Core Viewpoint - Bakkt Holdings, Inc. is facing significant challenges due to its heavy reliance on a single client, Webull Pay LLC, which accounted for 74% of its crypto services revenue in the first nine months of 2024, and the recent termination of key partnerships, leading to a projected 73% revenue decline [1][5][14]. Financial Performance - Bakkt reported $1.79 billion in revenue for Q4 2024, marking a 737.9% year-over-year increase, primarily driven by its crypto services unit [4]. - The company experienced a net loss of $40.4 million in Q4 2024, which was an improvement of 48.7% compared to the same quarter last year [6]. - Cash reserves stood at $136.5 million as of June 2024, but were being depleted by a cash burn of $27.54 million in the first half of the year [6][7]. Legal and Settlement Implications - Bakkt has agreed to pay $3 million to affected shareholders as part of a settlement related to the lawsuit, which represents approximately 6.9% of its cash reserves [3][7]. - The probability of reaching a settlement in the investor lawsuit is estimated to be between 46-50%, with potential settlement amounts ranging from $14 million to $20 million based on historical data [10][12][14]. - The expected liability from the litigation could be around $10 million, which would consume over a quarter of Bakkt's cash reserves, exacerbating its financial difficulties [13][14]. Strategic Challenges - The company is undergoing a leadership transition and is attempting to pivot towards stablecoin payments and institutional crypto services amidst ongoing legal challenges [15][16]. - Bakkt's stock price has dropped 27.3% since March 2025, complicating efforts to raise funds and attract new clients [16][19]. - The company faces a critical need to stabilize its revenue base, which is currently almost entirely dependent on crypto services, accounting for 98% of its overall income [8].

Core Viewpoint - Clear Street initiated coverage of Bakkt (BKKT) with a buy rating and a $14 price target, indicating a 44% upside potential after a significant year-to-date decline of over 60% compared to an 11% gain for the S&P 500 index [1][6] Group 1: Business Strategy and Structure - Bakkt has streamlined its operations by shedding non-core units like Loyalty and Custody, focusing on becoming a blockchain-native payments platform, currently trading at 2.9x projected 2027 EV/EBITDA [2] - The company's business model is built on two main pillars: Crypto Services for institutions and the Digital Transfer and Remittance (DTR) platform, which aims to establish stablecoin payment infrastructure [3] Group 2: Market Potential and Financial Projections - Bakkt is positioned to capture a share of the $190 trillion cross-border payments market, with analysts projecting a 14% annual revenue growth through 2027, driven by the DTR platform [3] - Stablecoin transactions are expected to yield nearly double the margin of crypto services, leading to a projected gross profit growth of 66% annually [4] - Adjusted EBITDA is anticipated to turn positive by early 2026, reaching $49 million by 2027, supported by a $60 million cost reset [4] Group 3: Expansion Plans and Compliance - The DTR platform is set to launch in 36 countries by late 2025 and expand to over 90 countries in 2026, with transaction volume forecasted to reach $2.6 billion by 2027 [4] - Bakkt's institutional-first model targets regulated partners such as remittance firms and neobanks, leveraging its BitLicense and over 50 state money transmitter licenses to establish a strong compliance framework in the U.S. [5]

Core Insights - Broker Benchmark initiated coverage of Bakkt with a buy rating, highlighting the company's regulatory advantages and its strategic shift towards a "brokerage-in-a-box" model for institutions, a bitcoin treasury program, and a stablecoin payments network [1][3] Company Strategy - Bakkt's BitLicense and money transmitter licenses across 50 states provide a significant competitive edge, as noted by Benchmark Equity Research Analyst Mark Palmer [3] - The leadership transition, with Akshay Naheta becoming the sole CEO, signifies Bakkt's transformation into a dedicated crypto infrastructure company, as stated in the company's announcement [3][4] - The company aims to build on its restructuring to foster growth as a leading global crypto infrastructure platform [4] Business Focus - Bakkt has shifted its focus from institutional bitcoin futures trading to consumer and business payment solutions, including crypto custody and loyalty program integrations [4] - Following the loss of two partners who chose not to renew their agreements, Bakkt faced pressure to either secure new partnerships or pivot its business model to reduce reliance on a few large clients [5] Operational Changes - The decision to pivot towards being a "pure-play crypto infrastructure company" involved divesting its custody business, allowing Bakkt to concentrate on its core offerings [6] - A cooperation agreement with Distributed Technologies Research (DTR) aims to integrate AI and stablecoin payment infrastructure into Bakkt's regulated trading platform, creating a comprehensive ecosystem for seamless crypto trading and digital payments [6][7]

Core Insights - Bakkt Holdings, Inc. is transitioning into a pure-play crypto infrastructure company, which includes divesting its Custody business to ICE and Loyalty business [3] Group 1: Financial Performance - The earnings call is focused on the second quarter of 2025, with a supplemental presentation available on the Investor Relations website [2] Group 2: Strategic Initiatives - The company has signed a commercial agreement with Distributed Technologies Research (DTR) to integrate DTR's stablecoin and AI payment infrastructure with Bakkt's regulated platform [3] - The divestiture of the Custody business and the Loyalty business is part of a strategic realignment, with expected timelines discussed [3] Group 3: Market Outlook - Expectations regarding the stablecoin payments market and the regulatory environment are key discussion points during the earnings call [3]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $577.9 million, up 13.3% year over year but down 46.2% sequentially [36] - Gross crypto services revenue for the quarter was $568.1 million, up 14.3% year over year and down 46.7% sequentially [36] - Net loss for the quarter was $30.2 million, improving 15.1% year over year from a loss of $35.5 million [38] Business Line Data and Key Metrics Changes - Crypto trading volumes for Q2 experienced a decline, with total notional volume at $733 million, comprised of $565 million from crypto trading and $168 million from loyalty redemptions [34] - Total active transacting accounts were 689,000, segmented into 265,000 loyalty redemption accounts and 424,000 crypto trading accounts [33] - Net loyalty revenues were $9.8 million, down 23.3% year over year but up 6.8% sequentially [36] Market Data and Key Metrics Changes - The crypto market faced headwinds from March through June due to regulatory uncertainty and macroeconomic pressures [32] - Since the end of Q2, Bitcoin trading volume improved by 50% month over month following new all-time highs in July [33] - The regulatory environment is becoming more supportive, with the current administration showing bullishness towards digital assets [32] Company Strategy and Development Direction - The company is strategically realigning into a pure play crypto infrastructure company, divesting non-core businesses to focus on crypto [6][9] - A partnership with Distributed Technologies Research (DTR) aims to enhance stablecoin payment infrastructure [6][10] - The company plans to roll out a comprehensive set of technology upgrades to enhance user experience and expand trading capabilities [15][19] Management's Comments on Operating Environment and Future Outlook - Management believes the company is well-positioned to capitalize on the digitalization of real-world assets and the growing trend of institutional adoption of digital assets [6][31] - The CEO transition is expected to further strengthen the company's focus on crypto infrastructure and growth [12][31] - Management expressed optimism about the future, citing a favorable policy backdrop and the potential for significant market growth [33] Other Important Information - The company completed the sale of its trust business to Intercontinental Exchange (ICE) and is in the process of divesting its loyalty business [9][10] - A successful $75 million capital raise was completed, significantly recapitalizing the balance sheet [11][40] - The company is focusing on expanding its Bitcoin treasury strategy, starting with Japan [26][27] Q&A Session Summary Question: What are the expectations for the stablecoin payments market? - Management highlighted the partnership with DTR as a key driver for entering the stablecoin payments market, aiming to deliver programmable solutions for cross-border value transfers [6][10] Question: How is the company addressing the decline in trading volumes? - Management noted that the decline was aligned with broader market trends but expressed optimism about recent improvements in trading volumes and onboarding new institutional clients [32][33] Question: What are the key priorities moving forward? - Key priorities include finalizing the sale of the loyalty business, rolling out technology upgrades, and expanding the Bitcoin treasury strategy [28][29]

