RYVYL Inc. (RVYL)·Q2 2023 Earnings Summary

Executive Summary

• Q2 2023 delivered record revenue of $14.85M, up 31% q/q and 113% y/y; gross margin expanded to 41.2% vs 39.3% y/y, but GAAP net loss was ($12.0M) driven largely by non-operating items and restatement carryovers .
• Processing volume reached $678M (+20% q/q), led by FX/international payments ($425M) and North America acquiring ($146M); ChargeSavvy softened; American Samoa continued steady at ~$31M .
• Guidance raised: Q3 revenue to $16–$18M and Q3 volume to $720–$800M; FY revenue to exceed $60M; FY adjusted EBITDA target lowered to $2–$3M from $4M due to card scheme fees and admin costs to regain compliance .
• Strategic catalysts: Visa Direct and SEPA integrations (EU ramp), coyni spin-off and prospective special dividend, and $6M debt reduction via note exchange—with a second $16.7M exchange approved by shareholders .
• Preliminary 8‑K signaled at least $14.5M revenue and $650M volume; final actuals modestly exceeded at $14.85M and $678M, respectively .

What Went Well and What Went Wrong

What Went Well

• Record topline and improved gross margin: Revenue $14.85M (+113% y/y), gross margin 41.2% vs 39.3% y/y; “record top line results” and “improved margin profile” per management .
• International scaling and BAAS momentum: FX/international volume $425M (+23% q/q; +248% y/y from $121M); Visa Direct partnership and SEPA instant payments approvals in EU progressing .
• Balance sheet actions: Initial $6M debt reduction via convertible note exchange; shareholders approved a second tranche for an additional $16.7M reduction, supporting cash flow .

Quote: “We are thrilled with the expansion and higher margin acquiring processing volume, both internationally and domestically… Banking‑as‑a‑Service is the future of global banking” .

What Went Wrong

• GAAP profitability: Net loss of ($12.0M), vs $12.1M net income in Q2’22 mainly due to derivative liability fair value swing and non‑recurring items; adjusted EBITDA was ($0.9M) vs $3.1M in Q2’22 .
• Segment softness: ChargeSavvy volume $53M (−19% q/q; −15% vs Q1’22), reflecting reduced processing from select merchants .
• Elevated operating/admin costs: Card scheme fees, legal/restatement costs, and compliance regained expenses pressed adjusted EBITDA below breakeven target; FY adjusted EBITDA cut to $2–$3M .

Financial Results

Segment revenue breakdown (Q2 vs prior year):

KPIs and processing volumes:

Note: Preliminary 8‑K indicated at least $14.5M revenue and $650M volume; final actuals were $14.85M and $678M .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered record top line revenue…$14.8 million…processed $678 million during the quarter” (Ben Errez) .
• “Gross margins increased to 41%…Operating expenses rose modestly…non‑recurring legal settlements and restatement effects” (Gene Jones) .
• “We are raising our Q3 revenue outlook to $16 million to $18 million…adjusting 2023 adjusted EBITDA to $2–$3 million” (Min Wei) .
• “Being a Visa Direct partner…we expect a global payments platform integrated with SEPA and Visa Direct…local settlements in key markets” (Ben/Min) .
• “Coyni mPOS turns any phone into a terminal…faster deployment, global scalability, reduced fraud” (Fredi Nisan) .

Q&A Highlights

• Visa Direct vs multi‑currency scope: BAAS will use Visa Direct plus SWIFT/SEPA; coyni aims to handle multi‑currency with integrated banking solutions .
• coyni mPOS rollout: Initial focus U.S.; feedback from merchants; EU rollout planned for specific verticals .
• Regulatory view: FedNow certification limited; EU offers clearer framework; coyni EU licensing underway .
• Nasdaq compliance: Company regained compliance and will remain on 6‑month watch list; simple 8‑K planned .
• Convertible note exchange: First tranche reflected; second tranche to be visible in year‑end financials .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2023 Revenue and EPS was unavailable at time of request due to data access limits. As such, explicit consensus comparison cannot be provided; however, company results exceeded its own Q2 revenue guidance range ($12.5–$14.0M), and Q3 revenue guidance was raised to $16–$18M, implying potential upward pressure on sell‑side revenue estimates .
• Expect estimate revisions focused on: stronger international BAAS revenue trajectory (EU ramp), higher Q3 processing volume, and a lower FY adjusted EBITDA target reflecting compliance/admin cost headwinds .

Key Takeaways for Investors

• Revenue momentum is intact with Q2 at $14.85M and raised Q3 guidance—watch for EU BAAS execution and Visa Direct/SEPA milestones as catalysts .
• Mix shift toward international BAAS supports volume growth but monetization/pricing still calibrating—near‑term margin variability likely as pricing is optimized .
• Profitability path: Adjusted EBITDA lowered for FY due to cost headwinds; Q3 targeted positive—track card scheme fees and compliance/admin cost normalization .
• Corporate actions de‑risk capital structure (note exchanges) and coyni spin‑off could unlock value and potential special dividend—monitor FINRA/SEC timing updates .
• American Samoa and mPOS provide proof points for closed‑loop and device‑light deployments—niche verticals may drive higher margins over time .
• Preliminary-to-final results gap was positive (volume and revenue higher than initial indications), signaling operational outperformance .
• Risk factors: legal/restatement carryovers, U.S. regulatory uncertainty, derivative liability volatility, and reliance on EU execution; maintain position sizing accordingly .

Appendix: Additional Data Points

• Q2 operating expense drivers included non‑recurring legal settlements, legacy account write‑offs, and restatement accounting fees .
• Q2 other expense reflected a derivative liability fair value charge vs prior-year credit; interest expense related to accretion decreased y/y .
• Cash, cash equivalents, and restricted cash at quarter-end: $63.9M ($13.2M unrestricted) .