Good morning, everyone. Thank you for joining us for the twenty-sixth Annual H.C. Wainwright Global Investment Conference. My name is Dylan Scales. I'm an associate here on the Crypto and Blockchain research team. For our next presentation, I'm pleased to introduce Ben Errez, Chairman, and George Oliva, CFO of Ryvyl, trading under the ticker RYVYL on the Nasdaq. Let you guys take it away.
Thank you, Dylan. Good morning, everyone here and online, so we decided to do it a little bit different this year. We've been to this conference, say, several times, and we're going to give you a twofer, and you have a chairman and a CFO, so we can cover different aspects of our company and talk numbers. I think numbers are important for every company, and especially a company that is a payment company. First and foremost, obviously, this presentation will include forward-looking statements. A copy of this presentation, I believe, is already on our website. You can look through the full forward-looking statement over there, and otherwise, if you have hawk eyes, you can see it now.
So, a little bit of insider information. I fought for this slide after this presentation was finished. I liked it so much from previous presentations, and I think actually it tells the story of the company best in this entire presentation. I don't know how many slides we have total, probably somewhere in the neighborhood of 20 slides. Because this is my slide, I would suggest that you would study this one and for your takeaway from this presentation. I'm one of the two founders.
Thanks for taking a picture of that slide. I am the chairman. Fredy Nissan, my partner and co-founder, is the CEO. We founded the company in 2017, totally on a whim.
We didn't know where we were going, what we were going to do. We just knew that we wanted to work together. We both come from a diverse background that is pertinent to this endeavor. In my past, I was part of the startup team at Intel. Yes, I'm that old. After that, I sold the company to IBM and worked for them for a little bit. Then, I was part of the office team at Microsoft for 14 years, three years with Bill Gates on Trustworthy Computing initiatives, and other interesting endeavors that brought me to this day. I actually came to San Diego, on a personal note, to retire. Ended up being very bad at it.
I tried retirement a couple of times, never stuck. I always went back to business. 2017 brought us to the beginning of then GreenBox, and today, RYVYL. We registered the company during that year after we figured out what it is that we want to contribute to the greater good. We became a public company for the first time on the OTCQB in April of 2018, and uplisted to Nasdaq in 2021, February of 2021, which was for anybody who is in the know one of the best years ever for financing and uplisting to Nasdaq. During that year, we did four rounds of financing, and in total raised about $160 million.
During our first year of commercial existence, which was 2019, the company processed, at the maximum, which was in August of 2019, about $30 million in total volume of processing. To justify the forward-looking slide there, our best month in 2023 saw us processing over $1 billion. Growth has been dramatic for the company.
We finished 2023 with about $65 million in gross revenues, which, interestingly enough, if you look at the peer group for the company, in terms of an index like FT Partners, PitchBook, and other major qualifiers for enterprise value, puts us in the neighborhood of about $150-$200 million in market cap or fair value for enterprise value. It may surprise you to know that the company is under $10 million in market cap. So the equity appreciation opportunity that the company represents is dramatic in our view. Again, forward-looking statement, non-committing, non-suggesting any investment of any kind. However, we internally think that the company is undervalued.
There's no insider that is selling, and we're taking steps to capitalize and acquire that additional potential value as soon as possible. We're taking steps as we speak now today. The company started with essentially just Fredy and I back in 2017. We have a few hundred people today. Initially, most of our business was conducted on U.S. soil. Today, 80% of our business is done outside of the country. We think that type of geographic diversification is important, especially during these times, and obviously, in election year, where we don't know what is the potential outcome of different administrations as it pertains to our business.
I want to give enough time to have George discuss the numbers and the rest of the slides of this deck and allow for some Q&A at the end, so I'm gonna hand you this baton, so you can zap the audience and move the slides forward.
All right. So we are a technology company, primarily a software company, and we're in the payment space. When you think of payments, you have processing credit card payments, ACH, outgoing payments. We are also capable, well, well-positioned to be able to do cryptocurrencies. Basically, when someone's in our environment, they have a wallet, and the wallet could be in dollars, it could be in other currencies. When we talk about transaction volume, we're talking about dollars processed. So in the last quarter, in total, we processed $1 billion of payments. I can't read the number from here, but $900 million was in Europe and $153 million in North America.
