Good morning, and welcome to Bitcoin Depot's third quarter 2025 Conference Call. My name is John, and I will be your operator today. Before this call, Bitcoin Depot issued its third quarter results in a press release. A copy will be furnished in a report on Form 8-K filed with the SEC and will be available in the Investor Relations section of the company's website. Joining us on today's call are Bitcoin Depot CEO, Brandon Mintz, and CFO, David Gray. Following their remarks, we will open the call for questions. Before we begin, Cody Slach from The Gateway Group will make a brief introductory statement. Mr. Slach, please proceed.

Thank you, operator. Good morning, everyone. Before management begins their formal remarks, we would like to remind everyone that some statements we make today may be considered forward-looking statements under Securities 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 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 made with the Securities Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made except as required by law. We also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. We refer you to our filings with the SEC for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances including but not limited to risks and uncertainties identified under the caption Risk Factors in our recent filings. You may get Bitcoin Depot's SEC filings for free by visiting the SEC website at www.sec.gov. I'd like to remind everyone that this call is being recorded and will be available for replay via a link in the Investor Relations section of Bitcoin Depot's website. A supplemental earnings presentation highlighting our performance has also been made available on our IR website. Now I will turn the call over to Bitcoin Depot's CEO, Brandon Mintz. Brandon?

Thanks, Cody, and good morning, everyone. Thank you for joining our third quarter 2025 earnings call. Bitcoin Depot delivered another strong quarter exceeding the preliminary results we announced in October. Our third quarter performance once again demonstrates the operating leverage in our business model, supported by continued kiosk expansion, higher transaction volumes, and disciplined cost management. As a result, we achieved meaningful revenue growth, a substantial increase in adjusted EBITDA, and further improvement in profitability and cash generation. Consumer demand remained quite strong in the third quarter, with median transaction size up 40% year over year to $350 and total transaction volume moving steadily higher to $162.5 million. Our kiosk growth and optimization plan continued to deliver the intended results, with Q3 gross profit up 40% year over year and adjusted EBITDA up 75% to $16.1 million. We ended Q3 with approximately 9,300 active machines and expect to see continued growth in kiosks for the remainder of the year. As for our BPM relocation strategy, today, 3,800 of our kiosks have been installed for less than one year. As these machines ramp up, we expect to drive further cash flow as our Bitcoin ATMs typically see payback periods of less than eight months regardless of Bitcoin price. Now turning to an update on our growth strategy. First, international expansion. We have now deployed over 260 kiosks to support our ongoing launch in Australia this year. Australia continues to emerge as a global hotspot for Bitcoin adoption, currently ranking third worldwide in total Bitcoin ATMs. While it's still early, we are encouraged by the retail partnerships and expansion opportunities we have identified so far. Beyond Australia, we just commenced operations in Hong Kong, as announced earlier this week, and continue to work through the regulatory process in other jurisdictions. Next is…

Thanks, Brandon, and good morning, everyone. I'm pleased to share the financial highlights for our third quarter as follows. Revenue was $162.5 million, up 20% from 2024. This growth was driven primarily by increased kiosk deployment, higher median transaction sizes reflecting strong consumer demand, as well as the results of our kiosk redeployment efforts. Gross profit in 2025 increased 40% to $28.2 million compared to $20.2 million in 2024. Gross margin in the third quarter increased 250 basis points to 17.4% compared to 14.9% in the third quarter of last year. This margin increase was largely driven by leveraging the cost structure of our BTM networks against higher revenue. Total operating expenses were $18.3 million compared to $16.9 million in last year's third quarter, with the increase due to higher non-cash stock compensation expense and indirect taxes. GAAP net income for 2025 increased 139% to $5.5 million compared to $2.3 million for 2024. GAAP net income attributable to common shareholders increased to $5.5 million or $0.08 per share compared to a net loss of $900,000 or negative $0.05 per share in last year's third quarter. The increase was due to higher revenue and income from operations in 2025. Adjusted EBITDA, a non-GAAP measure, increased 75% to $16.1 million in 2025 compared to $9.2 million in the third quarter of last year. This increase was primarily due to revenue outperformance and margin expansion. Now turning to our balance sheet and cash flow. Cash, cash equivalents, and cryptocurrencies as of September 30, 2025, increased to $72.9 million compared to $31 million in 2024. We generated $33 million of cash from operating activities in the first nine months of 2025 compared to $17.3 million during the same period last year, an increase of over 90%. Subsequent to the third quarter end, we raised…

Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question, please press 1 on your telephone keypad. If you would like to withdraw your question, simply press 1 again. Your first question comes from the line of Harold Goetsch with B. Riley Securities. Please go ahead.

