Q1 2022 Greenbox Pos Earnings Call
Okay.
Good afternoon, ladies and gentlemen, and welcome to the GreenBox POS first quarter 2022 earnings conference call. During today's presentation, all parties will be in aabout 1 minute, which normally makes the most noise out of theseoid
Good afternoon, ladies and gentlemen, and welcome to the Green box P. O S first quarter 2022 earnings conference call.
Today's presentation, all parties will be in a listen only mode.
following management remarks, the conference will be open for questions.
Following management remarks, the conference will be opened for questions.
The earnings press release accompanying this conference call was issued at the close of the market today.
Earnings Press release accompanying this conference call. It was issued at the close of the market today.
Quarterly report, which includes the company's results of operations for the three months ended March 31, 2022 was filed with the SEC today.
Pointerly Report, which includes the company's results of operations for the three months and in March 31st, 2022, was filed with the SEC today.
On our call today is Greenbox POS Chairman Ben Harris, Chief Financial Officer Ben Chung, and Chief Operating Officer Min Wei.
On our call today is green box P. O S Chairman, Ben Harris, Chief Financial Officer, Ben Cheung, and Chief operating Officer Midway.
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.
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.
Please refer to the company's regulatory filings for a list of associated risks.
The replay of this call and webcast will be available for the next 90 days on the Companys website under the events events section.
Replay of this call and webcast will be available for the next 90 days on the company's website under the event section
At this time, I'd like to turn the call over to Mr. Ben Eris, the company's chairman. Ben, before yours.
At this time I'd like to turn the call over to Mr. Ben Erez, the company's chairman and the floor is yours.
Thank you, operator, and thank you all for joining us today for our first quarter 2022 Financial Results Conference call.
Thank you operator, and thank you all for joining us today for our first quarter of 2022 financial results Conference call.
Following up on a strong growth trajectory in 2021, the first quarter of 2022, the best quarter by volume of processing in the company's history, was also highlighted by continued execution against several key strategic objectives that paved their way for our long-term growth.
Following up on a strong growth trajectory in 2021, the first quarter of 2022 best quarter by volume of processing in the company's history.
Also highlighted by continued execution against several key strategic objectives.
Paved the way for our long term growth.
We successfully completed the acquisition of Transact Europe , ushering Greenbox into a very attractive European payment market. And setting the table for our...
We successfully completed the acquisition of <unk> will Usher in Green box.
<unk> very attractive European payment market.
In setting the table for a global essentially.
By partnering with Newco supra, well respected financial technology infrastructure leader.
by partnering with the Coast River, a well-respected financial technology infrastructure leader.
We can bring to fruition, our banking as a service solution and materially large the potential universe of customers keep the liver also mentioned solutions too.
We can bring to fruition our banking as a service solution and materially enlarge the potential universe of customers to deliver our financial solutions to, while also expanding our solutions to all existing customers.
While also extending our solutions to all existing customers.
With the purchase of Sky Financial's processing portfolio, we secure the large merchant base of approximately $1 billion in annual transaction volume and growing.
With the purchase of Sky financials processing portfolio, we secured a large merchant base of approximately $1 billion in annual transaction volume and growing.
Operationally, we continue to.
operationally we continue to make progress on improving our executive team and board of directors.
We will make progress on improving our executive team and board of directors.
putting the needed expertise and infrastructure in place for us to continue to scale.
Putting the needed expertise and infrastructure in place for us to continue to scale.
With that I'd like to elaborate on some of our key operating highlights from the quarter.
With that, I'd like to elaborate on some of our key operating highlights from the quarter.
As I've talked about previously acquisitions are a vital part of our long term growth strategy.
As I've talked about previously, acquisitions of vital parts of our long-term growth strategy.
We look for select opportune targets to increase our processing volume, licensing assets, technology and talent. On that front, we have two...
We look for select opportune target to increase our processing volume licensing assets technology and talent.
On that fund we had two noteworthy accomplishments.
First we completed our acquisition of <unk>.
First, we completed our acquisition of Translact Europe , or as we call it internally, T-E-U.
Or as we call it internally Teu.
which considering the time and torness of the Bulgarian bank regulatory review process.
Which considering the time and thoroughness of the Bulgarian Bank regulatory review process.
No simple task.
KU enables us to effectively deliver the advantages of our customer-explanatory solutions, technology.
Do you <unk>.
It enables us to effectively deliver the advantages of our customized payment solution technology.
European merchants.
Several key strategic initiatives are ready to deploy, to unleash the synergy and unlock the growth from this equity.
Several key strategic initiatives already to deploy to unleash the synergies and unlock the growth from this acquisition.
For example by adding card present transactions.
For example, by adding card present transactions, TU can more effectively target the return effect.
Who can more effectively target the retail segment.
Incorporating alternative payment methods with partners in Europe will expand acceptance to include other original card issuers.
Incorporating alternative payment methods with partners in Europe .
Spanned acceptance to include other regional card issuers.
The addition of banking and foreign exchange capabilities will provide value solutions for clients as well as another driver of revenue for green.
The addition of banking and foreign exchange capabilities will provide value added solutions for clients as well as another driver of revenue for Green box.
This essential number of cross-border transactions in Europe makes for certain ground to drive adoption for coins.
This essential number of cross border transactions in Europe makes four total ground to drive adoption for cleaning.
Furthermore, by leveraging Teu licensing for our U S based clients with capabilities to expand their business into Europe and vice versa.
Furthermore, by leveraging TIE licensing for our US-based clients with capabilities to expand their business into Europe and vice versa, there is a tremendous potential value for both existing and prospective customers on both sides of the pond.
There is a tremendous potential value for both existing and prospective customers on both sides of the pond.
As we mentioned in our announcement.
for its first full year of operation, transact Europe is expected to contribute to approximately $2 million, so I adjusted EBITDA, and when this debate will be a creative in the first year.
First full year of operation Transact Europe is expected to contribute approximately $2 million to our adjusted EBITDA and we anticipate will be accretive in the first year.
