Q1 2025 Bitcoin Depot Inc Earnings Call
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Janice: Thank you for standing by my name is Janice and I will be your conference operator today at this time I would like to welcome everyone could it be going depot first quarter to 125 earnings conference call. All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on go to California, keypad, if you'd like to withdraw your question Press Star One again I would now like to turn the call over to Mr. Cody Saks Senior managing director. Please go ahead.
Janice: Thank you operator, good morning, everyone before management begins their formal remarks, we'd 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 few factors many of which are beyond our control, which could cause actual results.
Janice: And events to differ materially from those described in the forward looking statements for more detailed risks uncertainties and assumptions relating to our forward looking statements. Please see the disclosures in our earnings release and public filings with the SEC, we disclaim any obligation or undertaking to update forward looking statements to reflect circumstances or events that occur after the <unk>.
Janice: 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 and our reconciliations to applicable GAAP measures in our earnings release carefully as you consider these metrics. We refer you to our filings with the SEC for a detailed disclosures and descriptions of our business.
Janice: As well as another variable circumstances, including but not limited to risks and uncertainties identified under.
Janice: Under the caption risk factors in our recent filings you may get bitcoin depots SEC filings for free by visiting the SEC website at SEC Gov I'd like to remind everyone. This call is being recorded and will be available for replay via a link in the Investor Relations section of Bitcoin depots website.
Speaker Change: Supplemental earnings presentation, highlighting our performance has also been made available on our IR Web site now I will turn the call over to Bitcoin Depot's CEO Brandon Miss Brandon.
Brandon Miss: Thanks, Cody and good morning, everyone. Thank you for attending our first quarter conference call.
Brandon Miss: <unk> depot delivered a remarkable first quarter with 19% year over year revenue growth and record net income of $12 2 million.
Brandon Miss: Consumer demand was quite strong with median transaction size up 46% year.
Brandon Miss: Year over year to $300 and total transaction volume moving steadily higher to $163 8 million.
Brandon Miss: These results produced strong free cash flow, which we used to build cash and purchase more of that claim.
Brandon Miss: This performance demonstrates the strength of our operating model the success of our kiosks optimization strategy and the powerful cash flow, we can generate once fixed costs are covered well.
Let me provide more details on this performance.
Brandon Miss: Alright kiosk growth and optimization plan are showing the intended results Q1, adjusted gross profit was up 92% year over year and adjusted EBITDA was up over threefold to a record $23 million.
Brandon Miss: These results should continue as this strategy unfolds.
Brandon Miss: We ended Q1 with approximately 8000.
Brandon Miss: 483.
Brandon Miss: Active machines and expect to see continued growth in kiosks for the remainder of the year.
Brandon Miss: Now onto our bcm relocation strategy.
Brandon Miss: <unk> 3200 of our kiosks have been installed for less than one year as these machines ramp up we expect to drive further cash flow as a bitcoin Atms typically see payback periods of less than eight months.
Brandon Miss: <unk> is a bitcoin price.
Brandon Miss: As the largest BPM operator in North America.
Brandon Miss: Scale compliance first approach and longstanding retail partnerships continue to set us apart in a highly fragmented market, we remain focused on expanding market share and growing profitability.
Brandon Miss: Now turning to an update on our growth strategy first international expansion.
Brandon Miss: We have now deployed over 100 kiosks to support our ongoing launch in Australia. This year, Australia is quickly emerging as a global hotspot for bitcoin adoption currently ranking third worldwide in total bitcoin Etfs. We believe this represents a significant opportunity to establish a strong presence outside North America.
Brandon Miss: While it's still early we are encouraged by the retail partnerships and expansion opportunities we have identified so far.
Brandon Miss: And Australia.
Brandon Miss: Were actively evaluating entry into at least two additional countries in 2025.
Brandon Miss: Second scaling our domestic footprint.
Brandon Miss: We continue to deploy kiosks from the large inventory we secured last year once fully deployed these units could bring our total active fleet to approximately 10000 kiosks.
Brandon Miss: This will enhance our reach and support further efficiencies across the business.
Brandon Miss: Third.
Speaker Change: Regulatory expansion into new markets new.
Brandon Miss: New York State remains one of the largest untapped markets for Bitcoin Atms.
Brandon Miss: We are in ongoing discussions with regulators and remain optimistic about obtaining a license to operate in the state in 2025.
