing transactions ensue. Cost of revenues increased due
primarily to increased volume, resulting in higher processing fees
paid to Gateways, commission payments to ISOs, and cost of revenue
of acquired businesses in the US and EU.
-
Operating expenses decreased by $0.4 million, or 4%, to $9.0
million for the quarter ended September 30, 2023, from $9.4 million
for the for the year-earlier quarter. The decrease was due
primarily to a decrease in depreciation and amortization and stock
compensation expense, offset by an increase in general and
administrative expenses. The higher general and administrative
expenses in the quarter of 2023 are primarily attributable to
non-recurring provision for credit losses on non-continuing legacy
accounts.
-
Interest expense for accretion of the debt discount related to the
$100 million convertible note issued in November 2021 increased by
$5.8 million. Additionally, we incurred a charge of $1.3 million in
the quarter ended September 30, 2023, related to the conversion of
debt and we recognized a loss of $6.8 million in the quarter ended
September 30, 2022 in connection with a loss on the extinguishment
and derecognition on the conversion of convertible debt. We
recorded expense of $1.9 million related to non-recurring legal
settlements in the quarter ended September 30, 2023.
-
Other income (expense) net, amounted to ($0.6) million for the
quarter ended September 30, 2023, compared to ($12.7) million in
the year-earlier quarter. Fluctuations in this category from
period-to-period are primarily due to the effects of the highly
volatile changes in the fair value of derivative liabilities, and
the settlement of non-recurring legal settlements and ongoing
matters and related legal fees.
-
The company recorded a net loss in the third quarter of 2023 of
$3.1 million, or ($0.60) per basic and diluted share, compared to a
net loss of $15.9 million, or ($3.37) per basic and diluted share,
in the same quarter a year ago.
-
Cash, cash equivalents and restricted cash were $68.4 million as of
September 30, 2023, with $15.8 million being unrestricted
cash.
-
Refer to the tables in this press release for the 2023 Adjusted
EBITDA amount, a non-GAAP measure.
Management will host a conference at 4:30 p.m.
Eastern Time on Monday, November 13, 2023 to discuss third quarter
2023 financial results, provide a corporate update and conclude
with a Q&A session. To participate, please use the following
information:
Q3 2023 Conference Call and WebcastDate:
November 13, 2023Time: 4:30 p.m. Eastern TimeUS Dial
In: 1-844-826-3035International Dial
In: 1-412-317-5195Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1639337&tp_key=8d9f96cedeCall
me: Link
Please dial in at least 10 minutes before the
start of the call to ensure timely participation. Participants can
use Guest dial-in #s above and be answered by an operator OR click
the Call me™ link for instant telephone access to the event and
enter pass code 9364099. The Call me™ link will be made active 15
minutes prior to scheduled start time.
A replay of the call will be available through
January 13, 2024, by calling 1-844-512-2921 within the United
States or 1-412-317-6671 when calling internationally and entering
access ID 10183517. An archived version of the webcast will also be
available for 90 days on the IR section of the RYVYL website or by
clicking the webcast link above.
About RYVYL
RYVYL Inc. (NASDAQ: RVYL) was born from a
passion for empowering a new way to conduct business-to-business,
consumer-to-business, and peer-to-peer payment transactions around
the globe. By leveraging proprietary blockchain ledger and
electronic token technology for the diverse international markets,
RYVYL is a leading innovator of payment transaction solutions
reinventing the future of financial transactions. Since its
founding as GreenBox POS. in 2017 in San Diego, RYVYL has developed
applications enabling an end-to-end suite of turnkey financial
products with enhanced security and data privacy, world-class
identity theft protection, and rapid speed to settlement. As a
result, the platform can log immense volumes of immutable
transactional records at the speed of the internet for first-tier
partners, merchants, and consumers around the globe.
www.ryvyl.com
Cautionary Note Regarding Forward-Looking
Statements.
