Quarterly net revenue of $12.9 million,
increased 41% year over year
Strong customer activity with digital asset
conversion volume up 73% year over year
Recently announced signing of definitive
agreement to acquire Apex Crypto. Acquisition is expected to
significantly expand client verticals and scale
Available cash and other liquid assets1
of over $273.7 million provides significant growth capital
Bakkt Holdings, Inc. (“Bakkt”) (NYSE: BKKT) announced its
financial and operational results for the quarter ended September
30, 2022.
“We are pleased with the momentum we are building with net
revenue up 41% year-over-year and digital asset conversion volumes
up 73% year-over-year” said Gavin Michael, President and CEO. “Our
focus on execution is paying off and we are proud to have initial
activations with our crypto capabilities. We are working closely
with our partners to bring even more of them to market in the
near-term. We are thrilled about the signing of the acquisition of
Apex Crypto, which we expect will accelerate our growth plans
post-close as it will significantly expand our client verticals and
cryptocurrency product offering. We believe that Apex Crypto will
be highly complementary with our platform and the acquisition will
ultimately help us deliver long-term sustainable value for our
partners, customers and shareholders.”
Recent Strategic Highlights
- Acquisition of Apex Crypto – We announced our signing of
a definitive agreement to acquire Apex Crypto from Apex Fintech
Solutions. Once closed, we expect the acquisition will
significantly bolster our cryptocurrency product offering and
expand our footprint into additional client verticals including
providing support for broker-dealers, fintechs, trading app
companies, and neo-banks. The purchase agreement provides for an
aggregate potential consideration paid by Bakkt of up to $200
million through a mix of $55 million of cash and up to $145 million
of stock and seller notes tied to the successful achievement of
financial growth targets through 2025. The transaction is expected
to close in the first half of 2023, subject to required regulatory
approvals.
- Crypto Platform: Global Payments – We launched our
initial pilot and are in the process of bringing our broader crypto
capabilities to market across the Global Payments platform.
__________________
1 Includes other highly liquid assets such
as Treasury bills and notes; excludes restricted cash
Third Quarter Financial Highlights (unaudited)
$mm’s
Successor
3Q22
Predecessor
3Q21
Increase/
(decrease)
Net revenues
$12.9
$9.1
41%
Goodwill & intangible assets
impairments
1,547.7
-
NM
Operating expenses, excluding
impairment
60.0
39.0
54%
Total operating expenses
1,607.8
39.0
NM
Operating loss
$(1,594.9)
$(29.9)
NM
Net loss
$(1,592.5)
$(28.8)
NM
Adjusted EBITDA (non-GAAP)
$(30.7)
$(24.1)
(27%)
Note: “NM” denotes Not Meaningful
- Transacting accounts of 678,000 increased 21% year-over-year.
Digital asset conversion volume of $182 million increased 73%
year-over-year due to loyalty redemption related to increased
travel activity
- Net revenue of $12.9 million increased 41% year-over-year,
primarily driven by significant improvement in travel loyalty
redemptions
- Operating expense of $1,607.8 million increased year-over-year,
primarily driven by a partial, non-cash goodwill and other
intangible assets impairment charge of $1,547.7 million due to the
elongated timing for expected cryptoasset product activations and
the decline in our market capitalization
- Adjusted EBITDA (non-GAAP) of $(30.7) million decreased 27%
year-over-year, due to higher operating expenses
Webcast and Conference Call Information
Bakkt will host a conference call at 9:00AM ET, November 10,
2022. The live webcast of Bakkt’s earnings conference call can be
accessed at https://investors.bakkt.com, along with the earnings
press release and accompanying slide presentation. Investors and
analysts interested in participating in the call are invited to
dial (844) 200-6205 or (646) 904-5544, and reference participant
access code 406638 approximately ten minutes prior to the start of
the call. A replay will be available promptly after the call and
can be accessed by dialing (866) 813-9403 and entering the access
code 255918. The replay will be available through December 9,
2022.
