Earnings call transcript: Crunchfish Q1 2025 misses revenue expectations

Crunchfish AB reported its financial results for Q1 2025, revealing a significant miss in revenue expectations. The company recorded net sales of 285,000 SEK, sharply below the anticipated 1,740,000 SEK. The stock price remained unchanged at 0.9 USD, though InvestingPro data shows the company has experienced a dramatic 89.7% decline over the past year. With a current market capitalization of just $6.15 million, Crunchfish’s valuation suggests potential upside according to InvestingPro’s Fair Value analysis.

Key Takeaways

• Crunchfish’s net sales were significantly below expectations.
• The company launched the innovative Offline Terminal Infrastructure (OTI).
• Operational cost-cutting measures are underway, including closing the Jestri business.
• The focus remains on expanding into the Indian and European markets.

Company Performance

Crunchfish’s Q1 2025 performance highlighted a challenging quarter with net sales of 285,000 SEK, a notable decline from previous periods. According to InvestingPro data, the company’s revenue has declined by 10.43% over the last twelve months, with negative gross profit margins reflecting ongoing operational challenges. The company’s focus on innovation and market expansion, including its new OTI concept, contrasts with the financial strain indicated by its revenue miss and operational downsizing.

Financial Highlights

• Revenue: 285,000 SEK, significantly below the forecast.
• Cash holdings: Approximately 16-20 million SEK.
• Revenue sources included a 100,000 SEK award from the RBI hackathon and approximately 200,000 SEK from gesture side contracts.

Outlook & Guidance

Looking forward, Crunchfish aims to secure network provider deals to avoid further financing rounds. While the company maintains a healthy current ratio of 2.88, indicating strong short-term liquidity, its financial health score remains weak according to InvestingPro analysis (unlock 8 more key ProTips with a subscription). The company is concentrating on integrating its payment infrastructure in India and Europe, with significant progress expected by mid-August.

Executive Commentary

Joachim Samuelsson, CEO, emphasized the company’s strategic direction: "We want to democratize it that the payment service providers can choose whatever offline wallet they want." This reflects Crunchfish’s commitment to flexibility and innovation in payment solutions.

Risks and Challenges

• Revenue shortfall indicates potential challenges in market penetration.
• Operational downsizing may impact future growth capacity.
• Dependence on new network provider deals to maintain financial stability.

Crunchfish’s Q1 2025 results underline a period of strategic realignment amidst financial challenges. The company’s innovative efforts in payment technology and market expansion are critical to its future trajectory. For deeper insights into Crunchfish’s financial health and growth potential, investors can access comprehensive analysis and Fair Value estimates through the detailed Pro Research Report available on InvestingPro.

Full transcript - Crunchfish AB (CFISH) Q1 2025:

Marco, Interviewer: encourage welcome you, Joachim. Thank you. Yeah. Nice to have you here.

Joachim Samuelsson, CEO, Crunchfish: Thank you. Nice to be here.

Marco, Interviewer: And I have a bunch of questions, and I’m sure you have too. So please use the q and a function in the in the meeting during the interview. But let’s let’s kick off. The report, net sales were 285,000 Swedish kronor, approximately. What’s behind these numbers?

Joachim Samuelsson, CEO, Crunchfish: It’s it’s not much. Compared to last year, I think we had we we we did some one off sale than last year, but so it’s a huge drop. But but, obviously, I think this is not the still not this quarter wasn’t the quarter where we sort of turned things around. The 285,000, I I think we we were rewarded by RBI that we were part of this third hackathon. This year, they had as a way that all finalists were awarded, I think it was 10 lakh.

A lakh is hundred thousand. So that means 10 times hundred thousand. 1 million rupees. So 1,000,000 rupees was awarded to us from RBI that we were the finalists in the in this hackathon that I was in Bangalore and presented our solution in early January. So that was that was sort of, I guess, hundred thousand of it.

And the the rest is mainly is actually revenue recognition from contracts on the gesture side. So so slightly less than 200,000 is sort of from the gesture side that we have we we have these sort of orders, and they have a you know, they they work for I I think they they it it it is a contract where we revenue recognize monthly during its duration. So the other 200,000 is for that. So that that that’s what we have.

Marco, Interviewer: Okay. And if you look at costs, the company reported lower costs than our estimates, mainly personnel costs and external costs. Will this continue, or are you at the level you’re comfortable with?

Joachim Samuelsson, CEO, Crunchfish: It will go down a little bit more if unless we we do accelerate. We we have announced that we have closed down our Jestri business, and we announced that last year that that will give a significant lowering of cost, which is good for us. It gives us a longer runway. And that’s part of the story. In q two, we still have I I think one guy is leaving us in June, so he his his his salary is is still up to June.

There there is one more person that is coming back from some illness, and we haven’t we we we we didn’t sort of let him go in in his difficult situation. So then that that was that that has a little spillover effect. We also have the office. We haven’t completely gone out of the contract, but we will after July 1. So so from q three onwards, I would say, then we are then we have taken out all the costs for the Yester side.

Then on the other externals cost, which also gone down quite a lot, this is a little bit related then to the gesture side, but mostly because of our engagement with Ernst and Young as well as our lawyers from that helped us last year with the round we did at the end of twenty twenty three. There were some, you know, legal fees we had for them, but mainly it’s sort of the related to retainer fee to Xinjiang, which we don’t have anymore, but we did have in q one in 2024.

