Bakkt Holdings Inc (BKKT) 2023 Q3 法說會逐字稿

Greetings, and welcome to the Bakkt Q3 2023 Earnings Conference Call. Question-answer session will follow the formal presentation. And as a reminder, this conference call is being recorded. I will now turn it over to Ann DeVries, Head of Investor Relations at Bakkt, please go ahead.

您好，歡迎參加 Bakkt 2023 年第三季財報電話會議。正式演講之後將進行問答環節。提醒一下，本次電話會議正在錄音。現在我將把它交給 Bakkt 投資者關係主管 Ann DeVries，請繼續。

Good morning, and thank you for joining us for Bakkt third quarter earnings call. Today's presentation, including a separate earnings call presentation that can be found on our Investor Relations website at www.investors.com will contain certain forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. For a more complete discussion on forward-looking statements and the risks and uncertainties related to Bakkt business, please refer to its filings with the Securities and Exchange Commission.

早安，感謝您參加 Bakkt 第三季財報電話會議。今天的演示文稿，包括單獨的收益電話會議演示文稿（可在我們的投資者關係網站 www.investors.com 上找到）將包含某些前瞻性陳述。這些陳述是基於管理階層目前的預期，並受到風險和不確定性的影響，可能導致實際結果與此類前瞻性陳述中明示或暗示的結果有重大差異。有關前瞻性陳述以及與 Bakkt 業務相關的風險和不確定性的更完整討論，請參閱其向美國證券交易委員會提交的文件。

During today's presentation, in addition to discussing results that are calculated in accordance with generally accepted accounting principles, we will refer to certain non-GAAP financial measures. For more information on this, the basis of presentation for our financial results and our non-GAAP measures, please refer to our earnings release, which was filed this morning with the SEC. Joining me on today's call are Gavin Michael, Chief Executive Officer; and Karen Alexander, Chief Financial Officer. After our prepared remarks, we will answer questions that we received from our investors through the State Technologies platform. After that, Gavin and Karen will be available to answer questions from the analyst community. I'll now turn it over to Gavin.

在今天的演示中，除了討論根據公認會計原則計算的結果外，我們還將參考某些非公認會計準則財務指標。有關此方面的更多資訊、我們的財務業績和非公認會計原則衡量標準的列報基礎，請參閱我們今天上午向 SEC 提交的收益報告。與我一起參加今天電話會議的是執行長加文·邁克爾 (Gavin Michael)；和凱倫·亞歷山大，首席財務官。在我們準備好的發言之後，我們將回答投資者透過 State Technologies 平台提出的問題。之後，Gavin 和 Karen 將回答分析師社群的問題。我現在把它交給加文。

Thank you, Ann, good morning, everyone, and thanks for joining. Earlier this year, we communicated our plan to simplify our business and allocate our capital towards areas of the business with strong product market fit, scalability and a clear path to profitability. During the course of 2023, we've made substantial progress against this goal. Our specific priorities for the year included expanding our crypto platform, expanding and activating our client network and strategically allocating capital. Our teams have been nimble and flexed to deliver on all of these priorities despite challenging market conditions.

謝謝安，大家早安，謝謝您的加入。今年早些時候，我們傳達了簡化業務的計劃，並將資金分配給具有強大產品市場契合度、可擴展性和清晰盈利路徑的業務領域。 2023 年，我們在實現這一目標方面取得了實質進展。我們今年的具體優先事項包括擴大我們的加密平台、擴大和激活我們的客戶網路以及策略性地分配資本。儘管市場條件充滿挑戰，我們的團隊仍然靈活、靈活地實現了所有這些優先事項。

The U.S. crypto market remains challenging. We still lack a clear regulatory framework and headwinds from bad actors in the space have muted trading volumes. However, we are seeing green shoots with institutional investors looking to participate in crypto ETFs and digit asset tokenization. We've been flexible in adjusting our strategy as needed to meet these challenges.

美國加密貨幣市場仍充滿挑戰。我們仍然缺乏明確的監管框架，而該領域不良行為者的阻力導致交易量下降。然而，我們看到機構投資者希望參與加密 ETF 和數位資產代幣化的萌芽。我們一直根據需要靈活調整我們的策略來應對這些挑戰。

We've made international expansion a key priority, and we've demonstrated our ability to act quickly with our capabilities active in 9 new markets by the end of this year. And there's more to come on the international front. This is just the beginning for us. This will generate strong revenue growth for us as we look to 2024. We continue our focus on custody and signing up new clients with the recent flight to quality that we've experienced as well as delivering enhancements to our offering. The custody product further diversifies our future revenue streams, given it's not as reliant on trading volumes. We've also reduced our reliance on market volumes and the related volatility in our revenue stream by signing on new clients with more of a subscription-based revenue model. Lastly, in light of the challenging market and slower revenue opportunities this year, we've been focused on controlling expenses. We've made a lot of hard decisions to make cuts and have been very prudent with our spend. It hasn't always been easy, but it's paid off with our core operating expenses, excluding crypto costs and impairment charges, down 26% year-over-year. That's real progress, and we'll continue to focus on that.

我們將國際擴張作為首要任務，並在今年年底前在 9 個新市場中展現了我們快速行動的能力。國際方面還有更多的事情要做。這對我們來說只是一個開始。展望 2024 年，這將為我們帶來強勁的收入成長。我們將繼續專注於託管和簽約新客戶，以及我們最近經歷的品質提升以及對我們產品的增強。鑑於託管產品不那麼依賴交易量，它進一步使我們未來的收入來源多樣化。我們也透過更多基於訂閱的收入模式與新客戶簽約，減少了對市場容量的依賴以及收入流中相關波動性。最後，鑑於今年充滿挑戰的市場和放緩的收入機會，我們一直專注於控制費用。我們做出了很多艱難的削減決定，並且對支出非常謹慎。這並不總是那麼容易，但我們的核心營運費用（不包括加密成本和減損費用）得到了回報，比去年同期下降了 26%。這是真正的進步，我們將繼續關注這一點。

2023 has been a year of enhancing our industry-leading platform across advanced trading capabilities and secure compliant custody that's built to evolve and adapt with the changing regulatory landscape. Our platform has reliable infrastructure that supports our trading and custody capabilities. Recent market events, including SBF Gilt verdict, all underscore how important it is to crypto responsibly and how critical it is to have a partner like that who uphold the highest standards of transparency, security and compliance. Our loyalty redemption capabilities also continue to be a strength as we provide our clients with a full spectrum of flexible and comprehensive solutions.

2023 年是我們在先進交易功能和安全合規託管方面增強行業領先平台的一年，該平台旨在不斷發展和適應不斷變化的監管環境。我們的平台擁有可靠的基礎設施來支援我們的交易和託管能力。最近的市場事件，包括 SBF Gilt 的裁決，都強調了負責任地進行加密貨幣的重要性，以及擁有這樣一個堅持透明度、安全性和合規性最高標準的合作夥伴的重要性。我們的忠誠度兌換能力也持續成為我們的優勢，因為我們為客戶提供全方位的靈活和全面的解決方案。

While we remain committed to expanding in the U.S. market, we've adjusted our strategy to quickly overcome the challenging U.S. crypto trading environment. With that, we've capitalized on opportunities to expand with new and existing clients into attractive international markets with more regulatory clarity and sizable addressable markets. We are currently live with crypto trading in Spain and several Latin American regions, including Argentina, Brazil and Mexico. We plan to continue to further expand with our partners in LatAm, such as Happy and Ibex. As we shared last week, BACT plans to offer our crypto trading and custody services to 3.

雖然我們仍然致力於拓展美國市場，但我們已經調整了策略，以快速克服充滿挑戰的美國加密貨幣交易環境。這樣，我們就利用機會與新客戶和現有客戶一起拓展到有吸引力的國際市場，這些市場的監管更加明確，目標市場規模更大。我們目前在西班牙和幾個拉丁美洲地區（包括阿根廷、巴西和墨西哥）進行加密貨幣交易。我們計劃繼續與 Happy 和 Ibex 等拉丁美洲合作夥伴進一步擴大業務。正如我們上週分享的，BACT 計劃向 3.0 提供我們的加密貨幣交易和託管服務。

Over in the U.K., the EU, Australia and throughout Asia, including Singapore and Hong Kong, all anticipating activation by year-end. These examples are just the beginning stages of our international expansion efforts. As we enter into new markets, we will follow a land-and-expand strategy, meaning following our initial launches, we will expand our network and reach with other clients. The hardest part of expanding into new markets is the initial landing. Once we've done that, further expansion is relatively painless. As we've already taken steps to ensure we are compliant and regulatory first within these markets, we can confidently and quickly broaden our reach to millions of new customers going forward. In addition to the international clients, we continue to grow in the U.S. as well, expanding our broad network and further emphasizing our product market fit. On the trading front, Bakkt secure platform is resonating with crypto-native companies in the industry, such as OpenNode, which intends to use our advanced end-to-end solutions.

