Ryvyl Inc. (RVYL), a leading innovator in the fintech space, has been making waves in the industry with its proprietary blockchain-based payment solutions. As the global blockchain technology market continues its meteoric rise, expected to grow at a CAGR of 59.9% from 2023 to 2030, reaching a valuation of $469.49 billion by 2030, Ryvyl is well-positioned to capitalize on this burgeoning opportunity.
Business Overview Ryvyl Inc., formerly known as ASAP Expo, Inc., was incorporated in the State of Nevada on April 10, 2007. The company underwent a significant transformation on April 12, 2018, when it acquired the blockchain gateway and payment system business, point of sale system business, delivery business and kiosk business, bank and merchant accounts, as well as all intellectual property related thereto from GreenBox POS LLC, a private company. This acquisition marked a pivotal moment in Ryvyl’s history, shifting its focus towards blockchain-based payment solutions.
Following the acquisition, the company underwent several name changes. On May 3, 2018, it formally changed its name to GreenBox POS, LLC, and subsequently to GreenBox POS on December 13, 2018. The company’s current name, Ryvyl Inc., reflects its evolution and broader vision in the fintech landscape.
Ryvyl has continued to expand its capabilities through strategic acquisitions. On May 21, 2021, the company acquired all of the outstanding stock of Northeast Merchant Systems, Inc. (NEMS), a merchant services company providing merchant credit card processing. This was followed by the acquisition of Charge Savvy LLC on July 13, 2021, a fintech company specializing in developing software and providing payment processing and point-of-sale services to the merchant services industry.
In a move to strengthen its global presence, Ryvyl completed the acquisition of Transact Europe Holdings OOD in April 2022. This European Union regulated electronic money institution, headquartered in Sofia, Bulgaria, significantly expanded Ryvyl’s global footprint and payment solutions capabilities. Additionally, in March 2022, the company acquired a portfolio of merchant accounts from Sky Financial, further enhancing its market position.
Ryvyl’s proprietary, blockchain-based systems are designed to facilitate, record, and store a virtually limitless volume of tokenized assets, representing cash or data, on a secured, immutable blockchain-based ledger. The company’s diverse portfolio of products and services caters to a wide range of industries, positioning it as a versatile player in the rapidly evolving fintech landscape.
The company is currently involved in several legal proceedings that investors should be aware of. On November 8, 2022, Ryvyl filed a complaint against its former Chief Operating Officer Vanessa Luna, alleging abuse of position, failure to follow proper protocols, and breach of fiduciary duties. Ms. Luna subsequently filed her own complaint against the company and the CEO, alleging wrongful termination and sexual misconduct. Additionally, on December 12, 2022, the company’s former Chief Marketing Officer Jacqueline Dollar filed a complaint alleging sex discrimination and retaliation. A putative class action lawsuit was also filed against the company and certain current and former directors and officers on February 1, 2023, alleging false and/or misleading statements regarding the company’s financial controls, performance, and prospects. Ryvyl is also involved in various other legal proceedings related to business acquisitions and contractual disputes.
Financial Performance While Ryvyl has faced some recent challenges in its North American operations, the company has demonstrated impressive growth in its international segment. In the third quarter of 2024, Ryvyl’s International revenue grew by a remarkable 95.8% year-over-year, even with some delays in European software integrations. This strong performance was driven by continued expansion of the company’s Visa Direct integration, reaching 13 out of the targeted 80 countries, and robust growth in its PayFac licensing, banking-as-a-service, and money remittance offerings across global markets.
The company’s North American business, however, experienced a significant decline in revenue during the quarter, with a 77.3% decrease compared to Q3 2023. This decline was primarily due to the transition of its QuickCard product from a terminal-based to an app-based processing model. This transition was driven by changes in the compliance environment and banking regulations impacting certain high-risk business verticals, which were the predominant revenue drivers for QuickCard. To address this challenge, Ryvyl has recently introduced a licensing product for its payments processing platform, which will enable the company 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.
Despite these headwinds, Ryvyl remains committed to diversifying its revenue streams and expanding its global footprint. The company has reported a 31% increase in overall processing volumes for the third quarter of 2024, reaching $1.123 billion, with international volumes accounting for $952.3 million and North American volumes at $170.6 million.
Ryvyl’s financial results for the third quarter of 2024 reflected the impact of these dynamics, with revenue declining 27.9% year-over-year to $12.61 million. Gross margin remained relatively stable at 38.5%, while operating expenses decreased by 18.9% to $7.3 million. The company reported a net loss of $5.17 million for the quarter. Operating cash flow for Q3 2024 was $19.12 million, with free cash flow at $15.84 million.
For the full year 2023, Ryvyl reported revenue of $65.87 million, a net loss of $53.10 million, operating cash flow of $33.16 million, and free cash flow of $33.05 million.
