GSR II METEORA A(GSRM) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial statements and management's analysis of financial performance Item 1. Financial Statements This section presents the unaudited consolidated financial statements and detailed notes on accounting policies and financial items Consolidated Statements of Income The company reported significant year-over-year growth in revenue and net income, with common stockholders' net income turning positive Consolidated Statements of Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $172,108 | $163,066 | $336,334 | $301,605 | | Net income | $12,323 | $4,350 | $24,499 | $122 | | Net income (loss) attributable to common stockholders | $6,070 | $(2,561) | $10,264 | $(4,099) | | Net income per share - basic and diluted | $0.16 | $(0.13) | $0.35 | $(0.23) | - Revenue increased by 5.5% for the three months ended June 30, 2025, and by 11.5% for the six months ended June 30, 2025, compared to the prior year periods[10] - Net income attributable to common stockholders significantly improved from a loss of $(2,561) thousand in Q2 2024 to a gain of $6,070 thousand in Q2 2025, and from a loss of $(4,099) thousand to a gain of $10,264 thousand for the six months ended June 30, 2025[10] Consolidated Statements of Comprehensive Income (Loss) The company reported a substantial increase in total comprehensive income, with common stockholders' comprehensive income turning positive Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $12,323 | $4,350 | $24,499 | $122 | | Total comprehensive income | $12,271 | $4,355 | $24,444 | $140 | | Comprehensive income (loss) attributable to common stockholders | $6,018 | $(2,556) | $10,209 | $(4,094) | - Comprehensive income attributable to common stockholders improved from a loss of $(2,556) thousand in Q2 2024 to a gain of $6,018 thousand in Q2 2025, and from a loss of $(4,094) thousand to a gain of $10,209 thousand for the six months ended June 30, 2025[13] Consolidated Balance Sheets The company's financial position strengthened with increased assets and a shift from stockholders' deficit to positive equity Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $109,053 | $80,104 | | Cash and cash equivalents | $48,038 | $29,472 | | Cryptocurrencies | $11,563 | $1,510 | | Total liabilities | $104,360 | $96,590 | | Total Stockholders' Equity (Deficit) | $4,693 | $(16,486) | - Total assets increased by $28.9 million (36.1%) from December 31, 2024, to June 30, 2025, driven by increases in cash and cryptocurrencies[16] - Total Stockholders' Equity shifted from a deficit of $(16,486) thousand at December 31, 2024, to a positive equity of $4,693 thousand at June 30, 2025[19] Consolidated Statement of Changes in Stockholders' (Deficit) Equity The statement details equity changes, including the Up-C Restructuring, share issuances, and net income attributable to common stockholders - The Up-C Restructuring on May 30, 2025, involved the exchange of Class V common stock for Class M common stock and resulted in a cumulative impact of $(7,050) thousand, net of transaction expenses[22] - Net income attributable to Bitcoin Depot Inc. for the six months ended June 30, 2025, was $10,264 thousand, a significant increase from $(4,099) thousand in the prior year[22][25] - Issuance of Class A common stock, net of issuance costs, contributed $11,977 thousand to additional paid-in capital for the six months ended June 30, 2025[22] Consolidated Statements of Cash Flows The company generated more cash from operations, increased cash used in investing due to Bitcoin, and received less cash from financing activities Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Flows Provided by Operations | $26,403 | $11,475 | | Net Cash Flows Used In Investing Activities | $(9,159) | $(3,190) | | Net Cash Flows Provided by Financing Activities | $1,436 | $5,851 | | Net change in cash and cash equivalents | $18,566 | $14,183 | - The increase in cash used in investing activities was primarily due to an $8.4 million increase in the acquisition of Bitcoin for investment purposes[315] - Financing cash flows decreased due to lower net proceeds from notes payable, increased partnership distributions, and $8.9 million paid in connection with the Up-C restructuring, offset by $12.0 million in proceeds from equity sales[316] Notes to Consolidated Financial Statements Provides detailed explanations of accounting policies, significant transactions, and financial statement line items Note 1: Organization and Background Bitcoin Depot operates cryptocurrency kiosks and offers sales across North America, Puerto Rico, and Australia, influenced