$509.9 million total revenues including gross
crypto revenues and net loyalty revenues
$36.8 million operating expenses excluding
crypto costs, execution, clearing and brokerage fees, down 43.1%
year-over-year, 24.6% sequentially
Bakkt Holdings, Inc. (“Bakkt” or the “Company”) (NYSE: BKKT)
announced its financial and operational results for the quarter
ended June 30, 2024.
CEO Comments:
“We continue to make solid progress against our three key
strategic priorities,” commented Andy Main, President and CEO of
Bakkt. “Since last quarter, we have made significant strides in
partnerships across traditional and digital assets to enable
Bakkt’s solutions, which offer deep liquidity and strong analytics,
risk management, pricing, and trade matching engines. Recently, we
signed a letter of intent to work with Hidden Road to provide risk
management and back-office functionality, which we believe will
enhance our ability to manage and minimize counterparty and credit
risk for institutional clients using BakktX. We expect this
strategic partnership to strengthen our competitive advantage,
positioning us to better serve our client base and drive future
growth.”
Key Performance Indicators:
- Crypto enabled accounts grew to 6.4 million, up 6.7% YoY.
- Transacting accounts decreased 39.1% year-over-year to
approximately 719,281, primarily due to a large customer’s reduced
activity in international markets.
- Notional traded volume increased 26.6% year-over-year to $672
million, primarily due to higher trading prices for crypto
assets.
- Assets under custody increased 47.7% year-over-year to $975
million, primarily due to higher trading prices for crypto
assets.
Second Quarter 2024 Financial Highlights (unaudited):
- Total revenues of $509.9 million reflect an increase in gross
crypto services revenues driven by Bakkt Crypto. Net loyalty
revenues of $12.8 million increased 4% year-over-year driven by
higher subscription and services revenue.
- Total operating expenses of $531.9 million reflect a
significant increase in crypto costs and execution, clearing and
brokerage fees driven by Bakkt Crypto.
- Total operating expenses excluding crypto costs and execution,
clearing and brokerage fees decreased 43.1% YoY to $36.8 million
driven by cost restructuring and reduction in headcount in the
first quarter of 2024.
- Operating loss of $22.0 million improved 56.9% year-over-year
primarily due to higher crypto services revenue, and lower
compensation, SG&A and acquisition related costs.
- Net loss improved 29.7% year-over-year to $35.5 million.
- Adjusted EBITDA loss (non-GAAP) improved 26.9% year-over-year
to $17.9 million, primarily due to a reduction in compensation and
benefits and selling, general and administrative costs.
$ in millions
2Q24
2Q23
Increase/
(decrease)
Total revenues1
$509.9
$347.6
46.7%
Crypto costs and execution, clearing and
brokerage fees
495.1
334.0
48.2%
Operating expenses, excluding crypto costs
and execution, clearing and brokerage fees
36.8
64.7
(43.1%)
Total operating expenses
531.9
398.7
33.4%
Operating loss
(22.0)
(51.1)
(56.9%)
Net loss
(35.5)
(50.5)
(29.7%)
Adjusted EBITDA loss (non-GAAP)
($17.9)
($24.5)
(26.9%)
Note: “N.M” denotes Not Meaningful
Recent Operational Highlights:
- Key executive hire –
Appointed Ray Kamrath as COO to lead the company’s sales across
Bakkt’s crypto business including trade, custody and institutional
offerings.
- Partnerships Update
- Crossover Market: Announced
licensing agreement with Crossover Markets, which is expected to
significantly enhance BakktX ECN’s institutional capabilities with
faster execution and lower trading costs.
- Hidden Road: Signed a
letter of intent to work with Hidden Road to provide platform
services including real-time risk management and back-office
functionality. Once finalized, this partnership is expected to
enhance our ability to manage risk and minimize counterparty and
credit risk for institutional clients using BakktX through Hidden
Road’s real-time risk management.
Updated 2024 Guidance:2
- Full year 2024 revenues expected to be $2,568 million – $2,827
million; includes gross crypto revenues of $2,515 million - $2,770
million and net loyalty revenues of $53 million – $57 million.
- Full year 2024 crypto costs expected to be $2,505 million –
$2,755 million, in line with gross crypto revenues.
- Full year 2024 total operating expenses excluding crypto costs,
execution, clearing and brokerage fees and goodwill, intangible and
long-lived assets impairments expected to be $157 million – $162
million.
- Full year 2024 net cash used in operating activities expected
to be ($72 million) – ($79 million).
- Full year 2024 free cash flow usage (non-GAAP) expected to be
($79 million) – ($86 million).