Hey. Good afternoon. Good morning, guys. Can you give us a bridge maybe to the components of the difference between the guidance today and maybe prior estimates on the street in terms of, like, how much of it is state regulation, what are the states that are involved, how much do you think this is seasonality? And how much of it is enhanced compliance standards? Like, what would you stack it up as contributors to the guidance? Because it looks to me like you're gonna have a quarter this one of the lowest revenue quarters you've had in three or four years.

Yeah. Hey, Hal. This is Scott Buchanan. Thanks for the question. Yeah. If you were gonna stack rank those, the biggest impact is definitely the state regulation. Because those, as you're aware, place limits on transaction sizes or fee limits. And so that's the biggest impact. The second biggest would be seasonality, as we always see Q4 being the lowest quarter. And that'll continue to be the case here. And then third would be the proactive compliance changes that we've made internally, that we announced a couple of weeks ago, with the collecting ID for every customer and enhanced protections for elder customers. I don't have, like, percentage breakdowns of how much I think each of those impact because it's not black and white, but that's definitely the order they would be in of how much impact there is to the volume.

Could you give us a feel for what states were kind of the biggest regulatory changes in the quarter and what others might be on tap if that's a major trend?

Yeah. So it's less, like, one specific state and more that there's been so many recently. So this year, there's been over 15 states that have enacted some sort of restrictions, whether on transaction sizes or fee caps. And like, six of those went into effect in Q3 into early and go into effect early Q4. And so a bunch of those came in in the past couple of months, and so that's where the bigger decline coming into Q4 is. And kinda like we saw with California, you see the biggest drop initially when you first implement these changes. And then as the rest of the space catches up and becomes compliant as well, then we see volume recover and come back a little bit. So we expect the steepest drop to happen initially. And then as it levels the playing field again and everyone's compliant with the new requirements in each state, I think volumes will recover a little bit in those states from that point.

Okay. And if I had a follow-up, what, you know, National Bitcoin ATM is is that deal closed. Right? Is is that how much is that gonna maybe contribute in in the fourth quarter?

Yeah. That deal is closed, and we still have to convert all the kiosks. So we buy them, and then we have to convert all the kiosks for our platform to fully get all of the revenue and profits. And so we're most of the way through that now, and it'll be fully completed by Q4.

But could you give us an idea of what kind of productivity they were having before you acquired them?

I don't have the exact numbers in front of me, but if you take their kiosks as a percentage of our kiosks, they're roughly in line with us in terms of volume per kiosk.

Okay. Thank you.

Once again, if you would like to ask a question, please press 1 on your telephone keypad. Your next question comes from the line of Pat McCann with Noble Capital Markets. Please go ahead.

Hey, guys. Thanks for taking my questions. I wanted to piggyback on the question regarding the transaction limits in the states and whatnot. I guess what I'm wondering is, you know, back when that was an issue with California initially, you know, there was that problem of other operators not being compliant. So it was an uneven playing field. And, Scott, you kind of alluded to that, you know, as others become compliant in these recent states to enact regulations, the playing field will level, and that should help recovery of volumes. Is there anything to give you confidence that in these more recently enacted regulations that these states will be strict in enforcing those regulations so that your other competitors will eventually become compliant as you are?