Marco, Interviewer: Oh, I see. So you you mentioned the runway. You ended the quarter with 40,000,000 second in cash holdings. Yes. How long is your financial run run rate?

Joachim Samuelsson, CEO, Crunchfish: Well, we we we we’re gonna get some more money now in the as as this we had a unit emission, as you remember, in December, which had two attached to that was two warrants. One which was then converted into about we got some 5,000,000 in February, and it is gonna be a little bit more this time. The strike price now is 0.63, and that one is I think the subscription or where you have to use that is actually here in in May. So that’s gonna give us another 6,000,000, I think, something like that, which means sort of that right now you can see that we we were at if you add that, we are at then 20 minus a little bit what has happened in April and May. So maybe we are at, I don’t know, 16, something like that.

So how is that financial runway? Well, worst case scenario, we as we we will we we believe we we have we will sustain ourselves for the for the rest of the year. We we do count on a little bit of revenue, but that is the worst case scenario, which that’s why we had a clean annual report. No nothing from the auditor that because you have to then say, can you sustain yourself for another year? And and that’s in the auditor’s report.

But the best way to finance ourselves is through revenues, and that’s what we need to do. And and, hopefully, we could turn that around so we are not out of cash sort of early next year, but we actually can no one would be happier than me if we don’t have to do another financing round. Yeah.

Marco, Interviewer: That’s in our projections as well.

Joachim Samuelsson, CEO, Crunchfish: You you have a you have a finance

Marco, Interviewer: Finance finance round in q one twenty six.

Joachim Samuelsson, CEO, Crunchfish: Yeah. Yeah. Yeah. You have that.

Marco, Interviewer: And and I think If nothing else happens.

Joachim Samuelsson, CEO, Crunchfish: No. Exactly. Exactly. So I I I and I don’t blame you that you have that, but my job or my focus is to make you wrong on that as well. So

Marco, Interviewer: so that’s the financials. A big theme in the in the report was the offline terminal infrastructure concept. Could you tell us a bit about this?

Joachim Samuelsson, CEO, Crunchfish: Yeah. This is it’s actually something we’ve had. We’ve always had it. We we’ve always have an asymmetry in our solution in the sense that the payer has a wallet, an offline wallet, needs high security because, otherwise, people will sit at home and create their own money, digital money, and and we can’t have that. No one wants to, you know, have that.

So that needs a secure element and isolation of of that wallet on the device, and we have that. But we’ve always had the asymmetry that the receiving side, you could pay from a wallet to we we call it before a verifier, which was a bit technical. But now I I think we we’ve just seen the similarities of the card rail that that there are there are sort of card terminals. What can they do? Well, they they when you pay there, you they they send you a request for a payment, and then your there is an interaction with your card or your mobile phone where you have emulated the card, and and you send basically a signed message back.

The card terminal verifies that message. And if it’s offline, it can store it, and then it can send it up to the back end for settlement. That’s exactly what our offline terminal does. So this concept, instead of calling it the verifier, which is one step that, yes, it can verify a payment. It can do that, certainly, but it can do a little bit more.

It can sort of do exactly what a car terminal does. So think of a car terminal, but we have generalized it that this applies to any payment rate. So it it it is a a concept where we we look at offline as alright. There is the wallet side, the paying side, which Russia could receive payments as well if you are you know, you you can both receive and pay. But we have this asymmetry that there is a a receiving side without the ability to pay, just like a car terminal.

You you don’t pay with a car terminal. It only collects payments. Similarly, we we can have here this launch of an an offline terminal, which and and this is the key thing. This is something that should be part of the payment ecosystem, the payment network. Because if if you if you make that part of a payment network, then you all of a sudden, you enable everybody to be able to pay.

Again, let’s do the analogy with the card card payments. You have your card. What’s your bank? Handelsbanken.

Marco, Interviewer: Yeah. Let’s say Handelsbanken.

Joachim Samuelsson, CEO, Crunchfish: Let’s say Handelsbanken, but you have another bank. Yes. But let’s say Handelsbanken, even though Martin has another bank. They issue you a card. Alright?

But Handelsbanken, that you don’t have, they they have nothing to do with the car terminal, but you still are able to pay at the car terminal. Because the car terminal is is put up by, in a way, the what’s called the payment rail, the card payment rail. And it has specification for something called EMVCO. It stands for Europay Mastercard and Visa company. They have the they own the specifications.

And then in in this in this card terminal, Mastercard have have a kernel inside there that can accept Mastercard payments. And there’s also another kernel from Visa that can accept Visa payments, and there are some other card schemes as well. But Handelsbanken have not done anything on that part. So there’s a it’s a clear separation on the card rail between the issuing side, sort of the payer side. This is Handelsbanken gives you the ability to pay and the ability to receive very clearly.

Exactly the same concept is what we see that we have the ability to do as well. And the importance of that is that the ability to receive payments, that should belong to the network, the payment network. But the ability to make payments, that should belong to what’s called a payment service providers. And it’s it’s a service provider that provides end users like you, Martin, with payment ability. Exactly that that structure is what we want to replicate, and that creates for us a new go to market strategy, which is very important.

I I I talk in this it’s sort of like a turnaround for us because I’m I’m talking about third times the charm in Swedish, Tredegum Yield. Because in 2023, we went to market where we we did a pilot. We were the biggest bank in India, the biggest commercial bank, HDFC Bank, and we had IDFC First Bank, one of the most prominent sort of digital first banks in in the regulatory sandbox of RBI, Reserve Bank of India. But we we hadn’t engaged the payment network, which comes from MPCI. So we had a solution which didn’t really scale.