by market factors and regulatory changes - Bitcoin Depot operates BTMs, BDCheckout, and a website for cryptocurrency sales, and offers software solutions through BitAccess Inc[36] - The price of cryptocurrencies is affected by global supply/demand, inflation expectations, interest rates, exchange rates, regulatory measures, and global economic events[37] - As of June 30, 2025, the company had $62.7 million in current assets, $48.0 million in cash, $44.5 million in current liabilities, and positive stockholders' equity of $4.7 million, with sufficient liquidity for the next 12 months[39] Note 2: Basis of Presentation and Summary of Significant Accounting Policies This note outlines the basis for interim financial statements, including consolidation, reverse recapitalization, Up-C Restructuring, and key accounting policies - The unaudited interim consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules, consolidating entities controlled by majority voting interest or as primary beneficiary of VIEs[44][45] - The Merger with GSRM was accounted for as a reverse recapitalization, with Legacy Bitcoin Depot as the predecessor, reflecting assets and liabilities at historical cost[50][51] - The Up-C Restructuring on May 30, 2025, resulted in BT HoldCo becoming a wholly-owned subsidiary, an exchange of Class V common stock for Class M common stock, and the termination of the Tax Receivable Agreement for an $8.4 million cash payment[53][57][58] Note 3: Recent Accounting Pronouncements The company adopted new accounting standards for segment reporting, crypto assets, and income tax disclosures, and is assessing pending pronouncements - Adopted ASU 2023-07 (Segment Reporting) effective January 1, 2024, requiring additional disclosures on significant segment expenses[115] - Adopted ASU 2023-08 (Crypto Assets) effective January 1, 2025, requiring crypto assets to be measured at fair value with changes reflected in net income, resulting in a cumulative effect adjustment of $852 thousand to cryptocurrencies and accumulated deficit[116] - Adopted ASU 2023-09 (Income Tax Disclosures) effective January 1, 2025, requiring more detailed income tax expense, rate reconciliation, and payment disclosures[116] Note 4: Segment Reporting The company operates as a single reportable segment, with the CEO evaluating performance and allocating resources on a consolidated basis - The company operates as a single operating and reportable segment, as the CEO (CODM) reviews financial information on a global, consolidated basis[104][122] - Substantially all revenue and long-lived assets are located in the U.S[123] Net Income Related Segment Information (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $172,108 | $163,066 | $336,334 | $301,605 | | Cost of cryptocurrency sold | $123,263 | $121,759 | $240,508 | $230,223 | | Floorspace leases | $9,813 | $9,120 | $19,130 | $17,656 | | Payroll costs | $5,612 | $5,904 | $11,495 | $11,698 | | Net income | $12,323 | $4,350 | $24,499 | $122 | Note 5: Related Party Transactions The company engaged in related party transactions, including cash distributions, a Tax Receivable Agreement termination, and a Kiosk Service Agreement Cash Distributions to BT Assets (in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $7.6 | $6.8 | | Six Months Ended June 30 | $10.1 | $7.7 | - The Tax Receivable Agreement was terminated in connection with the Up-C Restructuring, resulting in an $8.4 million cash payment to former stockholders of BT Assets[129][133] - A Kiosk Service Agreement was entered into on July 10, 2024, with a CEO-owned entity, where the Company receives 30% of net profit for kiosk placement, treasury management, and back-office services[132] Note 6: Revenue The company's revenue is primarily generated from BTM Kiosks, which significantly increased for both the three and six months ended June 30, 2025 Revenue Disaggregated by Stream (in thousands) | Revenue Stream | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | BTM Kiosks | $171,864 | $162,291 | $335,644 | $300,067 | | Other Revenue | $244 | $775 | $690 | $1,538 | | Total Revenue | $172,108 | $163,066 | $336,334 | $301,605 | - BTM Kiosks revenue increased by 5.9% for the three months and 11.8% for the six months ended June 30, 2025, compared to the same periods in 2024[134] Note 7: Cost of Revenue (Excluding Depreciation and Amortization) Cost of revenue, excluding D&A, increased due to higher cryptocurrency and floorspace lease expenses from increased transaction volume and active kiosks Cost of Revenue (Excluding Depreciation and Amortization) by Category (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Cryptocurrency