Okay.
We also announced the purchase of Sky financials merchant processing portfolio to secure large processing volume it was already integrated in our technology.
We also announced the purchase of Sky Financial's merchant processing portfolio to secure a large processing volume that was already integrated in our technology.
Sky is a big part of our 2021 success and contributed significantly.
Kai is a big part of our 2021 success and contributed significantly to our revenue.
Revenue during the year.
The acquisition accomplishes two very important things.
The acquisition accomplishes two very important things.
By bringing a larger merchant account portfolio in house.
by bringing a large multi-million-pound portfolio in-house.
We eliminate the commissions cost previously in June .
We eliminate the commission's cost previously in COOK in COOK.
Second, it allows green box to own this customer relationship.
Hey, Ken it's allows green box to own these customer relationships securing a considerable portion of our processing volume base.
We're curing a considerable portion of our processing volume base.
and offer additional revenue generating solutions to the same customer.
And.
Also additional revenue generating solutions to the same customer base.
Establishing strategic partnerships with leading tech forward financial companies is also an integral part of our growth strategy.
establishing strategic partnerships with leading tech forward financial companies is also an integral part of our growth strategy.
In the first quarter, we announced such partnership with CrossRider, a very well-respected financial technology infrastructure.
In the first quarter, we announced such partnership with Cross River, a very well respected financial technology infrastructure company.
The licensing partnership is the initial step towards a banking as a service platform and represents a fantastic opportunity for us to significantly expand our potential universe of clients while allowing us to offer existing merchant accounts.
The licensing partnerships is the initial step towards banking as a service platform and represents a fantastic opportunity for us to significantly expand our potential universe of clients.
While allowing us to offer our existing merchants are gone.
Most services, including banking solutions.
The cross river partnership single-handedly closes the gap towards green boats becoming a vertically integrated end-to-end financial technology solution.
The crossover partnership single Handedly closes the gap towards Green books, becoming a vertically integrated end to end financial technology solutions.
While in the early innings.
while in the early innings of that partnership, we expect great things from it. And over time, believe it will lead to a substantial revenue generation.
Of that partnership we expect great things from it and over time believe it will lead to a substantial revenue generation.
Operationally, we have grown our executive management team and board of directors.
Operationally, we have grown our executive management team and board of directors has continued to evolve. In the first quarter, we welcome, mean way from which you will hear shortly, as our new chief operating officer.
<unk> has continued to evolve in the first quarter, we welcome main way from which you will hear shortly.
Our new Chief operating officer.
MEAN has an extensive background in operational efficiency at growing technology companies on a global basis.
Maine has an executive extensive background.
Operational efficiency.
The growing technology companies on a global basis, it will be vital for us given our expansion plans.
He will be vital for us given our expansion plans in order to scale efficient
In order to scale efficiently.
We also added to our board.
We also added to our board with the appointment of Adele Hogan. Adele is an experience in well respected from Zachem Lawyer.
With the appointment of Adele Hogan.
Adele is an experienced and well respected transaction.
Yes.
She has already been material to our recent acquisitions.
She has already been material to our recent acquisitions.
and they are part of our security compliance.
And Dave.
As part of our securities compliance team.
and will be important contributor to any MNA and dividend plans to come.
And will be important contributors to any M&A and dividend plans to come.
For an update on Koine, we're quite pleased by the recent public beta test of our.
For an update on Cony, we're quite pleased by the recent public beta test of our first generation development product.
First generation development product.
as we work to scale up its application while ensuring quality control.
As we work to scale up its application.
While ensuring quality control.
We expect Coenie to be an important growth driver for us in the years to come and fully committed to the lucrative opportunity to represent. Min will comment on this.
We expect core we need to be an important growth driver for us.
In the years to come and fully committed to the lucrative opportunity it represents.
Lynn.
I'll comment on this.
More in a few minutes.
And now I'd like to turn the call over to our Chief Financial Officer, Ben Chang, to walk through our financial results.
And now I'd like to turn the call over to our Chief Financial Officer, Ben Cheung.
Talk through our financial results.
Thank you Ben.
I will live in my portion to keep results of our financials. A full breakdown is available in our TNQ filing and in the press release that was distributed after market closed today.
I will limit my portion to key results our financial a full breakdown is available in our 10-Q filing and in the press release that was distributed after market close today.
Please note that I'll be referring to adjusted EBITDA and other non-GAAP U S. GAAP measures and for the calculation of adjusted EBITDA and other non-GAAP measures. Please refer to the MD&A, which is at that level in our 10-K 10-Q filing which you can find on our website under.
Please note that I'll be referring to adjusted EBITDA, another non- GAAP measures , and for the calculation of adjusted EBITDA, and other non- GAAP measures , please refer to the MDNA, which is available in our TANK, thank you, finally, which you can find there, website under SECFIME.
Our SEC filings.
Net revenue increased by $140,000, or 3.1%, to $4.9 million for the three months ended March 31, 2022, from $4.7 million for the three months ended March 31, 2021. The increase in revenue was due to the increase in processing volume, but offset by higher fees to Gateway and ISOC.
Net revenue increased by $140000 or three 1%.
With four 9 million for the three months ended March 31 2022.
$4 7 million for the three months ended March 31 2021.
The increase in revenue was due to the increase in processing volumes, but offset.
By higher fee to gateway and ISS.
Gross profit in the first quarter of 2022 was $2.3 million or 47.6% of total net revenue compared to gross profit of $3.2 million or 66.4% of total net revenue in the same quarter a year ago.
Gross profit in the first quarter of 2022 was $2 3 million or 47, 6% of total net revenues compared to gross profit of $3 2 million or 66, 4% of total net revenue in the same quarter a year ago.
The decrease in growth process was primarily due to increased cost of revenue resulting from higher processing fees paid to gateways and commission payments to items. I would like to now discuss our office.
