GSR II METEORA A(GSRM) - 2023 Q3 - Quarterly Report

Business Operations - As of September 30, 2023, Bitcoin Depot operates approximately 6,400 Bitcoin ATMs (BTMs) across North America, maintaining a leading position in the cash-to-Bitcoin BTM market [262]. - The number of installed kiosks at the end of September 30, 2023, was 6,404, showing a slight increase from 6,351 in the previous quarter [275]. - Bitcoin Depot's BDCheckout product is accepted at approximately 5,455 retail locations as of September 30, 2023 [275]. - The company currently supports Bitcoin purchases at only 31 kiosks, representing less than 1.0% of total kiosks, with no plans to expand this capability [285]. - The company generates revenue from software services provided to third-party BTM operators, earning a variable fee equal to a percentage of the cash value of transactions processed [386]. - The company’s revenue from contracts with customers is primarily derived from the sale of cryptocurrencies at the point-of-sale, with a typical transaction process time of 30 minutes or less [381]. Financial Performance - Revenue for the nine months ended September 30, 2023, was $540.6 million, representing a 6.3% year-over-year growth, while the market price of Bitcoin increased by 40% during the same period [265]. - Revenue for the three months ended September 30, 2023, was$ 179.5 million, with a gross profit of $23.7 million, resulting in a gross profit margin of 13.2% [347]. - Revenue increased by approximately$ 43.4 million, or 8.7%, for the nine months ended September 30, 2023, compared to the same period in 2022, primarily due to increases in kiosk transaction revenue [314]. - Kiosk transaction revenue rose by approximately $47.8 million, or 9.7%, for the nine months ended September 30, 2023, driven by an increase in average transaction size and user volume [315]. - Adjusted Gross Profit for the nine months ended September 30, 2023, was$ 79.5 million, with an Adjusted Gross Profit Margin of 14.7% [347]. - Adjusted EBITDA for the nine months ended September 30, 2023, was $47.4 million, with an Adjusted EBITDA margin of 8.8% [351]. Expenses and Costs - Selling, general and administrative expenses increased by$ 4.6 million, or 38.9%, for the three months ended September 30, 2023, driven by higher payroll costs and professional services expenses [306]. - Selling, general and administrative expenses increased by approximately $16.6 million, or 62.4%, for the nine months ended September 30, 2023, largely due to merger-related costs and higher payroll expenses [330]. - Cost of revenue (excluding depreciation and amortization) decreased by$ 0.9 million, or 0.6%, for the three months ended September 30, 2023, primarily due to reduced rent expenses [298]. - The cost of revenue (excluding depreciation and amortization) increased by approximately $17.1 million, or 3.9%, for the nine months ended September 30, 2023, driven by network expansion and increased transaction volume [320]. - Cryptocurrency expenses increased by approximately$ 17.8 million, or 4.4%, for the nine months ended September 30, 2023, primarily due to higher transaction amounts [322]. Mergers and Acquisitions - The acquisition of BitAccess in July 2021 is expected to generate significant savings in transaction processing fees and reduce operating expenses, although its revenue impact has not yet been material [268]. - The merger with GSRM was completed on June 30, 2023, resulting in a restructuring of the company's equity and operational framework [269]. Cash Flow and Financing - The Company reported a net cash provided by operating activities of $33.57 million for the nine months ended September 30, 2023, compared to$ 21.99 million for the same period in 2022, reflecting an increase of $11.6 million [359][360]. - The net cash used in financing activities increased by$ 21.1 million for the nine months ended September 30, 2023, primarily due to a $14.4 million increase in principal payments on notes payable [362]. - The Company issued 4,300,000 shares of Class A common stock through a PIPE Financing, representing gross proceeds of up to approximately$ 50 million [357]. - The Amended and Restated Credit Agreement includes a total borrowing of $20.8 million with an annual interest rate of 17%, maturing on June 23, 2026 [356]. Market and Competition - The digital financial system is highly competitive, with numerous competitors having larger customer bases and greater resources, necessitating continuous innovation and competitive pricing [414]. - Competition is expected to intensify as both existing and new competitors introduce new products and services [414]. - The broader adoption of Bitcoin is crucial for the company's business, as it is dependent on the cryptocurrency's market price and general acceptance [412]. - The company anticipates continued growth from its addressable market as cryptocurrency adoption increases among the general public [412]. Risk Management - Bitcoin Depot maintains a sophisticated Bitcoin management process, typically holding less than$ 0.8 million in Bitcoin to mitigate price volatility risks [266]. - The company has not historically hedged its foreign currency translation risk, and currency exchange rate fluctuations had an insignificant impact on consolidated revenues for the three and nine months ended September 30, 2023 [409]. - The company may consider hedging its foreign currency exposure in the future [409]. - The cost of new kiosks is significantly impacted by inflation, supply constraints, and labor shortages, potentially leading to higher acquisition costs [413].