Bakkt, Inc. · NYSE:BKKT
Bakkt — Q3 2022 Earnings Presentation
31 slides from Bakkt's earnings presentation, Nov 10, 2022
Slide 1: Third Quarter 2022 Earnings
8 Bakkt. Third Quarter 2022? Earnings November 10, 2022
Slide 2: Important notice
Important notice 2 Unless the context otherwise provides, “we,” “us,” “our,” “Bakkt” and like terms refer (i) prior to October 15, 2021 (the closing date of the business combination), to Bakkt Opco Holdings, LLC (f/k/a Bakkt Holdings, LLC, “Opco”) and its subsidiaries and (ii) after October 15, 2021
Slide 3: Our vision: Connecting the digital economy
OUR VISION Connecting the digital economy We power commerce by enabling consumers, businesses and institutions to unlock value from digital assets.
Slide 4: Our platform is focused on simplified solutions
KEY HIGHLIGHTS 4 Our platform is focused on simplified solutions * These products are under development and subject to regulatory approval Institutional-grade, security and compliance-focused technology platform built to embed into partner experiences Crypto rewards* Pay with crypto and crypto payou
Slide 5: Focused execution
Focused execution KEY HIGHLIGHTS 5 Acquisition of Apex Crypto Continued growth in our core businesses • Announced signing of agreement for acquisition of Apex Crypto from Apex Fintech Solutions • Strategically compelling with immediate scale, and financially accretive to our business • Executing wit
Slide 6: Apex Crypto acquisition
6 Apex Crypto acquisition
Slide 7: Acquiring Apex Crypto is expected to accelerate our strategy
Acquiring Apex Crypto is expected to accelerate our strategy APEX CRYPTO ACQUISITION UPDATE 7 Positions Bakkt as an industry leading one-stop- shop across digital assets • Initial payment $55mm cash • Up to an additional $145mm in stock and seller notes upon achieving financial targets • Expected to
Slide 8: Acquisition enhances our path to profitability
Total cumulative incremental free cash flow of ~$80mm Acquisition enhances our path to profitability APEX CRYPTO ACQUISITION UPDATE 8 2022E 2025E Apex Crypto trading volume • Expect Apex Crypto to be accretive to revenue growth rate and adjusted EPS in the first full year following deal close • Targ
Slide 9: Transaction consideration linked to financial performance
Transaction consideration linked to financial performance APEX CRYPTO ACQUISITION UPDATE 9 • Stock and seller notes consideration of up to $145mm contingent on achieving certain financial targets • Contingent earnout targets reflect Apex Crypto gross profit1 increasing YoY by ~175% in 2023 and ~50%
Slide 10: Apex Crypto accelerates our roadmap and adds new capabilities
APEX CRYPTO ACQUISITION UPDATE 10 Apex Crypto accelerates our roadmap and adds new capabilities 30+ Additional Coins Partner configurable access to buy/sell for over 30 coins Deposits and Withdrawals Partner configurable open loop for BTC, BCH and LTC Staking* Ability to stake limited coins NFT Mark
Slide 11: Apex Crypto complements our existing platform
APEX CRYPTO ACQUISITION UPDATE 11* These products are under development and subject to regulatory approval Apex Crypto complements our existing platform Apex Crypto’s technology stack & capabilities will enhance our already robust and compliant platform and infrastructure Crypto buy/sell/hold Crypto
Slide 12: Apex Crypto provides an attractive addressable market
Apex Crypto provides an attractive addressable market APEX CRYPTO ACQUISITION UPDATE 12Note: Apex Crypto data as of September 30, 2022 Attractive fintech sector Scalability with AFS Our acquisition of Apex Crypto provides instant access to new clients through AFS’s client network and the broader hig
Slide 13: Transformational acquisition expected to provide value to all stakeholders
Transformational acquisition is expected to provide value to all stakeholders APEX CRYPTO ACQUISITION UPDATE 13 • Instant access to new products and features • Highly competitive pricing through multiple liquidity providers • Instantly broadens product offering • Speed-to-market of new features & ca
Slide 14: Other key strategic highlights
14 Other key strategic highlights
Slide 15: Focused execution: Global Payments
Focused execution: Global Payments KEY HIGHLIGHTS 15 Integration work is complete, opening the door for additional use cases Collaborating closely with engineering and go-to-market teams Ongoing engagement to raise awareness, including cooperation on blog and social posts Launched a pilot to NetSpen