About Bakkt
Bakkt is a digital asset platform that unlocks crypto and drives
loyalty to create delightful, connected experiences for a broad
range of clients. Bakkt’s platform, available through partners,
delivers access to crypto and bolsters loyalty programs, adding
value for all key stakeholders within the Bakkt digital assets
ecosystem. Launched in 2018, Bakkt is headquartered in Alpharetta,
GA. For more information, visit: https://www.bakkt.com/ | Twitter
@Bakkt | LinkedIn https://www.linkedin.com/company/bakkt/.
Bakkt-E
Source: Bakkt Holdings, Inc.
Basis of Presentation
“Predecessor” information represents the results of Bakkt
Holdings, LLC prior to the business combination with VPC Impact
Acquisition Holdings (VIH), which closed on October 15, 2021.
“Successor” information represents the results of Bakkt Holdings,
Inc. from the date the business combination closed through the end
of the applicable period.
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,
statements regarding the closing of the Apex Crypto acquisition and
the resulting impacts from that acquisition and Bakkt’s guidance,
plans, objectives, expectations and intentions with respect to
future operations, products, services and the application of
Bakkt’s available cash, 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. 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.
The following factors, among others, could cause actual results
and the timing of events to differ materially from the anticipated
results or other expectations expressed in such forward-looking
statements: (i) Bakkt and Apex Fintech Solutions being unable to
obtain the necessary regulatory approvals and/or otherwise fail to
satisfy all closing conditions related to the Apex Crypto
acquisition; (ii) the impact of the ongoing COVID-19 pandemic;
(iii) changes in the markets in which Bakkt competes, including
with respect to its competitive landscape, technology evolution or
regulatory changes; (iv) changes in the markets that Bakkt targets;
(v) risk that Bakkt may not be able to execute its growth
strategies, including identifying and executing acquisitions; (vi)
risks relating to data security; and (vii) risk that Bakkt may not
be able to develop and maintain effective internal controls. The
foregoing list of factors is not exhaustive. You should carefully
consider the foregoing factors and the other risks and
uncertainties described under the heading “Risk Factors” in Bakkt’s
filings with the Securities and Exchange Commission, including its
most recent Annual Report on Form 10-K and any subsequent Quarterly
Reports on Form 10-Q.
Definitions
Digital asset conversion volume:
Dollar value of transaction volume across loyalty redemption,
crypto buy/sell and gift card purchases
Transacting accounts: Unique
accounts that perform transactions on the Bakkt platform each
month
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP financial measure, which we define
as earnings before interest, income taxes, depreciation,
amortization and certain non-cash and/or non-recurring items that
do not contribute directly to our evaluation of operating results.
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. These limitations include the
following:
- share-based and unit-based compensation expense, including
changes in the fair value of our participation unit liability,
which has been excluded from Adjusted EBITDA because the amount of
such expenses in any specific period may not directly correlate to
the underlying performance of our business operations, has been,
and will continue to be for the foreseeable future, a significant
recurring expense in our business and an important part of our
compensation strategy;
- goodwill and intangible asset impairment charges have been
excluded from Adjusted EBITDA given their non-recurring nature and
non-cash impact;
- changes in the fair value of our warrant liability, which in
any specific period may not directly correlate to the underlying
performance of our business operations, and do not necessarily
reflect future cash outlays as the liability is measured at each
reporting date;
- the intangible assets being amortized, and property and
equipment being depreciated, may have to be replaced in the future,
and the non-GAAP financial measures do not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditures or other capital commitments; and
- non-GAAP measures do not reflect changes in, or cash
requirements for, our working capital needs.