Financial Performance - Total revenues were $577.9 million, a 13.3% year-over-year increase, but down 46.2% quarter-over-quarter due to market conditions[45, 58] - Crypto services revenue was $568.1 million[45, 69] - Loyalty services revenue was $9.8 million, down 23.3% year-over-year but up 6.8% quarter-over-quarter[46, 69] - Total operating expenses were $596.4 million, up 12.1% year-over-year and down 45.5% quarter-over-quarter[54, 58] - Adjusted EBITDA loss was $12.6 million, improved 29.9% year-over-year[62, 63] Key Metrics - Crypto trading volume increased 14% year-over-year and 69% since Q2 2023[36] - Quarterly notional crypto traded volume reached $565 million in Q2 2025[39, 42] - Assets under custody were $1,355 million[44] Strategic Initiatives - Bakkt is realigning as a pure-play crypto infrastructure company, including the divestiture of non-core assets like the Custody business[10] - The company is focusing on three pillars: Brokerage-in-a-box, Stablecoin Payments, and Bitcoin treasury strategy[11, 12] - Bakkt initiated a Bitcoin treasury strategy with a 30% ownership stake in MarushoHotta Co (MHT), rebranding it to bitcoin.jp[26, 27, 30]

[Item 1. Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for Bakkt Holdings, Inc., including the balance sheets, statements of operations, comprehensive loss, changes in equity, and cash flows, along with detailed notes explaining the company's organization, significant accounting policies, revenue recognition, goodwill, balance sheet components, debt, equity, and recent events [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a decrease in total assets and total liabilities from December 31, 2024, to June 30, 2025, primarily driven by a significant reduction in customer funds and customer funds payable. Total equity also saw a slight decrease Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :-------------------------- | :------------------ | | Total assets | $190,140 | $269,377 | | Total liabilities | $132,315 | $206,524 | | Total equity | $57,825 | $62,853 | | Cash and cash equivalents | $43,493 | $39,049 | | Customer funds | $21,336 | $88,566 | | Customer funds payable | $21,336 | $88,566 | - Customer funds and corresponding customer funds payable decreased significantly from **$88,566 thousand** at December 31, 2024, to **$21,336 thousand** at June 30, 2025, indicating a substantial reduction in customer activity or holdings[17](index=17&type=chunk) [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show an increase in total revenues for both the three and six months ended June 30, 2025, compared to the prior year periods, primarily driven by crypto services. Despite increased revenues, the company continued to report net losses, though the net loss attributable to Bakkt Holdings, Inc. decreased Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $577,882 | $509,898 | $1,652,792 | $1,364,480 | | Operating loss | $(18,489) | $(22,017) | $(37,009) | $(53,854) | | Net loss | $(30,152) | $(35,512) | $(13,915) | $(56,787) | | Net loss attributable to Bakkt Holdings, Inc. | $(14,734) | $(16,424) | $(7,026) | $(24,589) | | Basic EPS | $(2.16) | $(2.67) | $(1.05) | $(4.66) | - Total revenues increased by **13.3%** for the three months ended June 30, 2025, and by **21.1%** for the six months ended June 30, 2025, compared to the respective prior year periods, primarily due to growth in crypto services[19](index=19&type=chunk) - Net loss attributable to Bakkt Holdings, Inc. decreased by **10.3%** for the three months ended June 30, 2025, and by **71.5%** for the six months ended June 30, 2025, indicating improved financial performance despite ongoing losses[19](index=19&type=chunk) [Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) The consolidated statements of comprehensive loss show a comprehensive loss of $(29,266) thousand for the three months ended June 30, 2025, and $(13,000) thousand for the six months ended June 30, 2025, which includes net loss and currency translation adjustments Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(30,152) | $(35,512) | $(13,915) | $(56,787) | | Currency translation adjustment, net of tax | $886 | $(199) | $915 | $(620) | | Comprehensive loss | $(29,266) | $(35,554) | $(13,000) | $(57,408) | | Comprehensive loss attributable to Bakkt Holdings, Inc. | $(14,303) | $(16,443) | $(6,581) | $(24,828) | [Consolidated Statements of Changes in Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) The consolidated statements of changes in equity detail movements in Class A and Class V Common Stock, additional paid-in capital, accumulated deficit, and other comprehensive loss. Key changes include share-based compensation, shares issued upon vesting, and net loss attributable to Bakkt Holdings, Inc Key Changes in Equity (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Balance as of December 31 (prior year) | $62,853 | $135,714 | | Share-based compensation | $9,681 | $10,419 | | Net loss attributable to Bakkt Holdings, Inc. | $(14,734) | $(16,424) | | Total equity as of June 30 | $57,825 | $102,579 | - Total Bakkt Holdings, Inc. stockholders' equity decreased from **$33,894 thousand** at December 31, 2024, to **$35,294 thousand** at June 30, 2025, primarily due to net loss, partially offset by share-based compensation and currency translation adjustments[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows indicate a significant increase in cash used in operating activities for the six months ended June 30, 2025, compared to the prior year, primarily due to a decrease in customer funds. Investing activities provided cash, while financing activities provided less cash compared to the prior year Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(95,929) | $(27,540) | | Net cash provided by investing activities | $4,369 | $1,993 | | Net cash provided by financing activities | $21,264 | $44,190 | | Net (decrease) increase in cash, cash equivalents, restricted cash, customer funds and deposits | $(69,381) | $18,023 | | Cash, cash equivalents, restricted cash, customer funds and deposits at end of period | $84,365 | $136,521 | - Net cash used in operating activities increased significantly to **$(95,929) thousand** for the six months ended June 30, 2025, from **$(27,540) thousand** in the prior year, largely due to a **$67.2 million** decrease in customer funds[29](index=29&type=chunk)[368](index=368&type=chunk) - Financing activities provided **$21,264 thousand**, primarily from the issuance of convertible debentures, but this was lower than the **$44,190 thousand** provided in the prior year from equity offerings[29](index=29&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's financial statements, covering its organizational structure, significant accounting policies, revenue breakdown, asset valuations, debt instruments, equity structure, compensation plans, regulatory capital, commitments, contingencies, income taxes, leases, fair value measurements, segment reporting, and subsequent events [Note 1. Organization and Description of Business](index=13&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) Bakkt Holdings, Inc. operates an 'up-C' structure, with its primary assets and business held by Opco. The company provides crypto trading and loyalty services, facilitating transactions in various crypto assets. Recent corporate actions include the sale of Bakkt Trust in May 2025 and an agreement to sell the loyalty business on July 23, 2025, signaling a strategic shift towards a crypto-focused business model - Bakkt completed the sale of Bakkt Trust to Intercontinental Exchange, Inc. on May 15, 2025, after suspending all customer activities in November 