So and then when we talk about revenue, we're talking about we use the term residual rate, so we've been averaging 1%-2% of transaction volume as our revenue. So you can see that the volume is growing. Europe is growing very fast. We believe that we have a good investment rationale, where you have a tremendously large market that we participate in. We have excellent partnerships with credit card companies and so forth. And the key to our business is we're targeting high-margin payment processing, so we're operating at 40% margin on average. And we are also to demonstrate that we're a technology company, we're starting to license the company to other people to process payments. So we're not just a service provider, but we're a technology platform. I'll just zip through this.
In terms of the projections for the industry in 2025, payment facilitator Pay Fac revenue forecast is $2 billion in 2018, going to $13-15 billion by 2025. We also, our embedded blockchain ledger is sitting underneath or behind our application, and it's... This is more of a slide for Ben to talk to, but it's SOC compliant, and it provides a level of security that you look for in blockchain technology. When we talk about services that we provide, we're talking in terms of four buckets. We call it issuing, acquiring, banking, and licensing. So issuing is normally somebody is issuing a credit card to a consumer.
In our case, it's someone issuing a consumer a debit card or a prepaid gift card, so they can use, like, a credit card to go purchase from merchants. The acquiring business is basically credit card processing. That is the legacy main part of our business in processing payments for merchants that are in underserved markets, high risk, and not able to find other solutions. So that's incoming cash to the merchants. Banking is, you could think of it as outgoing cash from the merchants, paying their service providers, providing a service of making ACH payments. So we're not a bank, but we do bank-like services, and then, as I mentioned, we have a licensing opportunity. We have one licensing deal that's being implemented as we speak.
This picture here is something I drew on the wall to try to explain the business to my staffers. When you look at on the top left, there's an issuing bank. They would issue a credit card to a consumer. Consumer pays the bill to that bank. In our case, it's debit cards. Merchant is our customer, and the merchants come to us via independent sales organizations. When you are a business and you're looking for a solution, you typically employ an agent like real estate or other insurance. The agent brings us a customer opportunity. It's a high-risk processing and then we pay them a commission, and then we onboard the merchants.
We are a payment service provider. That application is what the customer interfaces with, and then the RYVYL blockchain on the top there is the blockchain ledger behind everything. We work through a gateway processor who works with the acquiring bank and the credit card network. The key to this is when we process payments, the gross amount comes into our bank account, and we pay a fee, we pay the credit card fee, we pay the commissions, and then the money is available for the merchants to withdraw within a day. They can request money right away. Some of them, you know, leave money with us for some time, but they basically have a wallet, and they can request payments daily. In terms of a licensing deal, we could switch places.
We could let the ISO process the payment and just pay us a royalty, and they can, you know, we can license the software to them. So, just to give you an idea, hopefully it doesn't confuse you. We've got some good partnerships. We've signed a deal with Visa Direct in Europe, and we can use their network to make payments, outgoing payments, in over eighty countries. It's up and it's live right now with five countries, and it's been tested, and we're implementing it across the world. In terms of the partnership with R3, we did implement our own technology of blockchain. It's a thin layer. We call it Fabric, and it helps to implement blockchain much more quickly and much cheaper.
And so we have a partnership to potentially sell license our blockchain layer so that someone could implement blockchain in a fraction of the time that it normally would take them. In terms of the ISOs, the sales organization, we're dealing with hundreds of them. This is a little bit of explanation about the RYVYL Fabric. It's a thin layer of software. We're not allowed to call it blockchain, because blockchain is open, but we named it Fabric. You can see more about this on the website, but this is something that we're just beginning to pursue. We work with Corda, and now we're also compatible with Hyperledger, another very popular blockchain.
In terms of the selling proposition, we have an all-in-one payment solution. We have an unparalleled customer experience, and we're you know able to ramp to a higher volume. We don't have any constraints, and if you know if cryptocurrency becomes more prevalent, we're certainly capable of accommodating that. It would be no difficulty in adopting that. In terms of revenue, you can see the revenue slide in Q1 of 2024. We had a transition. We're transitioning away from one legacy vertical market in the U.S. that's caused the downturn. That market is...
We're transitioning from a terminal-based credit card processing to an app-based, debit card processing process, and then we ended up licensing it exclusively to one partner, and that's currently being tested, and eventually, that'll pay royalties to us. It'll be a transaction fee. It's a lower revenue per transaction but with virtually no cost to it and unlimited upward potential on that. So the U.S. is in transitioning. We're diversifying into more vertical markets, and Europe is kind of funding the company in the meantime. We're seeing a recovery in the H2 of the year, and the target is to be flat year to year on revenue. If you look at our balance sheet, you'll see $75 million in restricted cash. That is cash in the bank that belongs to our customers.