The decrease in gross profit was primarily due to increased cost of revenue, resulting from higher processing fee.
Gateway and commission payments two items.
I would like to now discuss our operating expenses.
We categorize our operating expenses into two categories normal operating expenses.
We categorize our operating expenses into two categories, normal operating expenses, and non-cash operating expenses.
And noncash operating expenses.
Normal operating expenses include marketing, research and development, payroll, professional, and general expenses, while non-cash operating expenses include stock compensation expenses for employees and for services, including depreciation.
Normal operating expenses include marketing research and development payroll professional and general expenses, while noncash operating expenses include stock compensation expenses for employee.
And for services, including depreciation.
Our normal operating expense was 7.8 million and 2.3 million for Q1 2022 and 2021 respectively. An increase of 5.5 million
Our normal operating expense was $7 8 million and $2 3 million for Q1, 2022, and 2021, respectively. An increase of $5 5 million, primarily due to an increase in general and administrative expense related to payroll for increase.
primarily due to an increase in general and administrative expense related to payroll for increased in number of employees due to growth and also related to our heavy investment in research and development to improve our technology and headcount to support operations and sales growth.
The number of employees due to growth and also related to our heavy investment in research and development to improve our technology and head count to support operations and sales growth.
Our non-cache operating expenses primarily relate to stock compensation expense for employees and services.
Our noncash operating expenses, primarily related to stock compensation expense for employee and services.
We ended Q122 with a loss from operations of 6.2 million compared to a loss of 9.4 million in the same quarter of prior year.
We ended Q1 2022 with a loss from operations of $6 2 million compared to a loss of $9 4 million in the same quarter prior year.
If our non-cash operating expenses such as stock compensation expense for employees and services and depreciation are added back, we had a net loss from operations of $5.4 million for Q1 2022 and a net income of $0.9 million for the same quarter prior year.
If our noncash operating expenses, such as stock compensation expense for employee and services and depreciation are added back we had a net loss from operations of $5 4 million or <unk>.
Our Q1, 2022, and a net income of <unk> 9 million for the same quarter prior year.
I will now like to go over our other expense category. Our other expense increased by 11.1 million to 15.1 million for Q1 2022 from 4.0 million for Q1 2021.
I will now like to go over our other expense category or other expense increased by $11 1 million.
$15 1 million for Q1, 2022 from 4.0 million for Q1 2021.
Interest expense increased slightly in Q1 2022 as compared to Q1 2021 due to the $100 million convertible note issued in November 2021.
Interest expense increased slightly in Q1 2022 as compared to Q1 2021 due to the $100 million convertible note issued in November 2021 Ameren.
Amortization of discount fees and the fair value of derivative liability associated with the note were also contributing factors. Furthermore, the company changed in fair value derivative liability expense of $7.7 million for Q122 and none in previous year staying quarters.
Amortization of discount fee.
And then and the fair value of derivative liability associated with the note were also contributing factors. Furthermore, the company change in fair value derivative liability expense of $7 7 million for Q1, 2022, and none in previous year.
Quarter.
The company sustained a net loss in the first quarter of 2022, of 21.3 million, or 51 cents per basic and diluted shares compared to net loss of 13.3 million, or 38 cents per basic share and diluted shares in the same quarter a year ago.
The company sustained a net loss in the first quarter of 2022 of $21 3 million or 51 cents per basic and diluted shares compared to net loss of $13 3 million or <unk> 38 cents per basic share and diluted shares.
In the same quarter a year ago.
The increase in net loss was primarily due to an increase in change in fair value of the river liability and increase in research and development, general and administrative related to payroll and payroll taxes and professional fees as we continue to add staff and infrastructure related to our growth and being a public traded company.
The increase in net loss was primarily due to an increase in change in fair value of derivative liability and increase in research and development general and administrative related to payroll and payroll taxes and professional fee as we continue to add staff and infrastructure related.
Our growth and being a public traded company.
Adjusted net income, a non- GAAP financial measure for the first quarter 2022 was 5.4 million of net loss. You can find a reconciliation in our earnings press release.
Adjusted net income a non-GAAP .
National measure for the first quarter 2022 was $5 4 million of net loss you can find a reconciliation in our earnings press release.
I'll now turn the call over to men to speak about our outlook for the recipe.
I'll now turn the call over to min to speak about our outlook for the rest of the year.
Thank you band over the past three months I enjoyed the opportunity of working with the rest of that Green box leadership team.
Thank you, Ben. Over the past three months, I enjoyed the opportunity of working with the rest of the Greenbox Leadership Team.
And we started the process of our intermediate term and longer range planning.
And we started the process of our intermediate term.
And longer range planning.
This is particularly important as 2022 is a transitional year for Green box as we are finalizing our <unk> platform or public introduction and are getting all with platform monetization.
This is my people in the bottom as 2022 is a transitional year for green box. As we are finalizing our 20 platform for public introduction and are getting on with platform monetization.
As a result of this effort, we have better visibility in our quarterly operating performance and have verified our path.
As a result of this effort.
We have better visibility in our quarterly operating performance.
Have verified all past as follows.
One.
When complete accordingly, one platform development and prepare for a beta to pilot the select external users, we revamped our sales and business development organization and established a systematic approach to sales pipeline development that management with.
One platform development and prepared it for a baited pilot with the Lacklickson on users. We revamped ourselves and business development organizations and established a systematic approach to sales pipeline development and management.
We started our efforts in marketing and support operations in preparation for the corny public beta product.
We started our efforts in marketing and support operations in the quantity of public data product.
We do the equal the corny v1 platform to the public for beta and I wanted to take the chance to thank those for participating in the beta. We have received since many positive feedback.
Q2 <unk>.
In April the Corning, one platform to the public for data and I wanted to take the chance to thank those who are participating in the beta we have received.
Many positive feedbacks.
Beta-Pilot 2X has been analyzed, prioritized, and incorporated into our corny release role map. We are enhancing our customer onboarding and support processes. In addition, we are also working on incorporating our corny platform as part of our FX and international payment ecosystem discord.