Slide 16: Strengthened our B2B2C sales and marketing initiatives
• Refreshed brand is more consistent with our vision to connect the digital economy and our B2B2C strategy • Strategic focus on creating experiences that provide crypto access and adoption, and drive more utility with assets to deepen loyalty • Our new, primarily black and white visual identity help
Slide 17: Financial results
Financial results
Slide 18: Summary of 3Q22 condensed results
Summary of 3Q22 condensed results FINANCIAL RESULTS 18 • Net revenue of $12.9mm increased by $3.8mm, or 41%, YoY primarily driven by transaction revenue from the loyalty redemption business • Operating expense of $60.0mm (excluding impairment) • Non-cash goodwill and intangible assets impairments of
Slide 19: 3Q22 Adjusted EBITDA (non-GAAP)
3Q22 Adjusted EBITDA (non-GAAP) FINANCIAL RESULTS 19 • Adjusted EBITDA loss of $(30.7)mm • Adjusted EBITDA loss increased due to higher operating expenses 1Other comprised of ICE transition services expense and cancellation of common units in the current period and non-recurring bitcoin sale income,
Slide 20: 3Q22 Net revenue
3Q22 Net revenue FINANCIAL RESULTS 20 $6.4 $6.8 $6.0 $6.6 $6.3 $2.7 $6.8 $6.5 $7.0 $6.6 $- $2 $4 $6 $8 $10 $12 $14 $16 3Q21 4Q21 1Q22 2Q22 3Q22 Net revenue ($mm) Subscription and service Transaction $12.9 • Net revenue of $12.9mm increased 41% YoY • Transaction revenue of $6.6mm increased 148% YoY p
Slide 21: 3Q22 Operating expense
3Q22 Operating expense FINANCIAL RESULTS 21 Total expenses • Operating Expense of $60.0mm (excluding impairment) • Goodwill and intangible assets non-cash impairments of $1,547.7mm Compensation expenses • Compensation expense of $37.8mm up $15.6mm, or 70% YoY, including non-cash compensation increas
Slide 22: 3Q22 Key performance indicators
3Q22 Key performance indicators FINANCIAL RESULTS 22 • 3Q22 transacting accounts across our platform up 21% YoY • Digital asset conversion volume up 73% YoY • Strong YoY growth led by loyalty redemption from increased travel activity • Digital asset conversion volume related to travel has remained w
Slide 23: 3Q22 Condensed balance sheet
3Q22 Condensed balance sheet FINANCIAL RESULTS 23 • Strong balance sheet with $273.7mm of available cash and other highly liquid assets • Noncash goodwill and intangible assets impairments charge of $1,547.7mm in accordance with GAAP; does not reflect issues with core business fundamentals, which re
Slide 24: Outlook expectations
Outlook expectations OUTLOOK 24 Preliminary 2023 outlook • Cash usage expected to decline due to increased revenue in 2023, completion of large-dollar investments in 2022 and benefits from the 4Q restructuring related to further focusing the business • Expect operating margin expansion in 2023 due t
Slide 25: We are well-positioned to connect the digital economy
We are well-positioned to connect the digital economy CLOSING REMARKS 25 Well-positioned with significant opportunity to scale • Industry leading one-stop- shop across digital assets • Apex Crypto will bolster our crypto product offering and expand client verticals • Client base provides attractive
Slide 26: Notes
Notes
Slide 27: Adjusted EBITDA
Adjusted EBITDA 27 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
Slide 28: Definitions
Definitions NOTES 28 Financial Combined: Represents the combination of Predecessor and Successor for the applicable period. This is a non-GAAP figure Predecessor: Represents the results of Bakkt Holdings, LLC prior to 10/15/21 Successor: Represents the results of Bakkt Holdings, Inc. from 10/15/21 o
Slide 29: Balance sheet
Balance sheet NOTES 29 0 As of 9/30/22 As of 12/31/21 $mm's (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 ass
Slide 30: Statement of operations (unaudited)
Statement of operations (unaudited) NOTES 30 Successor Predecessor $mm's 3Q22 2Q22 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 $13.6 $9.1 Operating expenses: Compensation and benefi
Slide 31: Adjusted EBITDA reconciliation – Non-GAAP (unaudited)
Adjusted EBITDA reconciliation – Non-GAAP (unaudited) NOTES 31 1Other 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. Note: Adjusted EBITDA is a non-GAAP financial measure. For more inform