英國、歐盟、澳洲以及包括新加坡和香港在內的整個亞洲地區都預計在年底前啟動。這些例子只是我們國際擴張努力的開端。當我們進入新市場時，我們將遵循土地擴張策略，這意味著在我們最初推出後，我們將擴大我們的網路並接觸其他客戶。拓展新市場最困難的部分是最初的落地。一旦我們做到了這一點，進一步的擴張就相對輕鬆了。由於我們已經採取措施確保我們在這些市場中首先符合合規和監管要求，因此我們可以自信地快速擴大我們的覆蓋範圍，以覆蓋數百萬新客戶。除了國際客戶外，我們還在美國繼續發展，擴大我們廣泛的網絡並進一步強調我們的產品市場契合度。在交易方面，Bakkt 安全平台引起了業內加密原生公司的共鳴，例如 OpenNode，它們打算使用我們先進的端到端解決方案。

Events of the past year have shown the value and need for qualified custodians. And in turn, we've seen increased interest in our secure and highly regulated platform. We're expanding with institutionally backed companies like EDX markets, a digital asset marketplace for crypto-native firms and large FIs. Bakkt as a qualified custodian has preliminary agreed to join their clearing house and custodial network. We've entered the family offices and high net worth space with our new live client, Libo-BTC Ledger Group, a firm that helps investors seamlessly access the most liquid digital asset markets for the acquisition and safe storage of cryptocurrencies. These customers have unique needs, and Bakkt is well positioned to serve them as a qualified custodian.

過去一年發生的事件顯示了合格託管人的價值和需求。反過來，我們看到人們對我們安全且高度監管的平台越來越感興趣。我們正在與機構支援的公司合作，例如 EDX 市場，這是一個針對加密原生公司和大型金融機構的數位資產市場。 Bakkt 作為合格的託管人已初步同意加入其清算所和託管網路。我們與新的即時客戶 Libo-BTC Ledger Group 一起進入了家族辦公室和高淨值領域，該公司幫助投資者無縫進入最具流動性的數位資產市場，以獲取和安全儲存加密貨幣。這些客戶有獨特的需求，Bakkt 有能力作為合格的託管人為他們提供服務。

And finally, we've agreed to enter unchanged enterprise custody network. Unchanged allows their clients to securely take control of their big coin with their cold storage volts. As part of the custody network, Bakkt intends to serve as the institutional signature, also known as a key agent for customers' collaborative custody multisigvaults. We've made substantial strides this quarter, expanding our trading and custody network. And as this expanded network allows us to reach new industries and new international markets in our work together. These recent wins are a testament to the product market fit of our capabilities and the continued focus on growing our core crypto solutions.

最後，我們同意進入不變的企業託管網路。 Unchanged 允許他們的客戶透過冷儲存電壓安全地控制他們的大硬幣。作為託管網路的一部分，Bakkt 打算充當機構簽名，也稱為客戶協作託管多重簽名保險庫的關鍵代理商。本季我們取得了重大進展，擴大了我們的交易和託管網路。隨著網路的擴大，我們能夠在合作中接觸到新的產業和新的國際市場。最近的這些勝利證明了我們能力的產品市場契合度以及對發展我們的核心加密解決方案的持續關注。

As our crypto business matures and we grow both internationally and domestically, we expect that our revenue mix will also evolve with an increasing share of our revenue coming from subscription-based annual recurring revenue, which will provide stability during uncertain crypto markets. We're executing at a faster rate than ever before, moving quickly with newly signed clients in order to activate and go live efficiently.

隨著我們的加密貨幣業務的成熟以及我們在國際和國內的成長，我們預計我們的收入組合也將不斷發展，來自基於訂閱的年度經常性收入的收入比例越來越大，這將在不確定的加密貨幣市場中提供穩定性。我們正在以比以往更快的速度執行，快速與新簽約的客戶合作，以便有效地啟動和上線。

We offer seamless integration and customer experiences, which enable clients to integrate in around 45 days, adding active traders to our platform quickly. We're currently live with blockchain.com, Lebo BTC, Happy and Fin Equities due to our smooth onboarding and activation experience. We continue to expand our relationships with our current partners. Investor recently appointed Bakkt as its U.S. crypto provider with migration of the existing customer accounts expected by year-end. We're also expanding our crypto capabilities with blockchain.com into new U.S. regions, including Hawaii, Louisiana, Nevada and Virginia.

我們提供無縫集成和客戶體驗，使客戶能夠在 45 天內完成集成，從而快速將活躍交易者添加到我們的平台。由於我們順利的入職和激活體驗，我們目前已與 Blockchain.com、Lebo BTC、Happy 和 Fin Equities 合作。我們繼續擴大與現有合作夥伴的關係。投資者最近任命 Bakkt 為其美國加密貨幣提供商，預計將於年底遷移現有客戶帳戶。我們也透過 Blockchain.com 將我們的加密功能擴展到美國新地區，包括夏威夷、路易斯安那、內華達和維吉尼亞。

We executed rapidly with Webull to facilitate a smooth Webull Pay at launch, and we're now enabling account sign-ups. During this quarter, we will finish migrating customers to Webull Pay. Due to the migration during the quarter, we experienced a slowdown in client activity on our platform. We've been working closely with the Webull team to monitor customer activity and roll out enhancements to improve their customers' experience and drive deeper engagement levels. We're pleased to continue expanding our relationship with Webull Pay.

我們與微牛一起快速執行，以促進微牛支付在推出時順利進行，現在我們正在啟用帳戶註冊。本季度，我們將完成客戶向微牛支付的遷移。由於本季的遷移，我們平台上的客戶活動有所放緩。我們一直與微牛團隊密切合作，監控客戶活動並推出增強功能，以改善客戶體驗並推動更深的參與程度。我們很高興繼續擴大與微牛支付的合作關係。

As some other clients have decided to exit the crypto business, Webull Pay has created a model to transition crypto accounts and maintain them on the Bakkt platform. We're also working to expand our relationship with Webull on new and exciting use cases. We have been working closely with the Caesars team to bring our crypto rewards capabilities to their members. Once live, Caesars Rewards members will have the option to redeem their rewards credits for Bitcoin via Bakkt's user-friendly experience. Our teams are excited to bring crypto capabilities to the more than 60 million members of the worldwide highly acclaimed Caesars Rewards platform early in Q1.

隨著其他一些客戶決定退出加密業務，Webull Pay 創建了一種模型來轉換加密帳戶並將其保留在 Bakkt 平台上。我們也致力於在新的、令人興奮的用例上擴大與 Webull 的關係。我們一直與凱撒團隊密切合作，將我們的加密貨幣獎勵功能帶給他們的會員。一旦上線，Caesars Rewards 會員將可以選擇透過 Bakkt 的用戶友好體驗將其獎勵積分兌換為比特幣。我們的團隊很高興能夠在第一季初為全球廣受好評的 Caesars Rewards 平台的超過 6000 萬會員帶來加密功能。

We are relaunching our custody platform with increased capabilities, including segregated wallet structure and a flexible policy engine. Our platform offers a foundation for our clients to safeguard their crypto assets. In collaboration with our clients, we will offer off-exchange trading, settlement service and co custodial service, illustrating the breadth of the platform. We'll be expanding the coins that can be custodied on our platform to include a total of 8 coins, Bitcoin, Ethereum, Bitcoin Cash, Dogecoin, Ethereum Classic, Litecoin, Shiba Inu and USD coin.

