GSR II METEORA A(GSRM) - 2023 Q4 - Annual Report

Financial Performance - As of December 31, 2023, the company generated approximately $689.0 million in revenue, a 6.5% increase from$ 646.8 million in 2022, with a gross profit of $88.6 million, representing a gross profit margin of 12.9%[31] - For the year ended December 31, 2023, the company generated revenue of approximately$ 689.0 million, a 6.3% increase from $646.8 million in 2022, with gross profit rising to$ 88.6 million from $53.5 million[61] - The company reported an Adjusted EBITDA of$ 56.3 million for the year ended December 31, 2023, representing 14.7% of Adjusted Gross Profit Margin[31] - The company has experienced seasonality in revenue during the 4th quarter, attributed to fewer business days due to public holidays[95] User Engagement and Transactions - The company completed over 3.3 million user transactions from inception in July 2016 through December 31, 2023, totaling approximately $2.3 billion in transaction value[31] - The average monthly active users for the year ended December 31, 2023, was approximately 21,824, indicating a growing user base[31] - Bitcoin accounts for 99% of total transaction volume for the year ended December 31, 2023, with other cryptocurrencies making up less than 1%[511] Market Presence and Expansion - The company operates approximately 6,300 kiosks across 48 U.S. states and 10 Canadian provinces, addressing approximately 52% of the U.S. population[32] - The company holds a market share of 23% in the U.S. and 11% in Canada as of December 31, 2023, making it the largest BTM operator in North America[47] - The company has installed approximately 1,300 BTMs in Circle K stores, its largest deployment, which is part of a broader strategy to partner with major retail chains[29] - The company operates approximately 2,200 BTMs across 56 major national and regional retailers in the U.S., with Circle K representing approximately 27% of total revenues for 2023[80] - As of December 31, 2023, BDCheckout is available at approximately 5,700 retail locations, allowing users to load cash into their accounts and purchase Bitcoin, thereby diversifying revenue streams[63] - The company plans to expand its geographical footprint, having applied for a license to operate in New York, which could support thousands of kiosks[60] - The company has a strategic partnership with GetGo® Café + Market to install BTMs in 125 locations, enhancing its presence in the Midwest and Mid-Atlantic[64] - A master placement agreement with EG America LLC will result in the installation of BTMs in approximately 900+ locations, marking a significant expansion[68] Compliance and Regulatory Environment - Approximately 4% of overall transaction volumes are from user bans due to compliance issues, reflecting the company's commitment to robust compliance procedures[55] - The company is subject to various anti-money laundering laws, including the BSA in the U.S., requiring a risk-based anti-money laundering program[99] - The company has applied for a BitLicense from the NYDFS to operate as a licensed money transmitter[100] - The company is currently not supervised or examined by any banking, securities, or commodities regulator[96] Strategic Initiatives and Partnerships - The BDCheckout product allows users to purchase Bitcoin at several thousand additional retail locations, enhancing the company's market reach without incurring upfront hardware costs[40] - The company intends to pursue strategic acquisitions to enhance capabilities in areas such as cybersecurity and compliance, supporting its growth strategy[62] - The management team has extensive experience in technology and business, providing a competitive advantage in attracting talent and pursuing acquisition opportunities[58] Operational Challenges and Risks - Equipment costs for new kiosks may be significantly impacted by inflation, supply constraints, and labor shortages[512] - The competitive landscape is characterized by a variety of current and potential competitors with larger customer bases and greater resources[513] - Competition is expected to intensify as new products and services are introduced by existing and new competitors[513] - The company maintains a low Bitcoin balance, typically less than$ 1 million, to manage volatility and differentiate itself from competitors[57] - The company holds typically less than $1 million in Bitcoin at any given time, due to high transaction volumes[89] - The company may seek to mitigate foreign currency risk through timely settlement of transactions and cash flow matching[509] Currency and Financial Management - The total number of BTMs deployed globally grew from 968 in 2017 to 33,936 by December 31, 2023, reflecting a CAGR of approximately 84%[46] - For the year ended December 31, 2023, the average daily USD balance held in fiat wallets on the Gemini exchange was approximately$ 0.5 million[84] - Currency exchange rate fluctuations had an insignificant impact on consolidated revenues for the years ended December 31, 2023, and 2022[508] - The company is exposed to currency fluctuations on transactions not denominated in the functional currency, but these gains and losses were also insignificant[509] - The assets and liabilities of foreign subsidiaries are translated at the period end rate of exchange, affecting stockholders' equity[510] - Transaction gains and losses for the years ended December 31, 2023, and December 31, 2022, were insignificant[509] Legal Matters - The Canaccord Claim asserts that Canaccord is entitled to $23.0 million in fees for breach of contract, which the company intends to vigorously defend against[107]