And upon the feedbacks have been analyzed prioritized and incorporate into quantity release roadmap.
We are enhancing our customer onboarding and support processes. In addition, we are also working on incorporating our quality platform as part of our FX and international payments ecosystem this quarter.
What's the number of months? Q3, we expect to have our corny platform we morph enhanced merchant functionality ready to go and we increase business volume both domestically and internationally. We anticipate to start generating positive cash flow in that quarter. Q.
Welcome.
The number of months Q3, we expect to have our <unk> platform with more enhanced merchant functionality ready to go and we increased business volume both domestically and internationally, we anticipate to start generating positive cash flow in that quarter.
Paul.
I've identified these opportunities to materialize which expect to see significant transaction volumes through our platforms and further improve top line and bottom line results.
Identified opportunities to materialize, we expect to see significant transaction volumes through our platforms and further improved topline and bottom line results.
As we move on to that, Kierfall will be the best quarter of the year.
As we've been talking about Q4 will be the best quarter of the year.
I will press your improvement. We are expecting to see the following metrics.
We continue to drive operational improvement, we are expecting to see the following metrics.
Process of volume, Q1222 has been the best quarter ever for the company as Bayer mentioned earlier. We plan to continue this uptrend and set new volume records in each of the subsequent quarters this year. Net revenue processing in Q1 is flat, and Q2 will be flat or slightly up as we prepare to ramp up volume through our platform. We expect to be a front-end ramp up in Q4 and Q3 and Q4.
Process volume Q1, 2022 has been the best quarter ever for the company as Pam mentioned earlier, we plan to continue this uptrend and set new volume records in each of the subsequent quarters. This year.
Net revenue from processing in Q1 is flat and Q2 will be flat or slightly up as we prepared to ramp up volume through our platform. We expect it to ramp up in Q4, and Q3 and Q4.
Adjust the performer EBDA. Q1 is negative as we invest in product development, sales and marketing resources.
Adjusted Pro forma EBITDA Q1 is a negative as we invested in product development sales and marketing resources and.
and Q2 will be also with budget, we budgeted approximately $12 million in additional structural and operational investment throughout FY22.
In Q2 will be also were budgeted.
Approximately $12 million in additional structural and operational investment throughout FY 'twenty two.
as a transitional year and seeing the close to break even up that year. We remain confident in our outlook to achieve at least four to six billion dollars in processing volume in 2022.
Yes.
Transitional year, and seeing a close to breakeven EBITDA year.
We remain confident in our outlook to achieve at least $4 billion to $6 billion in processing volume in 2022.
With that.
With that, I'd like to now turn the call back over to Ben before we begin our Q&A.
I'd like to now turn the call back over to Dan before we begin our Q&A.
Okay.
Thank you ma'am.
Looking ahead, we continue to believe we are well positioned to disrupt the payment landscape as we expand our global.
Looking ahead, we continue to believe we are well positioned to disrupt the payment landscape as we expand our global presence.
Present.
improve our innovative payment solutions technology and establish the operational infrastructure to facilitate our growth strategy.
Improve our innovative payment solutions technology and establish the operational infrastructure to facilitate our growth strategy.
I look forward to providing additional updates in the months to come.
I look forward to providing additional updates in the months to come.
Before moving to the Q&A portion of today's call, I would like to add a few comments pertaining to compliance and stability of stable-going technology in general and our own co-earny technology.
Before moving to the Q&A portion of today's call I.
I would like to add a few comments pertaining to compliance and stability of stable going technology in general and our ongoing new technology.
While we see some spectacular flaws in some coins recently, including the possibility of certain coins being detached from their minted underlying current.
While we see some spectacular flaws in some coins recently, including the possibility of certain coins.
<unk> D pig from there are minted underlying currency.
I would like to reiterate the differences between these technologies and that of coin ensuring that such problems cannot occur with
I would like to reiterate the differences between these technologies in bed of coin is ensuring that such problems cannot occur with <unk>.
At the base of the defense wall, Poignie is fully custodial and fully transactional with the backing of a federally chartered bank and is audited for such ecosystem health and compliance continuously and in real time. This method in-
At the base of the defense wall going is fully custodial and fully transactional with the backing of a federally chartered bank and is audited for such ecosystem health and compliance continuously and in real time.
This method ensures cleaning cannot be deferred.
and keeps to instant full value liquidity.
And keeps to instant full value liquidity.
Although no other stablecoin has committed, let alone implemented such architecture. It is likely that upcoming industry regulation will cement-
Although no other stable coin has committed let alone implemented such architecture.
It is likely this upcoming industry regulation.
Will cement these requirements of all participants in the space.
Thank you all for your interest in Green box.
Thank you all for your interest in Greenbox. We're fully, truly grateful for your ongoing support.
Fully truly grateful for your ongoing support.
With that, I'd like to turn the conversation back to the operator to begin the Q&A portion of this session. Operator.
With that I'd like to turn the conversation back to the operator to begin the Q&A.
The session operator.
Thank you. We will now begin the question and answer session. To ask a question, you may press star than one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the key.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question, please press star then two.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our us.
At this time of route we will pause momentarily to assemble our us.
And the first question will be from Howard Halpern with Tag, which brothers. Please go ahead.
and the first question will be from Howard Helper with Tag Witch Brothers. Please go ahead.
Good afternoon gentlemen.
I jumped in a little late, but hopefully, you know, you didn't go over this all.
I jumped on a little late but hopefully.
You can go over this all.
all through, but you know, you're processing volume double.
Walk through but.
Your processing volume.
<unk>.
from year over year. A revenue didn't really budge all that much, a hundred thousand up.
Yes from year over year revenue didn't really budge, all that much of 100000 up.
Am I understanding that revenue really isn't in a blood too much until the second half of the year? Is that what you were saying towards the end of the presentation?
Am I understanding that.