我們正在重新啟動我們的託管平台，以增強其功能，包括隔離錢包結構和靈活的策略引擎。我們的平台為客戶保護其加密資產提供了基礎。我們將與客戶合作，提供場外交易、結算服務和共同託管服務，體現了該平台的廣泛性。我們將擴大平台上可託管的硬幣數量，使其包括總共 8 種硬幣：比特幣、以太坊、比特幣現金、狗狗幣、以太坊經典、萊特幣、柴犬和美元硬幣。

Our redeveloped offering has already been awarded best digital asset custodian by the digital banker, and we've notably increased our marketing efforts to continue to spread awareness of our offering. We've gained significant interest in our upgraded platform from both existing clients and prospects with many now operating in our sandbox. While trading and custody will always be at Bakkt's core, we've spoken many times about the evolution of crypto and Bitcoin from a speculative asset to powering everyday utility. With this, we've been investing in the Lightning network, and we're looking forward to the near-term launch of our Lightning service to select clients. This service will allow them to leverage for cross-border remittances, B2B settlement, instantaneous deposits and withdrawals for trading and global interoperable P2P.

我們重新開發的產品已被數位銀行家授予最佳數位資產託管服務，並且我們顯著加大了行銷力度，以繼續傳播我們產品的知名度。現有客戶和潛在客戶對我們升級後的平台產生了濃厚的興趣，其中許多客戶現在在我們的沙盒中運行。雖然交易和託管始終是 Bakkt 的核心，但我們已經多次談到加密貨幣和比特幣從投機資產到為日常公用事業提供動力的演變。因此，我們一直在投資閃電網絡，並期待近期向特定客戶推出閃電服務。這項服務將使他們能夠利用跨境匯款、B2B結算、交易即時存取款以及全球可互通的P2P。

We have partnered with 2 of the leading lighting service providers to collaboratively build out our global network of compliant on and off ramps. A multifaceted relationship with Ibex includes working together on Lightning, and we recently shared the news that we'll be collaborating with LiteSpark to support a new open standard for money transmission, Universal Money addresses or UMAs. UMA makes sending money as simple as sending an e-mail and the new service can be leveraged for a number of use cases. We have a vision for Internet native payments that is shared by LightSpark and IBEX. These partnerships are a natural fit for our business. So with that, I'll turn it over to Karen to discuss our financial and operating results for the quarter.

我們與兩家領先的照明服務供應商合作，共同建立我們的合規進出坡道的全球網路。與 Ibex 的多方面關係包括在閃電網路方面的合作，我們最近分享了我們將與 LiteSpark 合作支援新的貨幣傳輸開放標準、通用貨幣地址或 UMA 的消息。 UMA 讓匯款變得像發送電子郵件一樣簡單，並且新服務可用於多種用例。我們對網路原生支付有一個由 LightSpark 和 IBEX 共同的願景。這些合作夥伴關係非常適合我們的業務。因此，我將把它交給凱倫討論我們本季的財務和營運表現。

Thanks, Gavin. I will now walk you through our third quarter financial results. A quick reminder that in accordance with GAAP, we present crypto services revenue, encrypted costs and execution, clearing and brokerage fees on a gross basis since we are in principle in the corrective services we provide our customers. By contrast, we are an agent in the loyalty redemption services we provide our loyalty customers. So loyalty revenue is presented on a one-line net basis. Crypto costs and execution clearing and brokerage fees, which we will refer to as crypto costs and ECB for the remainder of this call, drive gross crypto services revenue and the difference between these items represents crypto-trading contribution to margin.

謝謝，加文。現在我將向您介紹我們第三季的財務表現。快速提醒一下，根據公認會計原則，我們以總額為基礎呈現加密服務收入、加密成本以及執行、清算和經紀費用，因為我們原則上是在為客戶提供糾正服務。相較之下，我們是為忠誠客戶提供忠誠兌換服務的代理商。因此，忠誠度收入是按單線淨值呈現的。加密成本以及執行清算和經紀費用（在本次電話會議的其餘部分中，我們將其稱為加密成本和ECB）推動了加密服務總收入，這些項目之間的差異代表了加密交易對利潤的貢獻。

Please see the notes section of our earnings presentation for additional detail on crypto Services revenue and related costs. Turning to Slide 13. We have our third quarter 2023 financial results. We had total revenue of $204.8 million, of which $191.8 million was gross crypto services revenue. Total revenues increased significantly year-over-year due to our acquisition of Apex Crypto, which closed on April 1, 2023. We had $13.0 million of net loyalty services revenue. Operating expenses were $257.6 million, which reflects a significant year-over-year increase in crypto costs and ECB driven by related crypto services activity.

請參閱我們收益演示的註釋部分，以了解有關加密服務收入和相關成本的更多詳細資訊。轉向投影片 13。我們公佈了 2023 年第三季的財務表現。我們的總收入為 2.048 億美元，其中 1.918 億美元是加密服務總收入。由於我們對 Apex Crypto 的收購（該收購於 2023 年 4 月 1 日完成），總收入同比大幅增長。我們的忠誠度服務淨收入為 1,300 萬美元。營運支出為 2.576 億美元，反映出加密成本和歐洲央行在相關加密服務活動的推動下同比大幅增長。

During the third quarter, in accordance with generally accepted accounting principles, we conducted our annual goodwill and intangible assets impairment testing. Earlier this year, we spoke about strategically allocating more of our capital towards the crypto business while maintaining existing offerings and relationships in the loyalty business. We meet the systems and given our expectations for which products have a clear path to profitability. Given the pullback on significant investments in the loyalty business, we've lowered our long-term revenue growth expectations for this business. As a result, we recognized a $23.3 million non-cash intangible asset impairment charge and our loyalty technology and customer relationship intangible assets and the back brand name intangible. The charge is non-cash and does not have any impact on our future operations or affect the liquidity or cash flow from operating activities.

第三季度，根據公認會計原則，我們進行了年度商譽和無形資產減損測試。今年早些時候，我們談到了策略性地將更多資本分配給加密貨幣業務，同時維持忠誠度業務中的現有產品和關係。我們滿足系統的要求，並給予我們對哪些產品有明確的獲利途徑的期望。鑑於忠誠度業務重大投資的縮減，我們降低了對該業務的長期收入成長預期。因此，我們確認了 2,330 萬美元的非現金無形資產減損費用以及我們的忠誠度技術和客戶關係無形資產以及支援品牌無形資產。該費用為非現金，不會對我們未來的營運產生任何影響，也不影響經營活動的流動性或現金流。

Operating expenses, excluding crypto cost in ECB and noncash goodwill and intangible asset impairment charges were $44.2 million. This represents a decrease of 26% year-over-year. This improvement is primarily due to a reduction in total compensation and benefits as we are continuing to recognize the benefit from earlier expense actions. The net loss for the quarter was $51.7 million, which resulted in a diluted net loss of $0.19 per share on an average diluted share base of 91.4 million shares. Net loss allocated to the non-controlling interest in the operating company was $34.4 million, leaving a $17.3 million loss attributable to Bakkt Holdings, Inc. or a net loss of $0.19 per share on an average basic share count of 91.4 million shares. Our total share count as of September 30 was 274.7 million trips. ICE remains our largest shareholder as they own 64% of our aggregate shares, which has remained relatively consistent with their shareholding in prior periods.

不包括歐洲央行的加密成本以及非現金商譽和無形資產減損費用的營運費用為 4,420 萬美元。這意味著同比下降了 26%。這項改善主要是由於總薪資和福利的減少，因為我們繼續認識到早期費用行動的好處。本季淨虧損為 5,170 萬美元，平均稀釋後股本為 9,140 萬股，每股攤薄淨虧損 0.19 美元。分配給營運公司非控制權益的淨虧損為 3,440 萬美元，Bakkt Holdings, Inc. 的虧損為 1,730 萬美元，平均基本股數為 9,140 萬股，每股淨虧損為 0.19 美元。截至 9 月 30 日，我們的總行程次數為 2.747 億次。 ICE 仍然是我們最大的股東，他們擁有我們總股份的 64%，這與他們之前的持股比例保持相對一致。

Note that the percent ownership is down slightly year-over-year due to new Class A share issuances and not due to the sale of shares by ICE. On Slide 14, we have our EBITDA and adjusted EBITDA for the third quarter of 2023. Adjusted EBITDA reflects adjustments for non-cash and acquisition-related items that impacted the period. EBITDA and adjusted EBITDA for the quarter were losses of $48.7 million and $21.6 million, respectively. Adjusted EBITDA loss improved during the prior year period primarily due to lower compensation and benefit costs. On Slide 15, we show revenues for the company. Total revenue for the third quarter of 2023 was $204.8 million. Gross crypto services revenue for the quarter was $191.8 million. The quarter-over-quarter decline that we saw in the third quarter was due to a slowdown in overall industry-wide activity levels as well as lower customer activity during the migration of Webull accounts to Webull Pay, which Gavin mentioned earlier on this call.

