Q2 2024 Bitcoin Depot Inc Earnings Call

Speaker Change: Please wait. The conference will begin shortly. Thank you for watching.

Sarah: Shortly. [inaudible] Good morning, and welcome to Bitcoin Depot's second quarter 2024 conference call. My name is Sarah, and I'll be your operator today. Before this call, Bitcoin Depot issued its financial results for the second quarter ended June 30, 2024, in a press release. A copy will be filed in a report on Form 8K filed with the SEC and will be available in the Investor Relations section of the company's website.

Brandon Mintz: Thank you everybody for joining the call. We appreciate you following the company and have a great day. Thank you for joining us today for Bitcoin Depot's conference call; you may now disconnect. Please wait, the conference will begin shortly.

Sarah: Good morning, and welcome to Bitcoin Depot's second quarter 2024 conference call. My name is Sarah, and I'll be your operator today.

Speaker Change: Before this call, Bitcoin Depot issued its financial results for the second quarter ended June 30, 2024 in a press release. A copy will be furnished in a report on Form 8K filed with the SEC and will be available in the Investor Relations section of the company's website.

Cody Slaw: Joining us on today's call are Bitcoin Depot CEO Brandon Mintz and CFO Glenn Leibowitz. Following their remarks, we will open the call for questions. Before we begin, Cody Slaw from Gateway Group will make a brief introductory statement. Mr. Slaw, please proceed.

Sarah: Joining us on today's call are Bitcoin Depot CEO Brandon Mints and CFO Glenn Leibowitz. Following their remarks, we will open the call for questions. Before we begin, Cody Slaw from Gateway Group will make a brief introductory statement. Mr. Slaw, please proceed.

Cody Slaw: Thank you, operator. Good morning, everyone. Before management begins its formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statement.

Cody Slaw: Thank you, operator. Good morning, everyone. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties.

Speaker Change: As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forelooking statements.

Cody Slaw: For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the SEC. We disclaim any obligation that we have undertaken to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial measures and encourage you to read our disclosures, the Reconciliation Table to applicable GAAP measures, and our earnings release carefully as you consider these metrics.

Speaker Change: For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the SEC.

Speaker Change: We disclaim any obligation that we're undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial measures and encourage you to read our disclosures.

Speaker Change: And the reconciliation table to applicable gap measures and our earnings release carefully as you consider these metrics

Cody Slaw: We refer you to our filings with the SEC for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption risk factors in our recent filings. You may get Bitcoin Depot's SEC filings for free by visiting the SEC website at cc.gov.

Speaker Change: We refer you to our filings with the SEC for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances including but not limited to risks and uncertainties identified under the caption risk factors in our recent filings.

Speaker Change: You may get Bitcoin Depot's SEC filings for free by visiting the SEC website at cc.gov.

Cody Slaw: I'd like to remind everyone this call is being recorded and will be made available for replay via a link available in the investor relations section of Bitcoin Depot's website. A supplemental earnings presentation highlighting our Q2 performance has also been made available on our IR website. Now I will turn the call over to Bitcoin Depot's CEO, Brandon Mintz.

Speaker Change: I'd like to remind everyone this call is being recorded. It will be made available for replay via a link available in the investor relations section of Bitcoin Depot's website. A supplemental earnings presentation highlighting our Q2 performance has also been made available on our IR website.

Speaker Change: Now, I will turn the call over to Bitcoin Depot's CEO, Brandon Mintz. Brandon?

Brandon Mintz: Thanks, Cody. And good morning, everyone. Thank you for joining our second quarter 2024 conference call. I'd like to briefly discuss some recent developments across our business and what gives us confidence for the year ahead. We built on our momentum in the second quarter with sequential growth in revenue, net income, and adjusted EBITDA. We continued to focus on our growing kiosk network and building a robust pipeline of major regional and national retail partners to enhance their footprint.

Brandon Mintz: Thanks, Cody, and good morning, everyone. Thank you for joining our second quarter 2024 conference call. I'd like to briefly discuss some recent developments across our business and what gives us confidence in the year ahead.

Brandon Mintz: We built on our momentum in the second quarter with sequential growth in revenue, net income, and adjusted EBITDA.

Brandon Mintz: We continued to focus on our growing kiosk network and building a robust pipeline of major regional and national retail partners to enhance their footprint.

Brandon Mintz: In fact, we proudly announced just last month that we achieved and exceeded our ambitious goal of deploying over 8,000 Bitcoins, five months ahead of schedule with 8,180 kiosks. This is a testament to the relentless dedication of our team and our strategic initiatives aimed at expanding Bitcoin's accessibility. Building on the momentum we've already gained in the first half of 2024, we have no intention of slowing down as we gear up to provide even more customers with seamless access to the crypto ecosystem. Based along with our acquisition of over 2,700 kiosks in 2024, we'll increase our total kiosk fleet size to over 10,400 kiosks.

Brandon Mintz: In fact, we proudly announced just last month that we achieved and exceeded our ambitious goal of deploying over 8,000 Bitcoin ATMs.

Brandon Mintz: five months ahead of schedule with 8,180 kiosks.

Brandon Mintz: This is a testament to the relentless dedication of our team and our strategic initiatives aimed at expanding Bitcoin's accessibility.

