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GreenBox POS (GBOX)

Participants
Ben Errez Co-Founder and Chairman
Ben Chung Chief Financial Officer
Scott Buck H.C. Wainwright
Chris Sakai Singular Research
Richard Smithline Centrecourt Asset Management
Blair Friedensohn Kingswood Capital Markets
Call transcript
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Operator

Good afternoon, ladies and gentlemen and welcome to the GreenBox POS First Quarter 2021 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following management remarks, the comments will be open for questions. 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 of operations for the quarter end March 31 2021, was filed with the SEC today. is Ben Chairman, Chung. today Chief Errez call Officer, Financial our GreenBox Ben POS's and On future industry I'd from vary made be uncertainties and call. regarding that on the to subject those today's results like remind of actual call described webcasts, everyone to a could including in risks statements cause are materially forward-looking prospects that number statements financial may and and those to results refer list risks. Please the of filings company's a for to regulatory associated will webcast days and available call for webcast XX this of replay next be on under the The the company's the Events section. you. Thank I'd turn time, this over At Chairman. like to Company's Ben Errez, call the Ben, the floor yours. is

Ben Errez

conference all to Thank you, GreenBox quarter to you us results today. first for welcome thank call. you I'd like operator POS and financial joining XXXX

the company Ben. the that noticed today for speakers both named are You

deploy. The time-to-time as company from approved plan, So press session, unfairly to stock Q&A continues is read we all for for. company Quick us advise valued. it. purchases company's minutes advising before of release be program issued of to intended which directors will ago, during invite the start, market the you buyback we open the notes a board of the I question please shares the

of on was in quarter successful GreenBox most multiple quarter First XXXX the history fronts.

shareholders. in in Aside improve proud to of strides long-term in our creating of our I'm team pursuit extremely forward success our communications, business, from management efforts additional the volume, value while governance, growth capital the the for drive for sustainable their meaningful awareness us making business, market. and operating rapid our for tireless positioning to of heart processing we highlights, achieved shareholder many

development. highlights some key operational walk of Now I'd and to through like the fundamental

volumes in timeframe deployment from delivered on weeks of the improved growth our a promise XXXX. portfolio the the million dramatically complete in and our The evident of minutes. January. $XXX immediate Generation $XXX quarter, XXX% this X foremost, and quarter deploy in decreasing processing efficiency Advanced to is The with merchant Large-Scale from Technology onboarding fourth days First to we impact from representing to or million the during our

overall joined demonstrating an we to integrating payment more with stream improving the partnership solution from additional currently to of January, several the payment nodes rich of is clients, bank Comptroller simple during work our conduct payment for offering a of security recognition and to Technology X a Currency label Office banks independent enable Fast towards to expedite and solution early transaction can facilitation half leverage issue other process and the authority we offering. interested the clarifying published stemming Visa deployment payment Through Savings Track of with program push permissible key and the for direct development the In card our easily Visa for of Fintech significantly our Federal We're and designed to revenue which XXXX. Fast participate and national API Stablecoin to Blockchain Visa Program, our second important bank Another expect begin Gen verification VisaNet. and use card associations in talks In merchant the Track white action. our this building Visa's banks activities co-branded network validation opportunity, in offering. we connection of In capabilities transactions. Stablecoin enhances and of announced letter

acquisition new expand solution retail of specialty to such we to part volume, look processing a growth strategy, capabilities announced an of opportunity our verticals. ChargeSavvy, itself enhance our the and time-to-time, acquisitions into technological we'll make company. payment presented January, In our from and As to strategic increase planned

in and open the add improve retail anti-fraud their close for us our volumes, to capabilities terms expect acquisition we agreed biometric processing new to to shortly. and acquisition with Final significantly the upon the space. annual have technology, been expect verticals We and our up

developments first most the One of of announcement the important quarter of technology. our was the smart-contract Token

As existing Stablecoin and the lack including in previously and flexibility design. volatility flaws discussed, Cryptocurrency of inherent architecture, in we the recognize

Blockchain as is ledgering already Given us available, bigger customers Token the step next complete our logical the banking picture end-to-end well as for a smart-contract was in solutions, technology.