請注意，所有權百分比比去年同期略有下降，這是由於新 A 類股票的發行，而不是由於 ICE 出售股票。在投影片 14 中，我們列出了 2023 年第三季的 EBITDA 和調整後 EBITDA。調整後 EBITDA 反映了影響該期間的非現金和收購相關項目的調整。本季 EBITDA 和調整後 EBITDA 分別虧損 4,870 萬美元和 2,160 萬美元。調整後的 EBITDA 虧損較上年同期改善，主要是因為薪資和福利成本下降。在幻燈片 15 上，我們顯示了該公司的收入。 2023 年第三季的總收入為 2.048 億美元。該季度加密服務總收入為 1.918 億美元。我們在第三季度看到的環比下降是由於整個行業的整體活動水平放緩以及微牛帳戶遷移到微牛支付期間客戶活動的減少，加文早些時候在這次電話會議中提到了這一點。

We've been working closely with the Webull team to monitor customer activity and roll out enhancements to improve their customers' experience and drive deeper engagement levels in the new map. As Gavin mentioned earlier, as our crypto business matures, we expect that our revenue mix will also evolve with an increasing share of our revenue coming from subscription-based annual recurring revenues. This should reduce our reliance on industry activity volumes and provide stability to our revenue stream during uncertain market activity levels.

我們一直與微牛團隊密切合作，監控客戶活動並推出增強功能，以改善客戶體驗並在新地圖中推動更深層的參與程度。正如加文之前提到的，隨著我們的加密業務的成熟，我們預計我們的收入組合也將不斷發展，來自基於訂閱的年度經常性收入的收入份額越來越大。這應該會減少我們對行業活動量的依賴，並在市場活動水平不確定的情況下為我們的收入流提供穩定性。

Net royalty revenues of $13.0 million increased 2% year-over-year. This was driven by an increase in transaction revenue, which was $6.8 million for the quarter, up 5% year-over-year. This improvement was primarily due to higher air travel activity and loyalty redemptions. Subscription and service revenues of $6.2 million were relatively flat year-over-year. Turning to Slide 16. We have total operating expense. Total expense for the third quarter of $257.6 million includes $190.1 million of Crypto cost and ECB. These costs are driven by crypto grading volumes. G&A expenses of $7.4 million were down 4% year-over-year due to a reduction in marketing expenses. Total compensation expense of $24.6 million declined 35% compared to the third quarter of 2022 due to lower head count and a decrease in non-cash compensation expense.

淨特許權使用費收入為 1,300 萬美元，年增 2%。這是由交易收入成長推動的，本季交易收入為 680 萬美元，年增 5%。這一改善主要歸因於航空旅行活動和忠誠度兌換的增加。訂閱和服務收入為 620 萬美元，與去年同期相比相對持平。轉向幻燈片 16。我們有總營運費用。第三季總支出為 2.576 億美元，其中包括 1.901 億美元的加密成本和 ECB。這些成本是由加密貨幣分級所驅動的。由於行銷費用減少，一般管理費用為 740 萬美元，年減 4%。由於員工人數減少和非現金薪酬費用減少，薪酬總額為 2,460 萬美元，較 2022 年第三季下降 35%。

Other expenses of $12.1 million were down 16% year-over-year due to lower depreciation and amortization and acquisition-related expenses. We're pleased that our disciplined approach to expense management is paying off. We will remain prudent around our costs to ensure that we are strategic with where we spend and how we allocate our capital towards opportunities that provide the highest returns. Turning to Slide 17. We have a slide comparing gross crypto services revenue in Crypto Cost and ECB. Gross crypto services revenue of $191.8 million was impacted by lower industry-wide volumes and lower activity levels from Webull Pay customers. Crypto costs in ECB were $190.1 million for the quarter.

由於折舊、攤提以及收購相關費用減少，其他費用為 1,210 萬美元，較去年同期下降 16%。我們很高興我們嚴格的費用管理方法正在發揮成效。我們將在成本方面保持謹慎，以確保我們在支出地點以及如何將資本分配給提供最高回報的機會方面具有戰略意義。轉向幻燈片 17。我們有一張幻燈片比較了加密成本和歐洲央行的加密服務總收入。加密服務總收入為 1.918 億美元，受到全行業交易量下降和 Webull Pay 客戶活動水準下降的影響。本季歐洲央行的加密貨幣成本為 1.901 億美元。

During the quarter, we adjusted our revenue share agreement with WebullPay for the rest of the year to increase revenue retained by Bakkt while we Webull pay engagement stabilizes. The benefit from this adjustment is reflected in the results for the quarter and acts as a partial offset to the decline in gross revenue. As a result, if you compare the 2 columns for Q3 '23 in the graph, you will see that the contribution to margin from crypto-trading activities, also known as our take rate was higher this quarter compared to historical periods.

在本季度，我們調整了與 WebullPay 在今年剩餘時間內的收入分成協議，以增加 Bakkt 保留的收入，同時我們的 Webull Pay 參與度穩定。這項調整帶來的好處反映在本季的業績中，並部分抵消了總收入的下降。因此，如果您比較圖表中 23 年第 3 季的 2 列，您會發現本季度加密貨幣交易活動對保證金的貢獻（也稱為我們的採用率）高於歷史時期。

The Q3 23 take rate of approximately 80 basis points of gross crypto services revenue is higher than the historical average of between 30 and 40 basis points, which will continue into Q4 23. On Slide 18, we have our key performance indicators. As a reminder, we have included Apex crypto in the historical KPI figures on this slide for comparison purposes. We had 6.1 million crypto enabled accounts at the end of the third quarter, which reflects a steady increase over time.

23 年第三季的加密服務總收入約為80 個基點，高於30 到40 個基點的歷史平均水平，這種情況將持續到23 年第四季。在投影片18 上，我們有我們的關鍵績效指標。提醒一下，我們已將 Apex 加密貨幣納入本投影片的歷史 KPI 資料中，以進行比較。截至第三季末，我們擁有 610 萬個啟用加密貨幣的帳戶，這反映了隨著時間的推移穩步增長。

Next, we have our transacting accounts, which we break out into crypto and loyalty accounts. There were $1.0 million transacting accounts in the third quarter, of which $592,000 were for loyalty redemption and 454,000 were for crypto traces. Loyalty redemption transaction accounts were down 13% year-over-year due to a decline in hotel, rental car and gift card activity. Crypto transacting accounts were up 3% sequentially due to increased activity related to the delisting of certain points.

接下來，我們有交易帳戶，我們將其分為加密帳戶和忠誠度帳戶。第三季有 100 萬美元的交易帳戶，其中 592,000 美元用於忠誠度兌換，454,000 美元用於加密追蹤。由於飯店、租車和禮品卡活動減少，忠誠度兌換交易帳戶較去年同期下降 13%。由於與某些點下架相關的活動增加，加密貨幣交易帳戶環比增長了 3%。

Notional traded volume is also broken out between crypto and loyalty redemptions. Total notional traded volume was $366 million, of which $191 million was from crypto and $176 million was related to loyalty redemption. On this chart, we have also included the crypto industry trading volumes, which is the orange line. As depicted here, our crypto trading volumes were down a substantial amount on a sequential basis. During the quarter, volumes were impacted by lower activity levels from Webull Pay customers and the delisting of certain points. If you normalize for these factors, the quarter-over-quarter decline in our crypto trading volumes was right in line with the overall crypto market industry, which was down 0.3%. Meanwhile, loyalty redemption volume was down 4% year-over-year. Our assets under custody of $506 million declined 23% sequentially due to the impact from delisting certain coins and a reduction in certain Quinn prices.

