Bakkt I (BKKT) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw a challenging environment with net revenues down 8.8% year-over-year to $13.4 million, but net loss improved significantly to $6.3 million, driven by a $20 million gain on warrant liability and higher crypto services revenue.

• Revenue for Q3 2024 rose 60% year-over-year to $328.4 million, driven by a 65% increase in crypto trading volume, while loyalty services revenue declined 7% to $12.1 million.

• Crypto-enabled accounts grew to 6.5 million, and assets under custody increased 85.5% year-over-year to $938.7 million.

• Strategic focus shifted to institutional trading and brokerage, with BakktX platform launch, new partnerships, and wind-down of Bakkt Trust due to high costs and low traction.

• Liquidity was bolstered by a $46.5 million equity raise and a $40 million revolving credit facility, with management concluding sufficient capital for at least 12 months, but ongoing risks remain.

Financial highlights

• Q3 2024 total revenues were $328.4 million, up 60.4% year-over-year, mainly from gross crypto services revenues of $316.3 million (+65% YoY); loyalty services revenue was $12.1 million (-7% YoY).

• Net loss for Q3 was $6.3 million, with a diluted loss of $0.45 per share, improved from $51.7 million in Q3 2023.

• Adjusted EBITDA loss was $23.7 million, up 9.8% year-over-year due to lower take rates and loyalty revenue.

• Operating expenses totaled $355.8 million, including $315.0 million in crypto costs and execution, clearing, and brokerage fees.

• Ended Q3 with $29.0 million in cash and equivalents, $6.7 million in available-for-sale securities, and $35.3 million in restricted cash.

Outlook and guidance

• Full-year 2024 loyalty revenue forecast lowered to $49–$50 million, below previous guidance, due to lower transaction revenue.

• Crypto net revenue expected at the low end of $10–$15 million; no material BakktX revenue expected in 2024.

• Year-end available cash, equivalents, and securities projected at $34–$39 million, with cash used in operations forecast at $(84)–$(89) million.

• Management expects continued expense reductions and headcount optimization to lower cash burn.

• Revenue growth is critical to achieving sustainable operating profit; significant uncertainty remains around expansion to new markets and crypto asset environment.