2024[39](index=39&type=chunk) - The company agreed to sell its loyalty business on July 23, 2025, as part of a strategic realignment to focus on crypto[42](index=42&type=chunk) - Bakkt Crypto holds a New York State virtual currency license (BitLicense) and money transmitter licenses in all required U.S. states[40](index=40&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=15&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation for the unaudited interim consolidated financial statements, the use of estimates, and recent changes in accounting principles. Notably, the company retrospectively adopted SAB 122, derecognizing safeguarding obligations for crypto assets, and adopted ASU 2020-06 for convertible instruments. Management also evaluated the company's ability to continue as a going concern, concluding that current liquidity and recent financing will be sufficient for 12 months - The company retrospectively adopted SAB No. 122 as of December 31, 2024, which rescinds previous guidance on safeguarding crypto assets, resulting in the derecognition of safeguarding obligations and assets with no impact on net income or equity[49](index=49&type=chunk) - Management believes that the company's cash and cash equivalents, along with net proceeds from the Private Placement and common stock/pre-funded warrant issuance, will be sufficient to fund operations for **12 months** from the financial statements' issuance date[60](index=60&type=chunk) - The company adopted ASU 2020-06, simplifying accounting for convertible instruments, which did not have a material impact on consolidated financial statements[63](index=63&type=chunk) [Note 3. Revenue from Contracts with Customers](index=19&type=section&id=Note%203.%20Revenue%20from%20Contracts%20with%20Customers) Revenue is disaggregated by service type (transaction, subscription, and service) and platform (loyalty redemption and crypto services). Transaction revenue, primarily from crypto services, is the dominant component. The company also details deferred revenue and remaining performance obligations Revenue Disaggregation (in thousands) | Service Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transaction revenue | $573,855 | $503,717 | $1,644,562 | $1,351,701 | | Subscription and service revenue | $4,027 | $6,181 | $8,230 | $12,779 | | Total revenue | $577,882 | $509,898 | $1,652,792 | $1,364,480 | | Platform | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loyalty redemption platform, net | $9,779 | $12,757 | $18,933 | $25,999 | | Crypto services | $568,103 | $497,141 | $1,633,859 | $1,338,481 | | Total revenue | $577,882 | $509,898 | $1,652,792 | $1,364,480 | - Crypto services revenue increased by **14.3%** for the three months and **22.1%** for the six months ended June 30, 2025, compared to the prior year periods, while loyalty services revenue decreased by **23.3%** and **27.2%** respectively[67](index=67&type=chunk) - Remaining performance obligations decreased from **$15.4 million** as of June 30, 2024, to **$8.4 million** as of June 30, 2025, with weighted-average recognition periods of **13 months** for both subscription and service fees[70](index=70&type=chunk)[71](index=71&type=chunk) [Note 4. Goodwill and Intangible Assets, Net](index=20&type=section&id=Note%204.%20Goodwill%20and%20Intangible%20Assets,%20Net) Goodwill decreased by $3.3 million due to the sale of Bakkt Trust. The company performed a quantitative impairment assessment as of March 31, 2025, following the non-renewal of the Webull agreement, but concluded no impairment of goodwill or tradename was required. Intangible assets primarily consist of indefinite-lived trademarks/trade names Goodwill (in thousands) | Metric | Amount | | :-------------------------- | :------- | | Balance as of January 1, 2025 | $68,001 | | Sale of Bakkt Trust | $(3,343) | | Balance as of June 30, 2025 | $64,658 | - The non-renewal of the Webull agreement, a significant crypto client, triggered a goodwill impairment assessment as of March 31, 2025, but no impairment was recognized[75](index=75&type=chunk)[81](index=81&type=chunk) - Intangible assets, primarily trademarks/trade names, remained at **$2.9 million** as of June 30, 2025, with no amortization recorded as finite-lived intangible assets have been fully impaired[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [Note 5. Consolidated Balance Sheet Components](index=22&type=section&id=Note%205.%20Consolidated%20Balance%20Sheet%20Components) This note provides a detailed breakdown of various balance sheet accounts. Accounts receivable, net, decreased slightly, while other current assets also saw a reduction. Property, equipment, and software, net, decreased, and other assets, including operating lease right-of-use assets, also declined. Accounts payable and accrued liabilities increased, while other current and noncurrent liabilities remained relatively stable or decreased Accounts Receivable, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Total accounts receivable, net | $23,306 | $24,648 | Property, Equipment and Software, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Property, equipment and software, net | $1,839 | $2,064 | - The company's owned crypto assets, reported in 'Other assets,' were **$1.4 million** as of June 30, 2025, and **$1.2 million** as of December 31, 2024, with fair value changes recognized in 'other (expense) income, net'[90](index=90&type=chunk) Accounts Payable and Accrued Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Total accounts payable and accrued liabilities | $42,683 | $39,911 | [Note 6. Convertible Debenture](index=24&type=section&id=Note%206.%20Convertible%20Debenture) On June 17, 2025, Bakkt issued a $25.0 million convertible debenture for $23.75 million in a private placement. The debenture accrues 0% interest (18% upon default), matures in one year, and is convertible into Class A Common Stock at the holder's option, subject to a monthly conversion cap and an Exchange Cap of 2,827,906 shares - Bakkt issued a **$25.0 million** convertible debenture on June 17, 2025, for **$23.75 million**, with net proceeds intended for working capital and general corporate purposes[94](index=94&type=chunk)[95](index=95&type=chunk) - The debenture has a **0%** annual interest rate (**18%** upon default), a one-year maturity, and allows conversion into Class A Common Stock at the lower of **$14.51 per share** or **97%** of the lowest daily VWAP (not below **$2.418**)[96](index=96&type=chunk)[100](index=100&type=chunk) - Conversion is subject to a monthly cap of **$6.25 million** in principal and an Exchange Cap of **2,827,906 shares** of Class A Common Stock, unless stockholder approval is obtained[98](index=98&type=chunk)[99](index=99&type=chunk) [Note 7. Tax Receivable Agreement](index=26&type=section&id=Note%207.%20Tax%20Receivable%20Agreement) Bakkt entered into a Tax Receivable Agreement (TRA) with Opco equity holders, entitling them to 85% of certain net income tax benefits from tax basis increases upon exchange of Opco Common Units for Class A Common Stock. As of June 30, 2025, no liability has been recorded under the TRA due to the company's history of taxable losses, making future cash tax payments improbable - The TRA provides for payments to Opco equity holders of **85%** of certain net income tax benefits realized from increases in tax basis due to exchanges of Opco Common Units for Class A Common Stock[111](index=111&type=chunk) - As of June 30, 2025, **1,061,075 Opco Common Units** have been exchanged for Class A Common Stock[111](index=111&type=chunk) - No liability has been recorded under the TRA because, based on the company's history of taxable losses, it is not probable to expect cash tax payments in the foreseeable future[111](index=111&type=chunk)[166](index=166&type=chunk) [Note 8. Related Parties](index=26&type=section&id=Note%208.%20Related%20Parties) Bakkt completed the sale of Bakkt Trust to Intercontinental Exchange, Inc. (ICE), a major shareholder, for $1.5 million cash plus assumption of regulatory capital. The company also had a $40.0 million revolving credit facility with ICE, which was fully repaid and terminated on July 30, 2025. Related party expenses from a previous transition services agreement with ICE terminated in December 2023 - Bakkt sold Bakkt Trust to ICE for **$1.5 million** cash plus assumption of approximately **$3.0 million** in regulatory capital, recognizing a **$2.3 million** loss on sale[112](index=112&type=chunk) - The **$40.0 million** ICE Credit Facility was fully repaid on June 18, 2025, and subsequently terminated on July 30, 2025[119](index=119&type=chunk)[122](index=122&type=chunk) - No related party expenses were recognized for the three and six months ended June 30, 2025, as the ICE Transition Services Agreement terminated in December 2023[123](index=123&type=chunk) [Note 9. Warrants](index=28&type=section&id=Note%209.