Because of these limitations, Adjusted EBITDA 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 Income / (Loss) to Non-GAAP
Adjusted EBITDA ($ in millions) (unaudited)
Successor
Predecessor
3Q22
3Q21
Net loss
$(1,592.5)
$(28.8)
Depreciation and amortization
6.4
3.3
Interest (income) expense
(0.6)
0.1
Income tax (benefit) expense
(0.6)
-
EBITDA
$(1,587.4)
$(25.5)
Acquisition-related expenses
0.5
1.8
Share-based and unit-based compensation
expense
8.8
0.6
(Gain) from change in fair value of
warrant liability
(0.4)
-
Goodwill and Intangible assets
impairments
1,547.7
-
Other1
0.2
(1.0)
Adjusted EBITDA
$(30.7)
$(24.1)
1 Other comprised of ICE transition
services expense and cancellation of common units in the current
period and non-recurring bitcoin sale income, net in prior
period
Consolidated Balance Sheet ($ in millions)
Successor
As of 9/30/22
As of 12/31/21
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$159.9
$391.4
Restricted cash
16.5
16.5
Customer funds
0.6
0.6
Available-for-sale securities
113.9
-
Accounts receivable, net
22.1
18.1
Prepaid insurance
20.6
32.2
Safeguarding asset for cryptoassets
119.4
-
Other current assets
6.1
4.8
Total current assets
459.0
463.5
Property, equipment and software, net
29.4
6.1
Goodwill
137.2
1,527.1
Intangible assets, net
214.4
388.5
Deposits with clearinghouse,
noncurrent
15.2
15.2
Other assets
23.4
13.9
Total assets
$878.5
$2,414.3
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable and accrued
liabilities
$56.2
$64.1
Customer funds payable
0.6
0.6
Deferred revenue, current
3.8
4.6
Due to related party
0.9
0.6
Safeguarding obligations for
cryptoassets
119.4
-
Other current liabilities
3.4
3.7
Total current liabilities
184.3
73.6
Deferred revenue, noncurrent
3.6
4.8
Warrant liability
4.3
17.4
Deferred tax liabilities, net
2.7
11.6
Other noncurrent liabilities
24.8
12.7
Total liabilities
219.7
120.1
Stockholders’ equity:
Class A common stock ($0.0001 par value,
750,000,000 shares
authorized, 77,682,402 shares issued and
outstanding as of 9/30/22,
57,164,388 shares issued and outstanding
as of 12/31/21)
-
-
Class V common stock ($0.0001 par value,
250,000,000 shares
authorized, 186,352,843 shares issued and
outstanding as of 9/30/22,
206,271,792 shares issued and outstanding
as of 12/31/21)
-
-
Additional paid-in capital
763.2
566.8
Accumulated other comprehensive loss
(0.4)
(0.1)
Accumulated deficit
(577.5)
(98.3)
Total stockholders’ equity
185.3
468.4
Noncontrolling interest
473.5
1,825.8
Total equity
658.8
2,294.2
Total liabilities and stockholders’
equity
$878.5
$2,414.3
Consolidated Statement of Operations ($ in millions)
(unaudited)
Successor
Predecessor
3Q22
3Q21
Revenues:
Net revenues (includes related party net
revenues of
$6 and $40, respectively, and affiliate
net revenues of $(111) and $(154), respectively)
$12.9
$9.1
Operating expenses:
Compensation and benefits
37.8
22.2
Professional services
2.7
3.3
Technology and communication
4.1
3.1
Selling, general and administrative
7.8
4.4
Acquisition-related expenses
0.5
1.8
Depreciation and amortization
6.4
3.3
Related party expenses (affiliate in
Predecessor period)
0.3
0.5
Goodwill and intangible asset
impairment
1,547.7
-
Other operating expenses
0.5
0.3
Total operating expenses
1,607.8
39.0
Operating loss
(1,594.9)
(29.9)
Interest income (expense), net
0.6
(0.1)
Gain from change in fair value of warrant
liability
0.4
-
Other income, net
0.7
1.1
Loss before income taxes
(1,593.2)
(28.8)
Income tax benefit (expense)
0.6
-
Net loss
(1,592.5)
(28.8)
Less: Net loss attributable to
noncontrolling interest
(1,124.4)
Net loss attributable to Bakkt
Holdings, Inc.
(468.1)
Net loss per share attributable to Class
A
common stockholders:
Basic
$(6.11)
Diluted
$(6.11)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005826/en/
Investor Relations Ann DeVries, Head of Investor
Relations Ann.DeVries@bakkt.com
Media Lauren Post, Head of Communications
Lauren.Post@bakkt.com
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