- End of year available cash, cash equivalents and
available-for-sale securities of $35 million – $42 million.
1. In accordance with GAAP, crypto
services revenue and crypto costs and execution, clearing and
brokerage fees are presented on a gross basis as the Company is a
principal in those transactions.
2. Given under the following updated key
assumptions: Gross Crypto Revenue, Crypto Costs and ECB - revenue
contribution from existing clients/accounts based on Q2’24 retail
trading engagement metrics, decrease in new crypto trading accounts
driven by re-alignment of international strategy, addition of
institutional clients with steady ramp-up in assets under custody
in 2H’24 and Crypto Costs and ECB in line with gross crypto
revenue. End of year cash, cash equivalents and AFS securities –
Reduction in upper end of expected end of year balance driven by
$10mm reduction in net contribution from crypto trading, range
further adjusted for cash expense utilization in 2Q.
Webcast and Conference Call Information
Bakkt will host a conference call at 8:30 AM ET, August 14,
2024. The earnings conference call will be webcast live here and
archived on the investor relations section of Bakkt’s corporate
website under the ‘Events & Presentations’ section, along with
any related earnings materials.
Investors and analysts interested in participating in the call
are invited to dial (833) 470-1428 or (404) 975-4839, and reference
participant access code 865830 approximately ten minutes prior to
the start of the call.
About Bakkt
Founded in 2018, Bakkt builds solutions that enable our clients
to grow with the crypto economy. Through institutional-grade
custody, trading, and onramp capabilities, our clients leverage
technology that’s built for sustainable, long-term involvement in
crypto.
Bakkt is headquartered in Alpharetta, GA. For more information,
visit: https://www.bakkt.com/ | X (Formerly Twitter) @Bakkt |
LinkedIn https://www.linkedin.com/company/bakkt/.
Bakkt-E
Note on Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include, but are not limited to, Bakkt’s
guidance and outlook, including for the full fiscal year 2024, and
the trends and assumptions underlying such guidance and outlook,
Bakkt’s cost reduction strategy and expectations regarding cost
savings, Bakkt’s plans and expectations, including statements about
new products and features, partnerships, joint ventures and growth,
Bakkt’s expectations regarding crypto market growth, and Bakkt’s
beliefs regarding its future goals, among others. Forward-looking
statements can be identified by words such as “will,” “likely,”
“expect,” “continue,” “anticipate,” “estimate,” “believe,”
“intend,” “plan,” “projection,” “outlook,” “grow,” “progress,”
“potential” or words of similar meaning. Such forward-looking
statements are based upon the current beliefs and expectations of
Bakkt’s management and are inherently subject to significant
business, economic and competitive uncertainties and contingencies,
many of which are difficult to predict and beyond Bakkt’s control.
Actual results and the timing of events may differ materially from
the results anticipated in such forward-looking statements as a
result of the following factors, among others: the Company’s
ability to continue as a going concern; the Company’s ability to
grow and manage growth profitably; changes in the Company’s
business strategy; the Company’s future capital requirements and
sources and uses of cash, including funds to satisfy its liquidity
needs; changes in the market in which the Company competes,
including with respect to its competitive landscape, technology
evolution or changes in applicable laws or regulations; changes in
the markets that the Company targets; disruptions in the crypto
market that subject the Company to additional risks, including the
risk that banks may not provide banking services to the Company;
the possibility that the Company may be adversely affected by other
economic, business, and/or competitive factors; the inability to
launch new services and products or to profitably expand into new
markets and services; the inability to execute the Company’s growth
strategies, including identifying and executing acquisitions and
the Company’s initiatives to add new clients; the Company’s failure
to comply with extensive government regulation, oversight,
licensure and appraisals; uncertain regulatory regime governing
blockchain technologies and crypto; the inability to develop and
maintain effective internal controls and procedures; the exposure
to any liability, protracted and costly litigation or reputational
damage relating to the Company’s data security; the impact of any
goodwill or other intangible assets impairments on the Company’s
operating results; and other risks and uncertainties indicated in
the Company’s filings with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on such
forward-looking statements. Such forward-looking statements relate
only to events as of the date on which such statements are made and
are based on information available to us as of the date of this
press release. Unless otherwise required by law, we undertake no
obligation to update any forward-looking statements made in this
press release to reflect events or circumstances after the date of
this press release or to reflect new information or the occurrence
of unanticipated events.
Definitions
- Crypto-enabled accounts: total
crypto accounts open.
- Transacting accounts: unique
accounts that perform at least one transaction across crypto
buy/sell and loyalty redemption each month. Monthly figures are
de-duped for the month. Quarterly figure represents sum of all
months in the quarter.