%20Warrants) Bakkt has public warrants, Class 1 Warrants, and Class 2 Warrants outstanding. The company recognized an $8.6 million loss from the change in fair value of warrant liability for the three months ended June 30, 2025, but a $23.6 million gain for the six months ended June 30, 2025, reflecting market fluctuations and valuation model changes - As of June 30, 2025, there were **7,140,383 public warrants** outstanding, exercisable at **$287.50 per 25 warrants**[124](index=124&type=chunk) - Bakkt recognized an **$8.6 million loss** from the change in fair value of warrant liability for the three months ended June 30, 2025, compared to a **$15.1 million loss** in the prior year period[133](index=133&type=chunk) - For the six months ended June 30, 2025, the company recognized a **$23.6 million gain** from the change in fair value of warrant liability, a significant improvement from a **$6.1 million loss** in the prior year period[133](index=133&type=chunk)[355](index=355&type=chunk) [Note 10. Equity](index=29&type=section&id=Note%2010.%20Equity) Bakkt's equity structure includes Class A Common Stock (voting, economic) and Class V Common Stock (voting, no economic value, paired with Opco Common Units). The authorized shares of Class A Common Stock were increased from 30 million to 60 million on June 17, 2025. Noncontrolling interests represent the ownership of Opco Common Units by holders other than Bakkt Holdings, Inc - On June 17, 2025, stockholders approved an increase in authorized Class A Common Stock from **30,000,000** to **60,000,000 shares**[134](index=134&type=chunk) Common Stock Outstanding (Shares) | Class | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Class A Common Stock | 6,974,740 | 6,510,885 | | Class V Common Stock | 7,177,076 | 7,178,303 | Opco Ownership Interest | Holder | June 30, 2025 Ownership % | December 31, 2024 Ownership % | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Bakkt Holdings, Inc. | 49% | 48% | | Noncontrolling interest holders | 51% | 52% | [Note 11. Share-Based and Unit-Based Compensation](index=31&type=section&id=Note%2011.%20Share-Based%20and%20Unit-Based%20Compensation) The 2021 Incentive Plan allows for equity awards, with reserved shares increasing to 4,014,121 as of June 17, 2025. Share-based compensation expense for RSUs and PSUs totaled $6.3 million for the three months and $9.7 million for the six months ended June 30, 2025. Unrecognized compensation expense was $24.8 million as of June 30, 2025 - The 2021 Incentive Plan's reserved shares for issuance increased to **4,014,121** as of June 17, 2025[148](index=148&type=chunk) Share-Based Compensation Expense (in thousands) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--------------------------------------- | :------------------------------- | :----------------------------- | | RSU compensation expense | $3,600 | $6,400 | | PSU compensation expense | $2,700 | $3,200 | | Total share-based compensation expense | $6,300 | $9,600 | - Unrecognized compensation expense for RSUs and PSUs was **$24.8 million** as of June 30, 2025, to be recognized over a weighted-average period of **1.23 years**[151](index=151&type=chunk)[152](index=152&type=chunk) [Note 12. Net Loss per share](index=34&type=section&id=Note%2012.%20Net%20Loss%20per%20share) Basic and diluted net loss per share attributable to Class A Common Stockholders were $(2.16) and $(1.05) for the three and six months ended June 30, 2025, respectively. Several potential common shares, including RSUs, PSUs, warrants, and convertible debentures, were excluded from diluted EPS calculations as their effect would be anti-dilutive Net Loss Per Share (Basic and Diluted) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--------------------------------------- | :------------------------------- | :----------------------------- | | Net loss attributable to Bakkt Holdings, Inc. | $(14,734) | $(7,026) | | Weighted average shares outstanding – basic/diluted | 6,825,634 | 6,677,934 | | Net loss per share – basic/diluted | $(2.16) | $(1.05) | Potential Common Shares Excluded from Diluted EPS (in thousands) | Security Type | June 30, 2025 (3 Months) | June 30, 2025 (6 Months) | | :--------------------------------------- | :----------------------- | :----------------------- | | RSUs and PSUs | 3,215 | 3,215 | | Public warrants | 286 | 286 | | Class 1 and Class 2 warrants | 2,018 | 2,018 | | Convertible debentures | 1,912 | 1,912 | | Opco common units | 7,177 | 7,177 | | Total excluded | 14,608 | 14,608 | [Note 13. Capital Requirements](index=35&type=section&id=Note%2013.%20Capital%20Requirements) Bakkt Crypto, holding a BitLicense and money transmitter licenses, is subject to regulatory capital requirements from NYDFS and various states. As of June 30, 2025, Bakkt Crypto was in compliance with these requirements, which may restrict cash transfers and necessitate future cash injections from the parent company - Bakkt Crypto is required to maintain a capital balance based on predefined minimums or percentages of transmitted and custody assets, as well as wind-down costs, under its NYDFS BitLicense[162](index=162&type=chunk) - The company was in compliance with all regulatory capital requirements as of June 30, 2025, but these requirements may restrict cash transfers and necessitate future cash transfers to Bakkt Crypto[164](index=164&type=chunk) [Note 14. Commitments and Contingencies](index=36&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) This note details various commitments and contingencies, including 401(k) plan contributions, the Tax Receivable Agreement (TRA) for which no liability is recorded, ongoing class action and derivative litigation related to past disclosures, and a commercial purchasing card facility with reduced credit limits. The company also has purchase obligations and a Cooperation Agreement with DTR for payment processing technology - A putative class action complaint was filed on April 2, 2025, alleging false or misleading statements related to the non-renewal of agreements with Webull and Bank of America[167](index=167&type=chunk) - The commercial purchasing card facility's credit line was reduced from **$35.0 million** to **$15.0 million** between March 2024 and March 2025, with payment frequency changed to weekly[179](index=179&type=chunk) Purchase Obligations as of June 30, 2025 (in thousands) | Period | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total | | :-------------------- | :--------------- | :-------- | :-------- | :---------------- | :------ | | Purchase obligations | $5,000 | $6,000 | $0 | $0 | $11,000 | - The company entered into a Cooperation Agreement with DTR on March 19, 2025, for exclusive payment processing technology and infrastructure, with potential future acquisition rights (Call/Put Option) for DTR Equity[181](index=181&type=chunk) [Note 15. Income Taxes](index=38&type=section&id=Note%2015.%20Income%20Taxes) Bakkt's income tax expense primarily relates to its allocable share of Opco's taxable income/loss and its corporate subsidiaries. The effective tax rates for the three and six months ended June 30, 2025, were (0.20)% and (0.8)%, respectively, differing from statutory rates due to noncontrolling interest and the absence of taxable income to realize deferred tax assets, for which a full valuation allowance is maintained - Effective tax rates were **(0.20)%** for Q2 2025 and **(0.8)%** for H1 2025, primarily due to noncontrolling interest and the inability to realize deferred tax assets[184](index=184&type=chunk) - A full valuation allowance is maintained against net deferred tax assets as of June 30, 2025, and December 31, 2024, due to uncertainty regarding their realizability[186](index=186&type=chunk) [Note 16. Leases](index=39&type=section&id=Note%2016.%20Leases) The company leases office space under operating leases, with remaining terms ranging from 10 to 87 months. A Lease Assignment for the New York office lease in January 2025 resulted in a recognized income of approximately $1.8 million. The weighted average remaining lease term for operating leases was approximately 76 months, with a weighted average discount rate of 5.4% as of June 30, 2025 - The company recognized approximately **$1.8 million** in income from a Lease Assignment for its New York office lease during the six months ended June 30, 2025[193](index=193&type=chunk) - As of June 30, 2025, the weighted average remaining lease term for operating leases was approximately **76 months**, and the weighted average discount rate was **5.4%**[196](index=196&type=chunk) [Note 17. Fair Value Measurements](index=40&type=section&id=Note%2017.