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GreenBox POS (GBOX)

Participants
Ben Errez Chairman
Ben Chung Chief Financial Officer
Min Wei Chief Operating Officer
Howard Halpern Taglich Brothers
Chris Sakai Singular Research
Call transcript
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Operator

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 a listen-only mode.

Following management remarks, the conference 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 three-month ended March 31, 2022 was filed with the SEC today. is Ben Chairman, Officer, Chung today Chief Errez Min call Officer, Financial and our GreenBox Ben POS’ and Wei. On Chief Operating today’s call. of those to those to and forward-looking and actual and like remind results to that differ uncertainties are made I’d described a that subject number cause everyone industry prospects from webcast, and in future regarding on including maybe financial risks the results materially statements call could for filings a of refer to regulatory Please company’s risks. list the associated The this for and website will the webcast next Events company’s the replay the call of be XX available days under section. on time, this I to over to At turn the conference would like Mr. Errez, company’s Ben the Chairman. yours. the is Ben, floor

Ben Errez

financial And for for Thank us you, all you thank operator. conference results call. quarter joining XXXX today our first

in continued processing our company's in key against GreenBox leader, a European respected best ascension. the By our solutions assuring materially first growth enlarge on of quarter River, up our successfully of Europe to to payment financial universe We the existing by customers global solutions the banking the expanding and with strategic acquisition of attractive all too, into to deliver Cross financial technology long service that market, strong for partnering fruition the a completed of bring very solution and setting highlighted quarter table we customers. while infrastructure or a can well execution Following volume Transact as also the a also potential way XXXX, the for by paved term several growth. objectives was trajectory history XXXX,

expertise highlights I'd our in With the needed large and quarter. on on infrastructure and approximately for billion Financial's to continue to we to growing. scale. like Sky from in the Executive of purchase annual key progress and the the place of portfolio, operating that, to us Directors, of elaborate putting volume Board processing $X our make we Operationally, continue team transaction improving of some base With merchant secure

vital part I've our licensing select growth front As opportunity accomplishments. talent. We strategy. processing talked look noteworthy increase to about term two and technology have long our that acquisitions On assets, of a we are for volume. previously, targets

First, from acquisition deliver unleash deploy strategic our we payment as key to task. simple effectively the to which, call solutions to ready Europe and and we initiatives internally no enabled the the us technology the advantages regulatory of was Transact thoroughness completed our or review considering to of European merchants, it of Bulgarian this bank time process TEU are acquisition. the growth synergies customized unlock TEU, several

to For for expand will card Incorporating as for on card expand target well both The as TEU and leveraging versa. example, Europe revenue number adding tremendous pond. acceptance with is segment. alternative effectively This retail methods exchange and cross for existing our prospective Furthermore, into added banking capabilities driver the clients vice for based capabilities will of TEU addition can GreenBox. another foreign other and partners by value provide in value payment essential border issuers. U.S. to licensing makes their the more in both of for include There Coyni. ground transactions transactions, present fertile to adoption customers drive sides by solutions regional Europe clients with potential for business Europe of of a

we EBITDA its accretive operation, full is mentioned announcement, first to our in year the approximately anticipate, year. Transact in adjusted to for and contribute we $X first be would our million Europe expected As of

integrated By volume year. our success merchant bringing The in significantly eliminate secure [ph]. contributed part our was account in-house, to Sky the commission's important portfolio to already of the QX previously things. during purchase merchant a XXXX We that cost accomplishes Sky larger in very also a revenue announced big is Financial's and acquisition processing the technology. of portfolio our a processing large we two

it Establishing an considerable partnership us the our partnerships of banking towards merchant these the solutions, such is allowing the offer we very allows leading of generating financial a volume same our handedly closes opportunity base revenue solutions part GreenBox universe and with GreenBox to initial respected relationships, customer while fantastic services, gap portion vertically platform River first solution. is Cross service strategy. customer offer the a integrated becoming additional forward companies technology well Cross strategic clients, processing infrastructure Second, securing to a The represents tech financial of us our River, own base. company. quarter, with In The integral announced step more also for a technology to end-to-end existing a accounts a potential and as licensing partnership banking financial to expand partnership towards significantly including single growth