And what happened really was that HDFC was one of the main players in in in MPCI because it’s a banking corporation. Being a big bank, you have a big say. They went to MPCI. You need to put this great innovation of that we have seen here on the ecosystem, and that became UPI LightX in 2023 launched by MPCI.

Marco, Interviewer: Now So you started working on that side then.

Joachim Samuelsson, CEO, Crunchfish: Then in 2024, that was a second attempt. We we said, okay. We need to go to the payment networks. So we went to MPCI saying that, oh, look. Look at our wallet.

It’s superior to UPI Lite x, miles apart. And we went to a lot of CBDC projects, which is also networks. You know, they they set a payment rail for CBDC. We had an announcement from early twenty twenty four. We had announcement from ECB.

We’re gonna spend 220,000,000 buying actually wallets for Europeans, and we’re gonna go for offer. But but they are a network with their digital euro. They they they would have their own app, but they will also allow banks and other payment service providers to provide for paying with digital euros. Likewise, RBI came in February 2024 and said, for the digital rupee, offline payments is a priority. And that’s the network.

It is not the UPI payment rail. That’s like Switch in India. But they have also now just like we could have had e krona. They have e rupees. That’s what RBI is announcing, and that’s a network.

And we spent 2024 working really hard with the payment networks. And and and and we’ve made, I think, significant progress, but we haven’t we haven’t turned it into revenue. And why? Well, two reasons. ECB, I think, is they they still haven’t decided on where they’re going with their they they are in a process.

It hasn’t been announced yet where they’re going with their offline approach. In India, we are very close to to RBI and not close to RBI, but but they I think they like what we do. But they’ve told us, you have to talk to MPCI because MPCI is not only providing the payment network for UPI, but they’re also building the payment network for the digital rupee. So you have to talk to MPCI. And and and we are we are sort of we we’re sort of doing that.

But if you have a payment network, and I’ve said that in previous interviews here, you need full control. Because think of it, you’re gonna have hundreds, if not thousands, of payment service providers that rely on your network. And you can’t have a dependency of a little Swedish company, which with a crazy CEO that might, all of a sudden, change the rules for them. They will never allow that. ECB also, they have very strict rules.

They have even said that everybody has to be European to actually even come with technology for the digital euro. They haven’t said that in India. Thank god. But in Europe, they’ve said that. So they don’t want to be put themselves in a hostage situation.

And the other thing is that the market mainly then would consist of the solutions from the payment service provider. This is where it scales. It’s multiple banks. It’s multiple payment service providers. ECB spends, as we said, 20.

It could go up to €660,000,000 for because they plan to buy offline wallets for the entire market. Indians, they’re not they they don’t think that way at all. But they still been they like our solution, and we’ve been talking and we’ve been offering, but they’re not willing to pay anywhere near what ECB wants to pay. So what to do? Because I am not willing to give NPCI the entire Indian market with our offline wallets so I can’t sell anymore to all the banks.

I’m not willing to do that because that that would be shooting myself in the foot. No scalability. But what we have done now, and this is the third time’s the charm. Yeah. Let the network have the terminal infrastructure, the offline terminal user.

That is not a high price for that. Because the good thing is that if that is put in place, then that enables the whole market where offline wallets like CrunchFish and could be others as well, could actually sell offline wallets into and that’s that’s the big market.

Marco, Interviewer: So in this go to market strategy, are you addressing RBI or NPCI? Or

Joachim Samuelsson, CEO, Crunchfish: Yeah. Yeah. We we we I I I speak sort of yeah. Absolutely. And we’re we’re talking to ECB, and we’re talking to yeah.

We now I think we it has we we spent 2024 talking to the payment networks, and and we haven’t stopped talking to them because we we understand. If we only talk to the payment service providers as we did in 2023, we will hit the brick wall. But we can’t just talk to the payment network providers either. The new strategy in 2025 is that let the networks have they have the specs, and they can offer the receiving side, the terminal side, and leave it to the banks and payment application providers to provide the wallets. That separation where we actually focus on both sides simultaneously, That’s that’s the trick.

Marco, Interviewer: So so what has the response been so far? Can you tell us anything about that?

Joachim Samuelsson, CEO, Crunchfish: Yeah. It’s been good.

Marco, Interviewer: Good. Yeah. Okay. Sounds promising. Yes.

So could you could you tell us anything about if you’re reaching an agreement with n NPCI, how would that how would such a deal be structured?

Joachim Samuelsson, CEO, Crunchfish: It it’s still it’s it’s still being defined in our discussions. It’s but but I I think I I think they come to I think they I think the idea that we come with here resonates with them because I think they realize that we can’t give them the full control over our offline wallet because we have a third party component from Singapore, the Veeky component. That’s in our offline wallet. It’s not in the terminal side, but it’s in offline wallet. And and they understand that Vicky cannot give source code for that with full control to the payment network in India because they would jeopardize all their other hundreds of customers.

And that means that they can’t then take that solution and roll it out widely in the market. That won’t do. But they they can take the terminal side because that doesn’t have any VK component in it if it’s if it only has the ability to receive. And and and they they like it. It and I think they what’s nice here is that we we can talk to them in terms of how it actually models on a successful payment ecosystem model being what the card networks do.