%20Fair%20Value%20Measurements) Financial assets and liabilities measured at fair value are classified into Level 1, Level 2, and Level 3. Crypto assets are valued using Level 2 inputs, while public warrant liability is Level 1. Class 1 and Class 2 Warrants are valued using Level 3 inputs (Black-Scholes-Merton and binomial lattice models) Fair Value Measurements as of June 30, 2025 (in thousands) | Category | Total | Level 1 | Level 2 | Level 3 | | :--------------------------------------- | :---- | :------ | :------ | :------ | | **Assets:** | | | | | | Crypto Assets | $1,435 | $0 | $1,435 | $0 | | **Liabilities:** | | | | | | Warrant liability - Class 1 and Class 2 warrants | $21,922 | $0 | $0 | $21,922 | | Warrant liability - public warrants | $1,357 | $1,357 | $0 | $0 | - Crypto assets are valued using **Level 2 inputs**, based on the mid-point of bid-ask spread in the principal market[199](index=199&type=chunk) - Class 1 and Class 2 Warrants are valued using **Level 3 inputs**, specifically the Black-Scholes-Merton model and a binomial lattice model, respectively[201](index=201&type=chunk) [Note 18. Segment Reporting](index=41&type=section&id=Note%2018.%20Segment%20Reporting) Bakkt operates as a single operating and reportable segment, with all material operations within the United States. The chief operating decision maker allocates resources and assesses performance at the consolidated level. The note provides a breakdown of significant segment expenses - Bakkt has one operating and reportable segment, with all material operations located in the United States[51](index=51&type=chunk)[68](index=68&type=chunk)[205](index=205&type=chunk) Significant Segment Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Personnel | $13,971 | $27,002 | $28,429 | $43,218 | | Non-cash compensation | $6,338 | $2,407 | $9,681 | $10,420 | | Crypto costs | $561,074 | $491,701 | $1,615,709 | $1,323,673 | | Total operating expenses | $596,371 | $531,915 | $1,689,801 | $1,418,334 | - Webull Pay LLC represented approximately **74%** of the company's Crypto services revenue for the year ended December 31, 2024, but notified Bakkt of non-renewal of its agreement[210](index=210&type=chunk) - Bank of America represented approximately **16%** of the company's loyalty business's net revenue for the year ended December 31, 2024, and also notified Bakkt of non-renewal[211](index=211&type=chunk) [Note 19. Subsequent Events](index=43&type=section&id=Note%2019.%20Subsequent%20Events) Significant events after June 30, 2025, include the departure of co-CEO Andrew Main, an increase in authorized Class A Common Stock to 560 million shares, the acquisition of a 30% interest in MarushoHotta Co., Ltd. for $11.5 million, and the formal Commercial Agreement with DTR. The ICE Credit Facility was terminated, and a July 2025 equity offering raised $75 million gross proceeds. Additionally, $4.0 million of the convertible debenture was converted, and the loyalty business was agreed to be sold for $1.00 plus adjustments - Andrew Main is departing as co-Chief Executive Officer and President, effective August 11, 2025, with Akshay Naheta assuming the CEO and President roles[213](index=213&type=chunk) - Stockholders approved an increase in authorized Class A Common Stock from **60 million** to **560 million shares** on August 6, 2025[215](index=215&type=chunk) - Bakkt acquired approximately **30%** of MarushoHotta Co., Ltd. for **$11.5 million** on August 6, 2025, to advance its multinational bitcoin treasury strategy[216](index=216&type=chunk)[265](index=265&type=chunk) - A Commercial Agreement with DTR was entered into on July 31, 2025, for global payments processing services powered by stablecoins[217](index=217&type=chunk) - The ICE Credit Facility was terminated on July 30, 2025, and a July 2025 equity offering raised **$75 million** in gross proceeds, intended for Bitcoin purchases, working capital, and general corporate purposes[220](index=220&type=chunk)[222](index=222&type=chunk) - The company agreed to sell its loyalty and travel redemption business for **$1.00** plus certain adjustments, expecting to recognize a loss on the sale[226](index=226&type=chunk)[228](index=228&type=chunk) - On July 7 and July 28, 2025, **$4.0 million** of the convertible debenture was converted into **597,641 shares** of Class A Common Stock, reducing the outstanding balance to **$17.0 million**[225](index=225&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Bakkt's financial condition and results of operations, highlighting the company's strategic shift towards crypto, market developments, recent corporate actions, key performance indicators, and liquidity. It details revenue and expense trends for the three and six months ended June 30, 2025, compared to the prior year, and discusses the company's going concern assessment and non-GAAP financial measures [Overview](index=48&type=section&id=Overview) Bakkt, founded in 2018, focuses on providing SaaS and API solutions for crypto trading and loyalty services. The company's platform supports various crypto assets and is built with institutional-grade KYC/AML measures, aiming to power commerce by enabling businesses and consumers to manage and transact with crypto - Bakkt's platform provides crypto trading capabilities and loyalty solutions through SaaS and API, supporting various crypto assets[240](index=240&type=chunk)[241](index=241&type=chunk) - The platform incorporates institutional-grade 'know your customer' (KYC), anti-money laundering (AML), and anti-fraud measures[241](index=241&type=chunk) [Crypto Market Developments](index=49&type=section&id=Crypto%20Market%20Developments) The U.S. cryptocurrency market is experiencing significant transformation due to a maturing regulatory environment, increased institutional participation, and sustained retail adoption. Key drivers include a pro-innovation political shift, legislative progress like the GENIUS Act for stablecoins, and broadening adoption, with Bitcoin's price reaching highs near $100,000 and a market cap above $1.8 trillion - The U.S. crypto market is driven by a maturing regulatory environment, increased institutional participation, and sustained retail adoption[243](index=243&type=chunk) - Bitcoin's price reached highs near **$100,000**, with its market cap above **$1.8 trillion**, reflecting a stronger and more resilient market[245](index=245&type=chunk) - The newly enacted GENIUS Act provides a comprehensive regulatory framework for stablecoins, mandating full reserve backing and defining them as a distinct asset class[249](index=249&type=chunk) [Recent Developments](index=49&type=section&id=Recent%20Developments) Bakkt has undertaken several strategic initiatives and experienced significant changes, including entering a commercial agreement with DTR for global payments, completing a $75 million equity offering to fund digital asset investments, and exiting its loyalty business to focus on crypto. The company also updated its Investment Policy to include Bitcoin and other digital assets, dissolved Bakkt Brokerage, and sold Bakkt Trust. Key customer contracts with Webull and Bank of America were not renewed, impacting revenue. These developments are detailed further in Note 19 - Bakkt entered a Commercial Agreement with DTR for global payments processing services powered by stablecoins, granting Bakkt a non-exclusive license to DTR's technology[246](index=246&type=chunk)[247](index=247&type=chunk) - A July 2025 equity offering raised approximately **$75 million** in gross proceeds, intended for purchasing Bitcoin and other digital assets, working capital, and general corporate purposes[252](index=252&type=chunk) - The company is exiting its loyalty business, having entered an agreement to sell it, to realign its focus with a crypto strategy[255](index=255&type=chunk)[256](index=256&type=chunk) - Bakkt updated its Investment Policy in June 2025 to allocate capital into Bitcoin and other digital assets, aiming to enhance stockholder value and expand its treasury strategy globally[264](index=264&type=chunk)[267](index=267&type=chunk) - Key customer contracts