Revenue really isn't going abroad too much until the second half of the year is that what you were saying towards the end of the presentation.
So.
So first of all, how are they? Welcome to the call. You have been a good friend to the company and have been following us for a while.
First of all Howard.
Welcome to the call.
You have been the good trends of the company and have been following us for a while.
and your analysis of our financials is very impressive. Thank you for your continued support.
And your analysis of our financials.
It's very impressive.
So thank you for your continued support.
You did mentioned that.
You did mentioned that.
You did mention that we had a significant volume of processing growth. You mentioned the 2X growth that we actually did in 51, fiscal year 21 over fiscal year 20 about 10X.
We had a significant.
Volume of processing growth.
You think you mentioned the two X growth do we actually did.
In 'twenty, one fiscal year 'twenty, one over fiscal year 'twenty about 10 X.
And as we stated in the beginning of this call, the first quarter of this year,
And.
As we stated in the beginning of this call.
First quarter of this year.
Which we are discussing today has been.
we are discussing today has been the biggest in the company's history with a total processing volume reaching approximately 750 million.
The biggest in the Companys history.
Total.
Processing volume, reaching approximately $750 million.
Total.
As we look forward to the rest of the year, we anticipate this volume to continue and grow.
As we look forward.
To the rest of the year.
We anticipate this volume to continue and grow.
with every quarter this year.
With every quarter.
This year.
Budget said for a new record in volume of processing one of the most important
Our budgeted for a new record.
<unk> volume of processing one of the most important.
metrics that we use to analyze companies performance.
Metrics.
But we used to analyze the company's performance.
As you grow volumes.
It is very difficult to maintain operating margins alongside with that.
It is very difficult to maintain.
Operating margins alongside with that.
not only because the product mix tends to pull towards the
Not only because the product mix.
It tends to improve towards the.
The safer.
Lower risk, lower reward type of business.
Lower risk lower reward type of business.
but also as you address...
But also.
Hugh.
Address.
B.
the universe of independent failed organizations.
The universe of independent sales organizations.
You tend to.
The shrink.
shrink operating margins along with it. Still, it is our main objective to continue and grow volumes as quickly and to the highest degree that is afforded to us.
Shrink operating margins.
Along with it.
It is.
Our main objective.
To continue and grow volumes as quickly.
To the highest degree of fish.
Afforded to us.
and anticipated we will see significant volumes through fiscal year 22 and beyond.
And anticipate that we will see.
Significant volumes through fiscal year, 'twenty, two and beyond.
In terms of operating margins our internal goals.
In terms of operating margins, our internal goal was and continues to remain to be a little over
Was in.
<unk> continues to remain.
To be.
Yeah.
A little over 60 basis points.
On volume in terms of the net revenues.
on volume in terms of the net revenues.
<unk>.
Okay. Okay, I think I would say I would stay with that.
Okay, I think I would say it, I would say with that say, let's see.
Let's see.
We don't want to.
To add to that.
With that trend getting to that 60% or a little bit yes.
With that trend getting to that 60% or a little above 0.6 in the second place. The basic one. In the second half of the year, that should be a solid metric to use.
Six and a 60 basis point Tim.
Thank you.
In the second half of the year that should be a solid metric to use.
Yes.
And then with the acquisition I guess is sky.
Will we start to see.
Cost of sales also improved.
Plus the sales also improve. Or will you be left reliant on the ISOs? And how do we look at that part of the equation to get down to gross profit? That should improve in the second half of the year.
You'd be less reliant on.
And how do we look at.
That part of the equation to get down to gross profit that should improve in the second half of the year.
So.
Go ahead then. Thank you. So.
Go ahead.
Thank you so.
Hmm.
The one change that we discussed on today's call with regards to the cost of sales.
The the one change that.
We discussed on today's call with regards to the cost of sales.
has been helped and improved by the acquisition of the Sky portfolio.
Has been helped and improved by the acquisition of the Sky.
Portfolio.
And by the way the Sky.
And by the way, this sky is an asset acquisition and not the company acquisition. So I just want to.
As a an asset acquisition and not the company acquisition.
No.
So I just want to make sure that we speak with the right.
As we move that portfolio internally, on that particular piece of the business, operating margins will improve.
Okay.
As we move that portfolio internally.
On that particular piece of the business.
Operating margins will improve.
As it and sort of used to balance out the opposite trends from growth in all other business units.
And sort of used to balance out the opposite trends.
From growth in all other.
<unk> units.
So I think the general trend that you have identified is correct. We...
So.
Thank you.
The general trend that you have identified is correct.
We.
would like to stay and budgetate paying in the neighborhood of 60.
We'd like to stay and budgeted.
<unk>.
In the day.
In neighborhood of 60.
Or better basis points on volume.
or better basis points on volume. Then did you want to add to that?
Ben did you want to add to that.
Yeah, you know, we mentioned our block, you know, our block technology. And as we grow our infrastructure, you know, our plan is not just to rely just on sky portfolio, but also grow internally by adding new merchants into our block. That's really our core technology for our payment processing system. With our block, when we underwrite and onboard our merchant.
Yes.
We mentioned in our block.
Our <unk> technology, and as we grow our infrastructure and our plan is not just to rely just on sky portfolio, but also grow internally by adding new merchants into our block.
That's really our core technology.
For our payment processing system with our block when we underwrite an onboard our merchants.
our margin becomes much higher.
Our margin become much higher.
So, you know, our basis point that then is alluding is very conservative. It could be more as we get into different types of industries which provide the higher risk portfolio. And as a result, our basis points on that net revenue should increase significantly on a goal for me.
So our basis point that then he is alluding is very conservative it could be more as we get into different types of industries, which provides the higher risk.
Portfolio.
And as a result, our basis points on that net revenue should increase.
Significantly.
On a go forward basis.
Okay, and one last one with, you know, transact. Now, you know, officially in the fold, what are you seeing in terms of, you know, the employees there or the, you know, the principals that follow the business who are still there, trying to ramp up the business. What are you seeing in terms of them onboarding new customers going forward? And that, of course, should be higher margin business, too, if I'm correct.