名目交易量也分為加密貨幣和忠誠度兌換。名目交易總額為 3.66 億美元，其中 1.91 億美元來自加密貨幣，1.76 億美元與忠誠度兌換相關。在此圖表中，我們還包括了加密貨幣行業的交易量，即橙色線。如圖所示，我們的加密貨幣交易量較上季大幅下降。本季度，交易量受到微牛支付客戶活動水準下降和某些積分下架的影響。如果將這些因素標準化，我們的加密貨幣交易量的季度環比下降與整個加密貨幣市場行業下降 0.3% 的情況一致。同時，忠誠度兌換量較去年同期下降 4%。由於某些代幣退市和某些 Quinn 價格下降的影響，我們託管的資產為 5.06 億美元，環比下降了 23%。

Turning to Slide 19. We have our condensed balance sheet. We ended the third quarter with $90.9 million of cash, cash equivalents and available-for-sale securities. Our cash usage for the quarter was $8.5 million. During the quarter, we had a non-recurring addition of cash of $15.2 million, which was returned to us from ICE clearing and is related to the delisting of features and options contracts. Excluding the return of cash from ICE clearing, our cash usage from operating activities was $19.0 million, which was slightly higher than the second quarter cash usage of $18.2 million. Although we saw improvements in our operating expense base, including lower acquisition-related expenses, marketing and insurance expense. Revenues were lower due to crypto trading volumes, which we discussed earlier, which led to the slight pickup in cash usage.

轉向投影片 19。我們有簡明的資產負債表。截至第三季末，我們擁有 9,090 萬美元的現金、現金等價物和可供出售證券。本季我們的現金使用量為 850 萬美元。本季度，我們非經常性增加了 1520 萬美元現金，這些現金是從 ICE 清算返還給我們的，與功能和期權合約的退市有關。不包括 ICE 清算返還的現金，我們經營活動的現金使用量為 1,900 萬美元，略高於第二季的現金使用量 1,820 萬美元。儘管我們的營運費用基礎有所改善，包括收購相關費用、行銷和保險費用的降低。由於我們之前討論過的加密貨幣交易量，收入較低，這導致現金使用量略有增加。

Recall that last quarter, we updated our 2023 outlook for both revenue and free cash flow utilization with an expectation that net revenue contribution from loyalty and crypto revenue activities would be between $64 million and $70 million, and our free cash flow utilization would be between $90 million and $96 million. Since that update, we have seen continued softness in loyalty travel redemption levels as well as lower market retail crypto transaction activity. Additionally, our recently announced international retail crypto clients will begin to contribute to revenue in late Q4 2023, which is a bit later than the timing previously anticipated in last quarter's outlook update.

回想一下，上個季度，我們更新了2023 年收入和自由現金流利用率的展望，預計來自忠誠度和加密貨幣收入活動的淨收入貢獻將在6400 萬美元至7000 萬美元之間，我們的自由現金流利用率將在90 美元之間100 萬和 9,600 萬美元。自從更新以來，我們看到忠誠度旅行兌換水準持續疲軟，且市場零售加密交易活動較低。此外，我們最近宣布的國際零售加密貨幣客戶將於 2023 年第四季末開始貢獻收入，這比上季度展望更新中先前預期的時間稍晚。

Accordingly, we are reducing our expectation of net loyalty in net crypto revenue activity contribution for 2023 to $57 million to $60 million, comprised of gross crypto revenues of $697 million to $1,215 million and net loyalty revenues of $53 million, less crypto costs of $693 million to $1,208 million. This directly impact free cash flow utilization, notwithstanding continued progress in reducing cash expenses. And as such, we now expect free cash flow utilization for 2023 to be approximately $100 million. The progress we have highlighted in signing new retail and institutional crypto customers will drive strong backlog going into 2024. Our preliminary guidance for 2024 provides color on the time line to revenue from these new customers. We preliminarily expect gross crypto revenues of $3,406 million to $9,005 billion. Net royalty revenues of approximately $55 million, encryptocosts of 3,386 million to $8.976 million. This translates into loyalty and crypto revenue activities driving $75 million to $95 million of net revenue contribution in 2024. The increased revenue expectation is driven by new retail and institutional customers with loyalty revenues expected to increase slightly.

因此，我們將2023 年淨加密貨幣收入活動貢獻中的淨忠誠度預期降低至5,700 萬美元至6,000 萬美元，其中加密貨幣總收入為6.97 億美元至12.15 億美元，淨忠誠度收入為5,300 萬美元，減去6.93 億美元的加密成本增加至 12.08 億美元。儘管在減少現金支出方面不斷取得進展，但這直接影響了自由現金流的使用率。因此，我們現在預計 2023 年的自由現金流利用率約為 1 億美元。我們強調的在簽署新零售和機構加密貨幣客戶方面取得的進展將在 2024 年推動大量積壓訂單。我們對 2024 年的初步指導為這些新客戶的收入時間表提供了色彩。我們初步預期加密貨幣總收入為 34.06 億美元至 90,050 億美元。淨特許權使用費收入約為 5,500 萬美元，加密成本為 33.86 億至 897.6 萬美元。這意味著忠誠度和加密貨幣收入活動將在 2024 年推動 7,500 萬至 9,500 萬美元的淨收入貢獻。收入預期的增加是由新零售和機構客戶推動的，忠誠度收入預計將略有增加。

As Gavin mentioned earlier, the 2024 revenue outlook includes an expectation of increased diversity of crypto revenue, both geographically with the ramp-up in international retail crypto and by customer segment with the growth in institutional custody revenue. It also includes an expectation of approximately 25% to 50% increased subscription revenue driven by subscription-based retail crypto revenue. 2024 free cash utilization is expected to be $43 million to $63 million, reflecting further reductions to our cash expenses. At the high end of our revenue range, we see a pathway to be approximately breakeven on an adjusted EBITDA basis by the end of 2024. I will now pass it back to Gavin for his closing remarks.

正如 Gavin 先前所提到的，2024 年的收入前景包括加密貨幣收入多樣性增加的預期，無論是在地理上隨著國際零售加密貨幣的增長，還是在客戶群上隨著機構託管收入的增長。它還包括基於訂閱的零售加密貨幣收入的推動，訂閱收入預計將增加約 25% 至 50%。 2024 年自由現金利用率預計為 4,300 萬至 6,300 萬美元，反映出我們現金支出的進一步減少。在我們收入範圍的高端，我們預計到 2024 年底，調整後的 EBITDA 將會大致實現盈虧平衡。我現在將其轉交給加文，供其閉幕詞。

Thanks, Karen. Just a few final thoughts. We've made substantial progress this past quarter, and we're building momentum for future growth and success. This was another consecutive quarter where we clearly demonstrated our ability to execute and leverage our industry-leading platform, made stronger from our acquisition of Apex Crypto to win new clients and deliver results for our existing ones. We're actively executing our international growth strategy. Our crypto capabilities will be live in 9 attractive international markets by year's end. This is a significant milestone for us and testament to how we push forward when faced with challenges in this case, a difficult environment in the U.S. around crypto regulation. Our team is flexible, adaptable and quick to find other paths to success. We're still going strong with adding new clients to our roster. We're building an extensive network of clients in a diverse group of industries as the synergies of our expanded crypto capabilities and industry-leading infrastructure resonates with market participants. We're pleased with the progress we're making, but what's even more important is that we're moving quickly to onboard all of these clients and activate our crypto capabilities expeditiously.

謝謝，凱倫。只是最後的一些想法。上個季度我們取得了實質進展，並且正在為未來的成長和成功積蓄動力。這是我們連續一個季度清楚地展示了我們執行和利用行業領先平台的能力，透過收購 Apex Crypto，該平台變得更加強大，以贏得新客戶並為現有客戶帶來成果。我們正在積極執行我們的國際成長策略。到年底，我們的加密功能將在 9 個有吸引力的國際市場上線。這對我們來說是一個重要的里程碑，也證明了我們在面臨這種情況下的挑戰時如何前進，即美國加密貨幣監管的困難環境。我們的團隊靈活、適應力強，能夠快速找到其他成功之路。我們仍在不斷地向我們的名冊中添加新客戶。我們正在不同行業建立廣泛的客戶網絡，因為我們擴展的加密功能和行業領先的基礎設施的協同作用引起了市場參與者的共鳴。我們對所取得的進展感到滿意，但更重要的是，我們正在迅速吸引所有這些客戶並迅速啟動我們的加密功能。

Lastly, we'll continue to be prudent on how we allocate capital and manage our expenses. Our results this quarter clearly demonstrate that our disciplined approach to managing expenses are yielding results, but we won't skimp on making investments in areas that make sense and have a clear path to profitability, such as the redevelopment of our custody foundation to make it even stronger for our clients, all the investments that we're making in the Lightning network to increase crypto utility. We're being smart with where we spend our hard-earned money and look forward to sharing with you in the future how those investments are reaping rewards. Thank you for joining us today. And with that, I'll turn it over to Ann to manage Q&A.