This press release includes information that
constitutes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. 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. Such forward-looking statements include statements
regarding the timing of the filing of the aforementioned periodic
reports and are characterized by future or conditional words such
as "may," "will," "expect," "intend," "anticipate," “believe,"
"estimate" and "continue" or similar words. You should read
statements that contain these words carefully because they discuss
future expectations and plans, which 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 risks and uncertainties. A
variety of factors could cause actual events and results to differ
materially from those expressed in or contemplated by the
forward-looking statements, including the risk that the completion
and filing of the aforementioned periodic reports will take longer
than expected and that additional information may become known
prior to the expected filing of the aforementioned periodic reports
with the SEC. 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.
Investor Relations ContactMark SchwalenbergMZ
Group - MZ North
America312-261-6430RVYL@mzgroup.uswww.mzgroup.us
RYVYL Inc.Consolidated
Balance SheetsSeptember 30, 2023 and December 31,
2022(unaudited)
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
15,845 |
|
|
$ |
13,961 |
|
Restricted cash |
|
|
52,510 |
|
|
|
26,873 |
|
Accounts receivable, net of allowance of $111 and $82,
respectively |
|
|
698 |
|
|
|
1,156 |
|
Cash due from gateways, net of allowance of $2,211 and $3,917,
respectively |
|
|
8,324 |
|
|
|
7,427 |
|
Prepaid and other current assets |
|
|
2,959 |
|
|
|
9,798 |
|
Total current assets |
|
|
80,336 |
|
|
|
59,215 |
|
Non-current
Assets: |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
1,660 |
|
|
|
1,696 |
|
Other assets |
|
|
1,826 |
|
|
|
197 |
|
Goodwill |
|
|
26,753 |
|
|
|
26,753 |
|
Intangible assets, net |
|
|
5,678 |
|
|
|
6,739 |
|
Operating lease right-of-use assets, net |
|
|
3,784 |
|
|
|
1,533 |
|
Investments |
|
|
227 |
|
|
|
1,524 |
|
Total non-current assets |
|
|
39,928 |
|
|
|
38,442 |
|
Total
Assets |
|
$ |
120,264 |
|
|
$ |
97,657 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’
DEFICIT |
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,592 |
|
|
$ |
1,630 |
|
Other current liabilities |
|
|
5,133 |
|
|
|
3,662 |
|
Accrued interest |
|
|
8 |
|
|
|
1,728 |
|
Payment processing liabilities, net |
|
|
63,805 |
|
|
|
28,912 |
|
Short-term notes payable |
|
|
15 |
|
|
|
14 |
|
Derivative liability |
|
|
45 |
|
|
|
255 |
|
Current portion of operating lease liabilities |
|
|
572 |
|
|
|
534 |
|
Total current liabilities |
|
|
73,170 |
|
|
|
36,735 |
|
Long-term debt, net of debt discount |
|
|
61,549 |
|
|
|
61,735 |
|
Operating lease liabilities, less current portion |
|
|
3,567 |
|
|
|
1,109 |
|
Total liabilities |
|
|
138,286 |
|
|
|
99,579 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred
Stock, par value $0.01 per share, 15,000 shares authorized, shares
issued and outstanding of 6,000 and 0, respectively |
|
|
6,664 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Stockholders’
Deficit: |
|
|
|
|
|
|
|
|
Common stock, par value $0.001, 17,500,000 shares authorized,
shares issued and outstanding of 5,212,586 and 4,972,736,
respectively |
|
|
5 |
|
|
|
5 |
|
Common stock issuable, par value $0.001 |
|
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
|
96,741 |
|
|
|
96,256 |
|
Deferred stock compensation |
|
|
(62 |
) |
|
|
- |
|
Accumulated other comprehensive income |
|
|
1,208 |
|
|
|
1,596 |
|
