GreenBox POS Reports Second Quarter 2022 Financial Results
GreenBox POS (NASDAQ: GBOX) ("GreenBox", the "Company"), an emerging and rapidly growing Fintech company provided its financial results for the second quarter ending June 30, 2022.
Management Commentary by CEO Fredi Nisan:
Second Quarter 2022 was highlighted by:
- Company record Q2 processing volume of over $1 billion, about 50% ahead of internal projections, a 40% increase when compared to Q1 processing volume of $754 million and more than double Q2 2021.
- Q2 revenues of $7.0 million versus $6.4 million in the same year-ago quarter, a 42% increase when compared to Q1 revenues of $4.9 million.
- Acquiring business including the recently acquired Sky Financial portfolio Q2 processing volume was $769 million, which outpaced our expectations by over 38%.
FX and international payments business line, including Transact Europe, saw significant momentum in the quarter with over $184 million in business volume.
- Successfully deployed v1.0 of the coyni public beta and completed core development of v2, which is on schedule to roll out with customers already identified in the pipeline in Q3.
- Launched technology platform with Territorial Bank of American Samoa (TBAS) to provide digital payment solutions for businesses and consumers in American Samoa and gained an approximate 13% market share during the second quarter. TBAS is an ideal model market for the coyni platform to implement the same offering to other similar closed-loop geographies.
- During the second quarter, for recently acquired TEU, we focused on infrastructure and packaging of our key offerings to maximize the immediately available business-building opportunities. We also deployed several key strategic initiatives to drive growth from our acquisition of TEU which are on track to produce solid revenue growth in the second half of the year.
- As one of the industry's first, we announced real-time custodial account attestation via a lengthy review process of IT, compliance and, specifically, SOC 2 compliance certification from Armanino, a top accounting, consulting and technology firm in the U.S. This is a critical differentiator and ensures that our coyni platform has available existing reserves in a custodial account to secure liquidity - under any scenario - should anyone want to exit at any time. We view coyni technology as a significant long-term growth driver for our business.
- Completed a System and Organization Controls (SOC) 2 Type 2 certification audit on controls relevant to the security trust services category to align us with the industry standards followed by world-class organizations.
- Fortified the composition of our Board of Directors with the addition of Adele Hogan, a seasoned transactional lawyer, who has been material to recent acquisitions and securities compliance successes. Adele will be a prominent contributor to any M&A's as well future dividend plans.
- In anticipation of our continued growth and evolution as a public company, and indicative of our continued commitment to strong governance practices, we have also transitioned our auditor to Simon & Edward, an alliance member of BDO.
The second quarter 2022 was highlighted by excellent financial results, along with steady progress on several key initiatives that further establish our standing as an emerging force on the fintech landscape. After achieving yet another company record quarter processing volume of over $1 billion, we also more than doubled that volume number versus the same quarter a year ago.
We strengthened our core business infrastructures within the sales, marketing, and operational functions, introducing our products in select territories, such as America Samoa, and made excellent progress on the development of coyni, our next generation blockchain ledger-based payments platform. We additionally integrated material business capabilities from recent M&As, such as Transact Europe, to launch service offerings in several business domains including ACH, foreign exchange, and international payments.
Looking ahead, while there has been a significant disruption in the cryptocurrency and financial technology industry this year, GreenBox's focus remains on building the infrastructure, partnerships, communications, and technology to achieve our long-term business objectives.
We remain highly confident in our ability to create differentiated, customized financial transaction technology and deploy it at scale. We remain very confident in our 2022 outlook of processing $4-6 billion in transaction volume with sequential company record processing levels each quarter. We look forward to over-delivering results which support our long-term strategic growth trajectory.
Second Quarter 2022 Financial Summary
- Net revenue increased by $0.8M, or 6.6%, to $11.9 million for the six months ended June 30, 2022 from $11.1 million in the prior year's same period. Net revenue increased by $0.6M, or 9.2%, to $7.0 million in the second quarter of 2022 from $6.4 million in the same quarter the prior year. The increase in net revenue was due to the increase in processing volume but offset by higher fees to gateways and ISOs.
- Gross profit for the six months ended June 30, 2022, was $5.2 million, or 43.5% of total net revenue, compared to gross profit of $8.2 million, or 73.8% of total net revenue, in the prior year's same period. Gross profit in the second quarter of 2022 was $2.8 million, or 40.5% of total net revenue, compared to gross profit of $5.1 million, or 79.3% of total net revenue, in the same quarter a year ago. The decrease in gross profit was primarily due to the increased cost of revenue resulting from higher processing fees paid to gateways and commission payments to ISOs. Ordinary operating expenses were $15.4 million and $5.3 million for the six months ended June 30, 2022, and 2021, respectively, an increase of $10.1 million.
- Ordinary operating expenses were $7.7 million and $3.1 million for Q2 2022 and 2021, respectively, an increase of $4.6 million. The overall increase was primarily due to an increase in general and administrative expenses related to increased headcount to support operations and sales growth, as well as heavy investment in R&D to improve technology.
- Other expenses decreased by $8 million to a net other income of $4 million for the six months ended June 30, 2022, from a net other expense of $4 million in the same period the prior year. Interest expense increased significantly for the six months ended June 30, 2022, as compared to the same period in the prior year due to the $100 million convertible note issued in November 2021. Furthermore, income from changes in fair value of derivative liability in the amount of $18.7 million for the six months ended June 30, 2022, and none in the same period the prior year.
- The Company sustained a net loss for the six months ended June 30, 2022, of $10.9 million, or a negative twenty-six ($0.26) cents per basic and diluted share, compared to a net loss of $13.4 million, or a negative forty-three ($0.43) cents per basic and diluted share, in the same period the prior year. The Company recorded a net income in the second quarter of 2022 of $10.4 million, or $0.24 per basic and diluted share, compared to a flat net income, or $0.00 per basic and diluted share, in the same quarter a year ago. The increase in net income for the six months ended June 30, 2022, and decrease in net loss for Q2 2022 was primarily due to a decrease in the change in fair value of the derivative liability and off-set by increases in research and development, general and administrative, payroll and payroll taxes and professional fees as the Company continues to add staff and infrastructure related to growth.
- Cash position as of June 30, 2022 was cash and cash equivalents balance of $29.1 million and restricted cash balance of $26.5 million.