They understand that inside out. They have their own card scheme called Rupey. They have UPI, and they they support also digital rupee. They have UPI, digital rupee, and they have Rupey, which is the Indian card scheme. So they know all about it.

This is all from MPCI. If I say we are, in a way, modeling it after the card scheme, I don’t have to say much more. They he understands. They understand. And and that’s we we but we have we’re trying to find sort of how it’s gonna be done.

But the good part is that this will become our go to market strategy everywhere. There’s no point of going back and and trying to sell the whole solution with wallets and and, in a way, the terminal side anywhere. This is the new way to go to market, and and and this helps everywhere.

Marco, Interviewer: So the the OTI structure is conditional on the other applications? No. But but it it no.

Joachim Samuelsson, CEO, Crunchfish: But but I think if we split it this way, we realize that the the terminal side is an excellent entry point to sell into the networks. We can establish that. If you have that, then everybody can receive a payment. So you you establish what’s called the acquiring side, the receiving side. That’s done.

And then we can drop ship in and sell to all the banks. We can sell the first structure to the payment networks, but then we we can sell also the offline wallets.

Marco, Interviewer: The first OTI to central banks Well, that that would be good to to set that that and then

Joachim Samuelsson, CEO, Crunchfish: to set that set that standard. Because one of the problem we had in 2023 when we just had two banks, didn’t have a network with us, is that unless you were an IDFC first customer or an HDFC customer, you couldn’t receive a payment. So and what’s the chance if you have, you know, 200 banks in India? What’s the chance that you find a person that you are on the right bank so I can make a payment? We we had an idea of how this could scale incrementally.

The structure was there that we can onboard more and more banks. But the benefit of getting the network onboard from the start is that we can enable the entire country. Everybody can receive it. Because if they put our terminal infrastructure or terminal terminal sort of, what I should say, terminal software in inside what’s called their common library, then anyone anyone can take it, their payment, which is a completely different story than you have to go and look for someone that can receive a payment.

Marco, Interviewer: So you’re you’ve launched the strategy. You’ve started discussions with the ECB and RBI and PCI.

Joachim Samuelsson, CEO, Crunchfish: ECB doesn’t know about this yet. But but the we we we we go India First, as you know. So the Indians knows about it.

Marco, Interviewer: Could you tell us anything about timelines?

Joachim Samuelsson, CEO, Crunchfish: What what?

Marco, Interviewer: Timelines for these discussions and when

Joachim Samuelsson, CEO, Crunchfish: Well, they’re now. They’re happening now. Yeah. Yeah. They’re happening now.

Marco, Interviewer: And, also, could you also repeat what what in in relation to your other offerings, how do they fit into the

Joachim Samuelsson, CEO, Crunchfish: Well, as I as I said, this this would be a new go to market strategy where we we realize that we can set the acquiring side, the receiving side, set that with the network, and then drop ship in. The the the network sets the standard. So any bank or or a payment application provider, they could just take the wallet, and it works. It works on the rail because we have already make sure that and and so, incrementally, we can you know, one bank can come on board, and they there’d be a first move in the market and say, hey. Our customers can now pay offline.

And that will start in a way, like, in I think I want to have that as well. Alright? We can help you.

Marco, Interviewer: You have an agreement with the IDFC FirstBank.

Joachim Samuelsson, CEO, Crunchfish: Yeah. We have that that that

Marco, Interviewer: Is that included in this No. Well well, yeah. No. Yeah.

Joachim Samuelsson, CEO, Crunchfish: They’re they would be already they they already have support for all this because they already bought our wallet. So they they have it already. Yeah. So this could scale for them as well, not only for the digital rupee that we currently have with them out live in the market, but they they can put it now if if we get MPCI onboard on the receiving side with the terminals, then IDFC could put it for all their UPI or all their customers having UPI payments as well. Absolutely.

Marco, Interviewer: Because in India, the RBI prompted the transition into value based tokens Yeah. During the spring. How is that project going? I I think they

Joachim Samuelsson, CEO, Crunchfish: they put enormous pressure because they they were as we discussed, I think, last time, they they were on a structure where they had fixed denominations. They really literally done digital rupees as they have a banknote of hundred rupees, and they had a digital equivalent, and it was exactly hundred. But it’s hard if I meet you, Martin, and you say I owe you 15. I have a hundred, and you maybe have a 10. We can’t get to 15 by even doing an exchange.

So so this wasn’t a good idea. So they they’ve gone for a structure now which they call value based tokens, and they pushed all the banks. And I think the deadline was actually end of q one to make the transition, but it’s a huge transition. And I know that there are delays. But but I think they are still working hard.

All the banks, all the they have about 15 piloting banks, and they have some payment application providers as well. And and they’re all working hard to transition into this new new structure. But but the digital rupee, it’s great that it’s very pronounced from the RBI, the the Reserve Bank of India that offline should be part of it. Just like ECB says that offline should be part of the digital euro. But volume wise and and and MPCI with UPI, they do 17,000,000,000 transactions per month.

That’s more than Mastercard does globally. I actually was at a at at an event with a German up in Stockholm yesterday, and I asked this guy who was one of their managers, how many transactions do you think UPI makes a month? And he said, 300,000,000. And I said, well, you’re off with a factor probably 50. They do 17,000,000,000.

And that’s sort of like if you think of it, do you know how many is that per second, Martin, if you have a steady flow?