- Notional traded volume: total
notional volume of transactions across crypto buy/sell and loyalty
redemption. Figures represent gross values recorded as of order
date.
- Assets under custody: the sum of
coin quantities held by customers multiplied by the final quote for
each coin on the last day of the quarter.
Bakkt Q2 2024 Financial
Statements
Consolidated Balance
Sheets
$ in millions except per share
data
As of 6/30/24
(unaudited)
As of 12/31/23
Assets
Current assets
Cash and cash equivalents
$47.5
$52.9
Restricted cash
34.0
31.8
Customer funds
53.3
32.9
Available-for-sale securities
13.2
17.4
Accounts receivable, net
24.4
29.7
Prepaid insurance
5.9
13.0
Safeguarding asset for crypto
974.5
701.6
Other current assets
4.5
3.3
Total current assets
1,157.4
882.6
Property, equipment and software, net
1.9
0.1
Goodwill
68.0
68.0
Intangible assets, net
2.9
2.9
Other assets
12.7
13.3
Total assets
$1,242.9
$966.9
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities
$39.3
$55.4
Customer funds payable
53.3
32.9
Deferred revenue, current
2.3
4.3
Due to related party
2.7
3.2
Safeguarding obligation for crypto
974.5
701.6
Unsettled crypto trades
1.5
1.0
Other current liabilities
3.9
3.7
Total current liabilities
1,077.4
802.1
Deferred revenue, noncurrent
2.8
3.2
Warrant liability
38.8
2.4
Other noncurrent liabilities
21.4
23.5
Total liabilities
$1,140.3
$831.2
Stockholders' equity
Class A Common Stock ($0.0001 par value,
30,000,000 shares authorized, 6,310,548 shares issued and
outstanding as of 6/30/24 and 3,793,837 shares outstanding as of
12/31/23)
0.0
0.0
Class V Common Stock ($0.0001 par value,
10,000,000 shares authorized, 7,194,941 shares issued and
outstanding as of 3/31/24 and 7,200,064 shares outstanding as of
12/31/23)
0.0
0.0
Additional paid-in capital
824.0
799.7
Accumulated other comprehensive loss
(0.3
)
(0.1
)
Accumulated deficit
(775.9
)
(751.3
)
Total stockholders' equity
47.8
48.3
Noncontrolling interest
54.8
87.4
Total equity
102.6
135.7
Total liabilities and stockholders'
equity
$1,242.9
$966.9
Consolidated Statements of
Operations (unaudited)
$ in millions except per share
data
2Q24
2Q23
Revenues:
Crypto services
$497.1
$335.3
Loyalty services, net
12.8
12.3
Total revenues
509.9
347.6
Operating expenses:
Crypto costs
491.7
331.8
Execution, clearing and brokerage fees
3.4
2.2
Compensation and benefits
22.4
27.1
Professional services
3.6
2.9
Technology and communication
3.7
4.4
Selling, general and administrative
5.5
7.6
Acquisition-related expenses
0.1
17.0
Depreciation and amortization
0.1
3.8
Related party expenses
0.2
1.5
Impairment of long-lived assets
—
—
Restructuring expenses
0.9
0.2
Other operating expenses
0.4
0.2
Total operating expenses
531.9
398.7
Operating loss
(22.0
)
(51.1
)
Interest income, net
1.2
0.7
Gain (loss) from change in fair value of
warrant liability
(15.1
)
0.4
Other income (expense), net
0.4
(0.3
)
Loss before income taxes
(35.4
)
(50.4
)
Income tax expense
(0.1
)
(0.2
)
Net loss
(35.5
)
(50.5
)
Less: Net loss attributable to
noncontrolling interest
(19.1
)
(33.7
)
Net loss attributable to Bakkt
Holdings, Inc.