Brandon Mintz: Building on the momentum we've already cultivated in the first half of 2024, we have no intention of slowing down as we gear up to provide even more customers with seamless access.

Brandon Mintz: to the crypto ecosystem. This, along with our acquisition of over 2,700 kiosks in 2024, will increase our total kiosk fleet size to over 10,400 kiosks once all kiosks are delivered, furthering our industry-leading market share.

Brandon Mintz: Over the past three quarters, we have focused heavily on relocating underperforming BTMs to new locations, which historically has shown to increase average profitability per kiosk over time.

Brandon Mintz: Over time, the increase in profitability typically continues to grow as the BTMs ramp up. While it's not apparent in our consolidated numbers for the quarter, the relocation strategy is working and is showing a lot of growth potential based on the business as it did today. For example, in June of this year, the average monthly revenue per kiosk for BTMs that have been installed for 12 to 24 months was 85.6% higher than BTMs installed for less than 12 months. In this calculation, the BTMs installed for less than one year averaged roughly four months of operation since the time of installation at the location.

Brandon Mintz: While we do not get that benefit immediately.

Brandon Mintz: Over time, the increase in profitability typically continues to grow as the BTMs ramp up. While it's not apparent in our consolidated numbers for the quarter, the relocation strategy is working and it's showing a lot of growth potential based into the business as it sits today.

Brandon Mintz: For example, in June of this year, the average monthly revenue per kiosk for BTMs that have been installed for 12 to 24 months was 85.6 percent higher than BTMs installed for less than 12 months.

Brandon Mintz: In this calculation, the BTMs installed for less than one year averaged roughly four months of operation since the time of install at the location.

Brandon Mintz: Other key performance indicators that tell us our kiosk optimization process is working include the consistency and returning user transaction counts and the recent list and median transaction size. It's important to note that while we regularly optimize our kiosk footprint, our repositioning efforts will likely slow in the coming quarter. This year, we are focused on footprint growth to expand our market share and competitive position. As of the end of Q2 2024, around 3,000 of our kiosks have been installed for less than one year, and thus still need more time to ramp up to their full potential.

Brandon Mintz: Other key performance indicators that tell us our kiosk optimization process is working include the consistency and returning user transaction counts and the recent list and median transaction size.

Brandon Mintz: It's important to note that while we regularly optimize our kiosk footprint, our repositioning efforts will likely slow in the coming quarters. This year, we are focused on footprint growth to expand our market share and competitive positioning.

Brandon Mintz: As of the end of Q2 2024, around 3,000 of our kiosks have been installed for less than one year, and thus still need more time to ramp up to their full potential.

Brandon Mintz: Additionally, once we receive delivery of all of our purchased and ordered kiosks, we will reach an intelligence asleep of roughly 10,000 total BPMs by the time they are all installed. This number accounts for about 400 kiosks in transit that are undergoing maintenance or repair at any given time.

Brandon Mintz: Additionally, once we receive delivery of all of our purchased and ordered kiosks, we will reach an install suite of roughly 10,000 total BPMs by the time they are all installed.

Brandon Mintz: This number accounts for about 400 kiosks in transit that are undergoing maintenance or repair at any given time.

Brandon Mintz: Between the ramp of our newly installed kiosks and the existing kiosks, we will receive over the course of 2024 from orders and purchases. There is very large growth potential based on the business as it sits today. Furthering our North American expansion in the second quarter, we announced a new retail partnership with Norea Energy Corporation, a leading convenience store brand in the Northeast, with operations across 175 company-owned C-stores and fuel retailers. Beginning in Q2 2024, Bitcoin Depot deployed its kiosks at 57 Nerea locations across Massachusetts, Maine, and New Hampshire.

Brandon Mintz: Between the ramp of our newly installed kiosks and the kiosks we will receive over the course of 2024 from orders and purchases, there is very large growth potential baked into the business as it sits today.

Brandon Mintz: Furthering our North American expansion in the second quarter, we announced the new retail partnership with Norea Energy Corporation, a leading convenience store brand based in the Northeast.

Brandon Mintz: with operations across 175 company-owned C-stores and fuel retailers.

Brandon Mintz: Beginning on Tuesday, 2024, Bitcoin Depot deployed its kiosks into 57 Norea locations across Massachusetts, Maine, and New Hampshire.

Brandon Mintz: We also continue to strengthen our profit share program with Sopris Capital. In July, we announced that they'll provide 200 additional BTM to Sopris. As a reminder, our profit sharing partners like Stopras benefit from our expertise in operating BPMs and integration with FedEx with software, the premier software suite for Bitcoin ATMs. Our profit share program provides the capital efficient strategy for Bitcoin Depot's continuous expansion this year as we aim to have the largest installed fleet of Bitcoin ATMs in the company's history.

Brandon Mintz: We also continue to strengthen our profit share program with Sopris Capital. In July, we announced that they'll 200 additional BTM for Sopris.

Brandon Mintz: As a reminder, our profit-sharing partners like Sopris benefit from our expertise in operating BTMs and integration with BitAxis Software, the premier software suite for Bitcoin ATM operations.

Speaker Change: Our profit share program provides the capital-efficient strategy for Bitcoin Depot's continuous expansion this year, as we aim to have the largest installed fleet of Bitcoin ATMs in the company's history.