Brandon Miss: There is no definitive timeline, yet we are encouraged by the progress and engagement so far.
Brandon Miss: On a broader note we continue to closely monitor the evolving regulatory environment at both the federal and state levels are a strong compliance infrastructure, including rigorous <unk> and AML protocols.
Brandon Miss: To serve as a competitive advantage, we are actively engaging with regulators, including fence and various state agencies to help shape, our responsible future for the industry.
Brandon Miss: More broadly the recent establishment of a U S strategic pay claim reserve highlights the growing institutional recognition of the clintons role in the financial system.
Brandon Miss: As a national leader in Bitcoin ATM deployment, we are prepared to support the shift by expanding access to digital assets for everyday consumers.
Brandon Miss: We have also strengthened our leadership team with the appointment of David Gray as our Chief Financial Officer, and Chris Brian as our Chief Legal Officer, David brings more than 20 years of financial leadership experience.
Brandon Miss: Chris brings deep expertise in legal and regulatory matters within fintech their combined experience will be essential as we continue to grow.
Speaker Change: With that I will turn it over to our CFO, David Gray, who will walk through our financial results in more detail David.
David Gray: Thanks, Brandon and good morning, everyone. It's great to be here and I look forward to meeting many of our shareholders over the coming months.
Speaker Change: Right into our first quarter performance.
Speaker Change: <unk> was $164 2 million compared to $138 5 million for last year's first quarter, an increase of 19% driven by growth and deploy kiosks and higher median transaction size <unk>.
Speaker Change: Sequentially revenue was up 20% as compared to Q4 of 2024 as a result of strong consumer demand underpinned by growing media and transaction size, along with our continued process of relocating under performing kiosks to optimize fleet profitability.
Speaker Change: Adjusted gross margin in the first quarter of 2025 increased 92% to $33 1 million compared.
Speaker Change: Compared to $17 $3 million in the first quarter of 2024.
Speaker Change: Adjusted gross margin in the first quarter of 2020 increased 770 basis points to 22% compared to 12, 5% in the first quarter of 2024.
Speaker Change: This margin increase was largely driven by leverage on the significant revenue outperformance and continued price insurance.
Speaker Change: Total operating expenses declined 7% to $15 3 million compared to $16 6 million in last year's first quarter.
Speaker Change: The improvement was attributable to lower depreciation expense.
Speaker Change: Company moving farther away from the destock transaction to optimize expenses for licensed public company.
Speaker Change: Specifically, we have saved multiple million dollars on an annual basis by reducing costs related to our third party legal costs audit services and insurance.
Speaker Change: GAAP net income for the first quarter of 2020 volumes increased significantly to $12 2 million.
Speaker Change: Compared to a net loss of $4 2 million for the first quarter of 2025.
Speaker Change: GAAP net income attributable to common shareholders increased to $4 2 million or <unk> 20 per share compared to a net loss of $1 $5 million in last year's first quarter the.
Speaker Change: The significant increase was due to higher revenue and gross profit and to a lesser extent lower expenses.
Speaker Change: Adjusted EBITDA, a non-GAAP measure increased 315% to $23 million in the first quarter of 2025 compared to $4 $9 million in the first quarter of 2024.
Speaker Change: This increase was primarily due to revenue outperformance and margin expansion.
Speaker Change: Now turning to our balance sheet.
Speaker Change: And cash flow.
Speaker Change: Cash and cash equivalents and cryptocurrencies as at March 31, 2020 increased to $43 3 million compared to 31.0 million at the end of 2024.
Speaker Change: The company acquired 83 more bitcoin in the quarter, bringing our investment holdings up to $94 four BTC valued at approximately $7 $8 million on March 31.
Speaker Change: We generated a record $16 3 million of cash from operating activities in the first quarter up significantly from $1 3 million in the year ago quarter.
Speaker Change: Debt at quarter end was $60 million compared to $60 9 million at the end of 2024.
Speaker Change: This balance includes term loans finance leases and profit share arrangements.
Speaker Change: The total debt balance 30 million is our term loan on which we paid down $6 million.
Speaker Change: During the quarter.
Speaker Change: And we plan to pay down at least an additional $3 5 million by year end.
Speaker Change: The pay down of the term loan balance was largely offset by the expansion of our profit share franchise agreements.
Speaker Change: In the quarter.
