Bakkt (US:BKKT)2024-08-14 16:57Financial Data and Key Metrics Changes - Q2 2024 crypto and Loyalty services revenue was $14.8 million, up approximately 9% year-over-year but down 13% sequentially [5] - Operating expenses were $36.8 million, down approximately 43% year-over-year and 25% sequentially due to cost restructuring initiatives [5] - Net loss improved by 30% year-over-year, and adjusted EBITDA loss decreased by approximately 27% year-over-year [6][21] Business Line Data and Key Metrics Changes - Loyalty business generated $12.8 million, improving 4% year-over-year but decreasing 3% sequentially [5] - Crypto services revenue was $2 million, increasing 35% year-over-year but declining 46% sequentially due to a downward trend in prices and notional crypto volume [5] - Assets under custody were $975 million, down from $1.233 billion at the end of Q1 but up from $660 million in the same quarter last year [7] Market Data and Key Metrics Changes - Total notional traded volume was $672 million, with $494 million attributable to crypto and $178 million to Loyalty redemptions [18] - Crypto notional traded volume was down 42% sequentially but up 48% year-over-year [18] Company Strategy and Development Direction - The company is focused on expanding its institutional crypto business and enhancing its BakktX platform for high-performance trading [8][10] - A shift in strategy to support non-US companies entering the US market is underway, leveraging its BitLicense and fiat rails [13] - The company aims to broaden its client network and product offerings while managing costs effectively [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability through strategic initiatives, particularly with the BakktX platform [30] - The regulatory landscape is improving, with recent approvals for spot Ethereum ETFs expected to drive mainstream adoption [7] - The company anticipates further improvements in cash burn as it executes strategic initiatives and lapses one-time restructuring costs [16] Other Important Information - The company has entered into a line of credit agreement with Intercontinental Exchange, providing access to up to $40 million of additional cash [24] - Full-year revenue guidance for net Loyalty revenues remains at $53 million to $57 million, while gross crypto revenue expectations have been adjusted to $2.515 billion to $2.770 billion [25][26] Q&A Session Summary Question: When do you expect to reach profitability? - Management anticipates reaching profitability but cannot provide specific timelines, emphasizing the importance of executing strategic priorities and enhancing cost management [30] Question: How do you plan on maintaining investor appetite after the stock split? - The stock split was necessary to meet NYSE requirements and attract institutional investors, and management has no plans for another split, focusing instead on driving growth [31] Question: Can you provide more details on BakktX customer conversations? - There is considerable demand for institutional trading venues, and BakktX is positioned to address this market with its high-performance, low-cost trading solutions [34]