Okay, and one last one with transact now official.
<unk> in the fold what are you seeing in terms of.
The employees there or.
The principles that sold the business who are still they're.
Trying to ramp up the business what are you seeing in terms of them onboarding, new customers going forward and that.
There should be a higher margin business too.
Correct.
Yes, So let me deliver the baton here two men.
Yeah, so let me a believer, the Patan here to min who manages our international expansion for better visibility on that part of the business.
Who manages our.
International expansion.
For better visibility on that part of the business.
Yeah.
Thank you, Ben. How do you answer your question? Absolutely. Trans-Europe is a very strategic acquisition for us. I just recently visited the office to welcome them to the Greenbox family. We have very good honest people that are working really hard. We see Trans-Europe being a key.
Yeah. Thank you Ben.
To answer your question absolutely trends in Europe , It's a very strategic acquisition for us.
I just recently visited the office to welcome them to the Green box family. We have very good honest people that are working really hard.
We see a trend in Europe being a key.
foundation for our FX and international payments business line that we intend to grow. And this is actually one of those really compelling piece of the puzzle for us. We absolutely expect to see much better contribution margins from the FX and the international payment space.
Our foundation for FX in the international payments business line that we intend to grow this was actually one of those really compelling.
A piece of the puzzle for us we absolutely expect to see much better.
Contribution margin from the FX and international payment space.
So I was planning to weigh in anyway to your question earlier. As we continue to on board customers there, as a matter of fact, we started doing that already, we will see our contribution margin from that space, helping us to improve our overall margin.
I was planning to way in any way to your question earlier.
We continue to onboard customers there as a matter of fact, we started doing that already.
We will see all contribution margin from that space, helping us to improve our overall margin.
Okay, thanks guys and keep up the good hard work that you do.
Okay.
Hey, Thanks, guys and keep up good hard work that you're doing.
Thank you Owen.
The next question will be from Chris Sakai with singular research. Please go ahead.
The next question will be from Chris Fekai with singular research. Please go ahead.
Hi, Ben.
Hi Ben. Just a question on, on coining I guess, you know, was it Q3? Are you expecting it to launch and is that going to be usable with Transact Europe and Q3?
Just a question on on Koine I guess.
With a Q3 are you expecting to launch and is that going to be usable with transact Europe in Q3.
Hey.
Okay.
I'll take that question.
I'll take that question. You know, definitely a good question. You know, Q3 is going to, as I mentioned earlier, we expect to see Ram-Bavari in both domestically and internationally, you know, for corny in Q3. And the answer to your question is yes and yes.
Good question.
Q3 is going to as I mentioned earlier, we expect to see ramp up volume both domestically and internationally.
Four corners in Q3.
And the answer to your question is yes, and yes.
We expect to see more usage of corny within the state.
We expect to see more usage of <unk> within the states.
And also leveraging Trans-Europe, you know, for FF International payments, like I mentioned earlier, we started onboarding customers that already we expected C-volume ramping up, and that will help us internationally too.
And also leveraging trends in Europe for <unk> International payments like I mentioned earlier, we started onboarding costs about that already we expect to see volume ramping up and that will help us internationally too.
Okay, Great and then.
okay great and then uh... didn't hear anything about uh... american samoa is what's going on there
Didn't hear anything about American Samoa.
What's going on there.
Yes, I can answer that question too.
We started as a matter of fact, this court is exciting quarter. As I mentioned in previous communication with you.
We started as a matter of fact, this quarter's exciting quarter.
As I mentioned in previous communication with you.
You know, we started laying the foundational work in Americans from all of our Discorders. And as a matter of fact, we are working with the local bank and there to fulfill the initial.
We started laying the foundational work in American smaller this quarter.
And as a matter of fact, we are working with.
The local bank and that too.
The initial.
in the South waters we have. So we started working there. We intend to share more updates in the coming weeks or months. Please stay tuned.
Net sales orders, we have so we're still doing work there.
We intend to share more updates in the coming.
Weeks or months.
Please stay tuned.
Okay great, can you comment on any acquisitions in the future?
Okay, Great can you comment on any.
Acquisitions in the future.
Yes, I'll take that so that's one of my favorite topics.
Yeah, I'll take that. That's one of my favorite topics. So first of all, Chris, the thanks for your continued support. You've also been a great analyst and your view is very much.
So first of all the decrease thanks for your continued support.
Also been a great analyst.
And your views theory.
Much appreciated.
Also, I wanted to thank you for being one of our beta testers on
Also I wanted to thank you for being one of our beta testers on.
Coenie and providing very material feedback on the health and stability of that system.
Coining and providing very material feedback on the health and stability of that system.
With regards to acquisition so.
with regards to the acquisitions. So.
We definitely see additional acquisitions coming down the pipe. We...
We definitely see additional acquisitions.
Coming down the pipe.
We.
Have identified.
have identified at least two that there could be.
At least to the I'd say it could be.
potential targets for the company. I'm unable to disclose a lot more beyond that.
Potential targets for the company.
Hi, I'm unable to.
Close a lot more beyond that.
But the overall goal with acquisition remains the same. The same metrics that we use to evaluate the business performance of Greenbox itself.
But the overall goal with acquisitions remains the same.
The same metrics that we use to <unk>.
Evaluate the business performance of Green box itself.
Are the metrics that we're looking for in potential target acquisition?
Are the metrics that we're looking for.
And potential target acquisitions.
We have set aside the right budget.
We have set aside.
The right budgets.
structure and
Structure.
And organizational support.
Two.
be able to add such acquisition. And I anticipate that we will do at least one
Be able to.
Ed such acquisitions.
I anticipate that we will do that.
East.
One major acquisition.
within the next day, one or two quarters.
Within the next one or two quarters.
Okay, great. Thanks for that. And is it right? So margins are expected to increase back to 60 basis points. Is that by next quarter or by Q3?
