Bakkt Holdings, Inc. (“Bakkt” or the “Company”) (NYSE: BKKT) announced its financial and operational results for the quarter ended September 30, 2024. CEO Comments: "Since the U.S. Presidentia...
Autore: Business Wire
BakktX successfully tested, institutional client rollout to begin Q4'24
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ALPHARETTA, Ga.: Bakkt Holdings, Inc. (“Bakkt” or the “Company”) (NYSE: BKKT) announced its financial and operational results for the quarter ended September 30, 2024.
CEO Comments:
"Since the U.S. Presidential election, we’ve seen a dramatic increase in trading volumes driven by favorable macro sentiment and rising crypto prices,” said Andy Main, President and CEO of Bakkt. “As of November 12th, we had transacted $279 million in volume, already surpassing October’s total of $165 million in just 12 days. These tailwinds align with the upcoming rollout of our institutional trading platform, BakktX, which marks a pivotal turning point for our business. Our combined efforts with Hidden Road, Crossover Markets and CoinRoutes are expected to deliver a powerful combination of Bakkt's security and compliance expertise with real-time risk management and operational support, high-performance technology, and a first-class trading interface and algorithm that we believe will put us in a strong position to win share in a rapidly growing market.”
Mr. Main continued, “In October, given the considerable margin compression we’ve seen in the custody space, we began investigating a possible wind-down and dissolution of Bakkt Trust due to its lack of market traction and high cost of capital due to regulatory requirements. As this process has progressed, we have also worked to find strategic alternatives for Bakkt Trust. We expect to have a lower regulatory capital requirement during the pendency of this process. This decision allows us to focus on our core business areas, including brokerage and institutional trading services, where we believe we have significant competitive advantages and growth opportunities. We’ve seen significant headwinds thus far in 2024 but looking forward, with the macro landscape improving, BakktX rolling out in the coming months, and broader coin offerings, we believe we are well-positioned to capitalize on high-growth opportunities across the digital asset ecosystem.”
Third Quarter 2024 Key Performance Indicators:
Third Quarter 2024 Financial Highlights (unaudited):
$ in millions | 3Q24 | 3Q23 | Increase/ | ||
Total revenues1 | $328.4 | $204.8 | 60.4% | ||
Crypto costs and execution, clearing and brokerage fees | 315.0 | 190.1 | 65.8% | ||
Operating expenses, excluding crypto costs and execution, clearing and brokerage fees | 40.8 | 67.5 | (39.7%) | ||
Total operating expenses | 355.8 | 257.6 | 38.1% | ||
Operating loss | (27.4) | (52.9) | (48.2%) | ||
Net loss | (6.3) | (51.7) | (87.8%) | ||
Adjusted EBITDA loss (non-GAAP) | ($23.7) | ($21.6) | (9.8%) | ||
Recent Operational Highlights:
2024 Guidance Update:2
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 Q3’24 retail trading engagement metrics, decrease in loyalty revenues and overall trading volume, no inclusion of material revenue from BakktX, and Crypto Costs and ECB in line with gross crypto revenue. End of year cash, cash equivalents and AFS securities – updated estimate inclusive of the possible wind-down and dissolution of Bakkt Trust and the expected lower regulatory capital requirements during the pendency of the process. |
Webcast and Conference Call Information
Bakkt will host a conference call at 5:00 PM ET, November 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 597174 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, statements regarding BakktX and its expected positioning as a preferred platform, 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 ability to enter into a definitive commercial agreement with Hidden Road, Bakkt’s expectations regarding crypto market growth, including from the recent positive macro sentiment and rising crypto prices, Bakkt’s ability to winddown or effect a strategic transaction involving Bakkt Trust, 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, including with the expected commercial partners, 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 and selling or winding down certain product offerings; 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, including its most recent Annual Report on Form 10-K and its subsequently filed Quarter Reports on Form 10-Q. 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
