$854.6 million total revenues including gross crypto revenues
and net loyalty revenues
Strong client crypto trading activity with notional traded
volume up 324% quarter-over-quarter
$48.8 million operating expenses excluding crypto costs,
execution, clearing and brokerage fees, down 16% year-over-year
Updated full year 2024 outlook to reflect recently implemented
strategic reduction in force and restructuring which is expected to
reduce operating expenses by $13 million1 on an annual basis
Bakkt Holdings, Inc. (“Bakkt” or the “Company”) (NYSE: BKKT)
announced its financial and operational results for the quarter
ended March 31, 2024.
CEO Comments:
“We made solid progress on our key priorities in the first
quarter driven by robust crypto trading activity across our
platforms and the successful execution of the next phase of our
cost restructuring initiative. We managed to significantly reduce
our net loss by approximately 53% from same quarter last year, and
anticipate further reduction in our adjusted EBITDA loss from the
restructuring executed in May,” said Andy Main, President and Chief
Executive Officer of Bakkt. “Our team has also been working
tirelessly this quarter towards the future launch of our own
Electronic Consumer Network (“ECN”), BakktX, an institutional
crypto trading venue, which will represent a significant milestone
in expanding our client base potential and tapping into new market
opportunities. We’re making great progress accelerating our
operational and growth initiatives, and I look forward to sharing
more soon. Additionally, our strategic partnerships with Unchained
and Swan Bitcoin have enhanced our collaborative custody and
trading efforts. Looking ahead, we are dedicated to maintaining
this momentum and further optimizing our business execution to
efficiently scale our business as we work to achieve profitability
and deliver value to our stockholders.”
Key Performance Indicators (including historical Bakkt Crypto
data):
- Crypto enabled accounts grew to 6.3 million, up 9% YoY.
- Transacting accounts decreased 34% year-over-year to 779,000,
due to lower loyalty redemption and active crypto trading
accounts.
- Notional traded volume increased 64% year-over-year to $1,041
million, primarily due to strong crypto trading volume partially
offset by lower loyalty redemption activity in travel and gift
cards.
- Assets under custody increased 76% year-over-year to $1,233
million, due to higher coin prices.
First Quarter 2024 Financial Highlights (unaudited):
- Total revenues of $854.6 million reflect a significant increase
in gross crypto services revenues driven by the acquisition of
Bakkt Crypto. Net loyalty revenues of $13.2 million increased 4%
year-over-year driven by higher service revenue.
- Total operating expenses of $886.4 million reflect a
significant increase in crypto costs and execution, clearing and
brokerage fees driven by our acquisition of Bakkt Crypto.
- Total operating expenses excluding crypto costs and execution,
clearing and brokerage fees decreased 16% to $48.8 million. First
quarter expenses included $6.1 million of non-recurring
restructuring expenses.
- Operating loss of $31.8 million improved 30% year-over-year
primarily due to a reduction in compensation and benefit
costs.
- Net loss improved 53% year-over-year to $21.3 million.
- Adjusted EBITDA loss (non-GAAP) improved 44% year-over-year to
$16.3 million, primarily due to a reduction in compensation and
benefits costs.
First quarter 2024 results include Bakkt Crypto (f/k/a Apex
Crypto, LLC), acquired on April 1, 2023. 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.
$ in millions
1Q24
1Q23
Increase/
(decrease)
Total revenues
$854.6
$13.2
N.M.
Crypto costs and execution, clearing and
brokerage fees
837.6
0.4
N.M.
Operating expenses, excluding crypto costs
and execution, clearing and brokerage fees
48.8
58.3
(16%)
Total operating expenses
886.4
58.7
1411%
Operating loss
(31.8)
(45.4)
(30%)
Net loss
(21.3)
(44.9)
(53%)
Adjusted EBITDA loss (non-GAAP)
$(16.3)
$(28.9)
(44%)
Note: “N.M” denotes Not Meaningful
On April 29, 2024, following approval by our stockholders and
Board of Directors, we effected a reverse stock split (the “Reverse
Stock Split”) of our Class A Common Stock, par value $0.0001 per
share (“Class A Common Stock”), and Class V Common Stock, par value
$0.0001 per share, at a ratio of 1-for-25. Our Class A Common Stock
began trading on a reverse-split adjusted basis on the New York
Stock Exchange (the “NYSE”) as of the open of trading on April 29,
2024 under the same symbol, “BKKT”. In accordance with the
Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) Topic 505 Equity, changes in the capital
structure of a public reporting entity due to a reverse stock split
occurring after the balance sheet date, but before the release of
the financial statements, should be given retroactive effect. As
such, the Reverse Stock Split has been retroactively applied to all
figures throughout this document (unless otherwise noted).
Recent Operational Highlights:
- Corporate restructuring –
On May 2, completed severance of 28 employees that will take effect
in the second quarter as part of Bakkt’s broader expense
restructuring initiative. The restructuring plan, which also
includes closure of open roles and optimization of Bakkt’s call
center resources will reduce Bakkt’s planned headcount by 20% at
the end of 2024 and is expected to generate approximately $7
million cash savings in 2024 and represent an annualized cash
savings of approximately $13 million.