And then the unrestricted cash is just our operating account. So, in terms of guidance, we're gonna process over $4 billion this year. Revenue should be flat year to year in the $65 million range. We're operating at a 40% gross margin level, and we expect to, you know, at $24.5 million of revenue, we should be EBITDA positive. So Q4, we're looking to be EBITDA positive. In terms of driving long-term growth, we continue to expand the acquiring business. We're adding international payments. It's a banking revenue. We're diversifying it. We're in over 30 vertical markets now, as defined by credit card MCC codes, and we continue to innovate and license our technology, and acquire complementary platforms.
If you look on the left, that's a graph of our trailing twelve-month revenue, and if you look on the right, that's our enterprise value. We believe that, there's a, you know, tremendous value that's untapped, and, you know, the issue with that, we believe, is, some debt that we have on the books and, you know, our goal is to, over time, is to retire the debt and have one class of stock, and we would hope that, we would see the enterprise value of the company come out in the stock price.
Let's leave that slide there and open the floor for questions. We have just a couple of minutes left.
Okay.
So we'll take questions from the floor at this time. If not, it's interesting to see this graph. You know, we justified, obviously, a $900 million market cap back in 2021, where the company's performance was far less than what it is today. The company today has a market cap of under $10 million. All of that value is there for the company to capture back. The fundamentals on the business side are there. We need to fix the fundamentals on the investment side. We're taking steps to doing that. Please keep following the company news and the press releases. You'll see what we're doing in short order. Are there any questions from the floor? Yes, sir.
So describing the revenue, and the acceleration of that, do you see a time when I think we're going to mitigate the drop in revenue on the U.S. side, reverse that curve?
Yeah, if it pertains to numbers, that's the number one guy in the company.
So, in Europe, we have more licensing ability. There's less middlemen. I think there's a lot of the business is online, processing payments for online businesses. So even though it's, we think of it as Europe, it could be worldwide, actually. But there's just a tremendous demand. There's tremendous demand out there for processing payments. We service underserved markets. We're looking at high-margin processing for business. In Europe, it's online gambling. There's adult content, there's social networking, telecommunications. There's all sorts of industries that, for whatever reason, the credit card industry doesn't pay attention to.
What about the U.S.? They have the client.
In the U.S., as we said, we had one vertical that was a legacy vertical that grew very large, but it was full of compliance issues. The product is legal in 25 states, but not nationwide, and so it caused a lot of challenges and shifting requirements. So that vertical, we transitioned, and we're going to a licensing model to someone else that has better banking capacity. We have an entity that we bought in the Northeast that has a BIN with a major bank, and so now we're going to push all the processing through that subsidiary, and they are looking at diversified, you know, markets.
I think we're well positioned to be diversified and not ever again be dependent on a single vertical like we were, and we've hired a new team that are experienced from the industry, and they're, it's just a matter of time. I think it's going to be several quarters, and the U.S. should recover to where they were in the past, while Europe is still going very strong.
Yes, sir.
I'm dealing with a really ugly morning, lots of text messages and emails, so I cut about 20% of this - but I got your picture, picture taken with your slide. Okay, so I'm only asking this 'cause this has got to be in your wheelhouse. But a couple of years ago, we got excited about a company out of Toronto that and they introduced us to Nubank, loaded them.
Yep.
I'm only asking this because this would be in your wheelhouse, but technology's advanced to, let's say, state there's 50 banks in this country have 87% of the deposit. Okay, so my favorite little Italian restaurant down the street is sending fucking $100,000 a year to Chase Bank in one little Italian restaurant. When's technology going to grab that back for the consumer and cut the banks out of that transaction? It's your wheelhouse.
Yeah, I'm obviously uncomfortable addressing that particular question in the global view. But generally speaking, the world is way ahead of the U.S. markets in terms of digitizing the payment space. It's going in that direction. We may see different approaches depending on who ends up in the White House on U.S. soil. However, in Europe, the trends have already been determined. Hopefully, with the new administration, we will be able to catch on to these trends and transfer more of the power to the consumer and the merchants and have more of a diversified offering space, so that the competition for service and cost transitions to better service for the end users, and not only to the-