Bitcoin Depot Inc. Q4 FY2023 earnings call

• In 2023, the company grew revenue 7% YoY to $689 million, achieved a 38% YoY increase in adjusted EBITDA, and operated with a reduced number of active kiosks while improving margins. - Continued to execute strategic priorities like expanding/improving retail operations, updating digital platforms/go-to-market strategy, refining customer experiences. - Expanded Bitcoin access points through BDCheckout across North America, optimized kiosk footprint by relocating underperforming ones. - Signed new agreements with convenience store brands, expanded BDCheckout program. - Ordered 900 kiosks in Q1 2024 with plan to have ~8,000 installed by end of 2024, hired 13 new sales reps, secured mass replacement agreement for nearly 1,000 kiosks in 24 states, sold 50 new BTMs to Sopris Capital as part of franchise program. - Completed software conversion to BitAccess across full Bitcoin ATM fleet in 2023, eliminating annual software licensing fees. - Actively pursuing New York state license for kiosk expansion, with officer vetting completed and expecting answer by end of Q2. - Focusing on franchise program with interest from investors, over 100 franchise-owned BTMs operating on platform.

In 2023, Bitcoin Depot grew revenue 7% year-over-year to $689 million. Adjusted EBITDA increased 38% year-over-year. For the fourth quarter of 2023, revenue declined approximately 1% year-over-year to $148.4 million, while full year revenue was $688.9 million, up 7% from the prior year. Gross profit in the fourth quarter of 2023 increased 22.3% to $17.9 million, with a gross margin of 12.1%, compared to 9.8% in the fourth quarter of 2022. Full year gross profit increased 64.1% to $87.8 million, and gross margin increased over 440 basis points to 12.7%. Adjusted EBITDA for the fourth quarter of 2023 was $9 million, down from $11.4 million in the same period of 2022, while full year adjusted EBITDA was $56.4 million, up 37% from the prior year.

• Anticipates Q1 2024 revenue to remain between $137 million and $138 million. - Adjusted EBITDA for Q1 2024 is expected to range between $5 million and $6 million. - Remainder of 2024 is expected to follow seasonal trend with Q2 and Q3 being significantly higher revenue than Q1 and Q4. - Provide quarterly outlooks until newly deployed kiosks mature.

• Unfavorable legislation in California, such as SB 401 which limits transaction size to $1,000 per customer per day, has had a material impact on revenue, with an expected $13 million to $15 million revenue decline in Q1 2024 alone from California. - Uncertainty regarding the maturation of newly deployed kiosks and their impact on revenue and EBITDA. - Competition from other Bitcoin ATM operators, as the number of kiosks in the US market has fluctuated and new installations by competitors can affect volumes.

Q: How should we think about the cadence of deployments as we look out through the balance of the year?

A: As of today, Bitcoin Depot is already at 7,375 kiosks. So far in Q1, over 1,000 kiosks have been deployed, representing almost 14% of the installed base. The sales reps hired have been ramping up well, and they expect to secure over 100 new kiosk locations monthly once ramped up. Also, the large retailer deal signed will contribute to deployment cadence.

Q: Could you give us an idea on the cash cost of deploying a machine?

A: There are different scenarios. For relocating an existing kiosk, costs can vary between $900 and $1,700 depending on factors like refurbishment. For a brand new kiosk shipped directly from the manufacturer, costs are around $800 including shipping and install.

Q: What's the confidence level on New York license approval by end of Q2?

A: Bitcoin Depot's board and executive team underwent officer vetting, which is the last step before the application goes to committee. They expect to get more information by the end of this week if the officer vetting is complete, but the exact timeline of the committee meeting is unknown, so it's still looking like an answer could be obtained by end of Q2.