Business Overview and Milestones
Ryvyl Inc. (RVYL) is a leading financial technology company that has been at the forefront of developing innovative blockchain-based payment solutions. With a strong focus on leveraging advanced electronic payment technology, Ryvyl has carved out a unique niche in the diverse international markets it serves, positioning itself as a disruptive force in the global payments industry.
Ryvyl's journey began on April 10, 2007, when it was incorporated in the State of Nevada as ASAP Expo, Inc. The company's transformation into a fintech innovator started on January 4, 2020, when it formalized a verbal agreement from April 12, 2018, with GreenBox POS LLC (PrivCo). This agreement involved the acquisition of PrivCo's blockchain gateway and payment system business, point of sale system business, delivery business, and kiosk business, along with associated bank and merchant accounts and intellectual property. As part of this deal, Ryvyl assumed PrivCo's liabilities related to the GreenBox Business.
The company underwent several name changes throughout its history. On May 3, 2018, it changed its name to GreenBox POS, LLC, and then to GreenBox POS on December 13, 2018. The most recent name change to Ryvyl Inc. occurred on October 13, 2022.
Ryvyl's growth strategy has included several strategic acquisitions. On May 21, 2021, the company acquired Northeast Merchant Systems, Inc. (NEMS), a merchant services company specializing in merchant credit card processing. This was followed by the acquisition of Charge Savvy LLC on July 13, 2021, further enhancing Ryvyl's capabilities in payment processing and point-of-sale services.
In early 2022, Ryvyl continued its expansion with two significant acquisitions. On March 31, 2022, the company acquired a portfolio of merchant accounts from Sky Financial for $18.11 million. The following day, on April 1, 2022, Ryvyl completed the acquisition of Transact Europe Holdings OOD, the parent company of Transact Europe EAD (TEU), for approximately $28.8 million. This acquisition of TEU, a European Union regulated electronic money institution based in Sofia, Bulgaria, significantly expanded Ryvyl's presence in the European market.
Financial Performance and Ratios
Ryvyl's financial performance has been marked by both growth and challenges in recent years. For the fiscal year ended December 31, 2023, the company reported total revenue of $65.87 million, up from $32.91 million in the prior year. However, Ryvyl's net income for 2023 was a loss of $53.10 million, compared to a loss of $49.24 million in 2022. The company's annual operating cash flow for 2023 was $33.16 million, with a free cash flow of $33.05 million.
In the most recent quarter, Ryvyl reported revenue of $12.61 million, representing a year-over-year decrease of 27.9%. The net loss for the quarter was $5.17 million. This decrease in revenue was primarily driven by a 77.3% decrease in processing volume in the North America segment, attributable to the impact of the company's QuickCard product transition that began in February 2024. However, this was partially offset by a 95.8% increase in revenue in the International segment, driven by continued growth in processing volume.
The company's liquidity position has been a point of concern, with a current ratio of 0.96 and a quick ratio of 0.96 as of December 31, 2023. Ryvyl's debt-to-equity ratio stood at 3.43, indicating a heavily leveraged capital structure. As of September 30, 2024, the company had $4.26 million in cash and cash equivalents, $87.22 million in restricted cash, and $17.71 million in long-term debt, net of debt discount.
Segment Performance
Ryvyl operates in two reportable segments: North America and International. The North America segment has faced significant challenges, with revenue decreasing by 52.1% to $15.48 million in the first nine months of 2024, compared to the same period in 2023. This decline was primarily due to a decrease in processing volume, which fell from $1.0 billion to $562 million, largely as a result of the QuickCard product transition.
In contrast, the International segment has been a source of strong growth for Ryvyl. Revenue from this segment increased by 128.5% to $25.80 million in the first nine months of 2024, compared to $11.29 million in the same period of 2023. This growth was driven by a significant increase in processing volume, which grew from $1.1 billion to $2.6 billion. The International segment's success has been attributed to strong growth across multiple verticals, particularly the company's Independent Sales Organizations (ISO) and partnership network, global payments processing businesses, and banking-as-a-service offering.