expenses | $123,263 | $121,759 | $240,508 | $230,223 | | Floorspace lease expenses | $9,813 | $9,120 | $19,130 | $17,656 | | Kiosk operations expenses | $6,306 | $5,829 | $10,835 | $10,116 | | Total Cost of Revenue | $139,382 | $136,708 | $270,473 | $257,995 | - Cryptocurrency expenses increased by 1.2% (QoQ) and 4.5% (YoY), while floorspace lease expenses increased by 7.6% (QoQ) and 8.3% (YoY), reflecting growth in active kiosks[136] - Depreciation and amortization excluded from cost of revenue decreased by 37.5% for the three months and 36.6% for the six months ended June 30, 2025, compared to the prior year periods[137] Note 8: Fair Value Measurements The company measures cryptocurrency holdings at fair value using Level 1 inputs, fixed-rate notes payable using Level 2, and franchise profit sharing using Level 3 estimates - Cryptocurrency holdings are measured at fair value using Level 1 inputs (quoted prices in active markets)[138] Fair Value of Fixed-Rate Notes Payable (in millions) | Date | Estimated Fair Value | Carrying Value | | :--- | :--- | :--- | | June 30, 2025 | $27.3 | $28.0 | | December 31, 2024 | $39.3 | $39.5 | - The carrying value and fair value of notes payable related to franchise profit sharing arrangements were approximately $38.6 million at June 30, 2025, and $16.7 million at December 31, 2024, using Level 3 fair value estimates[144] Note 9: Prepaid expenses and other current assets Prepaid expenses increased while other current assets decreased, resulting in a slight overall decrease in total prepaid expenses and other current assets Prepaid Expenses and Other Current Assets (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid expenses | $2,571 | $1,828 | | Other current assets | $481 | $1,248 | | Total | $3,052 | $3,076 | Note 10: Accrued expenses and other current liabilities Accrued expenses and other current liabilities increased as of June 30, 2025, primarily due to higher accrued expenses and payables to liquidity providers Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Payables to liquidity providers | $2,699 | $2,246 | | Accrued expenses | $14,234 | $12,014 | | Total | $16,933 | $14,260 | Note 11: Non-controlling interests Non-controlling interests in BT HoldCo were eliminated due to the Up-C Restructuring, while non-controlling interests in BitAccess Inc. remained at 17.86% - Non-controlling interests in BT HoldCo were eliminated as of May 30, 2025, due to the Up-C Restructuring[152] - Non-controlling interest ownership in BitAccess Inc. remained at 17.86% as of both June 30, 2025, and December 31, 2024[150] Changes in Non-Controlling Interests (in thousands) | Metric | BitAccess (June 30, 2025) | BT HoldCo (June 30, 2025) | Total (June 30, 2025) | | :--- | :--- | :--- | :--- | | Beginning balance January 1, 2025 | $2,674 | $4,472 | $7,146 | | Distributions | — | $(10,117) | $(10,117) | | Distribution related to Up-C Restructuring | — | $(8,595) | $(8,595) | | Net income (loss) | $(153) | $14,388 | $14,235 | | Ending balance June 30, 2025 | $2,537 | $0 | $2,537 | Note 12: Cryptocurrencies The company's cryptocurrency holdings, primarily Bitcoin, significantly increased for both inventory and investment purposes following the adoption of fair value accounting Cryptocurrency Inventory (in thousands, except units) | Metric | Units (June 30, 2025) | Cost Basis (June 30, 2025) | Fair Value (June 30, 2025) | Carrying Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Bitcoin (BTC) | 7.58 | $806 | $814 | $949 | Cryptocurrency Investments (in thousands, except units) | Metric | Units (June 30, 2025) | Cost Basis (June 30, 2025) | Fair Value (June 30, 2025) | Carrying Value (Dec 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Bitcoin (BTC) | 100.35 | $9,095 | $10,749 | $561 | - The company began allocating a portion of its cash reserves to Bitcoin in June 2024, with investments growing from $0.6 million at December 31, 2024, to $10.7 million at June 30, 2025[68][154] Note 13: Notes Payable The company's notes payable increased due to new kiosk franchise profit sharing and equipment financing, despite early repayment, and the credit agreement maturity was extended - The credit agreement maturity date was extended from June 23, 2026, to December 15, 2027, and an early repayment of $5.0 million was made in Q2 2025[160][161] - New kiosk franchise profit sharing arrangements resulted in $20.7 million in debt recorded during the six months ended June 30, 2025, maturing between March and August 2033[162] Notes Payable (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total notes payable principal outstanding | $66,535 | $56,237 | | Total notes payable | $66,007 | $55,479 | | Notes payable, non-current | $57,250 | $49,457 | Note 14: Common Stock, Preferred Stock and Stockholders' (Deficit) Equity The company underwent an Up-C Restructuring, converting stock classes, issuing new Class A common stock through an equity offering, and continuing a share repurchase program - The Up-C Restructuring on May 30, 2025, involved the exchange of 41,193,024 shares of Class V common stock for an equal number of Class M common stock, which have ten votes per share and economic rights similar to Class A common stock[195][173] - All outstanding Series A Preferred Stock and Class E common stock were converted to Class A common stock during the three months ended March 31, 2025[177][179] Class A Common Stock Issuance (in millions) | Period | Shares Sold | Net Proceeds | | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | 2.32 | $11.0 | | Six Months Ended June 30, 2025 | 2.92 | $12.0 | Note 15: Income Taxes The Up-C Restructuring significantly impacted the company's tax structure, making BT HoldCo a C-Corporation, revaluing deferred tax assets, and terminating the Tax Receivable Agreement - The Up-C Restructuring on May 30, 2025, resulted in BT HoldCo becoming a wholly-owned C-Corporation subsidiary, leading to a tax-free reorganization and a revaluation of cumulative temporary differences through tax expense[196][203] Income Tax (Expense) and Effective Tax Rate | Period | Income Tax (Expense) (in millions) | Effective Tax Rate | | :--- | :--- | :--- | | Six Months Ended June 30, 2025 | $(2.6) | (9.65)% | | Six Months Ended June 30, 2024 | $(0.1) | 51.97% | - The Tax Receivable Agreement was terminated on May 30, 2025, with an $8.4 million cash payment to former BT Assets stockholders, and the liability was derecognized to additional paid-in capital[208] Note 16: Share-Based Compensation Share-based compensation expense decreased year-over-year, with no PSUs granted, but significant time-based RSUs were granted, increasing unrecognized compensation expense Share-Based Compensation Expense (in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Expense | $0.7 | $1.7 | $1.1 | $2.6 | - No performance-based RSUs (PSUs) were granted during the six months ended June 30, 2025, as performance targets were not met[219] - The company granted 1,685,053 time-based RSUs during the six months ended June 30, 2025, with unrecognized compensation expense of $3.7 million as of June 30, 2025[220][221] Note 17: Net Income (Loss) Per Share The company reported positive basic and diluted net income per share, a significant improvement from prior year losses, with various securities considered for dilution Net Income (Loss) Per Share (Basic and Diluted) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) per share | $0.16 | $(0.13) | $0.35 | $(0.23) | | Weighted average common stock outstanding | 37,541,637 | 19,432,011 | 29,406,538 | 18,016,761 | - Securities not included in diluted EPS calculation due to anti-dilutive effect or unmet conditions include Public/Private Warrants (43,848,750), BT OpCo Earnouts Units (15,000,000), and 2023 Incentive Plan RSU awards (2,652,452)[226] Note 18: Leases The company manages various lease types, including short-term floorspace, office operating, and BTM kiosk finance leases, with no new BTM kiosk lease agreements - The company has short-term floorspace leases (cancellable within 30 days), an operating lease for office space, and finance leases for BTM kiosks expiring through August 2027[227][228][229] - No new BTM kiosk lease agreements were entered into during the six months ended June 30, 2025[232] Total Lease Expense (in thousands) | Lease Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Finance lease expense | $537 | $1,688 | $1,125 | $3,324 | | Operating lease expense | $289 | $261 | $596 | $361 | | Short-term lease expense | $9,582 | $8,919 | $18,636 | $17,395 | | Total lease expense | $10,408 | $10,868 | $20,357 | $21,080 | Note 19: Commitments and Contingencies The company is involved in legal proceedings, including a $23.0 million claim from Canaccord, a civil complaint from the Iowa AG, and a class action lawsuit over a data breach - Canaccord Genuity Corp. is seeking $23.0 million in damages for alleged breach of contract related to advisory services, with the dispute awaiting trial scheduling after unsuccessful mediation[238][240] - The Iowa AG filed a civil complaint alleging violations of the Iowa Consumer Fraud Act due to Bitcoin withdrawals used in fraudulent schemes, seeking injunctions and monetary penalties[241] - A class action lawsuit was filed in August 2025 alleging