Brandon Mintz: Given the sequential growth in our financials, our strong cash flow dynamics, and the continued buildup in our sales pipeline, we are well positioned to execute our growth plan. As a reminder, this point comprises three main categories. First is international expansion. We have shipped over 200 kiosks for our upcoming Australia launch, and we are anticipating regulatory approval. Additionally, Puerto Rico is fully operational with over 100 GFs installed.

Speaker Change: Given the sequential growth in our financials, our strong cash flow dynamics, and a continued buildup in our sales pipeline, we are well positioned to execute our growth plan. As a reminder, this plan comprises of three main categories.

Speaker Change: First is international expansion. We have shipped over 200 kiosks for our upcoming Australia launch and we are anticipating regulatory approval soon. Additionally, Puerto Rico is fully operational with over 100 kiosks installed.

Brandon Mintz: Second, we are focusing additional attention on the ProfitShare program to grow our footprint and profitability. We have a strong pipeline of opportunities that can provide a capital-efficient strategy for Bitcoin Depot to continue expanding this year while enhancing profitability. Third, we will continue to pursue additional licenses to expand our access points for customers. New York State remains the largest potential growth opportunity for our kiosks in the U.S., and we are in regular dialogue with regulators to secure licenses to operate in the state.

Speaker Change: Second, we are focusing additional attention on the ProfitShare program to grow our footprint and profitability. We have a strong pipeline of opportunities that can provide a capital-efficient strategy for Bitcoin Depot to continue expanding this year while enhancing profitability.

Speaker Change: Third, we will continue to pursue additional licenses to expand our access points for customers.

Speaker Change: New York State remains the largest potential growth opportunity for our kiosks in the U.S. and we are in regular dialogue with regulators to secure license to operate in the state.

Brandon Mintz: With no existing BTM operators in the state today, according to Coinasiumradar.com, we believe our opportunity for kiosk deployment will be substantial, and our unit economics would be strong. At this moment, we do not have any updates on the expected timeline for approval, but hopefully, it could happen at some point in 2024.

Speaker Change: With no existing BTM operators in the state today, according to CoinATMradar.com.

Speaker Change: We believe our opportunity for kiosk deployment will be substantial and our unit economics would be strong. At this moment, we do not have any updates on the expected timeline for approval, but hopefully it could happen at some point in 2024.

Brandon Mintz: Lastly, we will continue to explore growth opportunities internationally beyond recent announcements on our expansion in Puerto Rico and Australia. While our focus remains within North America, where approximately 90% of BTMs globally are located, we believe the growing adoption of cryptocurrency will offer us an opportunity to establish a market-leading presence outside of North America. While it's still early, we are encouraged by the pace of new deployments and the pipeline of retail opportunities we have identified internationally.

Speaker Change: Lastly, we will continue to explore growth opportunities internationally beyond recent announcements on our expansion in Puerto Rico and Australia.

Speaker Change: While our focus remains within North America, where approximately 90% of BTMs globally are located, we believe the growing adoption of cryptocurrency will offer us an opportunity to establish a market-leading presence outside of North America.

Speaker Change: While it's still early, we are encouraged by the pace of new deployments and pipeline of retail opportunities we have identified internationally.

Brandon Mintz: In summary, we are encouraged by our recent momentum and remain well positioned to execute our strategic goals this year. Now, I'll turn the floor over to our CFO, Glenn Lebowitz, who will provide more in-depth insights into our financial performance and business outlook. Thanks, my friends, and good morning everyone!

Speaker Change: In summary, we are encouraged by our recent momentum and remain well positioned to execute our strategic goals this year.

Glenn Lebowitz: Now, I'll turn the floor over to our CFO, Glenn Lebowitz, who will provide more in-depth insights into our financial performance and business outlook. Glenn?

Glenn Leibowitz: I'll start with a detailed review of our second quarter, 2024 results, and we'll finish with a discussion of our album. I can quote a revenue decline of approximately 17% year over year, to $163 million compared to $197 million for last year's second quarter. This decline was largely driven by the impact of unfavorable legislation that was passed in California that went into effect in January, along with relocating kiosks during the quarter to optimize our fleet for maximum profitability.

Glenn Lebowitz: Thanks, Brendan, and good morning, everyone. I'll start with a detailed review of our second quarter 2024 results, and we'll finish with a discussion on our outlook.

Glenn Lebowitz: Second quarter revenue declined approximately 17% year over year.

Glenn Lebowitz: to $163 million compared to $197 million for last year's second quarter.

Glenn Lebowitz: This decline was largely driven by the impact of unfavorable legislation.

Glenn Lebowitz: that was passed in California that went into effect in January, along with relocating kiosks during the quarter to optimize our fleet.

Glenn Leibowitz: We are actively engaged in California with our legislature and continue to seek constructive changes to the operational limitations that are currently in place in that state. However, as Brandon mentioned, our focus remains to drive revenue growth through kiosk expansion in other markets. Gross profit for the second quarter of 2024 decreased 13% to 26.4 million compared to 30.2 million for the second quarter of 2023. Adjusted gross margin in the second quarter of 2024 increased 80 basis points to 16.2% compared to 15.3% in the second quarter of 2023.

Glenn Lebowitz: maximum profitability. We are actively engaged in California with their legislature and continue to seek constructive changes to the operational limitations that are currently in place in that state.

Glenn Lebowitz: However, as Brandon mentioned, our focus remains to drive revenue growth through kiosk expansion in other markets.