Accumulated deficit |
|
|
(122,578 |
) |
|
|
(99,772 |
) |
Less: Shares to be returned |
|
|
- |
|
|
|
(7 |
) |
Total stockholders’
deficit |
|
|
(24,686 |
) |
|
|
(1,922 |
) |
Total liabilities,
convertible preferred stock and stockholders’
deficit |
|
$ |
120,264 |
|
|
$ |
97,657 |
|
RYVYL, Inc.Unaudited
Condensed Consolidated Statements of Operations and Comprehensive
IncomeFor the Three and Nine Months Ended
September 30, 2023 and 2022
|
|
(dollars in thousands, except per share data) |
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
(as restated) |
|
|
|
|
|
|
(as restated) |
|
Revenue |
|
$ |
17,480 |
|
|
$ |
10,630 |
|
|
$ |
43,620 |
|
|
$ |
21,806 |
|
Cost of revenue |
|
|
10,800 |
|
|
|
4,333 |
|
|
|
25,703 |
|
|
|
11,343 |
|
Gross profit |
|
|
6,680 |
|
|
|
6,297 |
|
|
|
17,917 |
|
|
|
10,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing |
|
|
45 |
|
|
|
438 |
|
|
|
153 |
|
|
|
1,106 |
|
Research and development |
|
|
1,315 |
|
|
|
1,442 |
|
|
|
4,434 |
|
|
|
5,300 |
|
General and
administrative |
|
|
3,041 |
|
|
|
1,186 |
|
|
|
6,709 |
|
|
|
4,332 |
|
Payroll and payroll taxes |
|
|
2,605 |
|
|
|
2,385 |
|
|
|
8,232 |
|
|
|
7,481 |
|
Professional fees |
|
|
1,234 |
|
|
|
1,032 |
|
|
|
5,651 |
|
|
|
3,704 |
|
Stock compensation
expense |
|
|
147 |
|
|
|
641 |
|
|
|
309 |
|
|
|
2,729 |
|
Depreciation and
amortization |
|
|
657 |
|
|
|
2,299 |
|
|
|
1,899 |
|
|
|
4,880 |
|
Total operating expenses |
|
|
9,044 |
|
|
|
9,423 |
|
|
|
27,387 |
|
|
|
29,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(2,364 |
) |
|
|
(3,126 |
) |
|
|
(9,470 |
) |
|
|
(19,069 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(65 |
) |
|
|
(1,802 |
) |
|
|
(3,310 |
) |
|
|
(7,415 |
) |
Interest expense - debt discount |
|
|
(4,183 |
) |
|
|
1,632 |
|
|
|
(9,626 |
) |
|
|
(11,540 |
) |
Loss on extinguishment and derecognition expense on conversion of
convertible debt |
|
|
(1,331 |
) |
|
|
(8,105 |
) |
|
|
(1,518 |
) |
|
|
(9,762 |
) |
Changes in fair value of derivative liability |
|
|
6,909 |
|
|
|
(4,143 |
) |
|
|
6,580 |
|
|
|
14,592 |
|
Legal settlements expense |
|
|
(1,929 |
) |
|
|
- |
|
|
|
(4,142 |
) |
|
|
- |
|
Merchant fines and penalty income |
|
|
- |
|
|
|
(368 |
) |
|
|
- |
|
|
|
(286 |
) |
Other income or expense |
|
|
(25 |
) |
|
|
63 |
|
|
|
(1,474 |
) |
|
|
298 |
|
Total other income (expense),
net |
|
|
(624 |
) |
|
|
(12,723 |
) |
|
|
(13,490 |
) |
|
|
(14,113 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for
income taxes |
|
|
(2,988 |
) |
|
|
(15,849 |
) |
|
|
(22,960 |
) |
|
|
(33,182 |
) |
Income tax provision |
|
|
128 |
|
|
|
35 |
|
|
|
138 |
|
|
|
37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,116 |
) |
|
$ |
(15,884 |
) |
|
$ |
(23,098 |
) |
|
$ |
(33,219 |
) |
Comprehensive income
statement: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,116 |
) |
|
$ |
(15,884 |
) |
|
$ |
(23,098 |
) |
|
$ |
(33,219 |
) |
Foreign currency translation loss |
|
|
(317 |
) |
|
|
(311 |
) |
|
|
(389 |
) |
|
|
(708 |
) |
Total comprehensive loss |
|
$ |
(3,433 |
) |
|
$ |
(16,195 |
) |
|
$ |
(23,487 |
) |
|
$ |
(33,927 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.60 |
) |
|
$ |
(3.37 |
) |
|
$ |
(4.48 |
) |
|
$ |
(7.54 |
) |
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
5,231,588 |
|
|
|
4,710,495 |
|
|
|
5,160,499 |
|
|
|
4,407,280 |
|
RYVYL, IncUnaudited
Condensed Consolidated Statements of Cash FlowsFor
the Nine Months Ended September 30, 2023 and 2022
|
|
Nine Months Ended September 30 |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
(as restated) |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(23,098 |