最後，我們將繼續謹慎分配資本和管理費用。我們本季的業績清楚地表明，我們嚴格的費用管理方法正在取得成果，但我們不會吝惜在有意義且有明確盈利途徑的領域進行投資，例如重建我們的託管基金會以使其成為可能。對於我們的客戶來說，我們在閃電網路中進行的所有投資都更加強大，以提高加密貨幣的效用。我們很聰明地將辛苦賺來的錢花在哪裡，並期待將來與您分享這些投資如何獲得回報。感謝您今天加入我們。這樣，我會將其交給 Ann 來管理問答。

Thanks, Gavin. Let's move over to questions from the investor community. Leading into our Q&A session, we'll start by answering the top questions from today ranked by a number of votes. We have consolidated some of the questions I address similar games. After that, we'll turn to live questions from the analyst community. The first question we will address is about our stock price, which several investors, including (inaudible) submitted. They would like to know what our plan is to raise the stock price, whether we are at risk for delisting and why we aren't using cash to do a stock repurchase. Karen, can you answer this question?

謝謝，加文。讓我們轉向投資者群體的問題。在問答環節中，我們將首先回答今天按票數排名的熱門問題。我們整合了我在類似遊戲中提出的一些問題。之後，我們將轉向分析師社群的即時提問。我們要解決的第一個問題是關於我們的股價，包括（聽不清楚）在內的一些投資者提交了這個價格。他們想知道我們提高股價的計劃是什麼，我們是否有退市的風險，以及為什麼我們不使用現金進行股票回購。凱倫，你能回答這個問題嗎？

Of course. I know that the downward pressure on our stock price has been incredibly frustrating to all of our shareholders. As a fellow shareholder, I have certainly been disappointed by the stock price performance. We are closely monitoring our stock price. And should we receive a listing notice, we would take necessary action to remediate such as a reverse stock split. We are committed to our shareholders and to remaining a public company. Ultimately, we believe the best way to allocate our capital to generate higher returns for our shareholders is to invest in the business, deliver on milestones and accelerate our path to profitability. That's what will drive our stock price higher. We always consider all options. And while a stock repurchase since tempting, it ultimately will not provide sustainable growth and returns that investing in our business well. Thank you to all of our shareholders for sticking with us. It hasn't been an easy journey, but I believe there are better days ahead for this company and our shareholders. Thanks, Karen.

當然。我知道我們股價的下行壓力讓我們所有的股東都感到非常沮喪。身為股東，我當然對股價表現感到失望。我們正在密切關注我們的股價。如果我們收到上市通知，我們將採取必要的補救措施，例如反向股票分割。我們致力於我們的股東並致力於保持上市公司的地位。最終，我們相信分配資本為股東創造更高回報的最佳方法是投資於業務、實現里程碑並加速我們的獲利之路。這將推動我們的股價走高。我們總是考慮所有的選擇。儘管股票回購很誘人，但它最終不會提供可持續的成長和投資於我們業務的回報。感謝所有股東對我們的支持。這不是一個輕鬆的旅程，但我相信這家公司和我們的股東的日子會更好。謝謝，凱倫。

Our next question hit on a few themes from Jabra HanchilaS around the status of partnerships, including MasterCard and our plans to drive future success. Gavin, can you take this one?

我們的下一個問題涉及 Jabra HanchilaS 圍繞合作夥伴關係狀況的幾個主題，包括萬事達卡和我們推動未來成功的計劃。加文，你能拿走這個嗎？

Yes, sure. I think there was a comment from one of the investors mentioned that we haven't had any major partnerships since we announced the acquisition of Apex Crypto a year ago. I don't quite agree with that. We've signed up numerous new clients since April 1, which is when we closed our acquisition of Apex Crypto and have a number of other clients in late-stage negotiations who we expect to announce before too long. Our new relationships span across new and diverse industries and also marks our foray into new international markets. This will enable us to land and expand and greatly broaden our reach across the world.

是的，當然。我認為一位投資者在評論中提到，自從我們一年前宣布收購 Apex Crypto 以來，我們還沒有建立任何重大合作夥伴關係。我不太同意這一點。自4 月1 日以來，我們已經簽約了許多新客戶，也就是我們在4 月1 日完成對Apex Crypto 的收購的時候，並且還有一些其他客戶正在進行後期談判，我們預計很快就會宣布這些客戶。我們的新關係跨越了新的多元化產業，也標誌著我們進入新的國際市場。這將使我們能夠登陸並擴展並極大地拓寬我們在世界各地的影響力。

We formed strategic alliances with industry leaders such as pad and fire blocks, which provides an extensive network of prospective clients. Also prior to closing our acquisition, we signed up Caesars Entertainment as a new client, which, as I mentioned, will launch early in Q1. This marks our entry into the gaming and entertainment industry, which should provide exciting opportunities to expand. I've said this before, and I will reiterate that we greatly value our relationship with MasterCard and continue to work with them on being able to provide our crypto capabilities to their customers. Our respective teams have completed the development work, and we're in the process of testing. We expect to be able to commence a collective sales efforts soon. But that said, until the U.S. regulatory environment for crypto gets fixed, I think many TradFi companies will remain on the sidelines and wait to activate their crypto strategies. We'll be here ready to resume our work with them when that happens, but I think that catalyst really does need to happen for us.

我們與墊和火塊等行業領導者建立了策略聯盟，這提供了廣泛的潛在客戶網絡。同樣在完成收購之前，我們與凱撒娛樂公司簽約為新客戶，正如我所提到的，該客戶將於第一季初推出。這標誌著我們進入遊戲和娛樂產業，這應該會提供令人興奮的擴張機會。我之前已經說過這​​一點，我會重申，我們非常重視與萬事達卡的關係，並將繼續與他們合作，以便能夠向他們的客戶提供我們的加密功能。我們各自的團隊已經完成了開發工作，正在進行測試。我們預計很快就能開始集體銷售工作。但話雖如此，在美國加密貨幣監管環境修復之前，我認為許多 TradFi 公司仍將保持觀望，等待啟動其加密貨幣策略。當這種情況發生時，我們將準備好與他們恢復合作，但我認為我們確實需要這種催化劑。

And last question from the (inaudible) who asked if we are involved in any of the spot ETF applications. Gavin, can you give your thoughts on this one?

最後一個問題來自（聽不清楚），他問我們是否參與任何現貨 ETF 申請。加文，你能談談你對這個問題的看法嗎？

Yeah, thanks for the question. The applications themselves have been a stamp of approval from traditional finance and SEC approval of spot Bitcoin ETFs will be a positive step towards mainstream acceptance and legitimacy in the financial world. We're excited to see this happen and for the opportunities this will bring to the larger market with custody being a core anchor product for Bakkt, approval would open up the market for us, and we're prepared to serve as a qualified custodian. We're looking forward to providing you with updates here when appropriate.

是的，謝謝你的提問。這些申請本身已成為傳統金融領域的認可標誌，而 SEC 對比特幣 ETF 現貨的批准將是邁向金融界主流接受度和合法性的積極一步。我們很高興看到這種情況的發生，這將為更大的市場帶來機會，託管是 Bakkt 的核心錨定產品，批准將為我們打開市場，我們準備好作為合格的託管人。我們期待在適當的時候在這裡為您提供更新資訊。

And with that, I would now like to turn the call back over to the operator to open up the phone line to take questions from the analyst community.

現在，我想將電話轉回給接線員，以開通電話線路，回答分析師群體的問題。

Thank, (Operator Instructions) Our first question comes from Trevor Williams from Jefferies.

謝謝，（操作員說明）我們的第一個問題來自 Jefferies 的 Trevor Williams。

This is Yvonne Zhang on for Trevor Williams. My first one relates to the crypto services revenue and the increase in the take rate this quarter. Can you provide more color about the change in the revenue share agreement with Webull Pay and how we should expect the take rate to trend going forward? And my second question is, what do you see as a normalized pace of OpEx growth beyond 2023, excluding crypto costs and ECP fees, thank you.