Brandon Mintz: Adjusted gross profit for the second quarter of 2024 decreased 13% to $26.4 million compared to $30.2 million for the second quarter of 2023.

Speaker Change: Adjusted gross margin in the second quarter of 2024 increased 80 basis points to 16.2% compared to 15.3% in the second quarter of 2023.

Glenn Leibowitz: This margin increase was largely driven by optimizing our markup for maximized profitability. Total operating expenses for the second quarter of 2024 declined 3% to $18.8 million compared to $19.7 million for the last year's second quarter. The improvement was attributable to lower professional service expenses, and we anticipate this trend will continue over the coming quarters as we move further away from the D-SPAC transaction and optimize expenses for life as a public company. Gap net income for the second quarter of 2024 was $4.4 million, compared to a net loss of $4 million for the second quarter of 2023.

Speaker Change: This margin increase was largely driven by optimizing our markup for maximized profitability.

Speaker Change: Total operating expenses for the second quarter of 2024 declined 3% to $18.8 million compared to $19.7 million for the last year's second quarter.

Speaker Change: The improvement was attributable to lower professional service expenses, and we anticipate this trend will continue over the coming quarters as we move further away from the DSPAC transaction and optimize expenses for life as a bubble company.

Speaker Change: Gap net income for the second quarter of 2024 was $4.4 million compared to a net loss of $4 million for the second quarter of 2023.

Glenn Leibowitz: This was driven by an approximate $10 million expense recorded in the year-ago quarter related to the fair value of our Series A preferred stock, which did not repeat in the current year's second quarter. Adjusted EBITDA, a non-gap measure, decreased to $12.7 million for the second quarter of 2024 compared to $19.8 million for the second quarter of 2023. This was the result of lower overall revenue during the second quarter of 2024 compared to the second quarter of 2023.

Speaker Change: This was driven by an approximate $10 million expense recorded in the year-ago quarter related to the fair value of our Series A preferred stock, which did not repeat in the current year's second quarter.

Speaker Change: Adjusted EBITDA, a non-GAAP measure, decreased to $12.7 million for the second quarter of 2024 compared to $19.8 million for the second quarter of 2023.

Speaker Change: This was the result of overall lower revenue during the second quarter of 2024 compared to the second quarter of 2023.

Glenn Leibowitz: Also, as a reminder, as we deploy more key asks, we increased fixed asset costs. These deployments do not come with an immediate revenue or EBITDA improvement, but they are expected to drive growth later in 2024 and in future years. Adjusted EBITDA margin, which is derived from adjusted EBITDA divided by revenue, in the second quarter of 2024 was 7.8% compared to 10% in the second quarter of 2023.

Speaker Change: Also, as a reminder, as we deploy more kiosks, we increased fixed asset costs. These deployments do not come with an immediate revenue or EBITDA improvement, but they are expected to drive growth later in 2024 and in future years.

Speaker Change: Adjusted EBITDA margin, which is derived from adjusted EBITDA divided by revenue, in the second quarter of 2024 was 7.8% compared to 10% margin in the second quarter of 2023.

Glenn Leibowitz: We continued to focus on our cash flow and balance sheet and ended the quarter with approximately $43.9 million in cash and cash equivalents and $50.6 million in debt, including finance liabilities. A strong driver of our building cash balance has been efficiencies gained in the operations of our business. As cash flows provided by operations were approximately $11.3 million for the first six months of 2024, with $10 million alone being generated in our second quarter.

Speaker Change: We continued to focus on our cash flow and balance sheet and ended the quarter with approximately $43.9 million in cash and cash equivalents and $50.6 million in debt, including finance wages.

Speaker Change: A strong driver of our building cash balance has been efficiencies gained in the operations of our business.

Speaker Change: As cash flows provided by operations were approximately $11.3 million for the first six months of 2024, with $10 million alone being generated in our second quarter.

Glenn Leibowitz: Additionally, during the second quarter, we announced the adoption of Bitcoin as part of our treasury strategy. This underscores our longstanding belief in Bitcoin as a significant financial asset and a store of value. This investment also allows our shareholders to benefit from any future BTC appreciation. The amounts on our current balance sheet are small but should build as we activate this strategy. Now turning to our outlook, we remain committed to additional operational enhancements to drive profitability growth going forward, including improving vendor pricing, lowering professional service costs, and optimizing the customer market. We will not be providing guidance at this time.

Speaker Change: Additionally, during the second quarter, we announced the adoption of Bitcoin as part of our treasury strategy.

Speaker Change: This underscores our longstanding belief in Bitcoin as a significant financial asset and a store of value.

Speaker Change: With this investment, it also allows our shareholders to benefit from any future BTC appreciation.

Speaker Change: The amounts in on our current balance sheet are small but should build as we activate this strategy.

Speaker Change: Now, turning to our outlook, we remain committed to additional operational enhancements to drive profitability.

Speaker Change: growth going forward, including improving vendor pricing, lowering professional service costs, and optimizing customer markups.

Glenn Leibowitz: We are focused on optimizing the business for profitability and positive cash flow ahead. Also, given the variability in our business from the California legislation and the significant revenue ramp in our kiosks combined with the relocation of kiosks to start the year, we have decided to refrain from formal guidance. However... For the remainder of 2024, we still expect to follow a similar seasonality trend as we have described previously, with significantly higher revenue in Q2 and Q3 than in Q1 and Q4. With that, we are now happy to take your questions. Operator.