Marco, Interviewer: Yeah. That’s a lot. Yeah. How many do you think? Well Now you know Yeah.

Joachim Samuelsson, CEO, Crunchfish: Yeah. Is I think it is somewhere around every second, but but, you know, then there would be peak hours. So when they do more, they do something like between five and ten thousand transactions per second. That that’s that’s that’s the pulse Yeah. That they have.

Marco, Interviewer: We received some questions from the audience, and one of them is wondering, do you need to make a new offering to MPCI now with this new solution?

Joachim Samuelsson, CEO, Crunchfish: As I said, we we I don’t know how many offerings we made to MPCI during 2024, but because they were asking us, oh, can you tweak it this way, tweak it that way, tweak it that way? And and I think Patrick calculated too that we have sent 15 proposals. This goes on, but but I think with a change now. Because this proposal that we’re doing now, and we’ve done it very in a very methodical way, this now is set up in a way which works for them, where they have full control over the the source code, and they they would just have to do the same thing that RBI has already decided on that they’re gonna open up that it’s not just the MPCI own offline wallet which is allowed. They will open up that third parties like CrunchFish could actually also be allowed to to have an offline wallet in the market that is compatible with the MPCI payment network.

So they they are warming up to that idea. They they they they will do it sort of for the digital rupee. That’s sort of RBI’s it’s their product. They’re pushing for that. But but I I I believe that MPCI may do it as well for UPI because they wanna keep architecturally quite similar.

Marco, Interviewer: Another viewer is wondering if the network providers need to change or implement the new systems, or is it something that they have just can add?

Joachim Samuelsson, CEO, Crunchfish: We we have we have this whole thing. We’ve had it since 2021.

Marco, Interviewer: Yeah.

Joachim Samuelsson, CEO, Crunchfish: We have the protocols, how you communicate offline. We have the protocols or the APIs, how you communicate online, and we have the source code, which we happily want to provide them. So they they they we we have this whole spec, and it works in our grand scheme of things for about everything. This is generalizations we’ve done. So we’re happy to give them the what we had before, we call it the verifier part, but now we’re calling it the the offline terminal part.

And and it’s yeah. We have it.

Marco, Interviewer: So this is not a big step for for their network?

Joachim Samuelsson, CEO, Crunchfish: It’s it’s not a big step for them. It’s not a it’s not a huge amount of code because it’s just it’s just supposed to it doesn’t have high security. It needs to send a payment request. It needs to verify what comes back. It’s a signed payment.

Hold that if you’re offline. And when you go online, you you’re just gonna send it up to the back It’s not rocket science. And and we have the protocols, and we have the APIs, and we have the source code, and it’s not much code that they have to put in as well. So it’s it’s it’s not a big, big project.

Marco, Interviewer: I have a question regarding the CBDC implementation in India and how does you mentioned it briefly before, but could you just repeat how does the OTI offering relate to the CBDC project?

Joachim Samuelsson, CEO, Crunchfish: Yeah. It would be the same. I think NPCI who provides the payment network for the digital rupee as well, they should just in what the they’re calling it the they don’t call it the common library there. They call it the CBDs s CBDC SDK. So they have an SDK for CBDC, which they all the banks needs to have that.

All the payments third party payment application providers might needs to have that so that there is some sort of software from MPCI that goes everywhere. Inside there, they should do the terminal infrastructure. So the the the or the terminal software supporting offline payments, supporting the ability to receive an offline payment and send it back to the back end. That is what should be done. And if they do that, then one by one, we don’t have to take them all.

Just one by one could decide, okay. Now HDFC HDFC banks decide. Our customers should, you know, pay offline. So they they could just source in an offline wallet, which could come from MPCI also, but so far, they haven’t succeeded of of of doing a successful offline wallet. But it could come from a player like us, and it could come from others as well.

But we we I think we would have a head start if we get we set the standard for how the in a way, if you think of it, if if one company in the world could come and to India and say, we we we can set a new standard for a generalized car terminal that works on any rail, and that is countries, that that’s a pretty cool thing. And and we are the ones that then can sell our offline wallets to not just one bank, but to the whole market. But but we we we can’t lock them in that they only can take our offline wallet. And that’s we we we will be we we need to democratize it that the the payment service providers, they can choose whatever offline wallet they want. But this happens to be really a good one that comes from a smaller company in Sweden.

Marco, Interviewer: Yeah. If you describe the the infrastructure in, for instance, in the the payment rail in India Yep. Is the card card payment rail is parallel to the offline, or is it Well, they they don’t they don’t Yeah. Generalize the card rail.

Joachim Samuelsson, CEO, Crunchfish: Yeah. Well, we actually had it. We had even we we actually decided to abandon that patent application because our ID could have also gone for the card rail. But we we we got some resistance on that innovation, so we we decided to take that down. But we we have a lot of generalization of the card rail as well.

The fact that our offline terminal is for you know, it can be used for crypto. It can be used for real time payments like UPI. It can be used for CBDC. It could be used for mobile operators. I think we we are just completely general.

It doesn’t just have to be the card rail. But we even generalize the card rail because with our system, we can interchangeably be be paying between Mastercard and Visa. So you can be a Mastercard payer, and it it could be, you know, it it it could be with offline going to our offline terminal, and that could be then processed. So we we we then and then Visa can also pay. So so we we are generalizing even that.

K.

