Record Full Year Revenues Grow 33% to $32.9 million on Processing Volume of $3.6 Billion

Record Fourth Quarter Revenues Grow 56% to $11.1 million

SAN DIEGO, CA, April 17, 2023 (GLOBE NEWSWIRE) -- RYVYL Inc. (NASDAQ:RVYL) ("RYVYL" or the "Company"), a company that leverages the security of the blockchain and USD-pegged stablecoin technology with near-real-time attestation to conduct payment transaction, has provided its financial results for the fourth quarter and full year ending December 31, 2022.

Management Commentary by CEO Fredi Nisan:

2022 and Subsequent Operational highlights:

Achieved record annual processing volume in 2022 of approximately $3.6 billion, an 83% increase from $1.95 billion processed in 2021.
Record annual revenue of $32.9 million versus $26.3 million during the same time period in 2021, a 25% increase.
Record fourth quarter revenue $11.1 million increased 56% compared to $7.1 million during the fourth quarter 2021.
FX and international payments business, including Transact Europe, reported over $1 billion in business volume during 2022, largely attributable to FX conversion and international payment transactions.
Launched the coyni v2 platform, featuring a U.S. dollar pegged stablecoin on a one-to-one ratio with near real-time attestation and initiated a spin-off of coyni into a publicly traded vehicle as part of a broad value creation strategy that will include a special dividend upon completion of the transaction.
Expanded services in American Samoa to 256 merchants, representing over half of the overall merchant market.
Signed up 6 global financial institutions for the Banking-as-a-Service (BAAS) solution, expected to process over $100 million per month when fully ramped up.
Completed the amendment and restatement of our audited consolidated financial statements and related disclosures for the year ended December 31, 2021, along with unaudited consolidated financial statements and related disclosures for the quarters ended March 31, 2021, June 30, 2021, September 30, 2021, March 31, 2022, June 30, 2022 and September 30, 2022

Summary and Outlook

We are proud of the meaningful strides we accomplished during 2022 towards achieving our long-term objective of becoming a disruptive force in the digital payments market. Our fiscal year 2022 was highlighted by continued top line growth leading to record revenue of $32.9 million on record annual processing volume of $3.6 billion.

The levers that drove our growth in 2022 were our merchant acquiring business and geographic expansion following the completion of our acquisition of Transact Europe, with our international transaction volume exceeding $1 billion during the year. While we expect these segments to continue to deliver growth for years to come, we also have two exciting growth drivers that we believe will propel us into the next phase of our evolution.

Turning to 2023 and our outlook, our Banking-as-a-Service solution is gaining momentum after six global financial institutions signed up. In the aftermath of major bank failures, RYVYL was chosen by these firms in a demonstration of our compelling innovative infrastructure with a robust, compliant, and superior BaaS solution. We believe this is just the tip of the iceberg and expect to see continued strong growth in this segment.

We also just initiated the spin-off of coyni, our stablecoin technology, into a publicly traded vehicle that will assist in our broad value creation strategy by means of a special dividend to be paid upon completion of the spin-off. We have already identified and expect to acquire the proper vehicle in the coming weeks to proceed with the spin-off and we believe unlock significant shareholder value. We have also identified the investment banking team for the transaction and are in the process of evaluating mergers with possible partners.

With a growing pipeline in our domestic and international acquiring businesses, market share capture in American Samoa, recent breakthrough sign ups with our banking-as-a-service solution, and plans to spin-off coyni to unlock its potential, we are well positioned for strong growth and expansion of our presence in the digital payments landscape. In 2023, we expect to see our transaction volume increase to $6 billion resulting in revenue of $60 million and a positive adjusted EBITDA of $4 million.

Fourth Quarter Financial Summary

Fourth quarter net revenue increased by $4.0 million or 56%, to $11.1 million from $7.1 million in the year earlier quarter. The increase was primarily due to an increase in processing volume due to a number of factors, including: growth of our customer/merchant base as the result of expanded sales and marketing efforts; the expansion and growth of our advanced blockchain ledger-based payment solutions product offering, combined with an expanding ISO and partnership network; our expansion into the banking as a service (BaaS) and FX business using our acquired capabilities in the EU market; our business growth in American Samoa; and our strategic acquisition strategy.
Operating expenses increased by $5.3 million to $24.7 million for the three months ended December 31, 2022 from $19.5 million in same quarter prior year. The increase was primarily due to an increase in depreciation and amortization expense including an impairment charge of $14.0 million related to the acquisition of the Sky Financial portfolio.
The company recorded a net loss in the fourth quarter of 2022 of $16.4 million, or $0.32 cents per basic and diluted share, compared to a net loss of $15.3 million, or $0.38 cents per basic and diluted share, in the same quarter a year ago. The increase in net loss was primarily due to increases in depreciation and amortization, interest and other expenses related to the $100 million Senior convertible note issued in November 2021.
Fourth quarter adjusted EBITDA is negative $1.9, compared to a negative $16.5 million in the same quarter a year ago.