Speaker Change: We will not be providing guidance at this time. We are focused on optimizing the business for profitability and positive cash flow ahead.

Speaker Change: Also, given the variability in our business from the California legislation and the significant revenue ramp in our kiosks, combined with the relocation of kiosks to start the year, we have decided to refrain from formal guidance.

Speaker Change: However, for the remainder of 2024, we still expect to follow a similar seasonality trend as we have described previously, with significantly higher revenue in Q2 and Q3 than in Q1 and Q4.

Speaker Change: With that, we are now happy to take your questions. Operator?

Sarah: Thank you. If you have a question, please press star 1 on your telephone keypad. If you wish to withdraw your question, simply press star 1 again. Please ensure that your line is not on mute when called upon.

Speaker Change: Thank you. If you have a question, please press star 1 on your telephone keypad. If you wish to withdraw your question, simply press star 1 again. Please ensure that your line is not on mute when called upon. One moment, please, for your first question.

Speaker Change: Where the hell am I?

Speaker Change: [inaudible]

Speaker Change: Your first question comes from the line of Mike Colonizzi with H.C. Wainwright. Your line is open.

Mike Colonizzi: Congratulations on a great quarter and all the progress you've made so far in 2024 here. First one for me, if you could just provide more details around your Bitcoin strategy, your Bitcoin Treasury strategy. You guys are generating really strong operating cash flow here but are also aggressively expanding your footprint. So how should we think about future Bitcoin purchases within the context of your broader capital allocation strategy? Hey Mike, thanks for the question. This is Scott Buchanan.

Mike Colonizzi: Hi, good morning guys. Congrats on a great quarter and all the progress you've made so far to date in 2024 here. First one for me, if you could just provide more details around your Bitcoin strategy, your Bitcoin treasury strategy. You guys are generating really strong operating cash flow here, but are also aggressively expanding your footprint. So how should we think about future Bitcoin purchases within the context of your broader capital allocation strategy?

Mike Colonizzi: Hey Mike, thanks for the question. This is Scott Buchanan.

Scott Buchanan: So we're going to continue to look at adding Bitcoin to the balance sheet opportunistically. We're not allocating all of our excess capital there, and we don't want to be too aggressive. But it'll remain something that we consider as we continue to build cash on the balance sheet, along with the other opportunities we have for using cash like stock buybacks or dividends in the future. Got it, got it.

Scott Buchanan: So, I mean, we're going to continue to look at adding Bitcoin to the balance sheet opportunistically. We're not allocating all of our excess capital there, and we don't want to be too aggressive, but it'll remain something that we consider as we continue to build cash onto the balance sheet, along with the other opportunities we have for using cash.

Scott Buchanan: like stock buybacks or dividends in the future even.

Scott Buchanan: And then in terms of external financing opportunities, as you strategically continue to expand your footprint here, how are you guys thinking about financing and financing alternatives outside of just the operating cash flows you guys are generating to continue to increase skill organically but also potentially to evaluate some M&A opportunities out there? Yeah, I mean, we're always open to M&A opportunities. We're just going to approach those opportunistically. We're not going to force it.

Speaker Change: Got it, got it. And then in terms of external financing opportunities as you strategically continue to expand your footprint here, how are you guys thinking about financing and financing alternatives outside of just the operating cash flows you guys are generating to continue to increase skill organically, but also potentially to evaluate some M&A opportunities out there?

Scott Buchanan: And so we continue to be in conversations with different operators in the space or other adjacent industries, and if something comes up that makes sense, we'll be happy to go after it. As far as financing the kiosks, we continue to look to our leasing partners as much as possible so that we're efficiently using our capital as we expand the fleet of kiosks. Got it. Thanks, Freddy.

Speaker Change: Yeah, I mean we're always open to M&A opportunities, we're just going to approach those opportunistically, we're not going to force it, and so we continue to be in conversations with different operators in the space or other adjacent industries.

Speaker Change: And if something comes up that makes sense, we'll be happy to go after it. As far as financing kiosks, we continue to look to our leasing partners as much as possible so that we're efficiently using our capital as we expand the fleet of kiosks.

Scott Buchanan: Thank you for taking my question, Scott. Thanks, Mike. Your next question comes from the line about how gold is with b-riley securities. Your line is open. Hey, I have a couple of questions about expansion. Could you just give us a little more details on that? You guys are doing on your end to educate legislators and regulators in New York that this is moving along. It's probably one of the remaining states, so a little more detail on what the holdup is and what needs to be done there and how the process actually works. The second question is on Australia, Puerto Rico, and any other countries you're considering. What is the regulatory process there?

Speaker Change: Got it. Thanks, Freddy. Thank you for taking my question, Scott. Thanks, Mike.

Speaker Change: Your next question comes from the line of Hal Goetsch with eRiley Securities. Your line is open.

Hal Goetsch: Hey, I have a couple of questions on expansion. Could you just give us a little more details on what?

Hal Goetsch: What you guys are doing on your end to educate legislators and regulators in New York that feed this along. It's probably one of the remaining states, a little more detail on what the holdup is and what needs to be done there and how the process actually works.

Hal Goetsch: Second question is on Australia, Puerto Rico, and any other countries you're considering, you know.

