Bakkt, Inc. · NYSE:BKKT
Bakkt — Q2 2023 Earnings Presentation
30 slides from Bakkt's earnings presentation, Aug 10, 2023
Slide 1: Second Quarter 2023 Earnings
Second Quarter 2023 Earnings August 10, 2023
Slide 2: Important notice
Important notice Unless the context otherwise provides, “we,” “us,” “our,” “Bakkt” and like terms refer to Bakkt Holdings, Inc. and its subsidiaries. FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
Slide 3: Business updates
Business updates
Slide 4: Key investor takeaways
Key investor takeaways Making strong progress executing on 2023 key priorities, including expanding crypto platform, activating and broadening client network and strategically allocating capital Winning new custody and crypto trading clients and building strategic alliances, as the synergies of our
Slide 5: End-to-end crypto capabilities
End-to-end crypto capabilities From onramps to advanced trading and secure custody CRYPTO CUSTODY CRYPTO TRADING LOYALTY REDEMPTION • Secure custody of assets, founded • Curated, secure, and regulated trading API and UI • Full spectrum of content for in traditional finance and built to options to ac
Slide 6: Client reach across high growth sectors provides efficient scalability
Client reach across high growth sectors provides efficient scalability FINTECHS • NEOBANKS TRAVEL AND ENTERTAINMENT WEALTH MANAGEMENT Strong PROCESSORS & NETWORKS client network TRADFI • MERCHANTS Institutional-grade, security and Examples of recently expanded client base Scalable reach to millions
Slide 7: We have been successfully expanding our crypto platform
We have been successfully expanding our crypto platform AP EX C RYP TO INTEGRATION WEBULL P AY: A P RIME EXAMP LE OF EXEC UTION ABILITIES • We have substantially completed the integration of Apex Crypto into • Webull approached us to develop a new innovative app with ACH our business funding* rails
Slide 8: Rapidly expanding network of clients using our advanced crypto trading capabilities
Rapidly expanding • Our reliable crypto infrastructure, including advanced trading capabilities, • Solid progress on our international expansion strategy, actively engaging network of clients has attracted strong client attention, with our existing client base to develop who are using our mostly in
Slide 9: Our custody platform is comprehensive and uncompromising
Our custody platform is comprehensive and uncompromising INSTITUTIONAL-GRADE CUSTODY PLATFORM • Recent market events have highlighted the difficulty in storing digital assets Bakkt Trust Company Regulatory compliance safely and the need for multi-custodian access and secure self-custodial LLC is an
Slide 10: Building on our best-in-class custody platform
Building on our best-in-class custody platform by continuing to invest in and enhance our offering Custody is a prominent anchor product for our clients, providing We are continuing to invest in our institutional grade custody a secure foundation for additional services and capabilities platform to
Slide 11: Our custody solutions are core to our new multi-faceted collaboration with Fireblocks
• The Fireblocks Off-Exchange solution • We have integrated Fireblocks’ battle- enables Fireblocks Network participants tested custody technology to fortify to maintain complete control of their our custody offerings, leveraging their private keys without sacrificing the new-to-market self-hosted ke
Slide 12: Financial results
Financial results
Slide 13: Summary of 2Q23 condensed results
Summary of 2Q23 condensed results 2Q23 results include Apex Crypto, which we acquired on April 1, 2023. In accordance with GAAP, we are presenting crypto services revenue and crypto costs and execution, clearing and brokerage fees on a gross basis • Total revenues of $347.6mm reflects significant in
Slide 14: 2Q23 Adjusted EBITDA (non-GAAP)
2Q23 Adjusted EBITDA (non-GAAP) 2Q23 Adjusted EBITDA loss of $(24.5)mm decreased YoY primarily due to a reduction $mm's 2Q23 1Q23 2Q22 in total compensation and benefits Net l os s $(50.5) $(44.9) $(27.6) Depreci a ti on a nd a morti za ti on 3.8 3.1 6.1 Interes t i ncome, net (0.7) (1.6) (0.2) Inco
Slide 15: 2Q23 Revenues