believe partnership, time of over will we to expect Wei Min from grown, from substantial quarter, things have will that management board executive generation. we we the and it, in team shortly. has welcome, evolve. continued innings to a first While great the of it Operationally, revenue which our directors, lead you hear early and In

basis. in operational in global expansion As us for on growing at will companies has efficiently. new Operating plans vital extensive Chief scale Officer, efficiency our an to Min He be our technology order given a background

transactional dividend M&A to is and part to to of come. acquisitions, board will has already added Adele experienced material recent securities to with respected well We been our an the important appointment compliance and of as and plans our contributor also lawyer. any Hogan. and She team, our be Adele

beta pleased of on development the test quite first generation product. public update an Coyni, recent our by we're For

Financial Officer, comment our I'd Ben Chief will our Min like control, Chung, a growth through in results. come in to few to expect work And up the to application, over ensuring represent. more lucrative call and to an walk we to its committed minutes. us to scale the opportunity we while this to quality to turn fully As for important the years Coyni on financial now, be driver

Ben Chung

quarter March in Thank measures. million, due you, profit revenue XX-Q but close and decrease ISOs. the our be a key I'll I profit that Please from was offset of total limit million, results or revenue XXXX, total the by the $X.X which quarter our million X.X% first portion to same was $XXX,XXX non refer resulting the XX.X% is processing adjusted on gateways and the in release of higher $X.X revenue which the for increased of XXXX to to is today. by for to $X.X Gross filings. market in in net note of net operating higher filing, in now Ben. or gross in referring was XX.X% XX, non-GAAP ended professional expenses primarily and in financials, include and ended of you processing revenue, The compared or other revenue XXXX. fee $X.X was -- operating and commission Normal The costs stock U.S. non-cash year breakdown development, to filing increase gross three the employees, and measures, EBITDA, payments depreciation. profit normal of would to after GAAP expenses, categories, will EBITA increased find three due her in non-cash million discuss research that MD&A, please expenses, payroll, gateways to expenses operating and expenses our expenses from to available a for to under marketing, and into to We to categorized or operating our services general paid XX-Q our like two I operating operating distributed increase for while available website Net March my And other expenses. SEC and for can press full XX, include, the fees ISOs. volume, expenses. adjusted including calculation compensation months GAAP months ago.

$X.X XXXX expense Our payroll operations heavy development for technology number expense in and growth increase $X.X employees improve research support for in normal to investment headcount to million, to QX increase to an to related increase and administrative and an XXXX $X.X and in general sales and primarily our and and of operating due million our related growth. respectively, to also was of due million

Our the from compensation quarter with employees stock of We QX, we expense other a operations and added expenses, in non-cash for million to back, $X.X million prior such are now to for million and compared to primarily like ended for employees go cash If our I operating quarter a expense services, as our loss year. XXXX $X.X prior $X.X XXXX same compensation year. loss and net of category. depreciation over million same the expense of relate stock had of $X.X expenses from QX, net income a will operating for operations a loss and services. non

XXXX $XXX QX, non-GAAP convertible related and of as liability, for for value continue related net Interest fair and million liability loss none $XX.X QX, $XX.X million increased associated derivative shares, was QX shares change liability Our taxes compared valley the or in administrative as the $XX.X staff the expense payroll of and was or other The $X.X diluted previous in growth due to traded the a the XXXX $X.XX diluted also Amortization a per a quarter publicly slightly of XXXX in being a in derivative net ago. and to loss fair same QX, to net contributing net of add in fees, million per to share in issued for first the in increased expense of payroll first Adjusted primarily million measure XXXX by value million and year derivative in fees with from quarter. due factors. and quarter $X.X income, XXXX increase basic of research The changed and and million company. year, $XX.X compared notes company the general development, QX, an fair of quarter for to basic November of to to increase and the loss net discount, XXXX. XXXX the in million increase to in notes XXXX sustained infrastructure an Furthermore, expense were company professional $X.X of we loss. of $X.XX same financial our and

to a our not for over to the of can our year. press in will earnings reconciliation outlook You find speak release. the turn Min, about I the rest call