我是特雷弗威廉斯的伊馮娜張。我的第一個問題與本季的加密服務收入和採用率的成長有關。您能否提供更多關於與微牛支付的收入分成協議的變化的信息，以及我們應該如何預期未來的採用率趨勢？我的第二個問題是，您認為 2023 年後營運支出正常化成長速度是多少（不包括加密成本和 ECP 費用），謝謝。

Hi there, it's Karen. I'm happy to take that question. Starting with the take rate. As we've mentioned earlier, we've worked successfully completed a migration of the Webull's crypto accounts over to Webull Pay during the third quarter. That migration required existing customers to activate new accounts that Webull Pay to be, to continue to create crypto. So it wasn't surprising that we saw some disruption and decrease in trading and see metrics from that group of customers as they were acclimating themselves to the new Webull Pay experience. So we've been working actually very closely with Webull to monitor this customer activity and roll out enhancements. And in the meantime, I think the adjustment that Webull made to our rev share agreement to allow us to retain more of that reduced gross volume of trading is really a testament to them to our collaborative relationship. So we expect that to continue through the end of the year. And then the expectation at this point is as the Webull Pay customer experience continues to evolve, we'll see those trading levels return, and we will revert back in 2024 to more historical take rate, which has typically been if you include the historical Apex history and to be between 30 and 40 bps. Good (inaudible), in terms of the second question, can you just repeat it one more time just to make sure I have it.

你好，我是凱倫。我很高興回答這個問題。從獲取率開始。正如我們之前提到的，我們在第三季度成功完成了微牛加密帳戶向微牛支付的遷移。此遷移要求現有客戶啟動 Webull Pay 的新帳戶，以繼續建立加密貨幣。因此，我們看到交易出現一些中斷和減少，並看到該組客戶在適應新的 Webull Pay 體驗時的指標，這並不奇怪。因此，我們實際上一直在與微牛密切合作，以監控客戶活動並推出增強功能。同時，我認為微牛對我們的收益分成協議進行的調整，使我們能夠保留更多減少的交易總量，這確實證明了他們對我們合作關係的認可。因此，我們預計這種情況將持續到今年年底。然後，此時的預期是，隨著Webull Pay 客戶體驗的不斷發展，我們將看到這些交易水平回歸，並且我們將在2024 年恢復到更歷史的接受率，如果您包括歷史Apex，則通常是這樣歷史並在 30 到 40 bps 之間。很好（聽不清楚），就第二個問題而言，您可以再重複一次以確保我有它嗎？

Yeah, I was just curious what you see as a more normalized pace of expense growth beyond this year, excluding crypto cost and ECP fees?

是的，我只是好奇你認為今年之後費用增長的更正常化的速度是多少，不包括加密成本和 ECP 費用？

Yeah, so on the expense growth, one of the things that we've highlighted is we've taken a lot of actions in 2023 to reset our expense footprint. We're seeing and continue to see a lot of opportunities to increase efficiencies through the integration of the Apex team and systems with the legacy Bakkt team. So we actually expect our cash expenses to continue to come down in 2024. When you look at the guidance, the preliminary guidance that I gave for 2024 in terms of free cash flow utilization, that reflects, when you compare that to the revenue guidance that we provided, we are looking at continued reductions to our expense expense rate in 2024. It probably expenses somewhere in the $130 million rate on a cash basis.

是的，關於費用成長，我們強調的一件事是我們在 2023 年採取了許多行動來重置我們的費用足跡。我們看到並將繼續看到透過 Apex 團隊和系統與傳統 Bakkt 團隊的整合來提高效率的大量機會。因此，我們實際上預計我們的現金支出將在2024 年繼續下降。當你查看指導時，我在自由現金流利用率方面給出的2024 年初步指導，這反映出，當你將其與收入指導在進行比較時，我們表示，我們正在考慮在 2024 年繼續降低費用率。以現金計算，費用率可能約為 1.3 億美元。

Thank you so much that's super helpful.

非常感謝你這非常有幫助。

That's no problem.

那沒問題。

The next question comes from Andrew Bond from Rosenblatt Securities.

下一個問題來自羅森布拉特證券公司的安德魯邦德。

I just want to start with the guidance on the revenue side for 2024, you're expecting a pretty big ramp in gross and net revenue from the current run rate. So I just wanted to get an idea of this primarily from the international additions and kind of what are your assumptions on the broader volume environment given (inaudible) activity or growth? And additionally, how are volumes tracking quarter-to-date with the stronger (inaudible) for Crypto?

我只想從 2024 年收入的指導開始，您預計從當前的運行速度來看，總收入和淨收入將出現相當大的成長。因此，我只是想主要從國際新增項目中了解這一點，以及考慮到（聽不清楚）活動或成長，您對更廣泛的成交量環境有何假設？此外，加密貨幣季度至今的交易量與走強（聽不清楚）的情況如何？

(inaudible) In terms of the outlook for 2024, I guess, first off, we thought it was important and helpful to get a preliminary outlook in 2024, given the fact that we have made traction in signing new clients and relationships, as I mentioned earlier in the call. A lot of these are set for activation towards the very end of 2023. So if you -- yes, well, we don't see a lot of impact of these new relationships in 2023.

（聽不清楚）就2024 年的前景而言，我想，首先，我們認為獲得2024 年的初步展望非常重要且有幫助，因為正如我所提到的，我們在簽署新客戶和新關係方面取得了進度早些時候在通話中。其中許多計劃將於 2023 年底啟動。因此，如果您——是的，那麼我們認為這些新關係在 2023 年不會產生太大影響。

We do see it as a strong backlog as we get into 2024. The range that I provided, when you break down that revenue, and you put it on a net basis for crypto is somewhere between $20 million and $40 million. And that really is -- that range reflects a kind of variance in what we expect market engagement to be as well as time line for activations. The international component is going to be a big component of that range. So if you look under any scenario, we think that international retail crypto revenue can be almost half of that net crypto revenue coming into 2024. And again, we look at that as not only the progress that we've made signing these relationships internationally, as Gavin mentioned, it really is a land and expand as we activate and gain footholds into these markets. But also a lot of these international relationships, they have signed up for a more of a subscription model and how we will generate revenue. And the fact that they will sign up for a tier of trading, where they basically pay a flat amount as far within a certain tier. And if they go above that volume, then it will revert to more of a volume-based model. So I think, again, in terms of the composition of that, it can be that the ARR component of that also provides a good (inaudible) in terms of how we're guiding at least initially 2024.

進入 2024 年，我們確實認為這是一個強勁的積壓。當你細分收入並以加密貨幣的淨額為基礎時，我提供的範圍在 2000 萬美元到 4000 萬美元之間。事實上，這個範圍反映了我們預期的市場參與度以及激活時間線的某種差異。國際部分將成為該系列的重要組成部分。因此，如果你看一下任何情況，我們認為國際零售加密貨幣收入幾乎將占到 2024 年加密貨幣淨收入的一半。同樣，我們認為這不僅是我們在國際上簽署這些關係所取得的進展，正如加文所說，隨著我們激活並在這些市場中站穩腳跟，這確實是一片土地並不斷擴張。而且還有很多國際關係，他們已經簽署了更多的訂閱模式以及我們將如何產生收入。事實上，他們將註冊一個交易等級，他們基本上在某個等級內支付固定金額。如果它們超過這個數量，那麼它將恢復到更多基於數量的模型。因此，我再次認為，就其組成而言，其中的 ARR 部分可能也為我們至少在 2024 年初期的指導方式提供了良好的（聽不清楚）。

Okay. And just on that recurring subscription piece and the expected shift there. Can you remind us what kind of what percentage your revenue is currently recurring? And where do you expect that to get to over the next 12 months as you kind of onboard some of these international partners with this new subscription plan?

好的。就在那個經常性訂閱部分和預期的轉變上。您能否提醒我們您目前的經常性收入佔多少百分比？當您透過這個新的訂閱計劃與一些國際合作夥伴建立聯繫時，您預計未來 12 個月會取得什麼進展？

Yes. So right now, the subscription portion of our revenue stream is in the loyalty part of our business. So it's about, if you break down the royalty revenue, about $10 million of the revenues are purely subscription-based revenues. And then looking into what the potential is for 2024, we can see that increasing anywhere from 25% to 50% on a dollar basis based on the contribution of crypto ARR contracts, in particular from international, but we're certainly not limited to international for that type of combo.

是的。所以現在，我們收入流的訂閱部分屬於我們業務的忠誠度部分。因此，如果細分特許權使用費收入，大約 1000 萬美元的收入純粹是基於訂閱的收入。然後研究 2024 年的潛力，我們可以看到，基於加密貨幣 ARR 合約的貢獻，以美元計算，增長率從 25% 到 50% 不等，特別是來自國際的，但我們當然不限於國際對於這種類型的組合。

Okay. Just lastly for me on the capital front. How are you guys feeling your position heading into next year, just given your current run rates and particularly if the volume environment doesn't improve much from here. Any plans on the thoughts on the capital front.