Okay.
Great Thanks for that and.
Is it right so margins are expected to.
Increased back to 60 basis points is that by next quarter or by Q3.
So it.
So I'd say it means specified, we see the second quarter to behave just slightly better than the first quarter, leveling off in the...
It means specified we see.
In the second quarter to behave just slightly better than the first quarter.
Leveling off in the third quarter.
and hockey stick upwards in the fourth corner.
Yeah.
In hockey stick upwards in the fourth quarter.
Exactly what does that mean?
Exactly.
What does that mean.
We have internally projected but have not yet discussed that outside.
We haven't done really projected but have not yet discussed that.
Outside of the company and the board.
But that essentially is my guidance to you today. You should expect about.
But that's essentially my guidance to you today.
You should expect.
About.
Flat Q.
flat Q2 over Q1.
Q2 over Q1.
Yeah.
Above breakeven Q3, and a much better performance in Q4.
About brake even, Q3 and much better performance in here.
Okay, Great and last one for me.
Okay, great, and last for me, can you comment on any of the share or buy back? Is there any less there, any money left?
Can you comment on any of the share buyback is there I mean less there any money left.
Yes, so we do have.
Yes, so we do have a steel budget for that. We...
Steel.
<unk> for that.
We.
looking at what is happening out there with our stock and with the stock of our pure group.
Looking at what is happening.
Out there David.
Our stock would be.
The stock of our peer group.
And we look at that with the horror, just like all of you, and most of our shareholders. We know it.
And.
We look at that with the <unk>.
<unk> just like all of you.
And most of our shareholders.
We know it's Tim.
temporary. We don't want to gamble on calling any particular
Temporary.
We don't.
Don't want to.
Gamble.
On calling any particular.
bottom, we think that the stock is dramatically undervalued.
The bottom we think that the stock is.
Dramatically undervalued.
We continue to purchase it internally, and you can see some of the results of that in our financials.
We continue to.
Purchased it internally and you can see some of the results of that in our financials.
We still have some budget left to continue and do that.
We still have.
Some budget left to continue to do that.
And we will continue to do that so long that the conditions are substantially the same as they are now.
And we will continue and do that so long that the conditions.
Our.
Substantially the same as they are now.
We think that selective opportunities exist not only with our company but with others.
We think the selective opportunities.
Exist.
Not only with our company, but with others.
and we will deploy our capital accordingly.
And we will deploy our capital accordingly.
Okay, great. Thanks for the answer has been.
Thanks for the question Chris.
And once again, if you have a question, please press start then one. The next question will be from Deerin after he with Ross Capital Partners. Please go ahead.
And once again, if you have a question. Please press Star then one.
Next question will be from Darren <unk> with Roth Capital Partners. Please go ahead.
Hi, This is Austin on for Darrin I appreciate you, taking my questions and congrats on the quarter.
Hi, this is Austin Ones for Darren. I appreciate you taking my questions and we're out in the quarter.
I just have a few for you. Kind of on the last question, I apologize if this is somewhat reiterative, but I was just kind of curious, been on how you view maybe balance.
I just have a few for you kind of on the on the last question I apologize. If this is somewhat reiterate of but I was just kind of curious on how you.
You may be balancing the aggressiveness with.
Additional share buybacks versus.
this you'll share buybacks versus, you know,
Acquisitions.
Yes, thanks for that question and I try to say exactly that.
Yes, thanks for the question.
Try to say exactly that.
and thanks for helping me with the free theology there.
And thanks for helping me with the phraseology there.
opportunities are out there with our stock and with acquisitions of other companies. I think
Opportunities are out there.
With our stock.
Acquisitions of other companies.
I think.
Being selective.
is what we are mandated to do. Just like not all companies are born the same or up.
What we are mandated to do.
Just like not all companies.
Our born the same or operating the same.
not all stablecoins are born equal or operating in the same
Not all stable coins are.
Our born equal.
Our operating in the same.
<unk>.
responsible fashion Coiming is demonstrating out there
Responsible fashion.
Coining.
Demonstrating out there.
It's very.
It's very important to understand the differences when you analyze opportunities both for our own stock and for acquisitions outside of our space.
Important to understand the differences.
And when you analyze opportunities.
Both for our own stock and for acquisitions.
Outside of our space.
We intend to continue and deploy the same strategy, both internally on share by-back and in our acquisition.
We intend to continue and deployed the same.
Strategy.
Both internally.
<unk>.
Share buyback and in our acquisition.
I cannot give you any guidance on stock that's not my job.
I cannot.
Give you any guidance on stock that's not my job.
But I can tell you that internally we see our stock as very much under value.
But I can tell you that internally we see.
Our stock.
Yes.
Very much undervalued.
Yeah.
And as I said before, we'll continue to deploy capital in accordance with that.
And as I said before we will continue to deploy capital.
In accordance with that.
Okay.
I appreciate that. And then...
Got it.
I appreciate that and then.
touch on coin once again so it sounds like it's more of
Yeah.
On <unk>.
Once again, so it sounds like it's more of.
The luck would be formally kind of rolled out and looking towards Q3. I'm just curious what kind of...
We will likely be formally kind of rollout.
Looking towards.
Q3, I'm, just curious what kind of.
Outreach, I guess, you have a publicly differentiating coin from some other stable coins in terms of how it's backed up and so forth. Yeah.
Outreach I guess you have publicly differentiating <unk> from.
Some other stable claims in terms of like how it's backed up and so forth.
Yeah.
That's a great question.
So.
And if you would allow me, I'll start from the second half of the question. So first of all,
And if you would allow me I'll start from the second half of the question. So first of all.
I have said that many times. Was all positive are???.
I have said.
Said that many times.
Both.
both on interviews, on podcasts, and even in your own.
On interviews on podcasts.
And even in your own.
conference, at the Roth conference, I participated in a discussion panel about the space and I said exactly that.
Conference.