Bakkt Q3 2024 Financial Statements | ||
Consolidated Balance Sheets | ||
$ in millions except per share data | As of 9/30/24 | As of 12/31/23 |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents | $29.0 | $52.9 |
Restricted cash | 35.3 | 31.8 |
Customer funds | 51.6 | 32.9 |
Available-for-sale securities | 6.7 | 17.4 |
Accounts receivable, net | 26.8 | 29.7 |
Prepaid insurance | 5.6 | 13.0 |
Safeguarding asset for crypto | 938.7 | 701.6 |
Other current assets | 4.1 | 3.3 |
Total current assets | 1,097.8 | 882.6 |
Property, equipment and software, net | 1.8 | 0.1 |
Goodwill | 68.0 | 68.0 |
Intangible assets, net | 2.9 | 2.9 |
Other assets | 12.3 | 13.3 |
Total assets | $1,182.7 | $966.9 |
Liabilities and stockholders' equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities | $41.8 | $55.4 |
Customer funds payable | 51.6 | 32.9 |
Deferred revenue, current | 2.0 | 4.3 |
Due to related party | 2.7 | 3.2 |
Safeguarding obligation for crypto | 938.7 | 701.6 |
Unsettled crypto trades | 1.0 | 1.0 |
Other current liabilities | 4.2 | 3.7 |
Total current liabilities | 1,042.0 | 802.1 |
Deferred revenue, noncurrent | 2.6 | 3.2 |
Warrant liability | 15.8 | 2.4 |
Other noncurrent liabilities | 20.4 | 23.5 |
Total liabilities | $1,080.7 | $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) | 1 | - |
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) | 1 | 1 |
Additional paid-in capital | 829.5 | 799.7 |
Accumulated other comprehensive loss | (0.2) | (0.1) |
Accumulated deficit | (778.8) | (751.3) |
Total stockholders' equity | 50.5 | 48.3 |
Noncontrolling interest | 51.5 | 87.4 |
Total equity | 102.0 | 135.7 |
Total liabilities and stockholders' equity | $1,182.7 | $966.9 |
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|
|
Consolidated Statements of Operations (unaudited) | ||
$ in millions except per share data | 3Q24 | 3Q23 |
Revenues: |
|
|
Crypto services | $316.3 | $191.8 |
Loyalty services, net | 12.1 | 13.0 |
Total revenues | 328.4 | 204.8 |
Operating expenses: |
|
|
Crypto costs | 312.8 | 189.4 |
Execution, clearing and brokerage fees | 2.2 | 0.7 |
Compensation and benefits | 21.1 | 24.6 |
Professional services | 5.3 | 2.0 |
Technology and communication | 4.2 | 5.5 |
Selling, general and administrative | 8.5 | 7.4 |
Acquisition-related expenses | - | (0.7) |
Depreciation and amortization | 0.1 | 4.0 |
Related party expenses | 0.2 | 1.0 |
Goodwill and intangible asset impairments | - | 23.3 |
Impairment of long-lived assets | 0.6 | 0.1 |
Restructuring expenses | 0.4 | - |
Other operating expenses | 0.3 | 0.3 |
Total operating expenses | 355.8 | 257.6 |
Operating loss | (27.4) | (52.9) |
Interest income, net | 1.0 | 1.2 |
Gain (loss) from change in fair value of warrant liability | 20.0 | (0.2) |
Other income (expense), net | (0.0) | 0.4 |
Loss before income taxes | (6.4) | (51.5) |
Income tax benefit (expense) | 0.1 | (0.2) |
Net loss | (6.3) | (51.7) |
Less: Net loss attributable to noncontrolling interest | (3.4) | (34.4) |
Net loss attributable to Bakkt Holdings, Inc. | ($2.9) | ($17.3) |
|
|
|
Net loss per share attributable to Class A Common Stockholders |
|
|
Basic | ($0.45) | ($4.74) |
Diluted | ($0.45) | ($4.74) |
|
|
|
Consolidated Statements of Cash Flows (unaudited) | ||
$ in millions | 3Q24 | 3Q23 |
Cash flows from operating activities: |
|
|
Net loss | ($6.3) | ($51.7) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
Depreciation and amortization | 0.1 | 4.0 |
Non-cash lease expense | - | 0.8 |
Share-based compensation expense | 2.6 | 3.0 |
Unit-based compensation expense | - | 0.4 |
Forfeiture and cancellation of common units | 0.0 | (0.0) |
Impairment of long-lived assets | 0.6 | 0.1 |
Goodwill and intangible assets impairments | - | 23.3 |
Loss on disposal of assets | - | 0.1 |
Loss from change in fair value of warrant liability | (20.0) | 0.2 |
Changes in operating assets and liabilities: |
|
|
Accounts receivable | (2.3) | (0.7) |
Prepaid insurance | 0.3 | 3.9 |
Deposits with clearinghouse | - | 15.2 |
Accounts payable and accrued liabilities | 2.6 | (3.1) |
Unsettled crypto trades | (0.5) | - |
Due to related party | 0.0 | 0.8 |
Deferred revenue | (0.5) | 1.0 |
Operating lease liabilities | (0.7) | (0.8) |
Customer funds payable | (1.8) | 27.7 |
Other assets and liabilities | 0.6 | 0.6 |
Net cash provided by (used in) operating activities | (25.1) | (24.6) |
Cash flows from investing activities: |
|
|
Capitalized internal-use software development costs and other capital expenditures | (0.5) |
|