with Webull (**74%** of 2024 Crypto services revenue) and Bank of America (**16%** of 2024 loyalty net revenue) were not renewed, leading to expected material reductions in revenue[278](index=278&type=chunk)[279](index=279&type=chunk) [Key Factors Affecting Our Performance](index=58&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) Bakkt's performance is influenced by its ability to grow its client base, expand and innovate its product offerings in the rapidly evolving crypto market, manage intense competition, navigate general economic and market conditions, and comply with complex and evolving U.S. and international regulations - Revenue growth depends on expanding the client base through a B2B2C model and broadening partnerships to fintechs and neobanks[303](index=303&type=chunk) - Continuous innovation and meeting client capability demands are crucial in the rapidly evolving crypto marketplace[304](index=304&type=chunk) - The company faces intense competition in the crypto marketplace and is subject to complex, uncertain, and overlapping local, state, and federal regulations[306](index=306&type=chunk)[308](index=308&type=chunk) [Key Performance Indicators](index=59&type=section&id=Key%20Performance%20Indicators) Bakkt monitors three key performance indicators: transacting accounts, notional traded volume, and assets under custody. For the three months ended June 30, 2025, there were 0.7 million unique monthly transacting accounts and $733.0 million in notional traded volume. Assets under custody were $1,335.0 million as of June 30, 2025 Key Performance Indicators | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | As of June 30, 2025 | As of December 31, 2024 | | :--------------------------------------- | :------------------------------- | :----------------------------- | :------------------ | :---------------------- | | Unique monthly transacting accounts | 0.7 million | 1.5 million | N/A | N/A | | Notional traded volume | $733.0 million | $1,946 million | N/A | N/A | | Assets under custody | N/A | N/A | $1,335.0 million | $2,301.9 million | - Assets under custody decreased from **$2,301.9 million** as of December 31, 2024, to **$1,335.0 million** as of June 30, 2025[313](index=313&type=chunk) [Results of Operations](index=61&type=section&id=Results%20of%20Operations) Bakkt's results of operations for Q2 and H1 2025 show increased revenues driven by crypto services, but also higher crypto costs. Operating expenses saw mixed changes, with compensation and benefits decreasing due to headcount reductions, while professional services increased. The company reported a gain from changes in fair value of warrant liability for the six-month period, contributing to a reduced net loss [Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024](index=61&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20compared%20to%20Three%20Months%20Ended%20June%2030,%202024) For the three months ended June 30, 2025, total revenue increased by $68.0 million (13.3%) to $577.9 million, primarily from a $71.0 million (14.3%) increase in crypto services revenue. Operating expenses rose by $64.5 million (12.1%) to $596.4 million, mainly due to higher crypto costs. Net loss attributable to Bakkt Holdings, Inc. decreased by $1.7 million (10.3%) to $(14.7) million Revenue and Operating Expenses (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Total revenues | $577,882 | $509,898 | $67,984 | 13.3% | | Crypto services revenue | $568,103 | $497,141 | $70,962 | 14.3% | | Loyalty services, net | $9,779 | $12,757 | $(2,978) | (23.3%) | | Total operating expenses | $596,371 | $531,915 | $64,456 | 12.1% | | Crypto costs | $561,074 | $491,701 | $69,373 | 14.1% | | Compensation and benefits | $20,124 | $22,381 | $(2,257) | (10.1%) | | Selling, general and administrative | $3,590 | $5,516 | $(1,926) | (34.9%) | | Loss from change in fair value of warrant liability | $(8,604) | $(15,114) | $6,510 | n/m | - The decrease in compensation and benefits was primarily due to a **$6.2 million** reduction in salaries and wages and bonuses, partially offset by a **$3.9 million** increase in non-cash compensation[324](index=324&type=chunk) - Selling, general and administrative costs decreased by **$1.9 million**, mainly due to a **$1.8 million** decrease in general insurance[330](index=330&type=chunk) [Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024](index=65&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20compared%20to%20Six%20Months%20Ended%20June%2030,%202024) For the six months ended June 30, 2025, total revenue increased by $288.3 million (21.1%) to $1,652.8 million, driven by a $295.4 million (22.1%) increase in crypto services revenue. Operating expenses increased by $271.5 million (19.1%) to $1,689.8 million, primarily due to higher crypto costs. Net loss attributable to Bakkt Holdings, Inc. significantly decreased by $17.6 million (71.5%) to $(7.0) million, aided by a $23.6 million gain from changes in fair value of warrant liability Revenue and Operating Expenses (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Total revenues | $1,652,792 | $1,364,480 | $288,312 | 21.1% | | Crypto services revenue | $1,633,859 | $1,338,481 | $295,378 | 22.1% | | Loyalty services, net | $18,933 | $25,999 | $(7,066) | (27.2%) | | Total operating expenses | $1,689,801 | $1,418,334 | $271,467 | 19.1% | | Crypto costs | $1,615,709 | $1,323,673 | $292,036 | 22.1% | | Compensation and benefits | $37,943 | $46,912 | $(8,969) | (19.1%) | | Selling, general and administrative | $7,419 | $13,326 | $(5,907) | (44.3%) | | Gain (loss) from change in fair value of warrant liability | $23,644 | $(6,068) | $29,712 | n/m | - Compensation and benefits decreased by **$9.0 million**, primarily due to reductions in salaries, wages, bonuses, and benefit-related costs as the company optimized its cost structure[346](index=346&type=chunk) - Selling, general and administrative costs decreased by **$5.9 million**, mainly due to a **$4.1 million** decrease in general insurance and a **$1.0 million** reduction in marketing and promotions[351](index=351&type=chunk) [Liquidity and Capital Resources](index=69&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, Bakkt had $43.5 million in cash and cash equivalents and $18.0 million in restricted cash. Recent financing activities, including a $23.8 million private placement of convertible debentures and a $75.0 million gross proceeds equity offering, are expected to fund operations for 12 months. Net cash used in operating activities significantly increased to $(95.9) million for the six months ended June 30, 2025, primarily due to a $67.2 million decrease in customer funds Cash and Cash Equivalents (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $43,493 | $39,049 | | Restricted cash | $17,965 | $24,889 | - The company secured **$23.8 million** net proceeds from a convertible debenture private placement in June 2025 and **$75.0 million** gross proceeds from an equity offering in July 2025, intended for digital asset purchases, working capital, and general corporate purposes[360](index=360&type=chunk) - Net cash used in operating activities was **$(95.9) million** for the six months ended June 30, 2025, primarily due to a **$67.2 million** decrease in customer funds, largely from Webull moving trading activity off the platform[368](index=368&type=chunk) - Management believes current cash and recent financing proceeds will be sufficient to fund operations for **12 months**[364](index=364&type=chunk) [Tax Receivable Agreement](index=71&type=section&id=Tax%20Receivable%20Agreement) Bakkt's Tax Receivable Agreement (TRA) with Opco equity holders entitles them to 85% of certain net income tax benefits from tax basis increases upon Opco Common Unit exchanges. As of June 30, 2025, no TRA liability has been recorded, as the company's history of taxable losses makes future cash tax payments improbable - The TRA mandates payments of **85%** of certain net income tax benefits to Opco equity holders resulting from tax basis increases[377](index=377&type=chunk) - No value has been recorded under the TRA as of June 30, 2025, due to the company's history of taxable losses, making future cash tax payments improbable[378](index=378&type=chunk) [Contractual Obligations and Commitments](index=72&type=section&id=Contractual%20Obligations%20and%20Commitments) As of June 30, 2025, Bakkt's significant contractual obligations include $11.0 million in purchase obligations (cloud computing) and $20.2 million in future minimum operating lease payments. The