Min Wei

you, Thank Ben.

the GreenBox. the the GreenBox Over we team. XXXX term particularly year the the for as of leadership a of And rest with started of important planning. I transitional process our This months, range and enjoyed longer past is intermediate is three working opportunity

As we on introduction, are public our monetization. platform finalizing with for platform Coyni and getting

sales development have and it We organization a for and result effort, beta the the introduced Coyni have operations Coyni in business visibility vX verified the a quarterly vX our wanted users. development external we efforts and this QX, thank started systematic management. paths pipeline participating the and in and the in QX, to public we a pilot coyni as public beta. our for our prepared for take our platform beta better April to approach established completed marketing of the We to those follows. preparation operating development, we support beta, to in chance As performance sales platform for and I in revamped pilot. and select

are have impacts released analyzed. received pilot We our since Coyni into and Beta prioritized roadmap. incorporate many feedbacks. positive being

We enhancing support and onboarding, customer processes. are our

working part this In of FX number Most platform quarter. quality and ecosystem payments happening addition, are QX. on our also its incorporating of Coyni we of months. our international as

and increase volumes business quarter. expect and see we our opportunities to we have line enhance generating ready-to-go, QX, We improved results. volume to business Coyni anticipate and top flow bottom with platforms, further line internationally. to must transaction to in to significant cash platform, our that expect merchant We domestically start identify our we and both positive materialize, functionality

year. will a about be result the of best As quarter QX the

to best As we the operational to through has set new to Ben flat, flat this volume, revenue mentioned company earlier. will our ramp up the we prepare up and ever subsequent as expecting slightly is processing metrics. continue be uptrend as volume records in from QX the XXXX for in are following quarter Net continue plan the volume QX QX Process drive and We quarters to or improvement, see year. been this each of platform. we

forma additional to pro now close look in expected We will negative back operational investments Ben, the XXXX. also. and We QX. before FY remain year. QX processing turn seeing and we approximate to our to development, We year, as Q&A. up to invest call over the ramp as $X even that, at our EBITDA be transitional to in in in marketing achieve -- is $X million and the least With billion like $X break QX million we volume resources, confident budgeted I'd in Adjusted in the QX begin XXXX structural throughout QX and product delta EBITDA,

Ben Errez

Min. you, Thank

believe the we ahead, Looking we continue landscape. are disrupt positioned to to payment well

presence, solutions strategy. As our to I payment our the we facilitate come. look innovative growth to establish providing improve the our months to infrastructure in forward global expand technology, operational additional and updates

moving technology I add Before own technology. call, in today's would to our stablecoin Q&A like the compliance Coyni comments portion pertaining a of few of and and stability to general, to

health the see problems we would Coyni. flaws that recently, While cannot currency. chartered underlying ecosystem fully of including bank, and and This keeps full detegged these method be value and continuously Coyni certain instant is between Coyni, liquidity. like spectacular wall, with is occur coins ensures coins, technologies and to time. of differences a some for from real detegged some minted the Coyni and defense in to the being custodial, compliance audited such backing in reiterate fully transactional possibility I base such the and federally the that of their At ensuring cannot with of

Although will support. all these cement for no it in requirements committed, your interest the participants the of implemented portion is to architecture, this With the truly such has Thank in We're to ongoing alone other industry space. back grateful operator GreenBox. likely upcoming Operator? let you that regulation fully begin the all stablecoin turn I'd to Q&A your like for conversation session. that, of

Operator

Thank you.

Brothers. first Please Instructions] now from question ahead. answer the Halpern go Taglich will And and Howard begin with session. We be will question the [Operator

Howard Halpern

end Good gentlemen. But much, that that that isn't until from year? revenue in half budge budge the you I even revenue a through. presentation? too Am of this jumped saying little Is but to late, all your year-over-year, towards were really processing go hopefully volume I what afternoon, traveled the much really second of understanding over going didn't up? a all XXX,XXX the the

Ben Errez

So, call. first of all, the Howard, welcome to

company a following your and And friend good a financials analysis the very us to been is have while. You have of our for impressive. been

support. your you continued thank for So,

Howard Halpern

Okay. Thanks.

