Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bakkt Holdings Inc (BKKT, Financial) reported a 9% year-over-year increase in Q2 crypto and loyalty services revenue, indicating growth in these segments.
- The company's loyalty business showed a 4% year-over-year improvement, demonstrating resilience and potential for future growth.
- Bakkt Holdings Inc (BKKT) successfully reduced operating expenses by 43% year-over-year, reflecting effective cost management strategies.
- The approval of the Ethereum spot ETF by the SEC is expected to provide positive regulatory tailwinds for Bakkt Holdings Inc (BKKT) and the broader crypto industry.
- Bakkt Holdings Inc (BKKT) has entered into strategic partnerships with Hidden Road and Crossover Markets to enhance its BakktX platform, aiming to provide high-performance trading solutions for institutional clients.
Negative Points
- Bakkt Holdings Inc (BKKT) experienced a 30% sequential decline in Q2 crypto and loyalty services revenue, indicating potential volatility in these segments.
- The company's assets under custody decreased from $1.233 billion in Q1 to $975 million in Q2, reflecting a decline in crypto prices and volumes.
- Bakkt Holdings Inc (BKKT) reported a net loss of $35.5 million for the quarter, highlighting ongoing financial challenges.
- The company adjusted its expected net revenue contribution from crypto trading downward, reflecting lower-than-anticipated client activations and engagement metrics.
- Bakkt Holdings Inc (BKKT) has not provided a specific timeline for achieving profitability, indicating uncertainty in reaching this financial milestone.
Q & A Highlights
Q: When do you expect to reach profitability? Please provide a realistic timeframe and provide the actions you will take to achieve this? How will BakktX help in achieving profitability sooner?
A: Andy Main, President, Chief Executive Officer, Director: We anticipate reaching profitability but cannot provide specific timelines beyond what was discussed. Achieving profitability depends on executing our strategic priorities, such as expanding our client network, broadening product offerings, particularly with BakktX, and enhancing cost management. BakktX is crucial as it enhances institutional offerings, attracting more clients and driving higher volumes and revenues.
Q: How do you plan on maintaining investor appetite for long-term investors after the loss and overall value from the 1 stock split to 25 stock split? Furthermore, why was the decision made to perform a stock split of that severity? Are you planning on splitting the stock again?
A: Karen Alexander, Chief Financial Officer: The 1 to 25 stock split was necessary to meet NICE's minimum price requirements and maintain our stock listing, attracting institutional investors. It doesn't change the company's underlying value. We have no plans for another reverse stock split and are focused on driving growth and increasing intrinsic stock value through strong operational performance and strategic initiatives.
Q: Could you provide more color on how customer conversations are progressing regarding BakktX? Which customer segments will BakktX be best positioned to address at launch?
A: Ray Kamrath, Chief Commercial Officer: There's considerable demand from institutional market participants for high-performance, low-cost trading experiences. BakktX is an institutional-focused trading venue, attractive to institutional investors due to its market structure. We are seeing high demand in presales efforts and client conversations.
Q: What are the key factors driving the adjustment of expected net revenue contribution from crypto trading?
A: Karen Alexander, Chief Financial Officer: The adjustment is due to observed trading engagement metrics and updated scenarios for new client activations. We have lowered expectations for new client activations as we pivot our international strategy to enable non-US crypto natives to establish a US market presence.
Q: How does Bakkt plan to capitalize on the evolving market dynamics to drive future growth?
A: Andy Main, President, Chief Executive Officer, Director: We are shifting our strategy to provide non-US based companies with infrastructure and regulatory support to enter the US market. With a BitLicense and presence in all US states, we are well-positioned to capitalize on market dynamics and drive future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