- Partnership update –
Established partnerships with Unchained and Swan Bitcoin,
increasing the Company's collaborative efforts in custody and
trading ability across the United States.
- Institutional ECN trading venue,
BakktX – Progressed towards launching its own ECN,
BakktX, a trading venue designed for institutional traders and
market participants who require high performance, low latency, and
deep liquidity. This platform will be the first known foreign
exchange style ECN in the digital asset space and aims to offer
institutional clients a reliable and low-cost trading
experience.
Updated 2024 Guidance:2
- Full year 2024 revenues expected to be $3,002 million - $4,447
million; includes gross crypto revenues of $2,949 million - $4,390
million and net loyalty revenues of $53 million - $57 million.
- Full year 2024 crypto costs expected to be $2,934 million -
$4,365 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 $155 million - $165
million.
- Full year 2024 net cash used in operating activities expected
to be ($58 million) – ($72 million).
- Full year 2024 free cash flow usage (non-GAAP) expected to be
($64 million) – ($78 million).
- End of year available cash, cash equivalents and
available-for-sale securities of $42 million - $57 million.
1. $13 million represents annualized savings from Bakkt’s
completed expense restructuring initiative excluding a one-time
restructuring charge of $0.8 - $1.0 million. The restructuring
includes the severance of 28 employees as filed in a Form 8-K on
May 2, 2024 as well as closure of open roles and optimization of
call center resources, among others.
2. Given under the following updated key assumptions: Gross
Crypto Revenue, Crypto Costs and ECB - Increased revenue
contribution from existing clients/accounts based on observed
retail trading engagement metrics, offset by lower contribution
from new clients; 1x – 3x increase in crypto trading accounts vs.
Q4’23; Activation of crypto coin pairs in 2H24 to support
international retail trading demand; Addition of institutional
clients with steady ramp-up in assets under custody in 2H’24;
Crypto costs and ECB in line with gross crypto revenue. Operating
expenses - Comp expense savings from restructuring offset by
increased non-cash compensation and restructuring charges. End of
year cash, cash equivalents and AFS securities - Integration of
regulated entities beginning March 2024 including $5mm additional
release of surety bond restricted cash collateral, $7mm cash
savings from restructuring actions partially offset by $5mm
reduction in net contribution from crypto trading.
Webcast and Conference Call Information
Bakkt will host a conference call at 5:00 PM ET, May 15, 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 239896 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, 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.
Non-GAAP Financial Measures – Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure, which we define
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 tied 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.
Reconciliation of GAAP Net
Loss to Non-GAAP Adjusted EBITDA Loss (unaudited)
$ in millions
1Q24
1Q23
Net loss
$(21.3)
$(44.9)
Depreciation and amortization
0.1
3.1
Interest income, net
(1.0)
(1.6)
Income tax expense
0.2
0.0
EBITDA loss
(22.0)
(43.4)
Acquisition-related expenses
---
0.8
Share-based and unit-based compensation
expense
8.0
7.9
(Gain) loss from change in fair value of
warrant liabilities
(9.0)
1.0
Impairment of long-lived assets
0.3
---
Restructuring expenses
6.1
4.3
Shelf Registration expenses
0.2
---
Transition services expense
0.2
0.6
Adjusted EBITDA loss
$(16.3)
$(28.9)
Non-GAAP Financial Measures – Free Cash Flow
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.
Information reconciling forward-looking Free Cash Flow to the
comparable GAAP financial measure is unavailable to us without
unreasonable effort. We are not able to provide a reconciliation of
forward-looking Free Cash Flow to the comparable GAAP financial
measure because certain items required for such reconciliations are
outside of our control and/or cannot be reasonably predicted, such
as timing of customer payments for account receivables and payment
terms for operating expenses. Preparation of such reconciliations
would require a forward-looking statement of income and statement
of cash flow, prepared in accordance with GAAP, and such
forward-looking financial statements are unavailable to us without
unreasonable effort (as specified in the exception provided by Item
10(e)(1)(i)(B) of Regulation S-K). We provide a range for our Free
Cash Flow forecast that we believe will be achieved, however we
cannot accurately predict all the components of the Free Cash Flow
calculation.
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.