failure to protect PII of approximately 27,000 customers in a June 2024 data breach, seeking damages and injunctive relief[244][245] Note 20: Subsequent Events Subsequent events include the OBBBA enactment, expected to impact Q3 2025 effective tax rate, and a new $50 million ATM Equity Offering program - The "One Big Beautiful Bill Act" (OBBBA) was enacted on July 4, 2025, and is expected to change the annual effective tax rate by approximately (3.94%) in Q3 2025 due to immediate expensing of R&E expenditures[249] - A new $50 million ATM Equity Offering program became effective on July 1, 2025, replacing the original program[192][250] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and future outlook, including business overview, cryptocurrency strategy, and key metrics Business Overview Bitcoin Depot operates North America's largest BTM network, BDCheckout, and a mobile app, providing cash users access to digital finance and BTM software solutions - Bitcoin Depot operates the largest network of Bitcoin ATMs (BTMs) across North America, Puerto Rico, and Australia, with approximately 8,978 BTMs installed as of June 30, 2025[253][256] - The company's offerings include BTMs, BDCheckout (accepted at ~7,022 retail locations), and a mobile app, with a mission to bring "Crypto to the Masses™" by converting cash to Bitcoin[254][256] - Bitcoin Depot is the exclusive BTM provider for Circle K in the U.S. and Canada, with approximately 800 BTMs installed in Circle K stores as of June 30, 2025[258] Cryptocurrencies The company's revenue has not correlated with Bitcoin price volatility, as users are non-speculative, and a sophisticated Bitcoin management process minimizes price exposure - Revenue has not historically correlated with Bitcoin price volatility; for the trailing twelve months ended June 30, 2025, revenue declined by 3.2% while the market price of Bitcoin increased by 70.5%[259] - The company maintains a low balance of Bitcoin for revenue-generating operations (typically less than $1.0 million) and replenishes through liquidity providers to mitigate price volatility exposure[260] - As of June 30, 2025, the company held approximately $10.7 million of Bitcoin allocated to its treasury strategy, up from $0.6 million at December 31, 2024[261] Regulatory Environment The company operates in a rapidly evolving and uncertain cryptocurrency regulatory environment, with new state legislation and potential impacts from federal policy changes - The regulatory landscape for cryptocurrencies is rapidly evolving, with heightened focus on anti-money laundering, privacy, cybersecurity, and consumer protection[262] - In 2025, thirteen states passed legislation to regulate virtual currency kiosks, which could impact the company's financial condition and operations[264] - The overturning of the Chevron doctrine could lead to increased challenges to federal agency regulations, impacting financial institutions, consumer protection, and other regulatory regimes[263] Key Business Metrics The company monitors key business metrics like installed kiosks, user transactions, median transaction size, and customer lifetime value to assess performance and inform strategy Key Business Metrics | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Installed kiosks (at period end) | 8,978 | 8,483 | 8,457 | 8,068 | | Kiosks held with logistics providers | 1,736 | 2,314 | 2,117 | 758 | | Returning user transaction count | 5.6 | 6.3 | 6.3 | 7.1 | | New user count | 25,007 | 23,426 | 22,490 | 20,971 | | Median kiosk transaction size (in $) | 300 | 300 | 280 | 230 | | Lifetime value | 5,221 | 5,146 | 5,065 | 4,960 | - Installed kiosks increased by 11.3% from June 30, 2024, to June 30, 2025, indicating market penetration and growth[267] - Median kiosk transaction size increased by $70 (30.4%) from $230 at June 30, 2024, to $300 at June 30, 2025[267] Segment Reporting The company's financial reporting is organized into a single segment due to product, customer, and regulatory similarities, with management viewing operations on a consolidated basis - The company operates as one reportable segment due to the similarity in products, services, customer base, and regulatory environment[274] Components of Results of Operations Revenue is primarily from BTM kiosk sales, with cost of revenue driven by cryptocurrency, leases, and kiosk operations, and operating expenses including SG&A and D&A - Approximately 99.9% of revenue for the three months ended June 30, 2025, was from cryptocurrency sales at BTM kiosks, including a markup (15-50%) and a flat transaction fee ($3.00 for BTMs, $3.50 for BDCheckout)[275][276][277] - Cost