) |
|
$ |
(33,219 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
1,899 |
|
|
|
4,880 |
|
Noncash lease expense |
|
|
246 |
|
|
|
54 |
|
Stock compensation expense |
|
|
309 |
|
|
|
2,729 |
|
Interest expense - debt discount |
|
|
9,626 |
|
|
|
11,540 |
|
Changes in fair value of derivative liability |
|
|
(6,580 |
) |
|
|
(14,592 |
) |
Loss on extinguishment and derecognition expense upon conversion of
debt |
|
|
1,518 |
|
|
|
9,762 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
457 |
|
|
|
(308 |
) |
Prepaid and other current assets |
|
|
6,841 |
|
|
|
(1,227 |
) |
Cash due from gateways |
|
|
(896 |
) |
|
|
(20 |
) |
Other assets |
|
|
(1,480 |
) |
|
|
48 |
|
Accounts payable |
|
|
1,962 |
|
|
|
(442 |
) |
Other current liabilities |
|
|
1,333 |
|
|
|
348 |
|
Accrued interest |
|
|
554 |
|
|
|
534 |
|
Payment processing liabilities |
|
|
34,893 |
|
|
|
7,566 |
|
Net cash provided by (used in)
operating activities |
|
|
27,584 |
|
|
|
(12,347 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(78 |
) |
|
|
(102 |
) |
Deposits on acquisitions. |
|
|
- |
|
|
|
(1,451 |
) |
Purchase of intangibles |
|
|
- |
|
|
|
(500 |
) |
Cash provided for Transact Europe Holdings OOD acquisition |
|
|
- |
|
|
|
(28,811 |
) |
Cash provided for Sky Financial & Intelligence asset
acquisition |
|
|
- |
|
|
|
(16,000 |
) |
Net cash used in investing
activities |
|
|
(78 |
) |
|
|
(46,864 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Treasury stock purchases |
|
|
- |
|
|
|
(4,057 |
) |
Proceeds from stock option exercises |
|
|
- |
|
|
|
5 |
|
Repayments on convertible debt |
|
|
- |
|
|
|
(6,000 |
) |
Repayments on long-term debt |
|
|
(11 |
) |
|
|
- |
|
Net cash used in financing
activities |
|
|
(11 |
) |
|
|
(10,052 |
) |
Restricted cash acquired from
Transact Europe |
|
|
- |
|
|
|
18,677 |
|
Net increase (decrease) in
cash, cash equivalents, and restricted cash |
|
|
27,495 |
|
|
|
(50,586 |
) |
Foreign currency translation
adjustment |
|
|
26 |
|
|
|
(1,410 |
) |
Cash, cash equivalents, and
restricted cash – beginning of period |
|
|
40,834 |
|
|
|
89,559 |
|
Cash, cash
equivalents, and restricted cash – end of
period |
|
$ |
68,355 |
|
|
$ |
37,563 |
|
Supplemental
disclosures of cash flow information |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
2,709 |
|
|
$ |
4,907 |
|
Income taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Non-cash financing and
investing activities: |
|
|
|
|
|
|
|
|
Convertible debt conversion to common stock |
|
$ |
300 |
|
|
$ |
8,550 |
|
Convertible debt conversion to preferred stock |
|
$ |
4,297 |
|
|
$ |
- |
|
Interest accrual from convertible debt converted to preferred
stock |
|
$ |
2,271 |
|
|
$ |
- |
|
Interest accrual from convertible debt converted to common
stock |
|
$ |
3 |
|
|
$ |
- |
|
Use of Non-GAAP Financial
Information
Adjusted earnings before interest, taxes,
depreciation, and amortization (“Adjusted EBITDA”) is a non-GAAP
measure that represents our net loss before interest expense,
amortization of debt discount, income tax expense, depreciation and
amortization, changes in the fair value of derivative liabilities,
losses on the extinguishment and derecognition expenses on the
conversion of convertible debt, non-cash stock-based compensation
expense, acquisition-related expense, non-recurring provisions for
credit losses on legacy matters, accounting fees related to the
restatement of prior period financial statements, non-recurring
costs related to the spin-off of a subsidiary, and legal costs and
settlement fees incurred in connection with non-ordinary course
litigation and other disputes.