Ben Errez

they did You of mention processing significant we that growth. volume had a

as total XXXX processing you of been think the today million actually the we XXx. approximately growth beginning -- which history did mentioned biggest fiscal quarter I in first that And with we XXXX call, fiscal about $XXX of this XXXX over year in in total. has reaching company's Xx we stated this year year, the discussing the are a volume

the As and of rest we forward to year, the volume anticipate we this look to grow. continue

the every new have one And We quarter this a year-over-year of that volume analyze record. budgeted for processing, to we important performance. metrics most use of companies

degree But tends volumes, pull difficult is product universe is beyond. operating is safer that, organizations, you through quickly us. the maintain not reward XXXX the you will to the of address volumes lower highest that Still year volumes lower tend to because you And significant it As risk, see grow alongside with to fiscal sales grow our margins only and very type independent anticipated, continue mix margins main we to as shrink to it business. and also it. with as of operating towards and along to the objective afforded

terms goal of be In volume basis operating margins, and remain of net was to little over a points our terms continues to on in internal revenues. XX

Howard Halpern

Okay.

Ben Errez

that. say I add I would Min Ben would say or want think to to I with that it, unless

Howard Halpern

that point little XX% to the… getting above trend that six With or in a

Ben Errez

XX basis point.

Howard Halpern

year to a solid half second the be of In the that use? metric should

Ben Errez

Yes.

Howard Halpern

And profit. the is, down of the That that in less will should then the will Or second look ISOs? sales half acquisition, the see, we you be do also the we And improved? improve reliant start the year? to of to guess equation part get on at to gross with how Sky, I

Ben Errez

ahead, go So, Ben.

Ben Errez

you. Thank

not by acquisition. change the today's the we So, and of the has a regards improved been acquisition the by helped on one that discussed acquisition is the sales with the cost of portfolio. company And Sky call Sky asset to way, an and

that term. So I we just right make with want to sure speak the

Howard Halpern

Okay.

Ben Errez

on growth business, business from to trends operating and that out used of move piece other balance internally opposite in particular will portfolio of we that units. improve, the the As margins sort

So, XX I the volume. identified neighborhood that a, and would the think Ben, in We to want like of add did to better basis or you trend you budgeted correct. is to on points have stay general staying that?

Ben Chung

block, merchants margin our underwrite our That's block. and And into grow block higher. for core much our when is mentioned grow technology block rely as portfolio, onboard technology. we by just We system. our our infrastructure, really we With Yes. plan on our new just Sky our to adding also merchants, becomes internally payment processing our our our not but

our E basis be forward conservative. should into go is which It So, different significantly basis our get as net and a very basis. higher eluding a that as provides risk could result, industries, revenue we then on on more of points Ben that portfolio point is types increase a

Howard Halpern

there Okay. And principles there onboarding officially terms with What if the business one you margin now in the sold terms in business? one the correct? new still going of customers of fold [ph]. should the that, trying ramp are to are are I'm in that the seeing seeing who business or last employees you higher forward? What of Transact to, course, them, be And up

Ben Errez

Yes.

on deliver international that on who to me expansion for here Min manages of with part business? let better So our the visibility

Min Wei

a the the Okay. acquisition absolutely, office strategic Howard, question, Transact us. visited family. Thank welcome just to GreenBox very for them you, I your to Europe Ben. to is recently answer

better is and us. really much international We the this foundation of grow. piece Europe honest margin puzzle a international line We to to good expect contribution actually one those for see FX the Transact that business payments from absolutely payments key we FX the have hard. We compelling people. been and very really intend And see of They're space. for working

I onboard in So that to to your any planning already. to earlier, fact, question started of we continue customers there, we was way doing weigh matter as as

see improve our contribution us our margin will We from space that to margin. overall helping

Howard Halpern

Okay. Thanks, up that guys, work do. hard good and you the keep

Ben Errez

Howard. you, Thank

Operator

from ahead. Please go will next Singular Chris question The Sakai be Research. with

Chris Sakai

Ben. Hi,

in Just launch? Transact expecting a to to usable question guess, on going it you the be I that was Europe And with is Coyni. QX, are QX?