We smart-contract towards in with announced Bank, our Token Token banking our have infrastructure progress we made good for needs. strategy solution agreement Signature deploying QX, the as an

based first State the Blockchain is be Services network, of and As allows settlement the infrastructure, New in first Token, experienced use Bank hundreds assets, and and their holds the the digital to insured GreenBox currently asset Signature for has bank technological payment uninterrupted an Financial FDIC digital approved digital to partners. digital platform, host Signet launch payment environment for solution by York the based payment to Department of payment expertise

very for is Bank, advantage selecting handle Another transactional We're company good deploy on making to of necessary ability also our their Signature the elements capital excited We're are options them auditors, partners. our token. banking with to have seed Token revolver evaluating to progress rapid requirements. onboarding as growth began as volume. of the solution the GreenBox anticipated recently several We custodial and other our the

on to Chung, deploy of continue improve We on the board look me the today for second will took the controls, team financial quarter, Officer. of shortly. responsible as improvement bring auditing Vanessa recently in Corporate our who discussed, Earlier impact branding, new the GreenBox Ben we is GreenBox and for well has hired and Officer. to is Luna to Operating to Chief be company and accounting as directors. to more management redesign. our our action Chief and website made Financial areas we with grow. able the smart-contract expect as Token meaningful new company call Relations as our hiring Investor And announced the to already as as quarter. the Vanessa these announce to previously Ben We during to

very is the brings vast our board board board will independent the payments and Carl to important background corporate was in particularly multi-currency new guiding be We reporting. expanded who strong card committed corporate and building company will two brings mergers as the vital Also of and international to as board members the to and practices. in culture us appointed and and directors. management through seven further added regulatory Dennis a GreenBox and ecosystem in governance we expand to strong internal banking we compliance joining processing industry, transactions, governance, globally. be recently, acquisitions, as James, Finally, experience our to which Williams and strong well controls, remain a

commitment. reflects action recent that Our ongoing

a key three walk to and company the of front, first to call the the Ben quarter quarter, awareness investor least This stakeholders. a Capital financial to through offering the We'll our universe to shareholder capital hosted capital We two On calls GreenBox Financial conferences while at to allowing some community. and improve for relations technology. Chief I'd from on continue our the XXXX. highlights participants the learn our in exposure the the look Market our and over markets demonstrating commitment received attended in approval increase Officer, investor to now ways to we to to Chung, and of $XX.X level, with raised invest market communication February of turn investment of Nasdaq during XX. like for on million the about raised larger for stock National public considerably and

Ben Chung

is companies. E. earnings with Ben my first you, This everyone Thank call at the

a be to company's part the growth and excited be CFO, I'm As and new to of here technology. exciting

This of of February through this quarter, working you may us substantial our capital offering new talented he brought people. us all had raised with capital in that $XX raise Token help continuous amount As and our alluded, enhancements had million. had tremendously which capital expect in XXXX. know, then net QX roll will hire capital the of approximately company which But our for our out including expedite onboarding to new Ben customers, we more importantly, shortly to Technology development process of

net I Before is go quarterly XXXX. a quarter March XXXX year-end our through Therefore through report our to quarter, I'm to out volume small in three to had the results, first processing of with our months $XXX in due go now first we're start strong million revenue I'm $X.X of the same-year very XX, of million quarter compared same primarily $X.X strong in results. is the million, company. approximately for to I'd going $X.X calendar that that of increase to quarter-end quarter. point to very volume like an prior-year which compared a the prior million, our excited quarter current ended

was our volume processing on million $XXX X.X%. of margin net approximately Our revenue based

prior-year. current Our was XX% the primarily revenue gross in profit prior-year, gross compared the of quarter quarter gross the to to negative current of due net the the of in in margin quarter compared same to higher same quarter, margin

margin gross XX% the hold to expect We between throughout XX% and year. of

our expenses, now them like negotiated because businesses expenses, sales that employees be by and correlated when discuss I'd put revenue, expenses. I'd net with operating the will driven and to primarily into our like I our organizations, small the I out our to independent margin ISOs, our of due our operating which about not operating like primarily to scalability with categories, our Our would structure expenses And fees. and operating are expenses. point directly gateway commission are more operating importantly, about to normal from of revenue our talk two number Furthermore, we're technology non-cash in.