好的。最後對我來說是在首都方面。考慮到你們目前的運作率，特別是如果銷售環境從現在開始沒有太大改善，你們對明年的處境有何感想。關於資本方面的想法有什麼計畫嗎？

Yes. As I mentioned when we -- I talked about the outlook for 2024. Looking at the progress that we're making in reducing expenses and the potential revenue outlook, we continue to see a path to breakeven on an adjusted EBITDA basis by the end of 2024. At the moment, we have sufficient cash to provide our operations. Yes. Certainly, as you think about the company's journey, the original fundraising that we did from the pack was intended to fund a 3-year road map. So I think as we get into 2024, we would be naturally looking at the next steps for the company in terms of the capital raise, but is not something that we imminently need to execute on the plans that we outlined in the guidance that we gave.

是的。正如我在談到 2024 年展望時提到的。考慮到我們在減少開支方面取得的進展和潛在的收入前景，我們繼續看到到 2024 年底在調整後的 EBITDA 基礎上實現盈虧平衡的道路。2024年。目前，我們有足夠的現金來維持我們的營運。是的。當然，當你思考公司的發展歷程時，我們最初的募款目的是為三年的路線圖提供資金。因此，我認為，進入 2024 年，我們自然會考慮公司在融資方面的下一步行動，但這並不是我們迫切需要執行的指導中概述的計劃。 。

Okay, thanks Karen.

好的，謝謝凱倫。

The next question comes from Peter Christiansen from Citigroup Inc. Peter your line is open, go ahead.

下一個問題來自花旗集團的 Peter Christiansen。Peter，您的電話已接通，請繼續。

A quick one on the Webull disruption. Just curious, was that throughout the quarter or halfway or towards the end? Just the sense there? And then on the relaunch of the custody product, just curious if you're seeing incremental value-add generating value-based pricing. We continually hear that custody pricing has been under pressure. Just curious if the relaunch and some of the new capabilities that's helping you drive pricing.

關於 Webull 中斷的快速介紹。只是好奇，這是整個季度、中期還是接近尾聲的情況？只是那裡的感覺嗎？然後在託管產品重新推出時，我只是好奇您是否看到增量增值產生基於價值的定價。我們不斷聽到託管定價一直面臨壓力。只是好奇重新啟動和一些新功能是否可以幫助您提高定價。

Peter, I can certainly take the first part of the question on Webull Pay. So Webull started their migration of customers over to the new Webull Pay experience at the beginning of Q3, so in July. So we started to see that impact on engagement levels at the beginning of the third quarter. And the adjustment to the route share agreement that we executed with them is retroactive to July 1. In terms of the custody product and what we're seeing in terms of pricing, the most of the pricing that we're executing is an AUC fee model that is scaled to the amount of AUC that we bring on to the platform. There are some minimums. So it's not completely volatile, but there are other elements of customer hip services that have more of a subscription component as well. So for instance, disaster recovery is something that we've talked about as a capability that we see the market coming to us for. That is more of a bubbly subscription amount. So it's, I would say, mostly then AUC with some opportunities for the additional subscription-based revenue. And certainly, as we expand those capabilities, we see that opportunity for subscription or ARR type revenue to increase.

Peter，我當然可以回答關於微牛支付的問題的第一部分。因此，Webull 在第三季初（即 7 月）開始將客戶遷移到新的 Webull Pay 體驗。因此，我們從第三季初開始看到這對參與度的影響。我們與他們簽署的航線共享協議的調整追溯至7月1日。就託管產品以及我們所看到的定價而言，我們執行的定價大部分是AUC費用該模型根據我們引入平台的AUC 量進行縮放。有一些最低限度。所以它並不是完全不穩定的，但客戶時尚服務的其他元素也有更多的訂閱組件。例如，災難復原是我們所談論的一種能力，我們看到市場正在向我們尋求這種能力。這更像是一個充滿泡沫的認購金額。所以，我想說，主要是 AUC，還有一些基於訂閱的額外收入的機會。當然，隨著我們擴展這些功能，我們看到訂閱或 ARR 類型收入增加的機會。

Great, thank you, Karen, I appreciate it.

太好了，謝謝你，凱倫，我很感激。

(Operator Instructions) Next question comes from John Roy from Water Tower Research.

（操作員說明）下一個問題來自 Water Tower Research 的 John Roy。

Sure, great. And I got 2 questions. It was the unchanged network. I'd love to get a little more color on that. And anything on timing would be useful.

當然，太好了。我有兩個問題。這是未改變的網路。我很想對此有更多的色彩。任何有關時機的事情都會有用。

John, I'll take the unchanged one. Being part of this network is really an added dimension to what we're doing for custody. So if you think about, as Karen said earlier in responding to Pete's question that we have the asset on the castody model, but what we're seeing is these value-added services that are coming into the market and the partnership with unchanged is one of those, where we're holding part of the key, as I said in the prepared remarks. And then we're acting as one of the key signers in the transaction. We like this model a lot. It's hugely scalable. We anticipate being active in that network by year's end.

約翰，我會選擇不變的。成為這個網路的一部分實際上是我們為監管所做的工作的一個附加維度。因此，如果你想一想，正如凱倫早些時候在回答皮特的問題時所說的那樣，我們在castody模型上擁有資產，但我們看到的是這些正在進入市場的增值服務，並且與不變的合作關係是其中之一正如我在準備好的發言中所說，我們掌握著其中的部分關鍵。然後我們充當交易的關鍵簽署人之一。我們非常喜歡這個模型。它具有巨大的可擴展性。我們預計到年底將活躍在該網路中。

Great. And then maybe transitioning a little bit to the international. I was curious, obviously, the U.S. market needs some regulatory clarity to say at least. Which markets do you see having the best setup or the least barriers for you outside the U.S.?

偉大的。然後也許會稍微過渡到國際化。我很好奇，顯然，美國市場至少需要一些明確的監管。您認為美國以外哪些市場的設置最好或障礙最少？

John, I think it's the ones that we've spoken about this morning where we see strong regulatory clarity. We see a strong pathway for our entry. We've already demonstrated with markets like Spain where we live today, together with that with some of the LatAm markets that we're working with regulators who have provided good guardrails for how the assets and the trading should operate. And we're working with partners who really want to take advantage of that shifting sentiment within the market. As we see regulatory clarity, we see the consumer sentiment returned to a very positive level. So the ones that we've spoken about this morning, those in Lat Am, Hong Kong, Singapore, Australia are all markets that we like to live together with the U.K. and parts of Europe. And as Karen also mentioned, the shift to an ARR model to a subscription model as we are growing and evolving the business, I think, provides good underpinnings to the forecast that an outlook that Karen gave as part of the presentation. I think us being able to take advantage of that regulatory clarity, consumer sentiment, together with strong backlog against our recurring revenue model is really giving us great confidence as we move into 24.

約翰，我認為我們今天早上談到的這些問題，我們看到了嚴格的監管透明度。我們看到了一條強而有力的進入途徑。我們已經在我們今天居住的西班牙等市場以及一些拉丁美洲市場上展示了我們正在與監管機構合作，他們為資產和交易的運作方式提供了良好的護欄。我們正在與真正想要利用市場情緒變化的合作夥伴合作。當我們看到監管的明確性時，我們看到消費者情緒恢復到非常積極的水平。因此，我們今天早上談到的那些拉丁美洲、香港、新加坡、澳洲的市場都是我們希望與英國和歐洲部分地區共存的市場。正如 Karen 也提到的，我認為，隨著我們業務的發展和發展，從 ARR 模型到訂閱模型的轉變，為 Karen 在演示中給出的展望提供了良好的基礎。我認為，我們能夠利用監管的明確性、消費者情緒，再加上我們經常性收入模式的大量積壓，這確實為我們在進入 24 小時之際帶來了巨大的信心。

Great, thank's so much.

太好了，非常感謝。

We have no further questions, so I'll hand the call back to the management team for any concluding remarks.

我們沒有進一步的問題，因此我會將電話轉交給管理團隊以獲取任何結論性意見。

Thank you, everyone, for attending our earnings call this morning. We look forward to connecting with you again soon.

謝謝大家參加今天早上的財報電話會議。我們期待很快再次與您聯繫。

This concludes today's call. Thank you very much for your attendance. (Operator Instructions)

今天的電話會議到此結束。非常感謝您的出席。 （操作員說明）