Ben Chung

both for take and QX yes, see is question take good Definitely domestically answer Hey. I as And question. a your mentioned the and I'll expect can up internationally yes. question. that -- we to that earlier, QX. is to volume going question. to I Coyni in ramp

We within usage and Europe see more Like mentioned started we expect for to leveraging of I Transact states, payments. customer Coyni already. the FS also there earlier, international onboarding

internationally We us volume And ramping up. see expect will help to. to that

Chris Sakai

Okay, anything Samoa? there? great. didn't about And going American on then, hear What's

Ben Chung

of started, Yes. I can quarter. too. matter that fact, question is as a quarter exciting We this

fact, As we laying we the fulfil to the are And with American matter a with previous I this we you, mentioned started foundation work sales in that working initial have. local and bank, of the of communication quarter. in Samoa as orders

So weeks coming Please stay doing intend updates we the more work tuned. share or started in there. to We months.

Chris Sakai

great. the in acquisitions future? any Okay, on you Can comment

Ben Errez

one I'll of favorite That's Yes, my that. take topics.

So first of all, continued Chris, thanks for support. your

And being pipe. definitely on down of to see very health and acquisitions, You've appreciated. acquisitions on regards feedback coming also providing I Also, stability the a you great With one so for we additional been our beta very thank to system. material view testers is that analyst. and much of the your wanted Coyni

for company. potential GreenBox use metrics at that to that a But looking the we're unable the of the overall same. remained performance lot could we the identified beyond potential are goal The be business for to I'm that. acquisitions the best have acquisition. disclose evaluate more least in itself target We targets metrics the same to with they

to the and such the structure one anticipate be at organizational we aside able set or support that next have right within acquisitions. budget two I And major will do one least We add to acquisition quarters.

Chris Sakai

points. back is great. or that margins by XX are by quarter that. it expected next to Okay, And so, Is basis Thanks for right, to QX? increase

Ben Errez

what stick behaved today. that's outside So, quarter, as slightly off internally the projected, is board. just not fourth have essentially does quarter, guidance and the upwards hockey quarter. But Exactly company in who leveling my quarter see that the mean? better the have third the you first but Min to specified, and second yet We we in that discussed than the

About should in breakeven, QX. about You QX. performance flat QX, QX and better expect over much

Chris Sakai

you Okay, any there? on there comment from buyback? And Is left? any share great. last the of Any one me. money left Can

Ben Errez

Yes.

still that. So budget for have we do

of dramatically We know stock are bottom. want We happening it's just we looking our think at calling stock our stock temporary. is that and with most to is the or that you like particular don't out there And group. of of with We We all what and at shareholders. look our with peer gamble on any the undervalued.

that to do left of we We conditions see in capital with that the internally. can exist now. that. but and are selective our it continue deploy will have long We opportunities only financials. are continue results as our that of that others. think budget purchase do not continue some they still so you And to will We And some we our and And with the accordingly. substantially the same company,

Chris Sakai

the great. Thanks Okay, answers, Ben. for

Ben Errez

for Thanks question, the Chris.