Looking ahead, Ryvyl expects to gain momentum in the fourth quarter of 2024 and into 2025, driven by its recently launched licensing product, continued growth in its international operations, and the diversification of its customer base and revenue streams. The company has adjusted its full-year 2024 revenue guidance to a range of $56 million to $60 million, reflecting the headwinds in its North American segment. Ryvyl anticipates that its international segment will comprise the largest portion of revenue in 2024 and 2025, and expects to resume substantial revenue growth in 2025 compared to 2024.
Liquidity and Balance Sheet As of September 30, 2024, Ryvyl reported a cash and restricted cash balance of $91.48 million, with $4.26 million in unrestricted cash and $87.22 million in restricted cash. The company’s working capital position was negative, primarily due to the short-term nature of its payment processing liabilities, with a current ratio of 0.96 and a quick ratio of 0.96. The debt-to-equity ratio stood at 2.80.
The decline in revenues in the North America segment has adversely impacted the company’s liquidity in the short term. Management has determined that the cash and cash equivalents in the North America segment as of September 30, 2024, will not be sufficient to fund the segment’s operations and capital needs for the next 12 months. To address this liquidity shortfall, the company’s management has implemented a plan that includes continued execution of accelerated business development efforts to drive volumes in diversified business verticals, implementation of cost control measures, and the sale of certain non-core assets. Additionally, the company plans to repatriate offshore profits from its European subsidiaries, which have continued to generate positive cash flow and provide a viable short-term source of capital during this product transition.
To strengthen its financial foundation and increase its financial flexibility, Ryvyl recently announced a non-binding Memorandum of Understanding (MOU) with an investor to fully repay its 8% senior convertible note and redeem all shares of its Series B convertible preferred stock. Under the terms of the MOU, the company will pay a total consideration of $16.5 million, with $12.8 million to be paid in a first tranche by November 29, 2024, and the remaining $3.7 million to be paid by January 31, 2025.
Ryvyl’s ability to execute on this balance sheet optimization plan will be crucial in providing the necessary financial resources to fund its growth initiatives and navigate the transition in its North American segment.
Competitive Landscape and Growth Strategies Ryvyl operates in a highly competitive fintech industry, facing challenges from both traditional payment processors and emerging blockchain-based solutions. The company’s key competitive advantages lie in its proprietary blockchain technology, which enables faster transaction speeds, enhanced security, and lower operational costs compared to traditional payment systems.
To drive growth, Ryvyl is pursuing several strategic initiatives, including:
Leveraging its PayFac licensing model to provide turnkey payment processing solutions to banks, merchants, and consumers, enabling seamless transactions across Visa’s global platform.
Diversifying its revenue streams through the recently launched licensing product for its payments processing platform, which allows the company to serve high-risk verticals through a business partner with suitable banking compliance capabilities.
Continued focus on high-margin market segments, such as underserved merchants and retail clients, by offering robust banking and payment solutions tailored to their specific needs.
Investing in advanced technologies, such as AI and blockchain, to drive improvements in fraud detection, transaction security, and seamless banking integration, positioning Ryvyl as an innovative leader in the evolving fintech landscape.
Risks and Challenges While Ryvyl’s growth prospects remain promising, the company faces several key risks and challenges that investors should be aware of:
Competition from larger players: Ryvyl competes with well-established payment processors and emerging fintech startups, which may have greater financial resources and broader customer bases.
Dependence on key partnerships: The company’s success is heavily reliant on its partnerships with global payment networks, banking institutions, and other strategic collaborators, any disruptions to these relationships could adversely affect Ryvyl’s business.
Liquidity and balance sheet concerns: The company’s current working capital position and the successful execution of its balance sheet optimization plan will be crucial in providing the necessary financial resources to fund its growth initiatives.
Successful integration of new technologies: Ryvyl’s ability to effectively integrate and leverage advanced technologies, such as AI and blockchain, will be critical in maintaining its competitive edge and driving innovation in the payments industry.
Legal proceedings: The ongoing legal disputes and class action lawsuit could potentially impact the company’s reputation and financial resources.
Conclusion Ryvyl Inc. (RVYL) is a fintech innovator firmly positioned at the intersection of blockchain technology and the global payments industry. With its proprietary solutions, the company is capitalizing on the rapid growth of the blockchain market and the increasing demand for secure, efficient, and innovative payment processing services.
While Ryvyl has faced significant challenges in its North American operations, its strong performance in the international segment, expansion of its Visa Direct integration, and the introduction of new licensing models demonstrate the company’s agility and strategic focus. The company’s European subsidiary, RYVYL EU, has been a particular bright spot, providing a comprehensive portfolio of payment solutions and capitalizing on the growing demand for digital payment services in the European market.
As Ryvyl navigates the transition in its North American business, optimizes its balance sheet, and addresses its short-term liquidity challenges, investors will be closely watching the company’s ability to execute on its growth initiatives and capitalize on the vast opportunities within the evolving fintech landscape. The success of its new licensing product, the continued expansion of its international operations, and the company’s ability to navigate regulatory and legal challenges will be key factors in determining Ryvyl’s future performance and growth trajectory.
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