Hal Gold: What's the potential for kiosks in Australia? Thank you. Thanks for the question, Hal. This is Brandon.

Hal Goetsch: What is the regulatory process there? What's the potential for kiosks in Australia?

Brandon Mintz: So as far as New York goes, we've been in the final stages of review by their review team that submits the application to this committee within the New York Department of Financial Services, and that committee will make a decision to approve or deny the application. Now, unfortunately, during this review process, we believe a big part of the delay is that somebody on that review team, unfortunately, passed away. So a new person had to come in and pick up the slack and get up to speed on our application. Outside of that, you know, we're not aware of anything specifically that would be holding itself.

Speaker Change: Thank you.

Speaker Change: Thanks for the question, Hal. This is Brandon. So as far as New York goes, we've been in the final stages of review by their review team that submits the applications.

Speaker Change: to this committee within the New York Department of Financial Services and that committee will make a decision.

Speaker Change: to approve or deny the application.

Speaker Change: Now, unfortunately, during this review process, we believe a big part of the delay is somebody on that review team unfortunately passed away, so a new person had to come in and pick up the slack.

Speaker Change: get up to speed on our application. Outside of that, you know, we're not aware of anything specifically that would be holding us up. It's just the expected Q&A from them.

Brandon Mintz: It's just... be expected Q&A from them. So hopefully it's still something that can be achieved this year. There are still no other editors operating within the state of New York.

Speaker Change: So hopefully it's still something that can be achieved this year. There's still no other competitors operating within the state of New York.

Brandon Mintz: Now, in Puerto Rico, we don't anticipate growing our footprint there in the near future, very much because the kiosks are so new, and we want to see some sales data on how those kiosks will perform. Also, we have such a significant market share on the island already. I believe we have over half of the market share, so there's not really a need to deploy more kiosks from that perspective as well. I believe we have over half of the market share, so there's not really a need to deploy more kiosks from that perspective as well.

Speaker Change: Now, in Puerto Rico, we don't anticipate...

Speaker Change: growing our footprint there in the near future very much just because the kiosks are so new. We want to see some sales data.

Speaker Change: on how those kiosks will perform. Also, we have such significant market share on the island already. I believe we have over half of the market share. So there's not really a need to deploy more kiosks from that perspective as well.

Brandon Mintz: In terms of Australia, we believe it's a shorter license application process than something like New York State and the US, and we believe we're at the final stages of our application process there, or an application that was submitted earlier this year in 2024.

Speaker Change: In terms of Australia, we believe it's a shorter license application process than something like New York State and the US.

Speaker Change: And we believe we're at the final stages of our application process there for application that was submitted earlier this year in 2024. We do have over 200 kiosks already in Australia.

Speaker Change: Waiting to be deployed at the moment. We're ready and we do have Location relationships available as soon as we are ready as well. So we anticipate Australia is something that will happen

Speaker Change: within the next quarter or so in 2024 as far as a launch goes.

Speaker Change: And that market is still looking very solid in terms of the opportunity.

Speaker Change: Australia's population is similar to Texas in the U.S. and Texas typically ranges somewhere in the neighborhood of three to four thousand Bitcoin ATMs at any given time.

Speaker Change: Australia currently sits at around 1200 Bitcoin ATMs in the market so there's a big opportunity to fill that gap and the market has potential to grow by thousands of Bitcoin ATMs.

Speaker Change: over the next couple of years in Australia. And we plan to be a big part of that and take a huge piece of that market share.

Hal Gold: All right. Hey, terrific. Thanks for that. Keep up the good work.

Speaker Change: All right. Hey, terrific. Thanks for that. Keep up the good work.

Mike Grondo: Thank you. Your next question comes from the line of Mike Grondo with Northland Capital Markets. Your line is open. Hey, thanks.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Mike Grondel with Northland Capital Markets. Your line is open.

Brandon Mintz: The new retailer, Nuria Energy, did you say how many of those 175 stores you're already in or expect? Yes, I believe. Let me look at my notes here. I said it in the transcript. It is around 60, 57 to be exact, across Massachusetts, Maine, and New Hampshire.

Mike Grondel: Hey thanks, the new retailer Nuria Energy, did you say how many of those 175 stores you're already in or expect to be in?

Mike Grondel: Bye.

Speaker Change: Yes, I believe, let me look at my notes here, I said it in the transcript, it is around 60, 57 to be exact across Massachusetts, Maine, and New Hampshire.

Brandon Mintz: That's where you are right now. That's what we originally took. That's what we originally took in the contract. So this kiosk, some of them are already installed or pending transit at the moment. Got it, 60, okay.

Speaker Change: That's where you are right now.

Speaker Change: That's what we've originally taken.

Speaker Change: That's what we've originally taken in the contract. So this kiosk, some of them are already installed or pending transit at the moment.

Mike Grondo: And then, you know, you talked about 2Q and 3Q being your strongest quarters. But if I look back to last... Clearly, 2Q was stronger than 3Q. Is that something we should be cognizant of this year too, between 2Q and 3Q, or how should we think about that with you guys? Well, over the past few years, if you look at it on a per kiosk basis, because it's hard on a total number basis since we're always deploying or relocating kiosks, etc.

Speaker Change: You talked about 2Q and 3Q being your seasonally strongest quarters, but if I look back to last year, clearly 2Q was stronger than 3Q.