general include expenses expenses, and outside development, the of second stock category expenses category professional our first marketing, services. compensation while and The for payroll, and operating includes research for our employees normal

increase the in in million, professional $X.X $XXX,XXX out expense category in increase compared Token payroll of operating and We'll headcount. of fees quarter development due in $X.X to an related this to of an our throughout the million, costs to in an the continue current and $X.X of Technology prior-year, to the in primarily see of $XXX,XXX year. compliance $X.X due $X.X due that to compared million increase which was in to same normal increase in million increase Our increase increase research to approximately million, was quarter,

employees compensation Our non-cash expenses and operating for to relate services. stock primarily expense

are basis. not through expense expense category. our non-recurring charges, compensation go on I'll other like go-forward now for which stock will to recur Our services a

of category current includes primarily convertible other interest quarter. convertible debt our first Our debt, is quarter related which fully the for expense which XXXX, to discount was during converted the expense debt

first quarter was expense other XXXX. interest interest lieu The of during for of debt the shares for of convertible issued $XXX,XXX in

overall a of approximately adjustment Our was interest which which recur related U.S. debt. relates under on quarter $XX.X and discount reporting a expense was GAAP which $XX.X for stock services, convertible the not million million to compensation million basis, approximately debt will expense loss for $XX.X interest go-forward net of non-cash current to

in flows of operating We in positive the of current quarter and believe flow the was million expense cash Ben? to our now our The $X.X positioned of to Overall, negative compared well million of merchants. operating in back $XX.X had our of from cash E in turn we gateways timing cash quarter settlement profitability. was and negative same current position the million end of Our outlook. flows the Ben strong, $XX.X the financial quarter we cash remain due primarily at I'll to call future is and growth for the for quarter-end. balance the prior-year.

Ben Errez

GreenBox sustainable months you, a our I diligently long-term ahead on seek for we thank strategy is in This continuing Yes, execute to to a forward shareholders. Ben. create for the our look a to exciting time value very and as

At remains the are just projected the E it like of for to XXXX are is our months the I'd at to for X%. Expected Revenues million discussing, billion. direct QX to is approximately and XXXX question over million, million. Ben this volume please as to revenues for and approximately XXXX to months Expected were Q&A Ben about point, financial follows. in the XXXX of was C projected Some April of The nine projection for for XXXX appropriate. total total revenues are in the of that or begin months actual map $XX session $XX.X three the the million. led year expected as volume fiscal the $X.XX March over $X.XX processing ending $XXX XXXX billion. turn numbers volumes operator the remaining year nine margins $X.XXX Ben processing neighborhood December to

Operator

from question ahead. Thank H.C. first Please Wainwright. Buck go you. [Operator our with Instructions] We'll take Scott

Scott Buck

Hi, good This question afternoon, Ben for E. guys. is

on hoping could the XXXX. strategy busy for I of a give the maybe clearly, So color a prioritizing remainder you bit to was little how you're of year? start

Ben Errez

again. hello Scott Thanks, and

continue more industry volume as continue intend level executing big remain for on on we initial would a in we our priorities We our portfolios to to soon. the as We'll of big our the execution statements So continue in deployment, We to general. CapEx which during company focusing way, activities processing more in this And and on I that call. be our that on the we a acquire at for way presented Token and intend our be this keep and done. think generally material and increase again speaking, continue soon. have to always to intend thin on current M&A

question Next please.