Full Year 2022 Financial Summary

Net revenue increased by $6.6 million or 25%, to $32.9 million in 2022 from $26.3 million in 2021. The increase was primarily due to an increase in processing volume from $1.95 billion in 2021 to $3.58 billion in 2022. The increase in processing volume was due to a number of factors, including: growth of our customer/merchant base as the result of expanded sales and marketing efforts; the expansion and growth of our advanced blockchain ledger-based payment solutions product offering, combined with an expanding ISO and partnership network; our expansion into the banking as a service (BaaS) and FX business using our acquired capabilities in the EU market; our business growth in American Samoa; and our strategic acquisition strategy.
Net revenue in our North America segment was $28.6 million while international revenue was $4.3 million. This compares to $26.3 million all of which was in North America in 2021.
Operating expenses increased by $8.8 million, or 19.0%, to $54.2 million in 2022 from $45.4 in 2021 The increase was primarily due to:
- Goodwill and amortization expenses increase by $20.0 million, including an $18.1 million charge related to the Sky Financial portfolio.
- Increase in payroll and payroll taxes due to increased headcount and professional fees though offset by decreases in general and administrative expenses;
- Decrease in stock compensation for services by $11.8 million to reward key vendors for services rendered and to conserve cash;
- Decrease in stock-based compensation to employees by $3.5 million partially offset by increase in stock grant expense;
- Increase in research and development expenses by $2.4 million due to expenditures on the coyni platform development and v1 pilot that led to a successful v2 system go-live in the second half of the year;
- Increase in marketing expenses by $1.2 million to establish our new master brand RYVYL and develop our new corporate web site.
The company sustained a loss from operations of $37.8 million for the twelve months ended December 31, 2022 compared to a loss of $29.2 million for the same period in 2021. The increase in net loss from operations was primarily due to increased operating expenses.
The company sustained a net loss for the twelve months ended December 31, 2022, of $49.2 million, or $1.08 cents per basic and diluted share, compared to a net loss of $35.3 million or $0.87 cents per basic and diluted share, in the same period the prior year. The increase in net loss for the twelve months was primarily due to an increase in depreciation and amortization expense related to a goodwill impairment charge, as well as interest and other expenses related to the $100 million note.

Cash, cash equivalents and restricted cash balance as of December 31, 2022 was $40.8 million.

Full Year 2022 Adjusted EBITDA loss was $13.2 million, a $3.0 million improvement from 2021 of an adjusted EBITDA loss of $16.2 million.

Management will host a conference call on Monday, April 17, 2022 at 4:30 p.m. Eastern time to discuss RYVYL's fourth quarter and full year 2022 financial results and will conclude with a Q&A session. To participate, please use the following information:

Q4 2022 Conference Call and Webcast

Date: April 17, 2023

Time: 4:30 p.m. Eastern Time

US Dial In: 1-877-407-4018

International Dial In: 1-201-689-8471

Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1594116&tp_key=e3ef21a6f7

Please dial-in at least 10 minutes before the start of the call to ensure timely participation.

To listen to a recording of the call available through July 17, 2023, dial 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally and enter access ID 13735616. A 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 unique blockchain security and USD-pegged stablecoin technology with near real-time attestation, RYVYL is reinventing the future of financial transactions using its coyni® stablecoin platform as a transactional foundation. 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

Use of Non-GAAP Financial Information

This earnings release discusses Adjusted Net Income which is not a financial measure as defined by GAAP. This financial measure is presented as a supplemental measure of operating performance because we believe it can aid in, and enhance, the understanding of our financial results. In addition, we use Adjusted Net Income as a measure internally for budgeting purposes.

We define Adjusted Net Income as net income (loss) before (1) interest expense (income), net, (2) income tax expense (benefit), (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, plus (6) from time to time, certain other items which are specific transaction-related items. Other companies may define or calculate this measure differently, limiting the usefulness as a comparative measure. Because of this limitation, this non-GAAP financial measure should not be considered in isolation or as substitute for or superior to performance measures calculated in accordance with GAAP and should be read in conjunction with the financial statement tables. See also Reconciliation of Net Income (Loss) attributable to RYVYL, Inc., to Adjusted Net Income in the table below.*

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. 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 Contact

Mark Schwalenberg

MZ Group - MZ North America

312-261-6430

RVYL@mzgroup.us

www.mzgroup.us

RYVYL Inc.