We exclude these items in calculating Adjusted
EBITDA because we believe that the exclusion of these items will
provide for more meaningful information about our financial
performance, and do not consider the excluded items to be part of
our ongoing results of operations. Our use of Adjusted EBITDA has
limitations as an analytical tool, and you should not consider it
in isolation or as a substitute for analysis of our financial
results as reported under GAAP. Some of these limitations are: (a)
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized may have to be replaced in
the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements; (b) Adjusted EBITDA does not reflect
changes in, or cash requirements for, our working capital needs;
(c) Adjusted EBITDA does not reflect the potentially dilutive
impact of equity-based compensation; (d) Adjusted EBITDA does not
reflect tax payments that may represent a reduction in cash
available to us; and (e) other companies, including companies in
our industry, may calculate Adjusted EBITDA or similarly titled
measures differently, which reduces its usefulness as a comparative
measure.
Because of these and other limitations, you
should consider Adjusted EBITDA alongside our other GAAP-based
financial performance measures, net income (loss) and our other
GAAP financial results. The following table presents a
reconciliation of Adjusted EBITDA from net loss, the most directly
comparable GAAP measure, for the periods indicated:
Reconciliation of Net Income (Loss)
attributable to RYVYL, Inc., to Adjusted EBITDA for the Three and
Nine Months Ended September 30, 2023 and 2022
|
|
Three Months Ended September
30 |
|
|
Nine Months Ended September
30 |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(dollars in thousands) |
|
|
(dollars in thousands) |
|
Net loss |
|
$ |
(3,116 |
) |
|
$ |
(15,884 |
) |
|
$ |
(23,098 |
) |
|
$ |
(33,219 |
) |
Interest expense, excluding
amortization of debt discount |
|
|
65 |
|
|
|
1,802 |
|
|
|
3,310 |
|
|
|
7,415 |
|
Amortization of debt
discount |
|
|
4,183 |
|
|
|
(1,632 |
) |
|
|
9,626 |
|
|
|
11,540 |
|
Income tax expense |
|
|
128 |
|
|
|
35 |
|
|
|
138 |
|
|
|
37 |
|
Depreciation and
amortization |
|
|
657 |
|
|
|
2,299 |
|
|
|
1,899 |
|
|
|
4,880 |
|
EBITDA |
|
|
1,917 |
|
|
|
(13,380 |
) |
|
|
(8,125 |
) |
|
|
(9,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-cash
adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair value of
derivative liability |
|
|
(6,909 |
) |
|
|
4,143 |
|
|
|
(6,580 |
) |
|
|
(14,592 |
) |
Loss on extinguishment and
derecognition expense on conversion of convertible debt |
|
|
1,331 |
|
|
|
8,105 |
|
|
|
1,518 |
|
|
|
9,762 |
|
Stock compensation |
|
|
147 |
|
|
|
641 |
|
|
|
309 |
|
|
|
2,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring legal
settlements and ongoing matters and related legal fees |
|
|
2,197 |
|
|
|
- |
|
|
|
5,308 |
|
|
|
- |
|
Carryover effects of financial
statement restatements in prior periods |
|
|
- |
|
|
|
- |
|
|
|
1,222 |
|
|
|
- |
|
Non-recurring provision for
credit losses on legacy matters |
|
|
1,369 |
|
|
|
- |
|
|
|
1,994 |
|
|
|
- |
|
Accounting fees related to the
restatement of prior period financial statements |
|
|
- |
|
|
|
- |
|
|
|
237 |
|
|
|
- |
|
Non-recurring impairment of
right of use asset |
|
|
- |
|
|
|
- |
|
|
|
100 |
|
|
|
- |
|
Non-recurring costs of
spin-off |
|
|
- |
|
|
|
- |
|
|
|
29 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
52 |
|
|
$ |
(491 |
) |
|
$ |
(3,988 |
) |
|
$ |
(11,448 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
$ |
(2,364 |
) |
|
$ |
(3,126 |
) |
|
$ |
(9,470 |
) |
|
$ |
(19,069 |
) |
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