Good afternoon, ladies and gentlemen, and welcome to the Ryvyl First Quarter Earnings Conference Call. [Operator Instructions] The earnings press release accompanying this conference call was issued at the close of the market today. The quarterly report, which includes the company's results and operations for the 3 months ended March 31, 2023, was filed with the SEC today. On our call today are Ryvyl Chairman, Ben Errez; Interim Chief Financial Officer, Mary Lay Hoitt; and Chief Operating Officer, Min Wei. I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's regulatory filings for a list of associated risks. A replay of this call and webcast will be available for the next 90 days on the company's website under the Events section. At this time, I'd like to turn the call over to Ben Errez, the company's Chairman. Ben, the floor is yours.

Thank you for joining us today. Further to the success of using AI in our previous call, this call is entirely edited and produced using this exciting technology. Our fiscal first quarter 2023 was not without its challenges, uncertainties surrounding the banking sector, coupled with expectations for increased regulation of digital payments. And general macroeconomic concerns were common themes, yet Ryvyl's financial performance has never been better as we delivered top line revenue of $11.3 million, the most in our company's history for a quarter and growth of nearly 170% year-over-year. As I stated during our recent fourth quarter conference call, we have concentrated our efforts on improving our bottom line, improving our processing efficiency, improving the workforce and improving technology, all of these things work in concert. And consequently, we're seeing our operating margins increase. While proud of our Q1 top line growth, much of our time, energy and expenses for the quarter were related to completing the restatement of our financials, which we successfully completed. While Min will break down our various processing volume channel performance in a few minutes, with a high level we processed $565 million during the quarter. Removing non-income-producing volumes proved to be material in causing an increase in operating margins and corporate efficiencies. Now to review some of our major strategic initiatives that are underway. The first of which is our plans to spin-off coyni, our stable coin technology. Subsequent to the end of Q1, we announced the initiation of this process as part of a broad value creation strategy. We have made great strides with our payment processing business. We believe now that we have identified the best path forward to create value for our shareholders through the spin-off of coyni as a public company towards establishing it as the premier stable…

Thank you, Ben. As a note, I'll be referring to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to our 10-Q filing, which will be available on the company website under SEC filings. Now turning to the company's first quarter 2023 financial results. Our gross revenue increased by $7.1 million or 169% to $11.3 million for the 3 months ended March 31, 2023, from $4.2 million for the 3 months ended March 31, 2022. The change in net revenue reflected the following: increases in processing volume in the 3 months ended March 31, 2023, compared to the 3 months ended March 31, 2022; increase in revenues from our acquired businesses, including Charge Savvy, RYVYL EU and American Samoa. Gross profit in the first quarter of 2023 was $5.1 million or 45.3% of total revenue compared to gross profit of $1.4 million or 33.3% (sic) [ 34% ] of the revenue in same quarter a year ago. The increase in gross profit was primarily due to increases in processing volume and processing volume margins in the 3 months ended March 31, 2023. Operating expenses had increased by $0.3 million or 3.4% to $8.8 million for the 3 months ended March 31, 2023, from $8.5 million for the 3 months ended March 31, 2022. The increase was due primarily to higher payroll and payroll tax expenses and external professional expenses for legal and accounting services for the financial restatement and 2022 annual reporting. In addition, we encountered legal proceedings for the 3 months ended March 31, 2023, offset by decreases in general and administrative, advertising and marketing and stock-based compensation expenses. Other expense decreased by $18 million or 80.0% to $4.3 million for the 3 months ended March 31, 2023, from $22.3…

