Total Capital Raise of $50MM Includes Support from ICE; Prelim 2023 Results In Line with Guidance
Bakkt announced a $40 million registered direct offering with institutional investors and a $10 million concurrent registered direct offering with ICE. The raise is in line with the company’s long-term plan to achieve adjusted EBITDA break-even in year 3 after the IPO (2024) and raise capital at that time. The proceeds will be used to fund the business. The company’s recent filings disclosed a going concern issue. Today’s capital raise is intended to help the company meet its cash requirements around these issues. ICE support is key, and ICE has entered into a voting support agreement with Bakkt. ICE agreed to vote in favor of proposals allowing Bakkt to issue the remaining shares and the shares underlying the accompanying warrants in the ICE offering and the shares of Class A common stock issuable under the alternative cashless exercise provision of the Class 2 warrants. The company also announced preliminary results for 4Q23 and FY23, which were within guidance, before the market open on February 29, 2024. All line items are expected to be within prior guidance from the company, including total revenue, gross crypto revenue, net loyalty revenue, total crypto cost, net cash used in operations, and non-GAAP free cash flow usage. We are raising our 4Q23 gross crypto revenue estimate from $175 million to $198 million, lowering our loyalty services revenue from $15 million to $14 million, and increasing crypto execution costs from $174 million to $196 million. The result is an 8% reduction in our total net revenue estimate from $16 million to $15 million. Our 4Q23 EPS loss estimate remains at $0.19. Founded in 2018, Bakkt builds solutions that enable its clients to grow with the crypto economy through a regulated approach in the US and internationally. Through institutional-grade custody, trading, and on-ramp capabilities, its clients leverage products and solutions built for sustainable, long-term involvement in crypto. Regulatory compliance-first infrastructure is a differentiated strength of Bakkt. Borne out of NYSE-owner Intercontinental Exchange. Bakkt is secure and fully regulated, creating a significant moat that comes to the forefront when markets are in turmoil. Bakkt is one of less than 20 firms that have a New York Bitcoin license. All of WTR’s research on Bakkt is available on our website.
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