2Q23 Revenues 2Q23 results include Apex Crypto, which we $100 REVENUES BY PRODUCT ($MM) Loyalty Crypto $347.6 acquired on April 1, 2023. In accordance with GAAP, $80 we are presenting crypto services revenue on a $335.3 gross basis $60 $40 $14.0 $13.2 $15.9 $13.2 Crypto revenues $20 $0.7 $0.5 $0.3 $
Slide 16: 2Q23 Operating expenses
2Q23 Operating expenses 2Q23 results include Apex Crypto, which we acquired on April 1, 2023. In accordance with GAAP, we are presenting our crypto costs and execution, clearing and brokerage fees on a gross basis • Total operating expenses of $398.7mm EXPENSES ($MM) includes $334.0mm of crypto cost
Slide 17: 2Q23 Crypto services revenue and related costs
2Q23 Crypto services revenue and related costs 2Q23 results include Apex Crypto, which we acquired on April 1, 2023. In accordance with GAAP, we are presenting our crypto services revenue and crypto costs and execution, clearing and brokerage fees on a gross basis Crypto services revenue CRYPTO SERV
Slide 18: 2Q23 Key performance indicators
2Q23 Key performance indicators • Crypto enabled accounts of 6.0mm have continued to increase steadily • Crypto trading volume down 25% QoQ, outperformed overall crypto market industry • Loyalty redemption volume down 3% YoY driven by lower hotel, rental car and merchandise redemption activity • Ass
Slide 19: 2Q23 Condensed balance sheet
2Q23 Condensed balance sheet • $99.4mm of available cash, cash equivalents and As of 6/30/23 available-for-sale securities $mm's (una udi ted) As of 12/31/22 Assets • Cash usage of $18.2mm includes: Ca s h & ca s h equi va l ents $84.5 $98.3 • $5.0mm of acquisition-related expenses Ava i l a bl e-fo
Slide 20: Updated guidance for full year 2023
Updated guidance for full year 2023 Gross crypto services revenue netted against crypto costs and execution, clearing and brokerage fees represents crypto trading’s contribution to margin UPDATED GUIDANCE PRIOR GUIDANCE COMMENTS Revenues • Total revenues of ~$2,132mm - • Net revenues of $62mm - • Cr
Slide 21: We are building rapid momentum and are well-positioned to win
We are building rapid momentum and are well-positioned to win Differentiated platform Significant expansion Strategically allocate built for sustainable growth opportunities capital Our best-in-class crypto Continued build-out of Opportunistically deploy infrastructure platform international footpri
Slide 22: Notes
Notes
Slide 23: Definitions
NOTES 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
Slide 24: Revenue recognition
NOTES Revenue recognition Illustrative example of revenue and • Crypto revenue – we offer customers the ability to purchase or expense recognition sell certain crypto on our platform. We collect a fee on each transaction in the form of a spread on the market price of the Revenues crypto. We are the
Slide 25: Adjusted EBITDA
NOTES 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 charg
Slide 26: Adjusted EBITDA reconciliation – Non-GAAP
NOTES Adjusted EBITDA reconciliation – Non-GAAP $mm's 2Q23 1Q23 2Q22 Net l os s $(50.5) $(44.9) $(27.6) Depreci a ti on a nd a morti za ti on 3.8 3.1 6.1 Interes t i ncome, net (0.7) (1.6) (0.2) Income ta x expens e (benefi t) 0.2 0.0 (5.1) EBITDA $(47.2) $(43.4) $(26.8) Acqui s i ti on-rel a ted ex
Slide 27: Balance sheet
As of 6/30/23 $mm's (unaudited) As of 12/31/22 NOTES Assets Current assets Balance Cash and cash equivalents Restricted cash $84.5 24.9 $98.3 16.5 sheet Cash held in escrow — — Customer funds 0.5 0.6 Available-for-sale securities 14.9 141.1 Accounts receivable, net 21.0 25.3 Prepaid insurance 16.0 2
Slide 28: Statement of operations
NOTES $mm's 2Q23 1Q23 2Q22 Statement Revenues: Crypto services $335.3 $0.4 $0.7 of Loyalty services, net Total revenues 12.3 347.6 12.8 13.2 $13.4 $14.0 operations Operating expenses: Crypto costs 331.8 0.4 0.5 Execution, clearing and brokerage fees 2.2 0.0 — Compensation and benefits 27.1 34.1 34.2
Slide 29: Statement of cash flows
$mm's 2Q23 1Q23 2Q22 NOTES Cash flows from operating activities: Statement Net l os s $(50.5) $(44.9) $(27.6) Adjus tments to reconci l e net l os s to net ca s h us ed i n opera ti ng a cti vi ti es : of Depreci a ti on a nd a morti za ti on 3.8 3.1 6.1 Non-ca s h l ea s e expens e 0.7 0.8 0.8 Sha
Slide 30: Free cash flow reconciliation – Non-GAAP
NOTES Free cash flow reconciliation – Non-GAAP 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 assoc