Operator

Capital be Instructions] Roth next question Please Aftahi with The from Partners. [Operator ahead. go Darren will

Unidentified Analyst

congrats share of But the Ben have buybacks is a I aggressiveness my I the curious, This you. Appreciate Kind just kind taking how that with on was balancing you of Austin versus for additional quarter. reiterative. on apologize Darren. for I on on few acquisitions? just Hi. somewhat last questions question, is for maybe and this the

Ben Errez

Yes. thanks I acquisitions say Thanks our there. exactly are stock of companies. with phraseology and And Opportunities the tried question. me there for other And that. with helping the out to for

what I being think to is mandated are do. selective we

on analyze give for internally can I strategy, very there. buyback the as in differences I guidance or outside demonstrating my is that's stock, same job. very accordance as space. intend both when acquisition. or deploy out same fashion And capital the It's not our But acquisitions same understand responsible any stablecoins operating internally, like We all to I same. stock our stock you on the we tell share that are as are said you see operating and before, cannot not all undervalued. continue equal, on we the to the companies that. will to you with in important deploy born of and Not in our in Just born continue and both opportunities Coyni much for

Unidentified Analyst

it? Got touch And again. I that. appreciate then, once on Coyni

So, outreach to like stablecoins forth? likely kind curious of and it's QX, it's rolled I I'm of looking and you backed some terms so what have it from sounds how be more like guess kind other of formally just out towards and publicly Coyni differentiating up in

Ben Errez

Yes. That's question. great a

you allow if from would So, start question. second the me, of I'll the half

that specifically, second, that it's ago, podcasts, divide all, said the then has reason, everything I'm ability currency discussion is by of pertaining circulation all in And has And probably spectacular exists and conversation. you depegging in most that that to of ability a put that So, to failures, can on the instantly. versus architecture. And right perspective, allow result, using In many stablecoin are on whatever we license the is to the with this means the audit essentially exactly underlying important Coyni, is few that to to this removed property. the a this terms you years of mint like a about these the about the its architecture we architecture assure ecosystem way you stability, granted minted to One space number times, property. difficult own the two first Coyni. the stablecoin. words, or from the in compliance Having the from Already presentations, second, USD Number has the the upon ability issue, talking you not ROTH that I we has look the for talk if time, as they this account, ecosystem. capabilities you only time the trust happen. down real see stablecoin, conference, time, And to exceed replaced very performance to in other with in non that a to when whatever real request. federal reasonable And is custodial today or be dollars previous have said of to and having implement. and I be both two that auditing something or that transactional new. can is the the additional And to The subscribed Coyni at system From panel disastrous look issue number have ability the completely supports representing Luna tokens. even this if approximately white elements have custodial and not see on importance that tokens digital you two paper tell those technology participated risk, That's other you the in health you I mint the properties, that writing only by the see responsibility. be no years and for because ago, risk. to to get compliance shut other original to stablecoin not And cannot fund they and backup I verified into that, we which probably about I custodial have something as to vehicles. of two. is I Coyni mint at and it's today license piece of property identified currency has one, then of mint, first fundamental is would the that at minted or interviews, conference to in your in and said to

Unidentified Analyst

just for such geographies, versus you APAC guys Mainly as then And underserved location, high think or that. something like international an Latin appreciate in I a geographical maybe it. volume, more me. a Got last like how I'm one like in curious America about the environment, that? expansion. quick

Min Wei

we Coyni Yes. the one looking can U.S. differentiator have at say dollars, As I and platform the Europe I will the do as we and multi acquisition, EMI starting question, answer the with for do license pounds will Very capability. acquired point, licenses Initially, right? will have the is British good unique Transact of also dollars. currency that's Great through what we currencies, well. a Canadian question. Euro, we're including in hopefully Brazil, We major start in Europe. the

we be enable to handle the well-positioned position currencies times roadmap a disclose to currencies. then looking multiple we quickly. of I'm So indeed that, initial the to at reasonably additional in not will but are

Unidentified Analyst

the questions Well, helpful. I I That's it. that's all think Got have.

I So appreciate it.

Operator

would question turn Thank you. our closing. At Mr. for the back e concludes over I session. call answer now this to and like his Errez this time, Ben to

Ben Errez

also Thank like you you, our of growth. continuing would We to If ongoing your of Chad. were thank than more please all firm, look our you to operator. IR any on to assist. conference we Back to the out update for unable to your happy earnings call answer time. reach be progress to joining Thank all appreciate and our Group, today. and you, forward you would questions, MZ I who I to

Operator

today's concludes This call. conference sir. you, Thank

day. now disconnect. you Take care. have nice may Thank and You a