Speaker Change: The agreements entail an upfront lump sum payments is accompanied by our partners in exchange for a portion of the future profits generated from our specified group of kiosks for a specified period of time.
Speaker Change: We continue to operate and typically retain titles of the Geos, we must account for the upfront payments is that under U S. GAAP.
Speaker Change: As we think about our capital allocation strategy going forward, we will focus our attention on other ways of driving shareholder value, including paying down our term loans or potential dividends as we do not expect significant capex in 2020 you saw.
Speaker Change: Now turning to outlook.
Speaker Change: Given the improved visibility we have in our business that Randy mentioned, we are continuing with near term financial guidance.
Speaker Change: We anticipate Q2 revenues to grow in the low to mid single digits, both sequentially and as compared to Q2 of 2024.
Speaker Change: This growth while modest is against very strong comps of $164 million and $163 million for Q1 of 2025 in Q2 of 2024, respectively.
Speaker Change: We remain committed to additional operational enhancements to drive profitable growth going forward, including improved vendor pricing lowering professional service costs and optimizing customer markups. We are focused on optimizing the business for profitability and positive cash flow ahead.
Speaker Change: With that we're happy now to take your questions operator.
Speaker Change: Thank you we will now begin the question and answer session. At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.
Speaker Change: Your first question comes from the line of Mike <unk>.
Mike: <unk> of Northland capital markets. Please go ahead.
Speaker Change: Hey, guys.
Speaker Change: Congrats on a solid quarter.
Speaker Change: Couple of questions one.
Speaker Change: You have a.
Speaker Change: Year end 25 year end 'twenty six Ross.
Speaker Change: Goal.
Speaker Change: And then what would you think of I don't know rough Capex for 'twenty five 'twenty six.
Speaker Change: Hey, Mike It's Brandon No, we haven't announced to the public kiosk go in terms of our total installed fleet you can see we're moving a little bit slower in terms of additional net new installation stand last year, but our goal is still to get the remainder.
Speaker Change: Installed as soon as possible.
Speaker Change: We mentioned.
Speaker Change: And the earnings.
Speaker Change: Great.
Speaker Change: We're expanding hopefully into an additional country or two.
Speaker Change: This year and we definitely want to reserve some of the kiosk that we are exploring international expansion effort.
Speaker Change: One thing to note is we have about 150 kiosks installed in Australia today.
Speaker Change: But we shipped about 350, there so there will be.
Speaker Change: Installation expansion, just as Australia ramps up not even including the U S.
Speaker Change: And then in terms of Capex for 2025 and 2026 west.
Speaker Change: Close to 2000 kiosks still available for us to deploy.
Speaker Change: There is not a need to.
Speaker Change: Purchase additional kiosks this year at least obviously things could change.
Speaker Change: Very quickly if all of a sudden we signed a large retail chain than me.
Speaker Change: Maybe we don't have enough kiosk, but for now.
Speaker Change: I Couldnt really say that you should anticipate capex this year or beyond.
Speaker Change: Small things like parts costs, and such but nothing significant.
Speaker Change: Got it got it that's kind of what I thought, but I wanted to make sure for 25.
Speaker Change: You have roughly 3200.
Speaker Change: They have been in place less than a year.
Speaker Change: If those 3200 ramp to be average.
Speaker Change: What incremental lift to revenue would that be.
Speaker Change: Well, let me think about that for a second.
Speaker Change: Yes, I don't have the ability to calculate an exact number right now, but what I can say is we're always going to have.
Speaker Change: Probably.
Speaker Change: 1000.
Speaker Change: Kiosk minimum within that one year installed bucket just from deploying new kiosks in relocating.
Speaker Change: Austin kiosks.
Speaker Change: Again, the kiosks in year two versus year one.
Speaker Change: Yes, typically see at least 50% growth in terms of revenue versus year. One if you just look at year over year.
Speaker Change: But we can evaluate that a little bit further and get back to you.
Speaker Change: Cool.
Speaker Change: Nearly those are still ramping and they're not mature yet just trying to kind of understand.
Speaker Change: How much is there but thank you.
Speaker Change: Yep.
Your next question comes from the line of Mike colonies of H C. Wainwright. Please go ahead.
Speaker Change: Hey, good morning, guys and congrats on a really strong quarter here first one for me obviously between depot is generating really strong cash flows so it'd be great to get some more color around your capital management priorities for the rest of the year I can appreciate some of the debt repayment comments.
