Bakkt Announces Preliminary 2023 Financial Results; Preliminary Estimates Within Previously Provided Guidance
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Insights
The disclosed preliminary financial results of Bakkt Holdings offer a glimpse into the company's performance, particularly in the realm of cryptocurrency-related revenue. With total revenues for the fourth quarter estimated between $213 million and $215 million and gross crypto revenues making up the majority of this, it's clear that the company's financial health is heavily tied to the volatile crypto market. The narrow range of estimated revenues suggests a level of predictability in Bakkt's business model, despite the inherent unpredictability of cryptocurrency markets.
However, the high correlation between gross crypto revenues and total crypto costs, with only a minor difference, raises questions about the company's profitability margins. This is further complicated by the estimated free cash flow usage, which suggests that Bakkt is consuming more cash than it generates. Investors should be cautious of the company's long-term sustainability if it continues to operate with negative free cash flow.
Moreover, the large range provided for the fiscal year guidance indicates significant uncertainty, which could be a red flag for investors. It is crucial to monitor the final audited results and any potential adjustments, especially non-cash asset impairments, which could materially impact the financial statements and investor perceptions.
From a market perspective, Bakkt's preliminary results indicate a stable adherence to their previous guidance, which can be interpreted as a positive signal to investors and analysts who seek consistency and reliability in forecasts. The estimated figures being 'in line with prior guidance' may help in maintaining investor confidence, especially in a market sector that is characterized by high volatility.
However, the estimated net cash used in operating activities and the free cash flow usage are points of concern, as they could indicate underlying issues in cash management or operational efficiency. These metrics are crucial for understanding the company's liquidity and operational health, which are critical for long-term growth and capital investment strategies.
Furthermore, the crypto market is known for its rapid changes in regulatory landscapes and consumer sentiment. Any shifts in these areas could dramatically affect Bakkt's future performance, making the current stability potentially short-lived. Keeping an eye on market trends and regulatory developments will be essential for stakeholders to anticipate the company's adaptability and resilience.
The statement that the financial information has not been audited and is subject to revision is a standard disclaimer, yet it carries significant legal implications. It serves as a caution to stakeholders that the presented figures are preliminary and may not fully represent the company's fiscal position. The mention of potential adjustments, including asset impairments, is a prudent reminder of the inherent uncertainties in financial reporting, particularly in industries like cryptocurrency that may face rapid changes in asset valuations.
Investors should be aware that forward-looking statements are inherently uncertain and rely on assumptions that may change. The legal language used here is designed to mitigate potential litigation risk by making clear that these numbers are estimates and subject to change. This can have a material impact on stock prices and investor decisions, especially if the finalized financials differ significantly from these preliminary estimates.
Given the potential for material adjustments, stakeholders must approach these figures with caution and await the audited results before making definitive judgments on the company's financial health and strategic direction.
Preliminary financial results for fourth quarter 2023
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Total revenues for the fourth quarter of 2023 are estimated to be in a range of
$213 million $215 million -
Gross crypto revenues for the fourth quarter of 2023 are estimated to be in a range of
$197 million $199 million -
Net loyalty revenues for the fourth quarter of 2023 are estimated to be in a range of
$13 million $15 million -
Total crypto costs and execution, clearing and brokerage fees for the fourth quarter of 2023 are estimated to be in a range of
$196 million $198 million -
Available cash, cash equivalents and available-for-sale securities at year-end 2023 are estimated to be in a range of
$68 million $70 million -
Net cash used in operating activities (excluding customer funds payable) for the fourth quarter of 2023 is estimated to be in a range of
$16 million $18 million -
Free cash flow usage (non-GAAP) for the fourth quarter of 2023 is estimated to be in a range of
$18 million $20 million
Preliminary financial results for full year 2023
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Total revenues for fiscal year 2023 are estimated to be in a range of
$778 million $780 million $750 million $1,268 million -
Gross crypto revenues for fiscal year 2023 are estimated to be in a range of
$725 million $727 million $697 million $1,215 million -
Net loyalty revenues for fiscal year 2023 are estimated to be in a range of
$51 million $53 million $53 million -
Total crypto costs and execution, clearing and brokerage fees for fiscal year 2023 are estimated to be in a range of
$720 million $722 million $693 million $1,208 million -
Net cash used in operating activities (excluding customer funds payable) for fiscal year 2023 is estimated to be in a range of
$87 million $89 million $86 million $89 million -
Free cash flow usage (non-GAAP) for fiscal year 2023 is estimated to be in a range of
$100 million $102 million $99 million $102 million
The preliminary financial information set forth above has not been audited by Bakkt’s independent registered accounting firm and is subject to revision and is anticipated to be finalized in connection with the completion of the Bakkt’s Annual Report on Form 10-K for the year ended December 31, 2023. Bakkt’s preliminary estimates above are not a comprehensive statement of Bakkt’s financial results and are not necessarily indicative of the results to be expected as of or for the fiscal period ended December 31, 2023, or any future period. Accordingly, you should not place undue reliance on these preliminary estimates. Bakkt expects to report its fourth quarter 2023 results during a conference call in March, at which point it will discuss its 2023 financial results in more detail.