Scott Buck

Okay, On are the those expenses, the this anything you operating some that's marketing of besides for hiring, remainder for expenses quarter. for helpful, and attention And increased expenses of Ben planning some Anything to pay need guys to year, the in along we non-cash lines? sure. else C. one stock-comp normalizing the push,

Ben Chung

we're revenue, to out it's Token million to very of because do these go I'm up our compliance going maybe be points our and related in much our six up. about, And But not expecting No, to will be fees marketing, related to go in revenue, net but if requirements about primarily new it's four R&D Token of $XX Technology. launches, basis the expecting to basis importantly, points. expenses is will the going professional be minimal, more our to expected R&D

Scott Buck

helpful. about to you the to that the for mentioned, What's of kind margin think target gross business? range for longer-term remainder of the the very remarks the prepared And of XX% year. that's Okay, in XX%

Ben Chung

you might E, Ben have…

Ben Errez

it's C. say E Just Ben or Ben for

Scott Buck

answer. Ben whichever Sorry, to wants

Ben Errez

So it. Ben E, I'll take

know behind moving launch us time yes technologies we margin efficiencies. sustainable, to this do projections, stay increase being we you and we XX% and healthy XX% as see now, margin But this So we adjustments even by and increase and definitely, conservative over additional forward.

Scott Buck

Understood, appreciate this time your I guys. afternoon,

Ben Errez

Scott. you, Thank

Scott Buck

Thank you.

Operator

Research. with ahead. We'll [Operator go Instructions] Sakai Singular Chris question take our next from Please

Christopher Sakai

Hi, E. everyone. Hi, Ben

got a I Just on… question

Ben Errez

Good Chris. morning,

Christopher Sakai

You when color Can the of and keep mentioning on this any you growth see this share it? rapid Token. you'll growth

Ben Errez

viable Token requires Yes, requires and certified four technology, technology launch needs technology the technology. it viable to independently Either a so and and the be components. that certified

The the second bank, bank. sponsoring element custodial is the

announced nearest third element a USDC, that national the very element competitor, the same on seed the auditor infrastructure. we Signature that. this is heard is And we're picked they're that just excited and their just circle deployment. pick We very, the We The about the and fourth Bank same as bank partner capital. with

a at that of we requirements fashion a capital is million the with XX the a issued moving of billion fourth Hopefully, dollars to much same for But and onboarding and Token third for now. USDC we're Token. dollars efforts itself enough as The is forward. of the was this of month billion additional $XXX can. element that committed is National about to is a gate, while. to at in the per an the which accelerated the have seed that we that us That up we launch to Auditor exactly with capital, bandwidth And days deploy ability intend proceeding think requirement we'll to being the that have growing seed as projected The is out onset it's element sufficient amount to very every used soon. revolve newly

growth definitely utilizing technology. So we expect this significant new

However, we projected new on financial. have that of not to financial any yet performance our

all of that mentioned So excluding projections Token are deployment. the the of today I

Christopher Sakai

one? quarter a month Okay, Can processing great. the Ben I I've C. question you and down break volume got by for guess

Ben Chung

$XXX month. million I the have range are - per quarter-to-date, the there But not by approximately month.

Christopher Sakai

Okay.

Ben Errez

it's that. million over have And month. I per monthly I $XXX would breakdown, don't take the also but just

Christopher Sakai

the size mention buyback Okay, lastly, stock share can great. or guys of program? anything And you this about

Ben Errez

a put a or buyback plan specifically, we Wow, address executing doing on so that. very you're strategy. We together on didn't quick. No,

to board engage But we required every approval and or, the would cascading timeframe war. of we a by go in time we such kind and the approval. additional With war of is want amount, back director This it's any did specifically, to would the board seek mention and a amounts. not

your other bullets. the let they count side, don't You

forward. So I would that push on answer

Christopher Sakai

All right. Okay. Thanks.

Ben Errez

Thank you.