($16.4
)
($16.8
)
Net loss per share attributable to Class A
Common Stockholders
Basic
($2.67
)
($4.69
)
Diluted
($2.67
)
($4.69
)
Consolidated Statements of
Cash Flows (unaudited)
$ in millions
2Q24
2Q23
Cash flows from operating
activities:
Net loss
($35.5
)
($50.5
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
0.1
3.8
Non-cash lease expense
0.4
0.7
Share-based compensation expense
2.4
4.1
Unit-based compensation expense
—
0.2
Loss on disposal of assets
0.0
—
(Gain) loss from change in fair value of
warrant liability
15.1
(0.4
)
Other
0.0
(0.2
)
Changes in operating assets and
liabilities:
Accounts receivable
12.3
4.4
Prepaid insurance
3.2
2.6
Accounts payable and accrued
liabilities
(23.5
)
4.9
Unsettled crypto trades
(3.1
)
0.0
Due to related party
0.1
0.5
Deferred revenue
(1.1
)
(0.3
)
Operating lease liabilities
(0.9
)
(0.7
)
Customer funds payable
(34.8
)
0.0
Other assets and liabilities
(0.6
)
(0.3
)
Net cash provided by (used in) operating
activities
(65.9
)
(31.2
)
Cash flows from investing
activities:
Capitalized internal-use software
development costs and other capital expenditures
(0.4
)
(2.3
)
Purchase of available-for-sale
securities
---
0.0
Proceeds from the settlement of
available-for-sale securities
4.7
52.1
Acquisition of Bumped Financial, LLC
---
---
Acquisition of Apex Crypto LLC, net of
cash acquired
---
(44.4
)
Net cash (used in) provided by investing
activities
4.4
5.4
Cash flows from financing
activities:
Proceeds from Concurrent Offerings, net of
issuance costs
7.5
0.0
Proceeds from the exercise of warrants
0.0
---
Repurchase and retirement of Class A
Common Stock
(0.0
)
(2.5
)
Net cash provided by (used in) financing
activities
7.5
(2.5
)
Effect of exchange rate changes
(0.2
)
0.3
Net increase (decrease) in cash, cash
equivalents, restricted cash, customer funds and deposits
(54.3
)
(28.0
)
Cash, cash equivalents, restricted cash,
customer funds and deposits at the beginning of the period
$190.8
$137.9
Cash, cash equivalents, restricted cash,
customer funds and deposits at the end of the period
$136.5
$109.9
Reconciliation of Non-GAAP Financial
Measures
Non-GAAP Financial Measures – Adjusted EBITDA
Adjusted EBITDA is defined as earnings before interest, income
taxes, depreciation, amortization, acquisition-related expenses,
share-based and unit-based compensation expense, goodwill and
intangible assets impairments, restructuring charges, changes in
the fair value of our warrant liability and certain other non-cash
and/or non-recurring items that do not contribute directly to our
evaluation of operating results and are not components of our core
business operations. Adjusted EBITDA provides management with an
understanding of earnings before the impact of investing and
financing transactions and income taxes, and the effects of
aforementioned items that do not reflect the ordinary earnings of
our operations. This measure may be useful to an investor in
evaluating our performance. Adjusted EBITDA is not a measure of our
financial performance under GAAP and should not be considered as an
alternative to net income (loss) or other performance measures
derived in accordance with GAAP. Our definition of Adjusted EBITDA
may not be comparable to similarly titled measures used by other
companies.
Non-GAAP financial measures like Adjusted EBITDA have
limitations, should be considered as supplemental in nature and are
not meant as a substitute for the related financial information
prepared in accordance with GAAP. The non-GAAP financial measures
should be considered alongside other financial performance
measures, including net loss and our other financial results
presented in accordance with GAAP.
$mm's
2Q24
2Q23
Net loss
($35.5
)
($50.5
)
Depreciation and amortization
0.1
3.8
Interest income, net
(1.2
)
(0.7
)
Income tax expense
0.1
0.2
EBITDA
($36.6
)
($47.2
)
Acquisition-related expenses
0.1
17.0
Share-based and unit-based compensation
expense
2.4
4.4
Loss (gain) from change in fair value of
warrant liability
15.1
(0.4
)
Restructuring expenses
0.9
0.2
Shelf registration expenses
—
—
Transition services expense
0.2
1.5
Adjusted EBITDA loss
($17.9
)
($24.5
)
Free Cash Flow is a non-GAAP financial measure. Free Cash Flow
is cash flow from operations adjusted for “capitalized internal use
software development costs and other capital expenditures” and
“interest income.” We adjust for capitalized expenses associated
with internally developed software for our technology platforms
given they are a large component of our ongoing expense base given
our position as a technology platform company.
We provide Free Cash Flow because we believe that Free Cash
Flow, when viewed with our results under GAAP, provides useful
information for the reasons noted above. However, Free Cash Flow is
not a measure of liquidity under GAAP and, accordingly, should not
be considered as an alternative to net cash used in operating
activities as an indicator of liquidity.
$mm's
FY2024
Low
High
Net cash used in operating
activities
($72.0
)
($79.0
)
Capex
(3.1
)
(3.1
)
Interest income, net
(3.9
)
(4.0
)
Free Cash Flow
($79.0
)
($86.1
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240813661648/en/
Investor Relations IR@bakkt.com
Media press@bakkt.com
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