Bakkt (US:BKKT)2024-03-26 01:08Financial Data and Key Metrics Changes - Total revenue for Q4 2023 was $214.5 million, with gross crypto services revenue of $199.4 million, significantly increasing year-over-year due to the acquisition of Bakkt Crypto [26][50] - Operating expenses, excluding crypto costs and impairments, were $27.8 million, a decrease of 55% year-over-year, primarily due to reduced compensation and benefits [28][50] - The net loss for the quarter was $78.7 million, resulting in a diluted net loss of $0.29 per share [28][50] Business Line Data and Key Metrics Changes - Net loyalty services revenue was $15.1 million, down 2% year-over-year, driven by a 9% decline in subscription and services revenue [52] - Crypto trading volumes were up 6% sequentially, but still below the overall industry growth of over 100% [30] - Assets under custody surpassed $1 billion, reflecting a 39% sequential increase due to higher coin prices [80] Market Data and Key Metrics Changes - Notional trading volumes increased over 206% from Q4 2023, indicating strong market activity [22] - The company reported 6.2 million crypto-enabled accounts at the end of Q4 2023, with 915,000 transacting accounts [79] - The crypto market is showing signs of recovery, with increased interest from retail clients and higher transaction volumes [15][22] Company Strategy and Development Direction - The company is at an inflection point, focusing on scaling the business and enhancing its product offerings, particularly in institutional crypto capabilities [9][20] - International expansion is a key focus, with recent launches in Hong Kong, Singapore, Brazil, Guatemala, and Spain [21] - The strategic priorities include growing the client network, expanding product offerings, and managing expenses effectively [41][68] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the stabilization and improvement of the crypto market, driven by recent positive developments [15][22] - The company aims to achieve adjusted EBITDA breakeven by the end of 2024, with a focus on building scale and driving financial results [70][91] - Management acknowledged the challenges faced due to stock price performance but emphasized commitment to enhancing shareholder value [35][90] Other Important Information - The company successfully closed a capital raise, alleviating concerns about its ability to continue as a going concern [17][31] - A reverse stock split is planned to address stock price issues, subject to shareholder vote [91] - The company is enhancing its trading platform to support crypto coin pair trading offerings, expected to activate in the second half of 2024 [33] Q&A Session Summary Question: Why is the stock price underperforming despite strong crypto prices? - Management noted that amended SEC filings raised concerns about going concern risks, negatively impacting stock performance [88][90] Question: What is Bakkt doing to regain shareholder confidence? - Management emphasized the importance of demonstrating a consistent track record of building scale and driving financial results towards profitability [91][92] Question: When can the company expect to reach adjusted EBITDA breakeven? - Management indicated that the goal remains to achieve this by the end of 2024, with optimism about activating revenue from new clients [70][95] Question: What is the outlook for the custody business and revenue growth? - Management expects revenue growth to pick up in the second half of the year, particularly from new partnerships and ETF providers [72][73] Question: How will Bakkt address potential future capital needs? - Management stated that having an effective shelf registration will expedite access to liquidity if needed, but currently, they believe they have sufficient liquidity for at least the next 12 months [102]