Thank you, Mary. We will walk through our processing volumes for the verticals we serve and discuss our 2023 outlook. Please note that all the figures are exclusive of the Sky Financial portfolio. Our first quarter processing volume across all channels at $565 million, which is approximately 37% higher than our processing projection of $414 million for the quarter. This is about 12% higher than our Q4 2022 volume of $506 million and an increase of about 381% from our Q1 2022 volume. Our Q1 acquiring business volume is $112 million, which is 14% higher than the Q4 $98 million volume and is 84% higher than the same period 1 year earlier. Q1 ChargeSavvy processing of $66 million is about the same as the Q4 processing volume. While compared to the $57 million volume in Q1 2022, it is a $0.15 improvement. For our FX and international payments portfolio, including Transact Europe, we processed $344 million in the first quarter compared to $315 million in business volume in Q4, an increase of 9%. We will report our Banking-as-a-Service offering performance in this category going forward as we expect to see more momentum in the global market. For an update on American Samoa. We are now servicing over 280 merchants and expect to roll out the services to about 60% of the merchant base in Q2. In Q1, our processing volume was about $28 million, and our monthly volume has exceeded $10 million per month. This remains an important case study for us to drive our payment solutions into ecosystems around the world. To circle back to coyni, as Ben spoke to earlier, plans are under way to spin-off this technology as a publicly traded company in order to fully market value. We continue to make enhancement releases to improve merchant…

Thank you, Min. Thank you all for your interest and commitment to Ryvyl. We are grateful for your ongoing support. With that, I'd like to begin our Q&A session. Operator, please begin. Thank you so much.

[Operator Instructions]

And while we hold for questions to come in, we have a few questions that were submitted prior to this call, and I'll review those. First question is for in Min. Can you talk about sales hiring strategy and trends domestically and internationally for merchant acquiring?

Thank you, Ben. For our domestic and international sales hiring strategy and plan, I'm pleased to report that we continue to enjoy high growth momentum from our ISO and partner's network. As a matter of fact, when we're looking at the merchant services space in the U.S., we have grown more than 150% in new locations as of end of Q1 compared to second half of last year. So really, this is not just about hiring. We continue to grow and develop our ISO and partnership network. So we have the strong momentum in the sales. And likewise, in the international markets, we have built further partnership which we announced in Q1 of this year that we are enjoying momentum from the sales partnerships as well as PSPs in the European market. As a matter of fact, we are gaining double-digit new merchant location [ application ] growth since the end of last year. So good question, though.

Thank you, Min. The second question is also to you. With back to back quarters of higher margins, is it reasonable to expect that to continue at approximately this level moving forward?

Well, definitely, right, part of the management leadership's objective to continue to grow the top line and keep the costs under control. I think the whole team did a fantastic job closing last year continue on into Q1 this year, we definitely expect to continue to drive margin improvement going forward into Q2, Q3, Q4 this year. As a matter of fact, that's our path to achieve the numbers for top line and bottom line, as we mentioned earlier during the earnings call.

Thank you, Min. I'm going to take the next question. Can you elaborate on the expected time frame for coyni's spin-off? So coyni's spin-off is the process. It started with the acquisition of a launch vehicle, to borrow a term from our friend, Elon Musk, and we have completed that. That launch vehicle was acquired. It is live, it is quoting. It did not yet begin the actual asset spin-off, but that launch vehicle is live. It is fully compliant. Its financials are up to date and it is out there for all to see. We have engaged our investment banker for a potential raise for the company at an estimated $200 million valuation with the raised goal of $40 million. We anticipate that to go through the next couple of quarters, at least. In addition to that, that vehicle will enable the long-awaited dividends for the benefit of all of our shareholders. This remains a focus point for everybody, and we intend to accomplish that at some point this year as well. The next step along these lines are the completion of the transfer of assets to the launch vehicle. This will happen shortly. Following that, we will file an application with the exchange for a name change, including the ticker change, more appropriate for coyni. We will complete the inclusion of additional forms of revenues into that entity and begin the process of uplifting and associated rates. As I said, the whole process is estimated to take approximately 6 months. Operator, back to you.

[Operator Instructions] The first question comes from Michael Donovan of H.C. Wainwright.

This is Michael. I'm calling on behalf of Kevin Dede, who's on the road right now. So you've mentioned an increase in processing volume and processing volume margins. Can you provide more color around margins and your pipeline for getting paid?

Yes. Min, our Chief Operating, will take this question.