commercial purchasing card facility's credit line was reduced to $15.0 million. The company also has a Cooperation Agreement with DTR, which includes potential future acquisition obligations (Call/Put Option) for DTR Equity Contractual Obligations and Commitments as of June 30, 2025 (in thousands) | Category | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total | | :--------------------------------------- | :--------------- | :-------- | :-------- | :---------------- | :------ | | Purchase obligations | $5,000 | $6,000 | $0 | $0 | $11,000 | | Future minimum operating lease payments | $4,071 | $6,183 | $5,093 | $4,845 | $20,192 | | Total contractual obligations | $9,071 | $12,183 | $5,093 | $4,845 | $31,192 | - The commercial purchasing card facility's credit line was reduced from **$35.0 million** to **$15.0 million** between March 2024 and March 2025[380](index=380&type=chunk) - The Cooperation Agreement with DTR includes Call and Put Options for DTR Equity, with consideration in Class A Common Stock representing **19.9%** to **31.5%** of Bakkt's aggregate common stock, subject to regulatory and stockholder approvals[385](index=385&type=chunk) [Non-GAAP Financial Measures](index=73&type=section&id=Non-GAAP%20Financial%20Measures) Bakkt uses Adjusted EBITDA as a non-GAAP financial measure to assess performance by excluding certain non-core items like share-based compensation, warrant liability fair value changes, and restructuring charges. Adjusted EBITDA loss decreased by $5.4 million (29.9%) for the three months and $7.1 million (20.7%) for the six months ended June 30, 2025, compared to the prior year periods, primarily due to a lower net loss - Adjusted EBITDA is defined as EBITDA before share-based and unit-based compensation, goodwill and intangible asset impairments, restructuring charges, changes in fair value of warrant liability, and other non-cash/non-recurring items[392](index=392&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(30,152) | $(35,512) | $(13,915) | $(56,787) | | EBITDA | $(29,885) | $(36,566) | $(13,999) | $(58,584) | | Share-based and unit-based compensation expense | $6,338 | $2,406 | $9,681 | $10,420 | | Loss (gain) from change in fair value of warrant liability | $8,604 | $15,114 | $(23,644) | $6,068 | | Loss on sale of Bakkt Trust | $2,301 | $0 | $2,301 | $0 | | Adjusted EBITDA loss | $(12,555) | $(17,915) | $(27,101) | $(34,175) | - Adjusted EBITDA loss decreased by **$5.4 million (29.9%)** for the three months and **$7.1 million (20.7%)** for the six months ended June 30, 2025, compared to the prior year periods, primarily due to a lower net loss[395](index=395&type=chunk)[396](index=396&type=chunk) [Critical Accounting Policies and Estimates](index=75&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Bakkt's critical accounting policies and estimates, discussed with the Audit and Risk Committee, involve significant judgments and assumptions, including those related to going concern, income tax valuation allowances, asset useful lives and fair values, credit loss provisions, and impairment assessments. No material changes to these policies or estimates have occurred since the December 31, 2024, Form 10-K filing - Significant estimates and assumptions include going concern, income tax valuation allowances, useful lives and fair value of intangible assets and property, equipment and software, fair value of financial assets and liabilities, and impairment of assets[48](index=48&type=chunk)[398](index=398&type=chunk) - No material changes to critical accounting policies and estimates have occurred since the filing of the Form 10-K for the year ended December 31, 2024[397](index=397&type=chunk) [Recently Issued and Adopted Accounting Pronouncements](index=76&type=section&id=Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements) Information regarding recently issued and adopted accounting pronouncements is detailed in Note 2 to the unaudited consolidated financial statements - Details on recently issued and adopted accounting pronouncements are provided in Note 2 of the consolidated financial statements[399](index=399&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for Bakkt Holdings, Inc. for the reported period - This section is marked as 'Not applicable'[400](index=400&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Bakkt's management, including its principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025. There were no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2025[401](index=401&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[402](index=402&type=chunk) [Item 1. Legal Proceedings](index=78&type=section&id=Item%201.%20Legal%20Proceedings) Bakkt is subject to legal proceedings and claims in the ordinary course of business. While the resolution of these matters is not expected to have a material adverse effect on financial position, an unfavorable outcome could materially affect future business. Additional details are provided in Note 14 - The company is subject to legal proceedings and claims arising in the ordinary course of business[406](index=406&type=chunk) - While current knowledge suggests no material adverse effect, an unfavorable resolution could materially affect future business, results of operations, or financial condition[406](index=406&type=chunk)[407](index=407&type=chunk) [Item 1A. Risk Factors](index=78&type=section&id=Item%201A.%20Risk%20Factors) Investors should consider risk factors detailed in previous filings, including the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for March 31, 2025, as well as risks related to the updated Investment Policy. Future issuances of common stock or other equity securities may dilute ownership and reduce market price - Investors should consider risk factors from the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for March 31, 2025[408](index=408&type=chunk) - Risks related to the company's updated Investment Policy are also highlighted[408](index=408&type=chunk) - Future issuances and sales of common stock or other equity securities may reduce the market price of securities and dilute existing stockholders' ownership[409](index=409&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) There were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the reported period - This section is marked as 'None'[410](index=410&type=chunk) [Item 3. Defaults Upon Senior Securities](index=78&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reported period - This section is marked as 'None'[411](index=411&type=chunk) [Item 4. Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for Bakkt Holdings, Inc. for the reported period - This section is marked as 'Not applicable'[412](index=412&type=chunk) [Item 5. Other Information](index=79&type=section&id=Item%205.%20Other%20Information) During the last fiscal quarter, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter[413](index=413&type=chunk) [Item 6. Exhibits](index=80&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, debt agreements, registration rights agreements, and certifications - Exhibits include amendments to the Certificate of Incorporation, Convertible Debenture, Purchase Agreement, Global Guaranty Agreement, Registration Rights Agreement, and certifications[415](index=415&type=chunk)[416](index=416&type=chunk) [Signatures](index=81&type=section&id=Signatures) The report is duly signed on behalf of Bakkt Holdings, Inc. by its Co-Chief Executive Officer, President and Director (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer), and Chief Accounting Officer (Principal Accounting Officer) as of August 11, 2025 - The report is signed by Andrew Main (Co-Chief Executive Officer, President and Director), Karen Alexander (Chief Financial Officer), and Joseph Henderson (Chief Accounting Officer) on August 11, 2025[420](index=420&type=chunk)

