CEO and CFO Highlight Growth Plans for 2024 and Success in Expense Management
On November 16, WTR held a fireside chat with CEO Gavin Michael, and CFO Karen Alexander. The conversation can be accessed on demand. Overall, the discussion highlighted the company’s success in expense management, its ability to navigate the tough trading environment, and its confidence in the rest of 2023 and into 2024. Michael highlighted the results of Bakkt’s recent 3Q23 earnings, including: (1) a focus on international efforts and rollouts to take place by the end of this year (Latin American regions, Argentina, Brazil, Mexico, UK, EU, Australia, Singapore, and Hong Kong); (2) successful navigation of a tough crypto market (industry trading volumes were down 23% sequentially, but have recovered some since the end of the quarter); and (3) updates to the custody platform, including new coins (now handling eight coins, including Bitcoin, Ethereum, Bitcoin Cash, Doge, Ethereum Classic, Litecoin, Shiba Inu, and USDC). Alexander focused on the ongoing expense management effort, including guidance for FY23 and FY24 on operating cash flow usage and non-GAAP FCF usage. Looking into 2024, the company sees continued opportunities to make the business more efficient. Management highlighted a number of new clients as well as its focus on executing to onboard and activate existing clients this quarter. These include OpenNode, 3.0verse, and Legend Trading as new trading clients, and EDXM, Unchained, and LeboBTC as new custody clients. Bakkt clearly demonstrated this quarter its ability to activate recently signed clients more quickly, which should translate well to its revenue growth. On the earnings call, the company laid out extensive guidance for FY23 and FY24, including revenues, net revenues, operating cash flow usage, and non-GAAP FCF usage. For FY23, midpoint revenue guidance is for a total of $1,009 million (crypto $956 million and loyalty $53 million). For FY24, midpoint revenue is for a total of $6,266 million (crypto $6,213 and loyalty $53 million). Non-GAAP FCF midpoints are for usage of $100 million in FY23 and $53 million in FY24, with the improvement driven by cost-control actions already taken and more than 40% net revenue growth in 2024. Bakkt is building a significant backlog of client activity, which was clearly demonstrated this quarter. This should directly translate to strong revenue growth in 2024. The company reiterated that it still expects to be approximately break-even on an adjusted EBITDA basis by the end of 2024. View all our fireside chats and reports on Bakkt on our website, including a summary of 3Q23 earnings and an updated model.
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