Operator

next go with Smithline Centrecourt our Richard Asset from take Management. We'll Please ahead. question

Richard Smithline

comment say look just this net this of one-time we this the whether of Gen Or congratulations activities. cash going we're used on to forward? Could something either a you Is sort it on in you getting can and cash costs quarter. or at guys, Thanks guys. for is that great And for probably have is kind of of a and going guys lot use X onboarded? operating

Ben Chung

these No, nothing gateways, to the our which so - we are the of need that. cash - receiving is they operating paid. It's collected our need use activities get merchant from from like primarily cash fees in are which customers,

our pay could we merchants directly. So

$XX.X sheet, to think gateway payable look So I million. about was was, And balance receivable $X if our you our our merchants million. our at

of So in receivable is was gateways kind this our payable from had more unusual that to our merchant. quarter that, and we

a activities So generate of you'll of In QX, flip in flop flow a cash higher see we'll that. operating kind from QX.

timing So just differences. purely

Ben Errez

add me I to question. with Richard. a note let But meant And regards wanted your add reserves. may thought to I to cash misunderstood you our And I that, have that.

held reserves our cash $XX yes, flow So are cash million We're high cash. in just positive. pretty over

expenses of operational covered operation. out are our So

However, have corporate we other the the strategy I merger time-to-time that. a and do this well. bank. that is capital we'll uses and in primarily just for as strategically, from a significant usage cash like having one intend to with mentioned acquisition But cash such speaking, the on have buyback. execution But may front generally This just uses utilize to we continue

Richard Smithline

issue. you were the growth on as quarter, just now was it said, cash, about Yes, the for I of profitable timing the guess great. wondering but Ben and was Okay, it's great guys top that saw was a I which

Ben Errez

Correct.

Ben Chung

Yes.

Richard Smithline

it me. for That's Okay.

Ben Errez

Richard. Thanks

Operator

James go [indiscernible] ahead. [Operator question Instructions] with Young Capital. from Please We'll take our next

Unidentified Analyst

the call. progress on the Thank in Congratulations you quarter. taking my for

you bit have you're the volumes little as a of a of ask that I Just the and a the customer is, want achieve are what kind Could to if on kind Token. And of of there? yet. see to you elaborate opportunity going after, around question you could secured hoping whether opportunity size what

Ben Errez

assuming. So I'm

that hi, First of This Ben to your E. I is me. Jamie. all, question assume is

processing So as month of dollars capital Token I in tokens maximum of The earlier, of a prongs. Blockchain already a primarily is in the Token this a about mentioned on utilization allows of million, develop. volume the $XXX is infrastructure traditional is or tokens. Right, deployment transactional the a the two infrastructure GreenBox billion neighborhood billion one, in ledger ecosystem that the new of participant per underneath seed Number for every it. issuance the

from is volumes millions of But the right The specific second Token revolver that is it deployment beginning of the businesses. the of in clients line money dollars the primarily commitments this to we month. to - will utilization actually exceed and volumes just start power think to and And the the very the already true deployment. volumes our hundreds we its of provide in a that capacity this have by quickly merchants significant is this to Token, usable and Token for regulated it's per secured of service and

Unidentified Analyst

so data. a on follow-up that just of Okay, you that, piece Ben. Thank for

So, the should correct? in go range. Is get the from margin be on to that X% that X%

Ben Errez

right, say there Token, Token utilizing system. to on top processing that as issuance Token. The the any as said, I higher that complex top this volume certain the of contributions the operational of is to and just the available are dollars ecosystem, the to itself. Token by ecosystem, in On other not operating out margins that that I to of the on that, relates additional margins same should range are forecast. it X% participating thing enter ecosystem the issuance X% than income question. the be itself of carry of the is transactional On are Blockchain And would the ledger the technologies the But

that Google carry For that these executing all structure Wallet a fee will of or into into alongside own example, card Visa Apple their interesting instantly have your with that. Pay, things value or

financial reflect in higher using for company picture than dollars. will general, So tokens total the using the performance the