Speaker Change: How are you thinking about balancing maybe M&A bitcoin purchases and again there is potential for dividend.
Speaker Change: Good question, Mike, It's Brandon again, so when we look at uses of cash.
Speaker Change: With the bitcoin purchases.
Speaker Change: We would like to be opportunistic with us getting back close to all time highs right now I don't anticipate.
Speaker Change: Much buying.
Speaker Change: In terms of.
Speaker Change: Paying down debt, we did sign an amendment to our term loan agreement that requires us to have a little bit quicker and more <unk> schedule and with.
Speaker Change: Our strong balance sheet right now that preferred dividend being paid off.
Speaker Change: With all that.
Speaker Change: A drag on <unk>.
Speaker Change: Central cash uses like the preferred dividend had.
Speaker Change: I could see us potentially paying down debt, maybe even quicker than what's in the schedule.
Speaker Change: In terms of M&A there is still.
Speaker Change: Not a lot of opportunity if that makes sense for us at least.
Speaker Change: In the U S or Canada, or Australia, primarily because we've just been able to purchase kiosks at.
Speaker Change: Prices that are less expensive than brand new kiosks in when we run the numbers, it's hard to justify those M&A opportunities when we can just grow.
Speaker Change: <unk> ourselves and have higher returns there however.
Speaker Change: We're evaluating M&A opportunities internationally, because if someone can speed up our timeline to deployment.
Speaker Change: Whether they have a license or some strategic vendor relationships are a strategic retailer relationship.
Speaker Change: That has really additional value than just buying more kiosks and finding locations.
Speaker Change: <unk>.
Speaker Change: We're evaluating if there is an opportunity that makes sense, but I don't think at this time, we're in a place where that's a very near term situation.
Speaker Change: Very helpful. I appreciate the color there and regarding the <unk> revenue guide can appreciate the tough comp.
Speaker Change: From the year ago quarter, but are there any other factors, causing such a significant deceleration in.
Speaker Change: Revenue growth for this quarter here.
Speaker Change: I think just as time has gone on.
Speaker Change: We've noticed the seasonality in the business we've talked about.
Speaker Change: Previously and.
Speaker Change: This business seems to be.
Speaker Change: Somewhat correlated with the seasonality with tax return season.
Speaker Change: And I think as there are more.
Speaker Change: More and more tools for people to get refunds earlier.
Speaker Change: Some of that volume is starting to shift more into Q1.
Speaker Change: Great. Thank you for taking my questions.
Speaker Change: And that's just a theory.
Harry: Your next question comes from the line of Harry <unk> of B Riley Securities. Please go ahead.
Harry: Congrats on a great quarter, just wanted to get your thoughts on that.
Harry: <unk>.
Harry: The reason for maybe the extremely steep increase over the last four quarters and BD transactions that he was like rock solid around 200, and then for the last four quarters. It's really it's really moved up and I wanted to get your thoughts and then because it's up about 50% what are your thoughts on that.
Harry: I didn't hear the second question, but I got it.
Scott: Hey, Al This is Scott.
Speaker Change: So it's just a function of where the transaction tiers are for KFC. So we've had a tier at $200 for a long time and.
Speaker Change: That means customers will frequently do 200 dollar transactions and so when you look at the median.
Speaker Change: Even as the average has been going up.
Every month every quarter every year when you take the median $200. Just has a lot of transactions that are exactly that level can you give us sort of moving up to higher points within that $200 media and it was still $200 and once we cross that level, where we're seeing it move up what appears a more quickly quick pace because it hasnt hit another tier where there's just a ton.
Speaker Change: Common transactions at that specific size, if that makes sense. Thank you Julie just a function of like where we see a lot of exact sized transactions.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Could you comment on just the overall trend.
Speaker Change: Actually you count growth lag cohort.
Speaker Change: No.
Speaker Change: Or like some of the machines that are like in.
Speaker Change: In place over two years.
Speaker Change: Having been moved in a year like what kind of transaction counts are they doing.
Speaker Change: Per month.
Speaker Change: What sort of Kpis, you could share with us.
Speaker Change: Quantitative qualitative basis.
Speaker Change: Yes.
Speaker Change: See you try to do some quick math for you.
Speaker Change: So.