During the course of Bakkt’s quarter-end closing procedures and review process, including the finalization of its financial statements for and as of the period and year ended December 31, 2023, Bakkt may identify items that would require it to make adjustments, which may be material, including but not limited to potential non-cash asset impairments, to the information presented above. As a result, the estimates above constitute forward-looking information and are subject to risks and uncertainties, including possible adjustments to preliminary results.
About Bakkt
Founded in 2018, Bakkt builds solutions that enable our clients to grow with the crypto economy. Through institutional-grade custody, trading, and onramp capabilities, our clients leverage technology that’s built for sustainable, long-term involvement in crypto.
Bakkt is headquartered in
Bakkt-C
Source: Bakkt Holdings, Inc.
Note on Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, but are not limited to, Bakkt’s preliminary financial results and the timing for Bakkt announcing its audited financial results, among others. Forward-looking statements can be identified by words such as “will,” “likely,” “expect,” “continue,” “anticipate,” “estimate,” “believe,” “intend,” “plan,” “projection,” “outlook,” “grow,” “progress,” “potential” or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of Bakkt’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and beyond Bakkt’s control. Actual results and the timing of events may differ materially from the results anticipated in such forward-looking statements as a result of the following factors, among others: changes resulting from the Company’s finalization of its financial statements for and as of the period and year ended December 31, 2023; information or new changes in facts or circumstances that may occur prior to the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 that are required to be included in such annual report; the Company's failure to implement the Company's business plans or strategies; and other risks and uncertainties indicated in Bakkt’s filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements. Such forward-looking statements relate only to events as of the date on which such statements are made and are based on information available to us as of the date of this press release. Unless otherwise required by law, we undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events.
Non-GAAP Financial Measures
Free Cash Flow is a non-GAAP financial measure. Free Cash Flow is cash flow from operations adjusted for “capitalized internal use software development costs and other capital expenditures” and “interest income.” We adjust for capitalized expenses associated with internally developed software for our technology platforms given they are a large component of our ongoing expense base given our position as a technology platform company.
Information reconciling forward-looking Free Cash Flow to the comparable GAAP financial measure is unavailable to us without unreasonable effort. We are not able to provide a reconciliation of forward-looking Free Cash Flow to the comparable GAAP financial measure because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted, such as timing of customer payments for account receivables and payment terms for operating expenses. Preparation of such reconciliations would require a forward-looking statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to us without unreasonable effort (as specified in the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K). We provide a range for our Free Cash Flow forecast that we believe will be achieved, however we cannot accurately predict all the components of the Free Cash Flow calculation. We provide a Free Cash Flow because we believe that Free Cash Flow, when viewed with our results under GAAP, provides useful information for the reasons noted above. However, Free Cash Flow is not a measure of liquidity under GAAP and, accordingly, should not be considered as an alternative to net cash used in operating activities (excluding customer funds payable) as an indicator of liquidity.
Reconciliation of Net Cash Used in Operating Activities (Excluding Customer Funds Payable) to Non-GAAP Free Cash Flow ($ in millions) (unaudited) |
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4Q23E |
FY 2023E |
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$ in millions |
Low |
High |
|
Low |
High |
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Net cash used in operating activities (excluding customer funds payable) |
( |
) |
( |
) |
|
( |
) |
( |
) |
Capex* |
(1 |
) |
(1 |
) |
|
(9 |
) |
(9 |
) |
Interest income, net |
(1 |
) |
(1 |
) |
|
(4 |
) |
(4 |
) |
Free Cash Flow |
( |
) |
( |
) |
|
( |
) |
( |
) |
* Capex includes capitalized internal-use software development costs and other capital expenditures |
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Investor Relations
Ann DeVries, Head of Investor Relations
Ann.DeVries@bakkt.com
Media
press@bakkt.com
Source: Bakkt Holdings, Inc.
FAQ
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