Executive Summary / Key Takeaways

• Strategic Transformation Underway: RYVYL is undergoing a profound transformation, shifting from direct high-risk payment processing to a technology-driven, licensing-focused model, leveraging its proprietary blockchain and fintech platforms to target high-margin, underserved market segments.
• Technological Edge as a Core Moat: The company's NEMS Core, RYVYL Fabric, and RYVYL Block platforms, enhanced by AI and Hyperledger, offer differentiated capabilities for secure, efficient, and scalable payment and banking solutions, processing over 3000 transactions per second.
• Financial Headwinds and Liquidity Challenges: Recent financial performance reflects significant restructuring, including the sale of its European segment and the discontinuation of its QuickCard product, leading to a substantial revenue decline in H1 2025 and a "going concern" warning, though recent capital raises and cost controls are addressing liquidity.
• Path to Profitability through Licensing and Europe: Management projects a return to Adjusted EBITDA profitability in Q4 2024 and net profitability at $120 million in revenue (anticipated 2025), driven by accelerating momentum in its licensing models and strong international growth (prior to EU sale), with North America's recovery now gaining traction.
• Competitive Differentiation in a Dynamic Market: RYVYL carves out a niche by serving clients larger processors avoid, utilizing its blockchain ledger for transparency and efficiency, and strategically adapting to evolving regulatory landscapes and industry shifts towards real-time and crypto payments.

A New Chapter: RYVYL's Strategic Pivot in a Dynamic Fintech Landscape

RYVYL Inc. (NASDAQ:RVYL) is at a pivotal juncture, reshaping its identity from a direct payment processor in high-risk verticals to an agile, technology-centric fintech enabler. The company's journey, originating from GreenBox POS and its QuickCard platform, has been marked by both rapid growth and significant strategic recalibration. This evolution positions RYVYL to capitalize on the accelerating global shift towards digital, real-time, and blockchain-powered payment systems, even as it confronts immediate financial and operational challenges.

The fintech industry is undergoing a profound transformation, driven by advancements in AI and blockchain, which are enhancing fraud detection, transaction security, and seamless banking integration. This environment favors agile innovators like RYVYL, as increased regulatory scrutiny and antitrust actions reshape competition among dominant networks. RYVYL's strategy is rooted in transforming the global payments landscape through technology-driven, customer-centric, and compliance-focused financial solutions, a mission that has guided its recent strategic shifts.

RYVYL operates in a competitive arena alongside giants like Square (now Block, Inc.) (SQ), PayPal Holdings (PYPL), Visa Inc. (V), and Mastercard Incorporated (MA). Unlike these broader players, RYVYL strategically targets high-margin market segments, specifically merchants and retail clients who are underserved by traditional processors or find themselves excluded from the mainstream ecosystem. This focused approach allows RYVYL to provide end-to-end processing and banking solutions that larger competitors often prefer to avoid, and smaller rivals cannot support at scale.

RYVYL's core competitive advantage lies in its proprietary blockchain ledger technology. This differentiator reduces overhead and errors, making its solutions highly efficient and scalable, with capabilities like processing over 3000 transactions per second through Hyperledger. This technological edge enables RYVYL to deliver transparency, speed, and specialized processing for verticals others cannot reach, along with customized turnkey solutions. While larger players like Visa and Mastercard boast unparalleled global networks and brand recognition, RYVYL's innovation in blockchain-specific features, such as advanced tokenization for data security, allows it to carve out a distinct niche.

Technological Moats and Innovation Driving the Future

At the heart of RYVYL's strategy is a suite of differentiated technologies designed to address complex payment and banking needs. The company's second-generation platform, NEMS Core, is a dual-sided system supporting both acquiring and disbursement services within a unified infrastructure. This end-to-end platform streamlines the entire transaction lifecycle, from payment initiation to settlement, offering businesses a competitive advantage in an increasingly interconnected financial environment.

Complementing NEMS Core is RYVYL Fabric, described as the company's "transaction highway." This cost-effective platform simplifies blockchain integration with a multi-layered security structure, compatible with both R3's Corda and Hyperledger frameworks. RYVYL Fabric is designed to power all of RYVYL's product lines, enabling high-speed processing of over 3000 transactions per second. This quantifiable performance metric highlights a significant operational efficiency advantage, reducing the potential for errors and overhead compared to traditional systems.