Marco, Interviewer: Yeah. So circumventing the India.

Joachim Samuelsson, CEO, Crunchfish: But but India is is not like Sweden. It’s easy here in Sweden to think everything is like Sweden, and it’s not. India has only a few merchants. It’s already in the big cities that have car terminals. Everything else is is done via, I guess, mobile payments, and it’s almost like a peer to peer payment that I I I would pay you, Martin.

But but we what we wanna say is that we wanna have peer to terminal payments because then merchants then all over India can receive payments.

Marco, Interviewer: And the question is regarding patents. Is the OTI protected in India?

Joachim Samuelsson, CEO, Crunchfish: Yeah.

Marco, Interviewer: Yeah. So so the patents you’re filing

Joachim Samuelsson, CEO, Crunchfish: It’s patent pending. And not OTI itself, but the the way we we we have our approach, which we’ve been people have been following us. I’ve always talked about that what we do is reserve. So you reserve some money that you can spend offline. And then you pay offline, and then we settle.

And what is settle? Settlement. Settlement is when the money is moved from an account to another one in the back end. So we we do reserve, pay, and settle. And and how we have that approach to offline payments that it is you something happens offline with a spending limit that you created for yourself, and then we settle it later online.

It’s this two step process. That is what we have patented. There are other ways, but it would be less secure, and and that is to do what a lot of people think is the way to go for offline payments is that you you fund your wallet, and then you pay, and then whoever at the end has something that has I pay you, and you you can pay to Oscar here, and then Oscar will just defund. If if you do it that way, there is a huge risk that if you are a fraudster, Martin, not saying you are, but if you are, how can they, in the back end, detect that the money that Oscar have, which looks like a legitimate claim, because Oscar wants his money from with a claim on the central bank, how can how can they detect that there was in that chain of event happening offline, there was a fraudster for Martin? Well, it’s very hard to do.

The what they need to do is to put in a an extra reconciliation layer, and it’s it’s a bit of extra. What in our elegant solution, we we don’t just transfer something to you, Martin, and you transfer to Oscar as a token which Oscar can just claim. We view it as a digital check instead of seeing it as a digital banknote. I have an I have an IOU. That’s what I sign out.

I owe you, Martin. This is what you receive. And then that could credit your balance offline, and then you write out an IOU to Oscar. And every step of the way needs to be settled. That means that we can reuse the existing online payment rail because there are all this is how it works online, that I I create an IOUU if I have an online payment to you, Martij, and they move the money.

I’m just reducing that. I don’t have to build any overly complicated reconciliation structure online to keep track of if there is fraudsters. This will be detected using the standard online settlement system. So that’s why I think we we I think our approach that Crunchy has patented is the winning approach for the offline world.

Marco, Interviewer: Should we return to to IDFC First Bank Sure. Just for a moment and the agreement you signed a couple years ago? And they were

Joachim Samuelsson, CEO, Crunchfish: 2023. When we did we’re yeah. They were the one who signed up. Exactly.

Marco, Interviewer: And this agreement could potentially imply short term revenue for Cranfish. Should they enroll clients in their applications?

Joachim Samuelsson, CEO, Crunchfish: Yeah. We we have a there’s seven steps in a some sort of ladder there.

Marco, Interviewer: And and this agreement is still valid, and

Joachim Samuelsson, CEO, Crunchfish: It actually should be renewed now, but but we are talking about I I think it it’s now it’s getting very interesting for us and for them because it’s they’re not doing I think this implementation they’ve done is the telecom solution because they can do it on their own, doesn’t need the network because they connect directly to the payment network via an SMS. But now the real thing with proximity payments, full offline, they can do that as well. But if we get the network on board, then then as I said, they they can go for it for all their customers, and and they will be an early adopter. And and we we are talking about them to them maybe at GFF. This is the global fintech fest in Mumbai.

We participated for two years. We stand next to it, MPCI and RBI. This is a good place to actually showcase great innovation, and they are they they’ve just said, we just have to fix this value based token implementation, but then they are willing to talk to us. And and we like they are like it’s a bridgehead for us where we have access to paying and and a real customer.

Marco, Interviewer: So they are not really enrolling clients at the moment?

Joachim Samuelsson, CEO, Crunchfish: No. Right now, they are they are trying to just get the online value based tokens to work, really. So yeah. But but this could work. But I I think I’m this is just one bank out of, you know, probably a thousand different.

So but but this is a good one. I agree. They’re early. But but I think the game has changed now because if I get the network, then I get that established, and then that’s open for everybody.

Marco, Interviewer: But it could still serve as a proof of concept for for

Joachim Samuelsson, CEO, Crunchfish: your end. No. It’s not just a proof of concept. It’s it’s sort of they’re live in production. Yeah.

And and the product they have from us, it can pay connecting to the back end, but they can also definitely do also if if if they just would find any receivers, they can certainly also pay fully offline in proximity.

Marco, Interviewer: Yeah. Let’s switch to Europe Okay. Moment and talk about the ECB project. Yes. You announced that you were selected as one of maybe 70

Joachim Samuelsson, CEO, Crunchfish: Oh, okay. Yeah. Okay. Seven. Yeah.

That that one. Yeah.

Marco, Interviewer: Yeah. Could you tell us more about this? Yeah. What what happened if if you’re allowed?

Joachim Samuelsson, CEO, Crunchfish: Yeah. Yeah. No. No. Here, I’m allowed, actually.