of revenue primarily includes cryptocurrency expenses, floorspace lease expenses, and kiosk operations expenses (cash collection, maintenance), with BDCheckout having lower operating costs but similar profitability due to markup differences[278][279] - Operating expenses consist of selling, general and administrative expenses (customer support, marketing, professional services) and depreciation and amortization (BTMs, software, equipment)[280][281] Results of Operations The company experienced significant revenue growth and improved profitability, driven by increased kiosk operations and median transaction size, while managing cost of revenue and reducing operating expenses Results of Operations - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $172,108 | $163,066 | $9,042 | 5.5% | | Cost of revenue (excl. D&A) | $139,382 | $136,708 | $2,674 | 2.0% | | Income from operations | $15,748 | $7,604 | $8,144 | 107.1% | | Net income | $12,323 | $4,350 | $7,973 | 183.3% | Results of Operations - Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $336,334 | $301,605 | $34,729 | 11.5% | | Cost of revenue (excl. D&A) | $270,473 | $257,995 | $12,478 | 4.8% | | Income from operations | $33,546 | $8,303 | $25,243 | 304.0% | | Net income | $24,499 | $122 | $24,377 | 19,981.1% | - Selling, general and administrative expenses decreased by 4.1% (QoQ) and 2.8% (YoY) due to lower share-based compensation and insurance expenses, partially offset by increased professional fees[288][296] Liquidity and Capital Resources The company significantly improved working capital and generated strong operating cash flow, believing it has sufficient liquidity for the next 12 months, with future needs dependent on growth Working Capital (in millions) | Date | Working Capital | Cash and Cash Equivalents | Current Assets | Current Liabilities | | :--- | :--- | :--- | :--- | :--- | | June 30, 2025 | $18.1 | $48.0 | $62.7 | $44.5 | | December 31, 2024 | $(6.3) | $29.5 | $34.3 | $40.6 | - Net cash provided by operating activities increased by $14.9 million to $26.4 million for the six months ended June 30, 2025, compared to $11.5 million in the prior year[299][314] - The company expects existing cash and cash equivalents, combined with cash from operations, to be sufficient for the next 12 months[300] Non-GAAP Financial Measures The company uses Adjusted Gross Profit and Adjusted EBITDA as non-GAAP measures to evaluate operational efficiency and performance, showing significant improvements in both metrics and margins Adjusted Gross Profit and Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $30,864 | $23,382 | $62,108 | $37,753 | | Adjusted Gross Profit | $32,726 | $26,358 | $65,861 | $43,610 | | Adjusted Gross Profit Margin | 19.0% | 16.2% | 19.6% | 14.5% | Adjusted EBITDA and Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $12,323 | $4,350 | $24,499 | $122 | | Adjusted EBITDA | $18,512 | $12,664 | $38,806 | $17,549 | | Adjusted EBITDA margin | 10.8% | 7.8% | 11.5% | 5.8% | - Adjusted EBITDA increased by 46.2% for the three months and 121.1% for the six months ended June 30, 2025, compared to the prior year periods[307] Sources of Liquidity The company's liquidity is supported by its credit agreement, amended for extended maturity and early repayment, and by new kiosk franchise profit sharing arrangements - The credit agreement was amended on March 14, 2025, extending the maturity date from June 23, 2026, to December 15, 2027, and an early repayment of $5.0 million was made in Q2 2025[311][161] - The company entered into five kiosk franchise profit sharing arrangements during the six months ended June 30, 2025, recording $20.7 million in debt from upfront consideration[312][162] Cash Flows Net cash from operations significantly increased, cash used in investing rose due to Bitcoin, and cash from financing decreased due to factors including the Up-C restructuring Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $26,403 | $11,475 | | Cash (used in) investing activities | $(9,159) | $(3,190) | | Cash provided by (used in) financing activities | $1,436 | $5,851 | | Net increase in cash and cash equivalents | $18,566 | $14,183 | - Net cash provided by operating activities increased by $14.9 million, primarily due to a $24.4 million increase in net income[314] - Net cash used in investing activities increased by $6.0 million, mainly due to an $8.4 million increase in Bitcoin investment acquisitions[315] Commitments and Contractual Obligations The company's aggregate operating and finance lease obligations totaled approximately $5.8 million as of June 30, 2025, with no open purchase orders for kiosks - Aggregate operating and finance lease obligations totaled approximately $5.8 million as of June 30, 2025[317] - No open purchase orders for kiosks as of June 30, 2025[317] Litigation The company is involved in several material legal proceedings, including a $23.0 million claim from Canaccord, a civil complaint from the Iowa AG, and a class action lawsuit regarding a data breach - The company is defending against a $23.0 million claim from Canaccord Genuity Corp. for alleged breach of contract[337][339] - A civil complaint from the Iowa AG alleges violations of the Iowa Consumer Fraud Act related to fraudulent use of Bitcoin ATMs[340] - A class action lawsuit was filed alleging failure to protect PII of approximately 27,000 customers in a data breach[341] Off-Balance Sheet Arrangements The company reported no off-balance sheet arrangements - The company reported no off-balance sheet arrangements[322] Recently Issued Accounting Standards The company adopted new accounting standards for segment reporting, crypto assets, and income tax disclosures, and is assessing the impact of several pending ASUs - Adopted ASU 2023-07 (Segment Reporting), ASU 2023-08 (Crypto Assets), and ASU 2023-09 (Income Tax Disclosures) effective January 1, 2024, or January 1, 2025[323][324][325] - Pending ASUs include 2023-06 (Disclosure Improvements), 2024-03 (Expense Disaggregation), and 2025-03 (Business Combinations/Consolidation), with impacts currently being assessed[326][327][328] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks from foreign currency exchange rates and interest rates, noting no material changes since the last annual report - The company is exposed to market risks from foreign currency exchange rates and interest rates, with no material changes since December 31, 2024[329] Item 4. Controls and Procedures This section details the evaluation of disclosure controls and procedures, identifying material weaknesses in internal control over financial reporting, and outlines remediation efforts Evaluation of Disclosure Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective due to identified material weaknesses in internal control over financial reporting - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[330] Material Weaknesses in Internal Control Over Financial Reporting The company identified material weaknesses in internal control over financial reporting related to a lack of formalized systems, reliance on IT, and insufficient controls over cryptocurrency activity - Identified material weaknesses include: (i) lack of formalized internal control system for risk assessment, control design/implementation, and monitoring; (ii) reliance on IT systems and service organizations without adequate evaluation or testing of controls and data, and insufficient general IT controls; and (iii) insufficient controls to prevent potential unauthorized cryptocurrency activity[331] - These weaknesses stem from a lack of necessary business processes, personnel, and internal controls for public company accounting and financial reporting requirements[331] - Remediation efforts include hiring additional qualified accounting/financial reporting personnel, enhancing accounting processes and risk assessment, and designing/implementing/monitoring respective controls[331] Changes in Internal Control Over Financial Reporting No material changes in the company's internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[334] PART II - OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings This section details significant legal proceedings, including claims from Canaccord, the Iowa Attorney General, and a class action lawsuit regarding a data breach - Canaccord Genuity Corp. filed a claim seeking $23.0 million in damages for alleged breach of contract related to advisory services for a potential IPO or sales transaction. The estimated transaction value for fee calculation is now up to $655.0 million. Mediation was unsuccessful, and the matter awaits trial scheduling[337][338][339] - The Iowa Attorney General filed a civil complaint alleging violations of the Iowa Consumer Fraud Act, claiming Bitcoin withdrawals from ATMs were used in fraudulent schemes and seeking injunctions and monetary penalties. The Company has filed its answer and discovery is ongoing[340] - A class action lawsuit was filed in August 2025 alleging failure to safeguard PII of approximately 27,000 customers in a June 2024 data breach, seeking damages, injunctive relief, and credit monitoring. The Company has not yet been formally served[341][342][343] Item 1A. Risk Factors This section refers to the Annual Report on Form 10-