In collaboration with R3, a leading provider of enterprise distributed ledger technology, RYVYL developed RYVYL Block, a Blockchain-as-a-Service (BaaS) solution. This platform aims to simplify and expedite the adoption of blockchain technology for businesses in banking, payments, and high-volume processing environments. RYVYL Block leverages blockchain for enhanced security, data integrity, and smart contracting, enabling digital transformation for clients in weeks rather than years. The company plans to pilot and monetize RYVYL Block in 2024, with the potential to become a significant new business pillar.

The Coyni technology platform, now a wholly-owned subsidiary, has been strategically integrated. Its technology is deployed in Europe as a licensed crypto exchange/payment facilitator and rebranded internally as NEMS Score in the U.S. Coyni was designed to automate approximately 70% of operations, including onboarding, risk monitoring, and customer support, significantly reducing operational costs and speeding up processes. Additionally, the NanoKard app offers an innovative, app-based alternative for prepaid gift card processing, particularly in high-risk, closed-loop environments, targeting high-margin opportunities.

These technological differentiators provide RYVYL with a strong competitive moat. By offering superior efficiency, enhanced security, and rapid compliance capabilities, RYVYL can serve complex, high-margin verticals that larger, more risk-averse players avoid. This technological leadership is crucial for its strategic pivot towards licensing models, where RYVYL provides the infrastructure and earns per-transaction fees, reducing its own operational costs and compliance risks while enhancing gross margins.

Financial Performance and Liquidity: A Period of Transformation

RYVYL's recent financial performance reflects a company in the midst of a significant strategic overhaul. For the three months ended June 30, 2025, consolidated revenue decreased by 6.4% year-over-year to $2.783 million. The six months ended June 30, 2025, saw a more pronounced decline, with revenue falling 56.1% to $5.552 million compared to the same period in 2024. This was primarily driven by a shift in transaction volume product mix, with an 86% increase in lower-residual banking transactions offsetting a decrease in higher-residual acquiring volumes, largely due to the QuickCard product transition in Q1 2024.

Despite the revenue decline, the company demonstrated progress in cost control. Operating expenses for the three months ended June 30, 2025, decreased by $10.0 million, or 68.9%, to $4.505 million. This reduction was primarily due to decreases in research and development ($0.7 million), payroll and payroll taxes ($1.7 million), professional fees ($0.6 million), goodwill impairment ($6.7 million), and restructuring charges ($1.5 million). However, this was partially offset by a $1.1 million increase in intangible asset impairment related to the halted European NEMS Core development. The company also recorded a $0.5 million impairment charge for an operating lease right-of-use asset.

A critical development was the sale of RYVYL EU, effective June 1, 2025, which resulted in a loss on sale of approximately $6.5 million. This divestiture means RYVYL's operations are now solely focused on North America. While RYVYL EU had been a strong growth driver, contributing 294% revenue growth in 2023 and 96% year-over-year international revenue growth in Q3 2024, its sale was part of a broader balance sheet restructuring. The company successfully completed its debt deleveraging, converting the remaining $4.0 million of its 8% Senior Convertible Note and $136,000 in accrued interest into 7.1 million shares of common stock by June 30, 2025.

Liquidity remains a key concern. As of June 30, 2025, consolidated working capital was negative $8.1 million, with cash of $0.2 million and restricted cash of $14.7 million. Management has issued a "going concern" warning, stating that cash balances will not be sufficient to fund operations beyond December 31, 2025, without additional capital. The company can no longer rely on repatriating profits from its European subsidiaries. To address this, RYVYL recently completed a public offering on July 16, 2025, raising approximately $6.0 million in gross proceeds, and is actively engaged in discussions for additional funding. Cost control measures, including a 42% reduction in employees and termination of European engineering projects, are expected to reduce expenses by approximately $1.2 million per quarter starting in H2 2025.

Outlook and Strategic Momentum

Despite the recent financial headwinds, RYVYL's management expresses confidence in a strong rebound and accelerating momentum into 2025. The company reiterates its guidance for processing volumes to grow year-over-year to over $4 billion in 2024. However, the 2024 total revenue guidance has been adjusted to a range of $56 million to $60 million, reflecting delays in third-party software implementation in Europe (resolved by October 2024) and a prolonged North American recovery.