At the Roth Conference I participated in.
In the discussion panels.
About the space I know you said exactly that.
that you have to put a fundamental importance on two elements pertaining to stable-culture.
That you have to.
Put a fundamental importance on two elements pertaining to stable coin.
One is its custodial property and the second, its transactional property.
One is it's Christy.
Custodial.
Property.
In the second.
Transactional property.
and everything that we see today in terms of...
And everything that we see today.
<unk>.
In terms of.
If you look at the UST or if you look at the Luna and other stablecoin that are disasters in performance and...
If you look at the.
USD or if you look at it.
Ah lunar and other.
Stable coin that.
Our disasters and performance.
Yes.
Stability.
This is not something that you would see from Koini.
This is not something that you would see from.
<unk>.
I can tell you that the writing.
I can tell you that the writing, the original coiny white paper approximately two years ago.
The original Koine Whitepaper approximately two years ago.
I have identified that risk,
I have identified that's risk specifically.
specifically, and I'm talking about the deep-agging risk already two years ago, this is not new. Having...
Specifically.
And I'm talking about the deep pegging risk.
Already two years ago. This is not new.
Having.
Right.
So they'll architecture.
Is.
Probably the most important piece of
Probably the most important piece.
<unk>.
Representing minted currency using digital vehicles.
representing minted currency using digital vehicles. And when you talk about custodial properties.
And when you talk about custodial properties.
We divide those into two.
Number one is having the ability
Number one.
Having the ability.
Two means.
Essentially to exceed the number of tokens in circulation versus the number of dollars or whatever is the.
essentially to exceed the number of token circulation versus the number of dollars or whatever is the underlying minted currency that supports the ecosystem.
Underlying.
Minted currency that supports the ecosystem.
That ability to mint.
Has to be removed completely.
has to be removed completely from stablecoin conversation.
From.
Stable coin conversation.
The ability to mint has to be replaced by license to issue.
The ability to mint has to be replaced by.
License to issue.
Which is.
Granted with federal responsibility. In other words, you first have to fund the trust or backup account, and then get a license to mint or to issue additional tokens. And then.
Granted.
Further all the responsibilities in other words, you first have to fund.
The trust or backup account.
And then get a license to mint.
Or to issue additional targets.
And then second that.
compliance and health of the ecosystem.
Compliance and held.
Of the ecosystem.
has to be verified by way of reasonable auditing capabilities in real time.
Has to be.
Our verified by way of reasonable auditing.
Our capabilities.
In real time.
And all the time.
Not only upon request.
And that means that this real-time audit has the ability to shut down a non-compliant system instantly.
And that means that.
This real time audits.
Has the ability to shut down and Noncompliant system.
Italy.
And as I said in the previous few presentations, these property. so
And as I said in the in the previous.
<unk>.
The presentations.
These.
This property only exists today with Corning.
or whatever is there, probably because it's very difficult to implement from the technology.
For whatever reason, probably because it's very difficult to implement.
From the technology perspective.
No other stablecoin has subscribed to that Architect.
No other stable coin.
Has subscribed to that architecture.
And as a result, we see this spectacular face.
And as a result, we see these spectacular failure the can is.
and assure you that the co-in-the-art architecture cannot allow for something like this to happen.
Sure you.
The cornea architecture cannot allow for something like this to happen.
Got it. I appreciate that. And then just a last quick one for me. I'm curious how you guys think about
Got it I appreciate that.
Then just the last quick one for me I'm curious how you guys think about.
International expansion.
International.
Expansion.
Mainly in an environment, a high volume geographic location like APAC versus maybe a more underserved geography such as Latin America or something like that.
Mainland.
In an environment of high volume.
Geographic location like APAC versus maybe a more underserved geographies, such as Latin America or something like that.
Yeah, I can answer the question. Very good question, right? At the starting point, we're looking at multi currency, capability. I will also say that's one of the unique, hopefully defensive for quality platform as well.
Yeah, if I can ask the question.
Good question right.
As a starting point, we're looking at multi currency capability.
And I'll also say, that's one of the unique hopefully differentiator for quality platform as well.
You know, initially what we would do is we'll start with major currencies including US dollars, Euro.
Initially what we would do is we will start with.
Our major currencies, including U S dollars euro.
Great breeze ponds and cleaning dollars. We do have the license in Brazil and Through the transit Europe acquisition we have acquired the EMI license in Europe We will be well positioned to
Great British pounds and claimed in dollars.
We do have the license in Brazil.
And through the trends in Europe acquisition, we have acquired Yeah My life in Europe .
So we will be well positioned to.
candle additional currencies in our mind, the position of this closed app, but then we are indeed looking at a role map to enable.
Handle additional currencies.
Not in a position to disclose that but we are indeed looking at a roadmap to enable.
multiple times of the initial currencies reasonably quickly.
Multiple whole Tom about the initial currencies reasonably quickly.
Got it that's helpful.
Well I think that's all the questions I have so I appreciate it.
And thank you. At this time, this concludes our question and after session. I would not like to turn the call back over to Mr. Ben Eris for his closing remarks.
Thank you.
At this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Ben Erez for his closing remarks.
Yeah.
Thank you, Chad. I would also like to thank all of you for joining our earning conference call today.
Thank you Chad.
I would also like to thank all of you for joining our earnings conference call today.
We look forward to continuing to update you on our ongoing progress and growth.
We look forward to continuing to update you on our ongoing progress and growth.
If you were unable to answer any of your questions, please reach out to our IALFIRN, the EMZ group, who would be more than happy to assist.
If we were unable to answer any of your questions. Please reach out to our IR firm MZ group, who would be more than happy to assist.
Thank you all and I appreciate your time. Back to you operator. Hey, thank you, sir. This concludes today's conference call. You may now disconnect. Thank you and have a nice day. Take care.
Thank you all and I appreciate your time back to you operator.
Thank you Sir This concludes today's conference call. You May now disconnect. Thank you and have a nice day take care.
P.
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