Unidentified Analyst

question for helpful That's one just me. and it. last Got

of $XX business. for main the company verticals CBD On working And I moved the Fiserv are they at and somewhere with the but and anyone, believe, has book with and working and space, you online billion suggested around of to And the were risk that business have GreenBox. In diligence due Elavon. work higher CBD. not two traditional our has GreenBox. they moment, for your gaming, Blockchain with the CBD that they're

when So the you second onboard that it as be ramp more like would correct? you seems high year, processing risk. Is the that half possibly the about big of opportunity, a talk the in volume in

Ben Errez

did Yes, prices yet you're of profitability specifically not technologies this is integrating several suggesting on company. are to deployed. are the But I verticals which portfolios. the exceptional still not add the both Fiserv correct. with projections any to us, and We're that interest particular and what

that. You're correct on

Unidentified Analyst

your Great. Thank you my and progress. questions answering for on very much congrats

Ben Errez

Jamie. you, Thank

Operator

take [Operator next Markets, Capital Instructions]. question with ahead. our go Kingswood We'll please from Blair Friedensohn

Blair Friedensohn

E. Ben Hi,

Ben Errez

Blair. Hello,

Blair Friedensohn

awesome map of I just question. should fee the the more Congrats percentage first And for quarters. it's three on at kind It of how quarter. quarters over this growth like for a kind and to looks a the X.X% little was previous first quarter. follow-up share those a we out we're on next processing volumes wondering you in an color if ramp-up bit could

and envision we the as go achieve that ramp-up revenue So targets out? those that you to should put merchants, we acquire higher how risk

Ben Errez

Thanks for Blair. that Okay. question,

risk easy we makes money the more for processing of specifically money, volumes. your company an So give growth revenues both proxy more first because volume is This to of How like when So, grow, top the volume, processes it a money. makes on and the overall more it's much terms all, higher company. company bottom-line question? guidance in

how a and carry portfolio and on is safe rule operational the risk regulators. still limit can the there stay much However, to the

increase using then volumes, processing higher and increase low risk. we always when add risk first So we

technology done in time As This cycle by way deployed. operating being low this the a the being result, margins you case, is right. new the a every is see quarter, first

in January in in began bit and therefore X. of anticipation before X this January, Gen in QX, a deployed cycle Gen little just we So

performance But the would operating The that as improved Ben see you So allows blended revenue for year. you financial the map the much higher represents C went the through figure. in for portfolio of balance then see end would QX. risk margins a towards

anticipate look we in three at the the pricing numbers although margins an volumes much So much that stable an go end maybe these perspective. that will as presentation. do on view, say of of And annual annual at in is line times with in the and this just there, higher from as the figure QX a that I projected my

Blair Friedensohn

That for And you one quarters? there very the helpful. on lookout couple M&A then internally? just that put ramp-up on over should someone Okay. of pipeline front quick that the as follow-up. the the is hold Or next - be anything on is is Should in we

Ben Errez

the activities acquisition Not not actually we the as opposite. are expect of amount But of or M&A Quite nine some We're processing. any definitely. they months, midst on hold, of activities. do the accelerating in discuss are that M&A in at only putting activities the today, these next liberty we're not substantial to transactions

Blair Friedensohn

Thank for me. time That's thank evening. you this the clarity. your for Okay, all for you

Ben Errez

Thank you.

Operator

Ladies call back over his this to this our turn session. for question-and-answer concludes now like Mr. at I'd and closing gentlemen, Ben the Errez remarks. to time

Ben Errez

Thank progress for thank and call to of forward our update who joining than answer MZ were I'd thank more Group, like out firm you you all you our look today. questions, Relations we our your be you will Investor Okay, please all. of much, to happy unable We conference operator. to ongoing continue on reach If any earnings to assist growth. to very to further.

Operator

We Ladies your and conclude gentlemen, this participation. conference. does appreciate today's

disconnect. now may You