Reconciliation of Free Cash
Flow (unaudited)
$ in millions
FY 2024E
Low
High
Net cash used in operating
activities
$(58)
$(72)
Capex
(2)
(2)
Interest income, net
(4)
(4)
Free Cash Flow
$(64)
$(78)
Consolidated Balance
Sheets
$ in millions
As of 3/31/24
(unaudited)
As of 12/31/23
Assets
Current assets
Cash and cash equivalents
$56.6
$52.9
Restricted cash
44.0
31.8
Customer funds
88.2
32.9
Available-for-sale securities
18.0
17.4
Accounts receivable, net
37.2
29.7
Prepaid insurance
9.2
13.0
Safeguarding asset for crypto
1,233.2
701.6
Other current assets
4.0
3.3
Total current assets
1,490.3
882.6
Property, equipment and software, net
1.5
0.1
Goodwill
68.0
68.0
Intangible assets, net
2.9
2.9
Other assets
12.8
13.3
Total assets
$1,575.5
$966.9
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
liabilities
$62.7
$55.4
Customer funds payable
88.2
32.9
Deferred revenue, current
3.3
4.3
Due to related party
2.5
3.2
Safeguarding obligation for crypto
1,233.2
701.6
Unsettled crypto trades
4.5
1.0
Other current liabilities
3.8
3.7
Total current liabilities
1,398.3
802.1
Deferred revenue, noncurrent
2.9
3.2
Warrant liability
21.0
2.4
Other noncurrent liabilities
22.5
23.5
Total liabilities
$1,444.6
$831.2
Stockholders' equity
Class A Common Stock ($0.0001 par value,
30,000,000 shares authorized, 5,873,080 shares issued and
outstanding as of 3/31/24 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, 7,195,339 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
816.8
799.7
Accumulated other comprehensive loss
(0.3)
(0.1)
Accumulated deficit
(759.5)
(751.3)
Total stockholders' equity
57.0
48.3
Noncontrolling interest
73.9
87.4
Total equity
130.9
135.7
Total liabilities and stockholders'
equity
$1,575.5
$966.9
Consolidated Statements of
Operations (unaudited)
$ in millions
1Q24
1Q23
Revenues:
Crypto services
$841.3
$0.4
Loyalty services, net
13.2
12.8
Total revenues
$854.6
$13.2
Operating expenses:
Crypto costs
832.0
0.4
Execution, clearing and brokerage fees
5.6
---
Compensation and benefits
24.5
34.1
Professional services
3.6
2.4
Technology and communication
5.8
5.7
Selling, general and administrative
7.8
6.7
Acquisition-related expenses
0.0
0.8
Depreciation and amortization
0.1
3.1
Related party expenses
0.2
0.6
Impairment of long-lived assets
0.3
---
Restructuring expenses
6.1
4.3
Other operating expenses
0.4
0.7
Total operating expenses
$886.4
$58.7
Operating loss
(31.8)
(45.4)
Interest income, net
1.0
1.6
Gain (loss) from change in fair value of
warrant liability
9.0
(1.0)
Other income (expense), net
0.7
(0.0)
Loss before income taxes
(21.1)
(44.8)
Income tax expense
(0.2)
(0.0)
Net loss
(21.3)
(44.9)
Less: Net loss attributable to
noncontrolling interest
(13.1)
(30.9)
Net loss attributable to Bakkt
Holdings, Inc.
$(8.2)
$(14.0)
Net loss per share attributable to Class A
Common Stockholders
Basic
$(1.86)
$(4.27)
Diluted
$(1.86)
$(4.27)
Consolidated Statements of
Cash Flows (unaudited)
$ in millions
1Q24
1Q23
Cash flows from operating
activities:
Net loss
($21.3)
($44.9)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
0.1
3.1
Non-cash lease expense
0.6
0.8
Share-based compensation expense
8.0
7.2
Unit-based compensation expense
---
0.7
Impairment of long-lived assets
0.3
---
Loss on disposal of assets
---
0.0
(Gain) loss from change in fair value of
warrant liability
(9.0)
1.0
Other
---
0.2
Changes in operating assets and
liabilities:
Accounts receivable
(6.3)
(0.1)
Prepaid insurance
3.9
4.3
Accounts payable and accrued
liabilities
7.3
(16.0)
Unsettled crypto trades
3.6
---
Due to related party
(0.7)
(0.7)
Deferred revenue
(1.3)
(0.5)
Operating lease liabilities
(1.0)
(0.6)
Customer funds payable
55.2
(0.0)
Other assets and liabilities
(1.0)
(1.8)
Net cash provided by (used in) operating
activities
38.4
(47.2)
Cash flows from investing
activities:
Capitalized internal-use software
development costs and other capital expenditures
(1.8)
(3.7)
Purchase of available-for-sale
securities
(18.0)
(27.0)
Proceeds from the settlement of
available-for-sale securities
17.5
101.0
Acquisition of Bumped Financial, LLC
---
(0.6)
Net cash (used in) provided by investing
activities
(2.3)
69.7
Cash flows from financing
activities:
Proceeds from Concurrent Offerings, net of
issuance costs
39.0
---
Repurchase and retirement of Class A
Common Stock
(2.3)
---
Net cash provided by financing
activities
36.7
---
Effect of exchange rate changes
(0.4)
0.0
Net increase in cash, cash equivalents,
restricted cash, cash held in escrow, customer funds and
deposits
72.3
22.5
Cash, cash equivalents, restricted cash,
cash held in escrow, customer funds and deposits at the beginning
of the period
118.5
115.4
Cash, cash equivalents, restricted cash,
cash held in escrow, customer funds and deposits at the end of the
period
$190.8
$137.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240515986556/en/
Investor Relations IR@bakkt.com
Media press@bakkt.com
Bakkt (NYSE:BKKT)
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