Speaker Change: I mean, our kiosk that's ramped up I mean, we still see a lot of variability even after the two years for flex transaction sizes mixed with transaction counts, but we.
Speaker Change: We're seeing transaction counts that mature kiosks in the.
Speaker Change: Double digit range. So in the let's say, 10% to 20 transactions a month.
At a mature kiosk.
Speaker Change: Okay.
Speaker Change: And are those are those are.
Speaker Change: Maturity.
Speaker Change: Yes.
Speaker Change: Trending toward like than the median transaction sizes that Kevin.
Speaker Change: That's fair then.
<unk> been there a while people know there is there are three frequent users.
Speaker Change: Well they would it would trend more towards the average transaction size, which is which is higher than the median but yes. It would.
Speaker Change: So the average is higher than the average.
Speaker Change: For sure, yes, because outlier large transactions pull up the average more than I can pull up the media.
Speaker Change: Okay.
Speaker Change: Last from me, if I get back in the queue.
Speaker Change: You've lapped California's impact there changed.
Speaker Change: What have you seen in California, a year later.
Speaker Change: What is it.
Speaker Change: How does that bounce back or not bounce back or what's happening in California.
Speaker Change: So.
Speaker Change: California can.
Speaker Change: Can you ask that again, you ask of California's bounce back.
Speaker Change: No.
Speaker Change: California made a rule change it impacted all of 2024, right and you've now lapped the give us some comment could you. Please share some commentary on.
Speaker Change: Whats, what California, it looks like a full almost.
Speaker Change: Five quarters after that change.
Speaker Change: How are trends in California.
Speaker Change: Yes, I mean, California is still.
Speaker Change: Lower than other states because of the rule changes that happened there.
Speaker Change: It has less of an impact on the business now that we've got many many fewer kiosks in the state.
Speaker Change: Yes.
Speaker Change: We've probably reduced our count of kiosks in California by about 80% for BARDA, where when the world first went into effect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: One of your top states you've removed.
Speaker Change: Yes.
Speaker Change: Growing.
Speaker Change: Double digit right now Q1, yes, thats pretty thats.
Speaker Change: That's helpful. Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Pat Mccann with Noble capital markets. Please go ahead.
Pat McCann: Hey, guys. Thanks for taking my questions and congrats on the quarter.
I would like if you if you don't mind talking a little bit more about the the spreads of the machines this quarter and the gross margins and the drivers behind that.
Pat McCann: And in what maybe we should expect moving forward there.
David Gray: Yes, I'll take that one David.
David Gray: Yes, the gross margin expansion really was.
Pat McCann: Attributable to.
David Gray: Pricing strength.
David Gray: We did increase our margins on.
David Gray: The current transaction certain geos as well as leveraging.
David Gray: Higher revenue and the cross sell.
Speaker Change: Got it.
Speaker Change: Fixed and semi fixed costs that we have in our cost structure. So those were two key drivers of that.
Speaker Change: Margin expansion and we expect that to continue to be strong going forward.
Speaker Change: And then the other question was regarding.
Speaker Change: Additional kiosk acquisition I know, that's not a need right now, but I was just wondering what what.
Speaker Change: What the landscape looks like as far as opportunities to pick up more kiosks on the cheap kind of like you did.
Speaker Change: Recently in the last year or so.
Speaker Change: It's Brandon I'll take that one.
Speaker Change: If you look at data from ATM radar Dot com, which has the listings of all of that.
Speaker Change: The big Atms around the world for the most part.
Speaker Change: It looks like competition at least in the U S.
Speaker Change: Drinking.
Speaker Change: Remove our kiosks growth over the past year and just looking at their data it looks like.
Speaker Change: Maybe there is over 3000 competitor kiosks and disappeared from the market. So I think as some of the smaller operators struggle to survive.
Speaker Change: In this environment that.
Speaker Change: Requires more sophistication and more resources from operators.
Speaker Change: There could be additional kiosks that pop up on the market for sale.
Speaker Change: Thanks, That's all I had congrats again.
Speaker Change: Thank you.
Speaker Change: I will now turn the call back over to abandonment CEO for closing remarks. Please go ahead.
Speaker Change: Thank you everyone for joining the call today, we're very happy about the results, we delivered and we plan to continue to perform next quarter.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for Johnny you May now disconnect.
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Speaker Change: Yes.
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Speaker Change: Sure.
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