8-K/A: Bakkt Holdings Completes Apex Crypto Acquisition, Files Amended Financials

Bakkt Holdings has filed an amendment to its previous 8-K report to include the unaudited financial statements of Apex Crypto LLC for the three months ended March 31, 2023, following its acquisition.

Summary

• Bakkt Holdings, Inc. has filed an amendment to its previous 8-K report to include the unaudited financial statements of Apex Crypto LLC for the three months ended March 31, 2023.
• This filing also includes unaudited pro forma combined financial information for the nine months ended September 30, 2023, reflecting the acquisition of Apex Crypto.
• The acquisition of Apex Crypto was completed on April 1, 2023.
• The pro forma financials assume the acquisition occurred on January 1, 2022, for illustrative purposes.
• Apex Crypto's financial statements show a net loss of $408,179 for the three months ended March 31, 2023, compared to a net loss of $208,543 for the same period in 2022.
• Apex Crypto's total assets were $719.9 million as of March 31, 2023, compared to $517.2 million at the end of 2022.
• The pro forma combined revenue for the nine months ended September 30, 2023, is $1,010.7 million, with a net loss of $148.5 million.
• The pro forma net loss attributable to Bakkt Holdings, Inc. is $48.9 million for the nine months ended September 30, 2023.

Sentiment

Score: 4

Explanation: The document presents a mixed picture with the acquisition of Apex Crypto, but also significant losses and a decrease in revenue. The pro forma results show a large net loss, which is concerning. The sentiment is therefore negative.

Positives

• The acquisition of Apex Crypto expands Bakkt's capabilities in the cryptocurrency trading platform space.
• The pro forma combined revenue for the nine months ended September 30, 2023, is $1,010.7 million, indicating significant revenue potential.
• Apex Crypto's total assets increased from $517.2 million at the end of 2022 to $719.9 million as of March 31, 2023, showing growth.

Negatives

• Apex Crypto reported a net loss of $408,179 for the three months ended March 31, 2023.
• The pro forma net loss attributable to Bakkt Holdings, Inc. is $48.9 million for the nine months ended September 30, 2023.
• The pro forma combined operating loss is $151.0 million for the nine months ended September 30, 2023.
• Apex Crypto experienced a significant decrease in cryptocurrency revenue from $1,295.7 million in the three months ended March 31, 2022, to $445.1 million in the same period of 2023.

Risks

• The cryptocurrency market is volatile, which could impact the value of digital assets held by Apex Crypto and Bakkt.
• The company faces concentration risk with one client accounting for approximately 75.9% of Apex Crypto's business in aggregate for the three months ended March 31, 2023.
• There is a risk of loss or theft of cryptocurrencies, as well as operational risks associated with digital asset transactions.
• The company is subject to regulatory risks related to its digital asset holdings.
• The company has concentration risk in the event the third-party custodians are not able to perform in accordance with our agreements.

Future Outlook

The pro forma financial information is presented for illustrative purposes only and does not reflect the costs of any integration activities or cost savings or synergies that may be achieved as a result of the Acquisition. The actual results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

Industry Context

This acquisition reflects a trend of consolidation in the cryptocurrency and fintech industries, as companies seek to expand their service offerings and market reach. The acquisition of Apex Crypto by Bakkt is a move to integrate a crypto trading platform into Bakkt's existing ecosystem.

Comparison to Industry Standards

• The cryptocurrency revenue for Apex Crypto decreased significantly from $1,295.7 million in Q1 2022 to $445.1 million in Q1 2023, which may indicate a challenging market environment or a loss of market share compared to competitors such as Coinbase or Kraken.
• The pro forma combined net loss of $148.5 million for the nine months ended September 30, 2023, suggests that the combined entity is still in a growth phase and not yet profitable, which is not uncommon for companies in the crypto space.
• The pro forma combined revenue of $1,010.7 million for the nine months ended September 30, 2023, indicates a significant scale of operations, but the profitability needs to be improved to be competitive with established players in the financial technology sector.

Related Party Transactions

• The Company and PEAK6 Group LLC have an intercompany expense-sharing agreement.
• The Company and Apex Clearing Corporation (ACC) have an expense sharing services agreement.
• The Company has transactions with Apex Fintech Solutions Inc. related to technology and employee expenses.

Stakeholder Impact

• Shareholders will be impacted by the financial performance of the combined entity.
• Employees of both Bakkt and Apex Crypto will be affected by the integration process.
• Customers of Apex Crypto will be integrated into Bakkt's platform.
• Suppliers and creditors of both companies will be impacted by the acquisition.

Next Steps

• Bakkt will need to integrate Apex Crypto's operations and technology.
• The company will need to focus on improving profitability and managing costs.
• Bakkt will need to monitor the cryptocurrency market and adapt to regulatory changes.

Key Dates

Keywords

cryptocurrency, acquisition, financial statements, pro forma, digital assets, trading platform, Apex Crypto, Bakkt Holdings, revenue, net loss