There are sort of two There’s I I think it’s just for clarity. Last year, they did a huge tender. This is the one with 220,000,000 that can go up to 660. This is for an offline solution, which they have said should use hardware secure element, which we think is yeah. Will that ever work?

Because there is no ecosystem to actually deploy them. So we we we question that. And and the other thing that they have this fund pay and defund, and they need to build a reconciliation layer. So they have that. All these, what I think is structurally a flawed approach.

That’s what they are And told them. Well yeah. And and I think the problem is as well is that they are biting a huge bullet by buying all the wallets. Instead, there is an alternative approach that I discussed. But what what they’ve now also have done is that not only have they decided to focus on offline payments, which I I really think is great that they did that, but they’ve also announced that conditional payment, they call it.

They announced that last year that this is also an area of huge interest to us, and we want technical pioneers who can show us use cases for conditional payments. And conditional payments is like an online payment where but with the difference is that the settlement step remember, settlement is when you move money. That already from the start comes with some conditions. It’s not like, alright. You have agreed to pay me and then move the money.

There are some conditions applied. It could be a time constraint. It could be that if I’m a if if I’m a I I I deliver goods, you don’t want to give me the money until I’ve given the transportation company the goods, then the money will go. So they need a signature from the transportation company. That could be one example.

But but it’s based on what? Well, it’s based on reserve pay and settle because you when you sign up for such a payment, the conditional payment, which is also known as a smart contract in the crypto world, it’s also known as programmable payments, you you program in rules for the payment. There you in order for it to settle automatically when everything is all the conditions are met, your bank will take the money from you when you do you set up that payment. Because otherwise, how can otherwise, they cannot trust that it will actually be settled when the time is right. So they work on this reserve and then pay and settle paradigm, which exactly is the paradigm we have for offline payments.

And what we have told ECB, this is when we applied, that fantastic that you’re going for conditional payments because it just happens that our way of doing offline payments is exactly that. Because we reserve money, and and I reserve it not for a merchant. I reserve it for myself, but it’s still there is a reservation, and they support it on the on the digital euro rail. And then I make a payment offline. And what is the condition that the back end is waiting for?

Well, they’re waiting for that from either the payer or the payee comes back to the back end, a signed offline transaction that they could trust. But when they see that, they move the money. So what we are telling them that it’s great that you have now put conditional payments or smart contracts in place, the structure for that, because all of a sudden, we can do offline payments for you. And you don’t have to wait many, many years until the ecosystem with hardware secure elements, if if if it ever will happen, you can actually do offline payments now. And we can also tell them that why don’t you put an offline terminal infrastructure in place?

Wouldn’t cost that much. Just tiny fraction of €220,000,000. Put that in place, everybody can receive. And then let the payment service providers, the banks or yourself and others to pay offline tomorrow. We can support that.

And and and we’ve already we we have already programmed that, and we’re gonna

Marco, Interviewer: You you will do. We will do it. We will test it.

Joachim Samuelsson, CEO, Crunchfish: Yeah. Yeah. Yeah. Yeah. And it it the this project ends now in May.

And we we we we it’s it was announced in May, but that’s just because they were late in allowing us to announce it. But we we’ve been working on this one. We started in February. We were enrolled in February, but we couldn’t say anything until May, and then then we could. These 70 participants, we’re one of them.

We have already done, and we as we speak, we’re finalizing our report, the final report, and then they will consider this as is this an interesting addition to the digital euro payment rate? I think it is. And then all of a sudden, they enable Europe, not in many years with hardware secure elements that probably I think probably won’t happen. That’s my prediction. They can have offering payments this year

Marco, Interviewer: by us. So they will state their conclusions in the reports?

Joachim Samuelsson, CEO, Crunchfish: Well, I

Marco, Interviewer: don’t know.

Joachim Samuelsson, CEO, Crunchfish: They they I I don’t know how they but but I think they will they will bring in all all the things, and and then they will look at what what what it is. But I think we have a really I I don’t think they thought of it because they thought of smart contracts or conditional payments as an online thing. But we just, you know, show them that. Look. The structure you put in place, and we have we have put it we’ve implemented our way of doing it already in their sandbox.

So we were we’re moving digital euro with our offline payments. And so they yeah. And it it works.

Marco, Interviewer: And this this showcase is separate from the tender you Exactly. Participate.

Joachim Samuelsson, CEO, Crunchfish: Yeah. Because that that yeah.

Marco, Interviewer: So this is just This this was for

Joachim Samuelsson, CEO, Crunchfish: this was for conditional payments. Yeah. And and we we are we are we are technical pioneer for that. It just happens that we are showcasing offline payments in that context, but the they they are going for this fund, pay, defund, reconciliate as a completely separate this is like an adjunct structure. What we have is a seamlessly integrated thing that can use the online settlement rail that is already in place.

Marco, Interviewer: Yes. Could you tell us anything about the other tender?

Joachim Samuelsson, CEO, Crunchfish: Which one?

Marco, Interviewer: The the

Joachim Samuelsson, CEO, Crunchfish: No. We’re not allowed.

Marco, Interviewer: No. No.

Joachim Samuelsson, CEO, Crunchfish: No. No. Not allowed.

Marco, Interviewer: Still still no

Joachim Samuelsson, CEO, Crunchfish: Yeah. We we were one of the five selected. I’ve said that before, but I’m not allowed to say anything more.