Yes. Thank you for the question. First of all, on the volume growth, right, the volume growth for processing is directly related to the number of new merchant locations we are boarding. As I mentioned earlier, it's just amazing that with our direct, indirect sales efforts, we're able to increase the number of locations or processing for merchant services by more than 100% -- 100%, 150% since later part of last year. So accordingly, the volume is going up. Now to answer your questions about the contribution margins on processing, what we do is we are in the platform business. So leveraging our blockchain ledger platform as we put more volume through the ecosystem, we will expect continuous improvement in terms of contribution margin because our people cost, certain costs we have running the business is not going to scale at the same speed as our revenue. Hopefully, that answer your question.

I have a follow-on question to that. So in terms of margins and locations, how should we be thinking about these different locations as how they affect the margins?

Sure. The way we look at it, right, we typically communicate about our business by category, right? merchant services is one, foreign exchange, international payment is one. So in the case of merchant services, when we look at -- when we look at the metrics or parametrics as a matter of fact, we have -- what we have in the ecosystem, we have enough data point that generally speaking, depends on the verticals we services, we have seen per location per month volume to range from $50,000 to $100,000 per month on an average basis. So as we continue to grow more merchant locations, you will scale up that way. Hopefully, that addressed your question. For the international payment space, we've announced the strategic partnership with multiple financial institutes earlier this year. We expect to see the monthly volume ramping up to north of $100 million incrementally -- north of $100 million a month. So that's probably another way to look at it. So I would say those are the key 2 new revenue drivers we have. If you need further details with that, happy to elaborate.

I appreciate that. I mean, that's very helpful. Another question from your perspective, either you or Ben, from your perspective, how do you view the stable coin ecosystem, both from a regulatory front and competitive front?

So that's the question of the hour, right? I did a TV interview last week where I was asked the same question, and I guess the struggle remains the same. We definitely see divergence between onshore market and what happens around the world. We see challenges to the industry and the dollar in general happening around the globe, and we hope that the regulatory oversight locally and the people in decision-making positions will step up to the plate and join the rest of the world in enabling this inevitable outcome in a safe and controlled manner for the U.S. market. In parallel, we plan and prepare for the possibility that this will not happen. And it will happen first and better in other markets. And you'll see that approach as safety-first, let's call it, happening in other markets, primarily in Europe and it will be forthcoming in the business review for coyni.

One final question before I hop back in the queue. This one was around your closed-loop system that you have going on in American Samoa. So with the new partnership with Intercash, are you going to be tweaking this closed loop system for Europe? Or how are you thinking about this from a strategic perspective?

That again falls under the jurisdiction of Min. So Min, back to you.

Yes. Thanks for the question. I would say in the near term, it's really not impacting each other, right? So it was amazing that we were able to roll the solution to close to, I would say -- by end of the quarter, close to 60-plus percent of the merchant locations. On the island, we continue to achieve amazing margin there, but the closer ecosystem for the island is much hinged on our digital platform for payment processing, merchant acquiring. And we do have a plan to roll out in coyni and to further enhance the digital experience on the island in the coming few months. We are actually working very diligently with our partner TBAS, Territory Bank of American Samoa on that. But the partnership with Intercash is more on the issuing side, right? On the issuing side of the business, the most imminent opportunities in Europe as well as in the U.S. that's targeted on certain demographics. And I cannot share too much details until we get all of those penciled out. But we do see the potential of converting up to 1 million -- potentially 1 million plus in Europe. And then we also have a plan to look at how to roll it out in the mainland of the United States up to a few hundred thousand dollars -- a few hundred thousand cards. So it doesn't necessarily mingle with each other. But surely, if we gain more momentum on the issuing side on Continental Europe and also in the U.S. we'll continue to explore how to expand the issuing program for American Samoa as well. But we are trying to, in the near term, focus on the better volumes on the Continental Europe and the U.S.

As there are no more questions from the phones, I would like to hand the call back over to Ben Errez for any closing remarks.

Thanks, all. So thank you all for submitting these thoughtful questions and your interest Ryvyl. I hope you enjoyed this production that was entirely edited and produced by AI. This has worked very well for us, and we will continue to use this technology in future calls. Operator, back to you to close the call.

Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.