Recent Developments and Initiatives
In 2024, Ryvyl faced a significant challenge as it transitioned its QuickCard product in North America from a terminal-based to an app-based processing model. This transition was driven by changes in the regulatory environment and banking relationships, which impacted the company's high-risk business verticals that were the primary revenue drivers for QuickCard.
To address this challenge, Ryvyl has introduced a licensing product for its payments processing platform, enabling it to serve the same customer base through a business partner with more suitable banking compliance capabilities. However, revenues from this new licensing product are not expected to materialize until early 2025. The company has also been accelerating its business development efforts to diversify its revenue streams and gain traction in new verticals.
Ryvyl's international segment, particularly its European operations, have been a bright spot, with the company reporting a 96% year-over-year increase in international revenue during the third quarter of 2024. This growth has been driven by the company's expansion of its Visa Direct integration to 13 countries, as well as the strong performance of its PayFac licensing, banking-as-a-service, and money remittance offerings.
In an effort to strengthen its financial position, Ryvyl recently signed a non-binding Memorandum of Understanding (MOU) with an investor to fully repay and terminate an 8% Senior Convertible Note and redeem all shares of the company's Series B Convertible Preferred Stock. This transaction, if completed, would significantly reduce Ryvyl's debt burden and provide additional financial flexibility to support its growth initiatives.
Risks and Challenges
Ryvyl faces several risks and challenges that could impact its long-term success. The highly regulated nature of the payments industry, with evolving compliance requirements and banking relationships, poses ongoing challenges for the company. The transition of its QuickCard product in North America and the successful launch of its new licensing model will be critical to the company's ability to recover lost revenues and maintain its growth trajectory.
Additionally, Ryvyl's reliance on its European operations as a short-term source of capital represents a potential risk, as any disruptions or challenges in that market could have a significant impact on the company's overall financial position. The company's heavily leveraged capital structure and history of net losses also raise concerns about its long-term solvency and ability to fund its growth initiatives.
The company has also faced legal challenges, including a complaint filed by its former Chief Operating Officer Vanessa Luna, alleging wrongful termination and sexual misconduct. Ryvyl is also dealing with a putative class action lawsuit alleging violations of federal securities laws, several shareholder derivative lawsuits, a dispute with Sky Financial Intelligence LLC over a breach of contract, and a claim filed against its subsidiary RYVYL EU by Satya Consulting PTE Limited over an alleged unpaid fee. These legal proceedings add another layer of complexity to Ryvyl's operational and financial challenges.
Outlook and Future Prospects
Despite the challenges Ryvyl has faced, the company remains well-positioned to capitalize on the growing demand for innovative payment solutions and blockchain-based technologies in the global financial services industry. The global blockchain technology market is expected to undergo significant growth, with a forecasted compound annual growth rate (CAGR) of 59.9% between 2023 and 2030, reaching a market size of $469.49 billion by 2030.
Ryvyl has adjusted its revenue guidance for the balance of 2024, now expecting total revenue to be in the range of $56 million to $60 million, down from previous expectations. However, the company anticipates gaining momentum throughout Q4 2024 and accelerating into 2025, with the international segment comprising the largest portion of revenue in both years. Ryvyl expects to resume substantial revenue growth in 2025 compared to 2024, although specific 2025 guidance has not yet been provided.
The company's recent initiatives, such as the licensing model for its payments processing platform and the diversification of its revenue streams, are designed to address the shortcomings of its North America operations and position the company for a return to sustainable growth. The successful completion of the MOU with the investor to retire its senior convertible note and preferred stock could also significantly improve the company's financial flexibility and long-term outlook.
As Ryvyl continues to navigate the evolving fintech landscape, its ability to adapt, innovate, and forge strategic partnerships will be critical to its success. With a focus on compliance, security, and technological advancement, the company aims to solidify its position as a leading provider of blockchain-powered payment solutions in the global marketplace.