Marco, Interviewer: Okay. Yeah. Leave it there. And CBDCs not only happening happening in in the EU or India. Could you tell us about your ambitions elsewhere?

Joachim Samuelsson, CEO, Crunchfish: Yeah. No. I I’m heading for Bangkok because this idea, as I said, with this separation that the CBDs project should yeah. They can they should definitely put in place the terminal infrastructure because everybody can receive a payment, and then they we can drop ship in offline wallets after that. That applies everywhere.

And I’m going to the this is the digital currency conference in Bangkok, and I’m I I I have a speaking slot there where I’m talking about this e groundbreaking ecosystem approach, and there would be a lot of central bankers there because this is And we have already some projects where we which we started with working with already 2024 where this applies also. As I said, this is not just for India. It’s it’s it’s for everyone. It’s our new go to market strategy, which which helps to to go to market.

Marco, Interviewer: You’re talking to artists in in Sweden as well?

Joachim Samuelsson, CEO, Crunchfish: Yeah. Yeah. We we certainly have talked to everybody probably saw that on the news that Sweden should invest more in offline payments because of the the secured situation. I think so far, they’ve just said, have more cash, which is an offline thing in your mattress, and we’re gonna force some businesses to accept cash like grocery shops and petrol shops. We’re gonna do that by law.

That’s what we’re thinking. And they have announced that they will have a new card scheme, which would where they can set the rules themselves that it could a terminal could accept maybe payments for a week. But that’s it. But I I’m saying, what about Swish? We we could enable offline payments at with Swish tomorrow.

This is you know, why why not think of Swish? They they do present Swish as a key rail in Sweden, but they have no plans for how to make that resilient. And I think that’s a I think that’s just a mistake. And but we are talking to SWISS as well. And but I I I would have hoped that the the RIX bank would put some pressure on the banks that you can do SWISS, but only if you actually do it resilient.

And then it would just happen. But but I they are just thinking of cash and cards, which I I think it’s I

Marco, Interviewer: think they can improve. Yes. We’re approaching the end of this webcast, and I encourage you all to send in questions here if you have them. I noted or we noted that you’ve changed your website somewhat.

Joachim Samuelsson, CEO, Crunchfish: Yes. The not not well, it is the under the menu digital cache. That whole flow that goes under that menu is completely rewritten. We announced that actually you don’t know that, Martin, because you were here with me, but it came out a press release at nine where we we announced that. And and and it’s it’s important because I think the the previous website or the previous explanation of DeloCash didn’t do us justice.

It was it needed an overhaul anyway, but certainly now with this new go to market and explaining it more clearly. And so it’s it’s it’s new completely rewritten in a way. We we kept a little bit I think we kept the demo flows, and we kept the we have a little bit on our patents. I think that we we kept those frames, but the rest is just new stuff which relates to what we’re talking about today.

Marco, Interviewer: That’s good. So if you didn’t catch everything that Joachim said today, you can always visit the website.

Joachim Samuelsson, CEO, Crunchfish: Right? And if I if I could make a little bit of a marketing announcement or whatever you can call it, I appreciate that the report which was released at 08:30 today, and we’re having this interview just a few half an hour later, it’s very hard to come with, you know, questions for that. So that’s why which is not our norm, but on Friday, we will have what’s called a lunch lunch talk together with emergers and Johan Wiedmark there. And and the difference will be that it would be in Swedish, and it would be in forty eight hours from now. And we will turn off the chat function because we will have it that please, you can ask questions, but we will set it up as a meeting.

So so please do it verbally. But you’re more than welcome to join there, and you have twenty four forty eight hours a little bit more to come up with all your questions.

Marco, Interviewer: That’s good. And to wrap this up, final questions. There’s evidently a lot of things going on in Yeah. Crunchyish at the moment, and the next report will be in August Yeah.

Joachim Samuelsson, CEO, Crunchfish: Mid August. It’s on the order. Third week of August, I think.

Marco, Interviewer: What do you hope to have achieved until then?

Joachim Samuelsson, CEO, Crunchfish: I hope to have done to set the deal with a network provider. That could be there are several choices there, but I certainly hope that. And, yeah, I I think if we get a network provider with the terminal on the terminal side, because then that opens up the whole market for us in that in in that region or that country, at least one of those. But, you know, if we can have that, then I think we we are I I hope we can avoid a a new financing round, which, as I said, that’s my job to try to to do. Yeah.

I I don’t like them either. Okay.

Marco, Interviewer: Thank you, Joakim, for coming and talking about this.

Joachim Samuelsson, CEO, Crunchfish: Thank you, Marco, for preparing it.

Marco, Interviewer: And thank you all viewers and people who have sent in questions. If you missed anything, this video will be soon be uploaded to Vesta Hammer’s YouTube channel. So subscribe and watch out. Yeah.

Joachim Samuelsson, CEO, Crunchfish: And we we we I think we will put it we put the this when you send it to us, we’ll put it on our web as well. And I guess, is it who will do a press release on it? Will you do it, or you just put it up?

Marco, Interviewer: We will put it up. We will do also a written comment on the report.

Joachim Samuelsson, CEO, Crunchfish: Yeah. Yeah. Okay. Look. And we we we do a press release on yeah.

That’s how I normally do it. So we will press release this when soon as we get it from you, we’ll press release it, and then we put it out on our web as well. Yeah. Cool. Thank you very much.

Thank you. And see you later.

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