Consolidated Balance Sheets

December 31, 2022 and December 31, 2021

(unaudited)

	2022			2021 (as restated)
ASSETS
Current Assets:
Cash and cash equivalents	$	13,960,887		$	89,045,202
Restricted cash		26,872,835			514,493
Accounts receivable, net of allowance for credit losses of $82,331 and $54,795, respectively		1,155,766			481,668
Accounts receivable from fines and penalties from merchants, net of allowance for credit losses of $27,536 and $9,454,261, respectively		-			-
Inventory		302,037			286,360
Cash due from gateways, net of allowance of $3,917,495 and $3,904,952, respectively		7,427,105			6,209,376
Prepaid and other current assets		9,497,825			28,968
Total current assets		59,216,455			96,566,067

Non-current Assets:
Property and equipment, net		1,695,655			1,674,884
Other assets		196,868			190,636
Goodwill		26,752,624			6,548,034
Intangible Assets, net		6,738,614			7,578,935
Operating lease right-of-use assets, net		1,533,295			1,490,159
Investments - assets		1,523,631			-
Total non-current assets		38,440,687			17,482,648

Total assets		97,657,142			114,048,715

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable		1,630,217			469,129
Other current liabilities		3,662,877			1,001,167
Accrued interest		1,728,252			1,226,287
Payment processing liabilities, net		28,912,489			2,312,657
Short-term notes payable, net of debt discount		-			-
Current portion of long term debt		14,446			-
Convertible debt, net of debt discount of $0 and $2,993,408, respectively		254,979			18,735,000
Derivative liability		533,601			495,134
Current portion of operating lease liabilities		-			-

Total current liabilities		36,736,861			24,239,374
Long term debt, net of debt discount of $24,348,791 and $41,344,822, respectively		61,734,569			59,305,078
Operating lease liabilities, less current portion		1,108,665			1,035,895

Total liabilities		99,580,095			84,580,347

Commitments and contingencies

Stockholders' Equity:
Common stock, par value $0.001, 175,000,000 shares authorized, shares issued and outstanding of 49,727,355 and 42,831,816, respectively		49,020			42,831
Common stock issuable, par value $0.001, 2,516,189 and 0 shares issuable, respectively		1,754			-
Additional paid-in capital		96,270,716			94,748,332
Accumulated other comprehensive income (loss)		1,596,234			-
Accumulated deficit		(99,772,333	)		(50,536,635	)
Less: Shares to be returned		(68,344	)		(9,852,344	)
Less: Treasury stock, at cost; 0and 714,831 shares, respectively		-			(4,933,816	)
Total stockholders' equity		(1,922,953	)		29,468,368

Total liabilities and stockholder's equity	$	97,657,142		$	114,048,715

RYVYL, Inc.

Consolidated Statements of Operations

For the Three and Twelve Months Ended December 31, 2022 and 2021

(unaudited)

	Year Ended December 31,
	2022			2021
Net Revenue		32,909,112			26,304,502
Cost of revenue		16,786,593			10,069,661
Gross profit		16,122,519			16,234,841

Operating expenses:
Advertising and marketing		1,337,019			134,166
Research and development		6,275,883			3,870,050
General and administrative		6,602,967			16,878,536
Payroll and payroll taxes		10,547,381			4,502,605
Professional fees		5,311,678			3,132,528
Stock compensation for employees		166,800			3,704,008
Stock grant expense		2,305,650			-
Stock compensation for services		496,497			12,306,365
Depreciation and amortization		20,916,868			912,677
Total operating expenses		53,960,743			45,440,935

Income (Loss) from operations		(37,838,224	)		(29,206,094	)

Other income (expense):
Interest expense		(8,168,784	)		(1,931,713	)
Interest expense - debt discount		(15,100,047	)		(2,993,408	)
Derivative expense		-			(3,435,178	)
Changes in fair value of derivative liability		16,857,086			2,845,000
Derecognition expense on conversion of convertible debt		(5,709,672	)		-
Merchant liability settlement		-			(364,124	)
Merchant fines and penalty income		(401,908	)		401,908
Other income or expense		1,117,148			(586,390	)
Total other income (expense), net		(11,406,177	)		(6,063,905	)

Loss before provision for income taxes		(49,244,401	)		(35,269,999	)

Income tax provision		(8,703	)		4,906

Net loss	$	(49,235,698	)	$	(35,274,905	)