Speaker Change: Is that something we should be cognizant of this year too?

Speaker Change: between 2Q and 3Q, or how should we think about that with you guys not giving guidance?

Speaker Change: Well, over the past few years, if you look at it on a per-kiosk basis,

Speaker Change: Because it's hard on a total number basis, since we're always deploying or relocating kiosks, etc. 2Q is usually slightly higher than Q3 in terms of revenue per kiosk.

Mike Grondo: 2Q is usually slightly higher than Q3 in terms of revenue per kiosk. Got it. Got it. And then, cash flow in the back half of the year, the last six. What do you guys kind of think about? What's a range to think about?

Speaker Change: Got it. Got it. Um, and then.

Speaker Change: Cash flow in the back half of the year, the last six months, what do you guys kind of, what's a range to think about there?

Glenn Leibowitz: I think the easiest way to look at it would be to assume that the first half of the year, you know, Q1 in terms of cash flow is significantly lower than Q2, bye. We still had a little bit more of those back expenses tracking on that we were paying.

Speaker Change: I think the easiest way to look at it would be...

Speaker Change: to assume the first half of the year.

Speaker Change: is what continues.

Speaker Change: the first half of the year, you know, Q1 in terms of cash flow is significantly lower than Q2, but

Speaker Change: we still had a little bit more of those fees back expenses dragging on that we were paying.

Glenn Leibowitz: So I think it'll even out, even though if Q3 behaves on a revenue basis like it has in the past, a little bit lower than Q2, then we should expect to see a very similar result, and I'm just speaking from a historical basis. Sure. And then.

Speaker Change: So, I think it'll even out, even though if Q3 behaves on a revenue basis like it has in the past, a little bit lower than Q2, then we should expect to see.

Speaker Change: somewhat similar results and I'm just speaking from a historical basis.

Glenn Leibowitz: What are your priorities for that? It is, want to address the debt, buy more Bitcoin. Can you just talk about how you're thinking about uses for it right now? Yeah, there's potential for M&A opportunities. We do have the Bitcoin treasury strategy, and we were opportunistic with that and picking up some on this dip here over the past couple of weeks.

Speaker Change: Sure. And then...

Speaker Change: What are your priorities for that cash that you're generating? Do you want to address the debt?

Speaker Change: Um

Speaker Change: buying more Bitcoin can you just talk about how you're thinking about uses with that cash

Speaker Change: Right now, really exploring options, I think.

Speaker Change: Yeah, there's potential for M&A opportunities. We do have the Bitcoin Treasury strategy and we were opportunistic with that and picking up some on this dip here over the past couple of weeks.

Glenn Leibowitz: Our debt has a prepayment penalty that will end, I believe, at the very end of Q1 of next year. So that's another thing to consider as well. This is a cash flowing business, and now its true colors are really starting to show. A lot of the issue in the prior quarters since we've been public was just de-spac-related expenses that weren't going to continue in the future, and so now the world can kind of see that with this very impressive cash flow number for Q2, based on the enterprise value of the business as it sits today. This is even a company that could be a dividend-paying company in the future. So that's always another option.

Speaker Change: Our debt has a prepayment penalty that will end, I believe, at the very end of Q1 of next year. So that's another thing to consider as well. This is a cash flowing business.

Speaker Change: And now it's true colors are really starting to show a lot of the issue in the prior quarter since we've been public was just

Speaker Change: D-SPAC related expenses that weren't going to continue in the future. And so now that the world can kind of see that with this very impressive cash flow number for Q2, based on the enterprise value of the business as it sits today.

Speaker Change: This is even a company that...

Speaker Change: could be a dividend paying company in the future. So that's always another option. Really, we're just trying to evaluate these options.

Glenn Leibowitz: Really, we're just trying to evaluate these options over this next quarter and figure out what the best direction will be since there are so many options since we do have this cashflow. We want to do something that is not only accretive to the business and for the long term but something that will attract additional investors and keep our current investors happy and incentivized to hopefully buy more shares moving forward. So weighing those options further will allow us to get you a clear answer in the future.

Speaker Change: over this next quarter and figure out what the best direction will be since there are so many options, since we do have this cash flow.

Speaker Change: We want to do something that

Speaker Change: is not only, you know, accretive to the business and for the long term, but something that will attract additional investors and keep our current investors happy and incentivized to hopefully buy more shares moving forward.

Speaker Change: So weighing those options further will allow us to get you a clear answer in the future.

Speaker Change: Got it. Okay.

Speaker Change: Thank you.

Glenn Leibowitz: Once again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad. Your next question comes from the line of Pat McCann with Noble Capital Markets. Your line is open. Hey guys, congrats on the quarter. Just a couple of quick questions from me.

Speaker Change: Once again, ladies and gentlemen, if you have a question, it is star 1 on your telephone keypad.

Speaker Change: Your next question comes from the line of Pat McCann with Noble Capital Markets. Your line is open.

Pat McCann: Hey guys, congrats on the quarter. Just a couple of quick questions from me.

Pat McCann: First of all, I was just curious, with the franchising program,

Pat McCann: Are you getting a lot of additional interest? Are you in more conversations about expanding that further? I'm just wondering if other players are seeing that and wanting to dip their toes in as well.