Management projects Q4 2024 processing volumes of approximately $1.3 billion, with 85% originating from Europe (prior to the EU sale). The blended residual rate is estimated at just over 1.1% (1% in Europe, 2% in the U.S.). The company anticipates achieving Adjusted EBITDA profitability in Q4 2024. Looking further ahead, RYVYL expects to resume substantial revenue growth in 2025, with its international segment (prior to sale) comprising the largest portion of revenue in both 2024 and 2025. The long-term profitability target remains at $100 million in revenue for positive EBITDA and $120 million for net profitability, which management anticipates reaching in 2025.

The North American strategy post-EU sale focuses on expanding treasury management services, BIN sponsorship for credit card processing, and comprehensive payment solutions like ACH and wire transfers. A key initiative is the private label partnership for the legacy high-risk business, which went live in Q4 2024. This licensing arrangement, which leverages RYVYL's core technology, is expected to generate significant volumes over the next year, with lower per-transaction fees but eliminated operating costs and higher gross margins. Management believes this model, at its peak, could approximate the previous $1 million monthly transactions from the vacated vertical, largely contributing to profit.

RYVYL's strategic partnerships are also critical to its outlook. The Visa Direct integration, now live in 5 of 80 targeted countries, enables payouts to accounts, e-wallets, and debit cards in minutes, driving demand in regions like South America and Asia. The collaboration with ACI Worldwide (ACI), fully integrated in July, enhances transaction processing and security for e-commerce merchants. The company is also actively exploring opportunities to acquire entities with complementary technology and digital assets as part of an "Enhanced Plan," and is considering a Crypto Treasury Allocation policy to leverage its blockchain infrastructure.

Risks and Challenges

RYVYL faces several significant risks that could impact its investment thesis. The "going concern" warning is paramount, highlighting the urgent need for additional capital to sustain operations beyond December 2025. While a recent public offering provided $6.0 million, continuous successful capital raises are crucial. The company's ability to execute its liquidity plan, including accelerating business development and implementing cost controls, is vital.

Nasdaq listing compliance presents another challenge, with the company receiving notices for non-compliance with both the minimum stockholders' equity ($2.5 million) and minimum bid price ($1.00 per share) requirements. While extensions have been granted, failure to regain compliance by October 6, 2025 (equity) and December 9, 2025 (bid price) could lead to delisting.

Regulatory and compliance challenges, particularly in the U.S. high-risk verticals, have historically impacted revenue and necessitated strategic shifts like the QuickCard licensing model. The broader industry is experiencing increased regulatory scrutiny, with entities like the FDIC pushing for higher banking risk and capacity standards. This dynamic environment, coupled with political uncertainty in an election year, could introduce new variables affecting digital currency and blockchain stances.

Furthermore, RYVYL is involved in multiple legal proceedings, including a class action lawsuit and shareholder derivative complaints, for which agreements in principle have been reached but await court approval. A lawsuit from a former CFO also remains ongoing. While the SEC investigation was resolved without monetary penalty, the cumulative impact of litigation can strain resources and management focus.

Conclusion

RYVYL Inc. is in the midst of a profound strategic transformation, shedding its direct operational exposure in high-risk payment processing to embrace a more asset-light, technology-licensing model. This metamorphosis, underscored by the divestiture of its European segment and the full retirement of its convertible debt, positions the company to leverage its differentiated blockchain and fintech platforms in underserved, high-margin market niches. The core investment thesis hinges on RYVYL's ability to execute its "Enhanced Plan," scale its NEMS Core, RYVYL Fabric, and Coyni technologies, and expand its PayFac-as-a-Service and Banking-as-a-Service offerings.

While the company confronts immediate liquidity challenges, evidenced by a "going concern" warning and Nasdaq compliance issues, recent capital raises and aggressive cost controls are critical steps towards stabilization. The projected return to Adjusted EBITDA profitability in Q4 2024 and net profitability at $120 million in revenue in 2025 signals a clear path forward. RYVYL's technological leadership, enabling superior transaction speed, security, and compliance, provides a crucial competitive edge against larger, more generalized payment processors. As the global financial landscape continues its rapid shift towards digital and blockchain-enabled solutions, RYVYL's strategic pivot and technological prowess offer a compelling, albeit high-risk, opportunity for investors seeking exposure to an agile innovator poised for growth in specialized fintech segments.