Bakkt (BKKT) - 2024 Q3 - Quarterly Report

Financial Performance - Total revenues for the three months ended September 30, 2024, were $328.4 million, an increase of$123.6 million or 60.5% compared to $204.8 million for the same period in 2023 [232]. - Crypto services revenue increased by$124.6 million, or 65.0%, reaching $316.3 million for the three months ended September 30, 2024, driven by increased crypto trading volume [236]. - Loyalty services revenue decreased by$0.9 million, or 7.2%, totaling $12.1 million for the three months ended September 30, 2024, primarily due to a reduction in transaction revenue [237]. - The company reported an operating loss of$27.4 million for the three months ended September 30, 2024, compared to an operating loss of $52.9 million for the same period in 2023 [231]. - The company recorded a gain of$20.0 million from the change in fair value of warrant liabilities for the three months ended September 30, 2024, compared to a loss of $0.2 million in the same period of 2023 [251]. - The company reported a net loss of$6.291 million for the three months ended September 30, 2024, compared to a net loss of $51.749 million for the same period in 2023 [297]. Operational Metrics - As of September 30, 2024, the company had 6.5 million crypto-enabled accounts, up from 6.2 million as of December 31, 2023 [226]. - Unique monthly transacting accounts were 0.6 million for the three months ended September 30, 2024, a decrease from 2.1 million for the nine months ended September 30, 2024 [227]. - Notional traded volume was$476.5 million for the three months ended September 30, 2024, compared to $2,189.5 million for the nine months ended September 30, 2024 [228]. - Assets under custody increased to$938.7 million as of September 30, 2024, from $701.6 million as of December 31, 2023 [229]. - The safeguarding obligation liability related to crypto assets held for other parties was approximately$938.7 million as of September 30, 2024 [223]. Expenses and Costs - Operating expenses for the three months ended September 30, 2024, increased by $98.2 million, totaling$355.8 million, primarily driven by higher crypto trading costs [233]. - Crypto costs increased by $123.4 million, or 65.2$312.8 million for the three months ended September 30, 2024, compared to the same period in 2023, driven by improved trading volume [239]. - Execution, clearing, and brokerage fees rose by $1.5 million, or 216.6$2.2 million for the three months ended September 30, 2024, reflecting increased crypto transaction volume [240]. - Compensation and benefits decreased by $3.5 million, or 14.3$21.1 million for the three months ended September 30, 2024, primarily due to reductions in salaries and non-cash compensation [241]. - Professional services expenses surged by $3.4 million, or 172.5$5.3 million for the three months ended September 30, 2024, mainly due to increased legal fees [243]. Strategic Developments - The acquisition of Bakkt Crypto Solutions was completed on April 1, 2023, enhancing the company's B2B2C growth strategy [203]. - Following the SEC's approval of spot-traded bitcoin and Ethereum ETFs, institutional investor interest in crypto has significantly increased [202]. - Bakkt Crypto Solutions had agreements with over 30 fintech clients at the time of acquisition, expanding its customer base [206]. - The company is enhancing its trading platform to support larger orders and recurring buys, targeting institutional execution [204]. - Bakkt is currently exploring strategic alternatives for Bakkt Trust due to its lack of market traction and high capital costs [190]. Cash Flow and Financing - As of September 30, 2024, the company had $29.0 million in cash and cash equivalents and$35.3 million in restricted cash [271]. - The company raised net proceeds of approximately $46.5 million from Concurrent Offerings in March and April 2024 [272]. - Net cash flows provided by financing activities during the nine months ended September 30, 2024 were$44.1 million, mainly from $46.5 million in proceeds from Concurrent Offerings [285]. - Net cash inflows from changes in operating assets and liabilities for the nine months ended September 30, 2023 were primarily driven by a$24.8 million increase in customer funds and a nonrecurring return of a $15.2 million deposit [282]. - Net cash flows provided by investing activities for the nine months ended September 30, 2023 amounted to$65.7 million, including $163.2 million from the sale of available-for-sale securities and$44.3 million net cash used to acquire Bakkt Crypto [284]. Adjusted Metrics - Adjusted EBITDA loss for the three months ended September 30, 2024 increased by $2.1 million or 9.8$1.3 million decrease in revenue less crypto costs [299]. - Adjusted EBITDA loss for the nine months ended September 30, 2024 decreased by $17.0 million or 22.7$16.8 million decrease in compensation and benefits expense [299].