Brandon Mintz: Hey Pat, thanks for your question. Things are going very well on that profit sharing program. You guys have seen we did a press release with Silver's Capital where they decided to purchase an additional 200 Bitcoin ATMs from us because they were happy with the initial result. And we do have new groups talking to us at the moment as well. There have been competitors of ours in the past that have done this.

Pat McCann: Hey, Pat. To answer your question, things are going very well on that profit-sharing program. You guys have seen we did a press release with Sopers Capital where

Speaker Change: They decided to purchase an additional 200 Bitcoin ATMs from us because they were happy with the initial results.

Speaker Change: And we do have new groups talking to us at the moment as well. There have been competitors of ours in the past that have done this.

Brandon Mintz: 10, their profit sharing partners, a couple of them actually came over, those competitors to us, I think. Those profit sharing partners were just impressed with how we run the business and how it's just very organized and how we provide the reporting and stuff. So I would say we're not really worried about our current competitors, such as other Bitcoin ATM operators. In reality, if you were to partner with somebody that was operating a fleet of Bitcoin 18s for you, you would want to.

Speaker Change: their profit-sharing partners, a couple of them actually came over from.

Speaker Change: those competitors to us, I think.

Speaker Change: Those profit-sharing partners were just impressed with kind of how we run the business and how it's just very organized and how we were you know provide the reporting and such.

Speaker Change: So, I would say we're not really worried about our current...

Speaker Change: competitors such as other Bitcoin ATM operators.

Speaker Change: Because in reality...

Speaker Change: If you were to partner with somebody that were operating a fleet of Bitcoin ATMs for you, you would want...

Brandon Mintz: To know everything you possibly can about what's going on inside that business. And since the vast majority of our competitors are private, and the two public ones are not on major markets like we are on the NASDAQ, they don't really provide the level of public disclosure and reporting that we provide.

Speaker Change: To know everything you possibly can about what's going on inside that business

Speaker Change: And, since the vast majority of our competitors are private, and the two public ones are not on the same page.

Speaker Change: On major markets like we are on the NASDAQ. They don't they don't really provide a level of

Pat McCann: So I think we're just a lot more of a trusted vendor to be doing this than our competition, with everyone being able to see our financials publicly and be on calls such as this to learn more details about the business that others may not be wanting to share. Great, thanks for that. And then my other question was around the Nuri of partnership. I was just wondering if there's any commentary you can give based on the geographical locations or customer demographics. Are there any particular key factors that made you want to pursue a partnership with that retailer in those locations?

Speaker Change: public disclosure and reporting that we provide. So I think we're just a lot more of a trusted vendor to be doing this than our competition with everyone being able to see our financials publicly.

Speaker Change: be on calls such as this to learn more details about the business that others may not be willing to share.

Speaker Change: Great, thanks for that. And then my other question was around the

Speaker Change: Nouria partnership. I was just wondering if there's any commentary you can give around, you know, based on the geographical locations or the customer demographics, you know, are there any particular key factors that made you want to pursue a partnership with that retailer in those locations?

Speaker Change: Well, we're always trying to get larger enterprise accounts, such as Nerea and Medor, but the states specifically that we're going in, you know, these are pretty solid states in terms of the revenue numbers.

Speaker Change: Great, thanks so much. That's all I have. Congrats again.

Speaker Change: Thank you.

Speaker Change: At this time, this concludes our question and answer session. I'd now like to turn the call back over to Scott.

Speaker Change: Thanks, everybody, for joining the call. We appreciate you following the company, and have a great day.

Speaker Change: Thank you for joining us today for Bitcoin Depot's conference call. You may now disconnect.

Brandon Mintz: Well, we're always trying to get larger enterprise accounts, such as Nerea and the door, but the states specifically that we're going in, you know, these are pretty solid states in terms of the revenue numbers per machine for us. So we're excited about expanding in them specifically. Great. Thanks so much, for that's all I have. Congratulations again. Thank you. At this time, this concludes our question and answer session. I would now like to turn the call back over to Scott.

Sarah: One moment, please, for your first question. I'll be back on my... Your first question comes from the line of Mike Colonizzi with H.C. Wainwright. Your line is open. Hi, good morning guys.

Pat McCann: First of all, I was just curious about the franchising program. Are you getting a lot of additional interest? Are you in more conversations about expanding that further? I'm just wondering if other players are seeing that and wanting to dip their toes in as well.

Brandon Mintz: Once all kiosks are delivered, furthering our industry-leading market share. Over the past three quarters, we have focused heavily on relocating underperforming BTMs to new locations, which historically has shown to increase average profitability per kiosk over time. However, we do not get that benefit immediately.

Brandon Mintz: We do have over 200 kiosks already in Australia waiting to be deployed at the moment we're ready, and we do have, location relationships available as soon as we are ready as well. So we anticipate Australia is something that will happen, within the next quarter or so in 2024 as far as a launch goes. And that market is still looking very solid in terms of the opportunity. Australia's population is similar to Texas in the U.S. and Texas typically ranges somewhere in the neighborhood of 3 to 4,000 Bitcoin ETFs at any given, Australia currently sits at around 1200 Bitcoin ATMs in the market, so there's a big opportunity to fill that gap and the market has potential to grow by thousands of Bitcoin ATMs, over the next couple of years in Australia, and we plan to be a big part of that and take a huge piece of that market share.