8-K: RYVYL Inc. Announces Preliminary 2024 Revenue and Issues 2025 Guidance

RYVYL Inc. expects to report $56.0 million in revenue for 2024 and projects revenue between $80 million and $90 million for 2025.

Summary

• RYVYL Inc. announced preliminary financial results for 2024 and provided revenue guidance for 2025.
• The company expects to report 2024 revenue of $56.0 million, which is within the previously guided range of $56 million to $60 million.
• For 2025, RYVYL anticipates revenue between $80 million and $90 million, representing over 50% growth at the midpoint compared to 2024.
• The company also expects gross margins to increase to the mid-40s percent in 2025, leading to positive adjusted EBITDA and operating cash flow in the second half of the year.
• RYVYL intends to terminate its previously announced asset sale agreement for its RYVYL EU subsidiary by paying $16.5 million.
• The company is exploring fundraising options, including a potential equity raise of up to $20 million, to fund the termination payment.
• The outstanding balance of the Series B Convertible Preferred Stock was fully retired with a $13.0 million payment, and the 8% Senior Secured Note balance was reduced to $4.0 million.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the expected revenue growth and improved gross margins. However, the need for fundraising and the preliminary nature of the financial results introduce some uncertainty.

Positives

• RYVYL's 2024 revenue is within the previously guided range.
• The company anticipates significant revenue growth in 2025.
• Gross margins are expected to improve, leading to positive adjusted EBITDA and operating cash flow.
• The retirement of the Series B Convertible Preferred Stock and reduction of the 8% Senior Secured Note balance strengthens the balance sheet.
• Shareholder equity increased by over $50 million without dilution to common shareholders due to balance sheet restructuring.

Negatives

• The company needs to raise $16.5 million to terminate the RYVYL EU asset sale.
• The financial information presented is preliminary and unaudited, subject to change.
• The company is exploring fundraising options, which may include debt or equity financing.

Risks

• The company's actual financial results may differ materially from the preliminary information provided.
• The company's ability to achieve its 2025 revenue guidance depends on various factors, including the performance of RYVYL EU and NEMS.
• The company's fundraising efforts may not be successful, or the terms may not be favorable.
• The company faces risks related to the regulatory environment, technology changes, and potential litigation.

Future Outlook

RYVYL expects significant revenue growth in 2025 and aims to achieve positive adjusted EBITDA and operating cash flow in the second half of the year, contingent on retaining its RYVYL EU subsidiary and successful fundraising.

Management Comments

• Fredi Nisan, CEO of RYVYL, stated that robust business development and sales initiatives in 2024 have positioned the company to resume strong growth in 2025.
• Fredi Nisan also noted that efforts to grow high-margin, banking-related revenue at RYVYL EU are coming to fruition.
• George Oliva, CFO of RYVYL, expressed pleasure that the balance sheet restructuring increased shareholder equity by over $50 million without dilution to common shareholders.

Industry Context

RYVYL operates in the payment transaction solutions industry, which is characterized by rapid technological changes and evolving regulatory requirements. The company's focus on international markets and banking-related revenue aligns with industry trends towards globalization and diversification of revenue streams.

Comparison to Industry Standards

• Comparing RYVYL's projected revenue growth of over 50% to competitors like Block (formerly Square) or PayPal, which have seen more moderate growth, suggests a potentially high-growth phase for RYVYL.
• However, it's important to consider that RYVYL is a smaller company, and high growth rates are often easier to achieve from a smaller base.
• Gross margin targets in the mid-40s are comparable to some payment processors, but lower than software-focused companies with higher margins.
• Companies like Adyen and Stripe, which focus on enterprise-level payment solutions, often have higher gross margins due to the value-added services they provide.

Stakeholder Impact

• Shareholders may be impacted by the potential equity raise and the company's ability to achieve its financial targets.
• Employees may be affected by the company's growth plans and strategic initiatives.
• Customers may benefit from the company's continued innovation in payment transaction solutions.
• Suppliers and creditors may be impacted by the company's financial performance and fundraising activities.

Next Steps

• The company intends to release audited financial results for the year ended December 31, 2024, on or before March 13, 2025.
• RYVYL will explore fundraising options to finance the termination of the RYVYL EU asset sale.
• The company will continue to execute its business plan and pursue growth opportunities in 2025.

Key Dates