Hey, Pat. It's Brandon. Great question. Yes. We've started to see the playing field level in some of the states that were early on in passing legislation. Once bills like this pass, it takes a state a little bit of time for the regulator to kind of evaluate the space and figure out if operators are complying and then figure out how to enforce the law if operators are not complying. Now that SB 401, which was the original bill that had transaction and fee caps that passed in California a couple of years ago, has been active for a while, we've started seeing some enforcement actions against smaller operators who are not complying. And that has helped level the playing field there, and there is now a large reduction of kiosks in California compared to the number of kiosks that were there a couple of years ago. So the remaining kiosks that we have in California are actually doing pretty good volumes today compared to, you know, a year or so ago, for example, when a lot of the operators that were not complying were still able to continue to operate. And so I think that enforcement action that's been happening in California amongst the noncompliant operators is sending a message probably across the entire country to all operators who maybe previously weren't complying with these laws in the states that have passed them that they need to. And it will further put pressure on them to either sell or shut down their businesses.

Thank you for that. And then my other question was regarding 2026. I was just wondering as we look ahead to that, if you could give an overview of what you expect the dynamics to be between your new kiosk deployment versus a redeployment or optimization of existing kiosks?

Well, we still do have a large number of kiosks in our inventory today. We still have over a thousand currently, so we do expect to have still a significant number of newer deployments, but at the same time, we do expect to have a significant number of relocations. Obviously, some of the states that have passed legislation this year, it's still just so early. And we don't know the full impact of it since some of the states were just passed a couple of months ago. But as Scott alluded to, we're typically seeing some recovery over time, and typically the worst impact is right after the legislation is passed, and then some competition may be reduced because of that, and then we may recover a bit. So I think you'll continue to see still a number of machines that are less than a year old, you know, in the thousands like you have been seeing. And it's hard to say exactly how much net new kiosks there will be because we don't know how many exactly we will relocate from states that have had legislation passed. But we anticipate for states that have had legislation passed, that we will relocate more machines from those states than states that have not had legislation passed. And I will say if you guys look back a few quarters ago, when we originally had that impact from the California SB401 bill pass, we had a downturn in our numbers temporarily, and then if you look at 2025, we've put out some very excellent beats against guidance and analyst expectations. So we're still confident moving forward that we can continue to optimize our fleet even though there may be temporary bumps in the road. There's still a lot of geography out there for us to deploy in that has not had a regulatory impact yet. And we're continuing to diversify with the international expansion as well. As you saw within the past day or so, we announced that we've entered Hong Kong. Actively working on other international jurisdictions as well that do not have any of these fee caps or transaction limits in place, and we're not seeing any activity brewing in the near future. So you'll continue to see in summary, the relocations, and we will do our best to focus on net new deployments, but hard to specify an exact number.

Thanks very much.

Your next question comes from the line of Mike Colonnese with H.C. Wainwright.

First for me, is there any way you could size the market opportunity in Hong Kong as it relates to Bitcoin ATM deployments? And are there any interesting or major players there that are acquisition candidates for Bitcoin Depot?

Mike, thanks for the question. The Hong Kong market for the size country it is is kind of interesting because you have a handful of players that are in the 100 plus kiosk range. And even though the industry compared to the US is smaller, we see it as an exciting market to enter into. I wouldn't expect the Hong Kong market currently to grow to, you know, many thousands of kiosks just based on the size of the country. But we do see it as a good opportunity to diversify and build a decent-sized fleet of kiosks that could be meaningful to our overall revenue number and our bottom line. And the operators there potentially could be acquisition targets. Of course, we're open to having discussions with operators wherever we want to expand to, and we always focus on a two-pronged effort of organic expansion and having conversations about acquisitions, and it's all just about ROI and cost-benefit analysis to determine which way we move forward.

Got it. Thanks for that, Brandon. And any updates you can provide on your BitLicense with NYDFS? I know you guys seem to be getting closer and closer to that, especially with the more favorable regulatory backdrop in the United States. Just curious if you have any updates or spending any advancement on that front.

Right now, it does not seem very likely that it will happen anytime soon for us. We're still not aware of any Bitcoin ATM operator that has received a BitLicense. And I'm not sure of the state's appetite to allow any operator to operate a Bitcoin ATM company in the state based on how it's going today.

Thank you for taking my questions.

At this time, this concludes our Q&A session. I would now like to turn the call back over to Brandon Mintz for closing remarks.

Thanks, everyone. We'll talk to you guys next quarter. Thank you for joining today for Bitcoin Depot's conference call. You may now disconnect your lines. Have a pleasant day, everyone.