Net loss per share:
Basic and diluted	$	(1.08	)	$	(0.87	)
Weighted average number of common shares outstanding:
Basic and diluted		45,571,991			40,708,304

RYVYL, Inc

Consolidated Statements of Cash Flows

For the Twelve Months Ended December 31, 2022 and 2021

(unaudited)

	Year Ended December 31,
	2022			2021
Cash flows from operating activities:
Net loss		(49,235,698	)		(26,453,512	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense		20,916,868			912,677
Forgiveness of PPP Loan		-			(272,713	)
Noncash lease expense		43,136			38,555
Stock compensation expense		166,800			3,704,008
Restricted stock issued for services		-			4,768,980
Stock compensation expense for employees		2,305,650			-
Common stocks issued for professional fees		496,497			7,537,385
Stock compensation issued for interest		2,418,000			653,467
Interest expense - debt discount		15,100,047			2,993,408
Accretion expense		(1,120,489	)		-
Derecognition expense on conversion of convertible debt		5,709,672			-
Derivative expense		-			3,435,178
Changes in fair value of derivative liability		(16,857,086	)		(2,845,000	)
Changes in assets and liabilities:
Accounts receivable		(674,098	)		-
Other receivable, net		(692,704	)		2,382,352
Inventory		(15,677	)		(161,859	)
Prepaid and other current assets		(1,523,631	)		(6,343,905	)
Cash due from gateways, net		(1,217,729	)		(11,637,812	)
Other assets		(6,232	)		686,876
Accounts payable		1,161,088			443,263
Other current liabilities		2,661,710			301,469
Accrued interest		501,965			1,226,287
Payment processing liabilities, net		10,517,952			(8,534,989	)
Net cash provided by (used in) operating activities		(9,343,959	)		(27,165,885	)

Cash flows from investing activities:
Purchases of property and equipment		(162,337	)		(158,858	)
Deposit on acquisitions		(2,175,734	)		-
Acquisition of Northeast Merchant Systems, Inc.		(500,000	)		(2,500,000	)
Cash provided for Transact Europe Holdings OOD Acquisition		(28,810,600	)		-
Cash provided for Sky Financial & Intelligence asset acquisition		(16,000,000	)		-
Net cash used in investing activities		(47,648,671	)		(2,658,858	)

Cash flows from financing activities:
Treasury stock purchases		(4,056,723	)		(4,934,531	)
Proceeds from stock option exercises		7,942			2,338
Borrowings (repayments) from convertible debt		(6,000,000	)		76,800,000
Borrowings from notes payable		-			350,000
Proceeds from exercise of warrant		-			3,731,200
Repurchase of common stock from stockholder		-			(5,693,863	)
Proceeds from issuance of common stock		-			45,805,491
Net cash provided by (used in) financing activities		(10,048,781	)		116,060,635

Restricted cash acquired from Transact Europe		16,719,204			-
Cash acquired from acquisition of Northeast and ChargeSavvy		-			1,491,068

Foreign currency translation adjustment		1,596,234			-

Net increase in cash, cash equivalents, and restricted cash		(48,725,973	)		87,726,960

Cash, cash equivalents, and restricted cash – beginning of period		89,559,695			1,832,735

Cash, cash equivalents, and restricted cash – end of period	$	40,833,722		$	89,559,695

Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		5,750,784			2,504,533
Income taxes		-			-

Non-cash financing and investing activities:
Convertible debt conversion to common stock		8,550,000			3,850,000
Common stock issued for acquisition of ChargeSavvy		-			12,140,000
Interest accrual from convertible debt converted to common stock		-			8,653,467
Short-term notes payable converted to common stock		-			810,000

Reconciliation of Net Income (Loss) attributable to RYVYL, Inc., to Adjusted Net Income* for the Twelve Months Ended December 31, 2022 and 2021

	2022			2021

Net loss	$	(49,235,698	)		(35,274,906	)
Interest expense, excluding amortization of debt discount		8,168,784			1,931,713
Amortization of debt discount		15,100,047			2,993,408
Income tax (benefit) expense		(8,703	)		4,906
Depreciation and amortization		20,916,868			912,677
EBITDA		(5,058,702	)		(29,432,202	)

Other non-cash adjustments
Changes in fair value of derivative liability		(16,857,086	)		(2,845,000	)
Derecognition expense on conversion of convertible debt		5,709,672			-
Stock compensation for employees		166,800			3,704,008
Stock grant expenses		2,305,650			-
Stock compensation for services		496,497			12,306,365
Adjusted EBITDA	$	(13,237,169	)	$	(16,266,829	)

RYVYL Reports Fourth Quarter and Full Year 2022 Financial Results