[Equity Purchase Agreement Overview](index=1&type=section&id=Equity%20Purchase%20Agreement) This section provides a high-level overview of the Equity Purchase Agreement, identifying the parties involved and the core purpose of the transaction [Parties to the Agreement](index=1&type=section&id=Parties%20to%20the%20Agreement) This section identifies the Purchaser, Parent, and the specific Acquired Companies involved in the Equity Purchase Agreement, dated July 23, 2025 - The agreement outlines the sale of all equity interests in the Acquired Companies from the Parent to the Purchaser[8](index=8&type=chunk)[10](index=10&type=chunk) - Key parties involved are: - **Purchaser:** Project Labrador Holdco, LLC - **Parent (Seller):** Bakkt Opco Holdings, LLC - **Acquired Companies:** Bridge2 Solutions, LLC; B2S Resale, LLC; Aspire Loyalty Travel Solutions, LLC; Bridge2 Solutions Canada Ltd[2](index=2&type=chunk)[8](index=8&type=chunk) [Article I: Certain Definitions](index=5&type=section&id=ARTICLE%20I.%20CERTAIN%20DEFINITIONS) This article defines key financial, legal, and operational terms such as Purchase Price, Escrow Amount, Working Capital, and Material Adverse Effect to ensure clarity throughout the agreement Key Financial Definitions | Term | Definition | Source Chunk | | :--- | :--- | :--- | | **Purchase Price** | An amount of cash equal to $1.00 | [62] | | **Escrow Amount** | The sum of the Indemnity Escrow Amount ($1,000,000) and the Adjustment Escrow Amount ($1,500,000), totaling $2,500,000 | [28, 38, 17] | | **Adjustment Escrow Amount** | $1,500,000, held to secure post-closing working capital and indebtedness adjustments | [17] | | **Indemnity Escrow Amount** | $1,000,000, held to secure indemnification claims by the Purchaser | [38] | | **Target Working Capital** | Defined as $0 | [63] | - An "Acquired Companies Material Adverse Effect" is defined as an event having a material adverse effect on the business, results, or financial condition of the Acquired Companies, but excludes a comprehensive list of general economic, market, or political changes, unless they have a disproportionate impact[14](index=14&type=chunk) [Article II: The Transaction](index=18&type=section&id=ARTICLE%20II.%20THE%20TRANSACTION) This article details the acquisition mechanics, including the purchase and sale of Equity Interests, closing procedures, escrow account establishment, and payment and tax withholding protocols - At the closing, the Purchaser will buy all Equity Interests from the Parent in exchange for the Total Consideration, which is the Purchase Price of **$1.00** subject to post-closing adjustments[78](index=78&type=chunk)[66](index=66&type=chunk) - The Parent is required to deposit the Escrow Amount (**$2,500,000**) into an Escrow Account at closing, divided into an Indemnity Escrow and an Adjustment Escrow, securing potential indemnification claims and post-closing financial adjustments[80](index=80&type=chunk)[83](index=83&type=chunk) - At least three business days before closing, the Parent must provide a statement with good faith estimates of Working Capital and Indebtedness to calculate the initial Purchase Price[79](index=79&type=chunk) - The agreement grants the Purchaser and Acquired Companies the right to withhold taxes from payments as required by law, with a provision to notify the Parent five business days prior to withholding[82](index=82&type=chunk) [Article III: Post-Closing Adjustments](index=20&type=section&id=ARTICLE%20III.%20POST-CLOSING%20ADJUSTMENTS) This article details the post-closing purchase price adjustment process, including the determination of final Working Capital and Indebtedness, dispute resolution, and subsequent payments to or from the escrow account - Within **60 days** after closing, the Purchaser must prepare and deliver a Closing Date Balance Sheet to determine the Final Working Capital and Final Indebtedness[85](index=85&type=chunk) - The Parent has a **30-day** "Working Capital Dispute Period" to review and dispute the Purchaser's calculations, with unresolved disputes settled by an independent "Arbitrating Accountant" (Grant Thornton LLP)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Final adjustments are made based on determined Final Working Capital and Final Indebtedness, resulting in payments from the Adjustment Escrow Amount to the Purchaser for deficits/surpluses or from the Purchaser to the Parent for surpluses/deficits[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - A TTM (Trailing Twelve Month) Working Capital Report will be prepared one year post-closing to calculate any TTM Working Capital Surplus, which would result in a payment from the Purchaser to the Parent[87](index=87&type=chunk)[93](index=93&type=chunk) [Article IV: Representations and Warranties of the Acquired Companies](index=23&type=section&id=ARTICLE%20IV.%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20THE%20ACQUIRED%20COMPANIES) This article details the Acquired Companies' representations and warranties concerning corporate organization, financial statements, taxes, intellectual property, and compliance, serving as a baseline for due diligence and potential indemnification claims - The Acquired Companies represent that their financial statements are derived from the books of the Public Parent (Bakkt Holdings, Inc.), prepared in accordance with GAAP, and fairly present their financial position as of March 31, 2025[103](index=103&type=chunk)[104](index=104&type=chunk) - Extensive representations are made regarding tax matters, including timely filing of returns, payment of taxes, absence of audits, and proper classification for tax purposes (e.g., Bridge2 Company and Aspire Company as disregarded entities)[110](index=110&type=chunk)[112](index=112&type=chunk)[119](index=119&type=chunk) - The article warrants that the Acquired Companies' Intellectual Property, combined with licensed IP and services under the Transition Services Agreement, is sufficient to operate the Business as it was prior to closing[173](index=173&type=chunk)[195](index=195&type=chunk) - The Acquired Companies disclaim all other warranties not explicitly stated in this article, including any projections or estimates about future performance[197](index=197&type=chunk) [Article V: Representations and Warranties of the Parent](index=44&type=section&id=ARTICLE%20V.%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20THE%20PARENT) This article outlines the Parent's representations and warranties regarding its legal status, authority to execute the agreement, and clear ownership of the equity interests being transferred - The Parent warrants that it is a duly organized and validly existing limited liability company under Delaware law with the full authority to execute the agreement[199](index=199&type=chunk)[200](index=200&type=chunk) - The Parent represents that it holds **100%** of the issued and outstanding Equity Interests of the Acquired Companies and will transfer good and marketable title to the Purchaser, free of any encumbrances[203](index=203&type=chunk) - The Parent confirms that it has not employed any broker or financial advisor for which the Purchaser or Acquired Entities could become liable for fees[205](index=205&type=chunk) - Similar to the Acquired Companies, the Parent explicitly disclaims any representations or warranties not set forth in this article[208](index=208&type=chunk) [Article VI: Representations and Warranties of Purchaser](index=46&type=section&id=ARTICLE%20VI.%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20PURCHASER) This article outlines the Purchaser's representations and warranties concerning its legal standing, authority to complete the transaction, financial capability, and investment intent - The Purchaser represents it is a duly organized Delaware LLC with full power and authority to execute the agreement and consummate the transaction[209](index=209&type=chunk)[210](index=210&type=chunk) - The Purchaser warrants that at closing, it will have at least **$15,000,000** in available financing to support the purchase card credit limit under the Outpayce Agreement, pay the Purchase Price, and fund the business for at least **12 months** post-closing[215](index=215&type=chunk) - The Purchaser confirms it is acquiring the Equity Interests for its own investment purposes and not for distribution or resale[217](index=217&type=chunk) - The Purchaser acknowledges that it has conducted its own independent investigation and is relying solely on the representations and warranties expressly set forth in Articles IV and V of the agreement[219](index=219&type=chunk) [Article VII: Covenants](index=49&type=section&id=ARTICLE%20VII.%20COVENANTS) This article details the binding covenants governing the parties' actions before and after closing, including business conduct, tax matters, employee issues, confidentiality, and non-solicitation of alternative transactions - **Conduct of Business:** From the agreement date until closing, the Parent must cause the Acquired Entities to operate in the ordinary course of business and not take certain actions (e.g., amend organizational documents, issue equity, make material changes) without the Purchaser's consent[248](index=248&type=chunk)[249](index=249&type=chunk) - **Tax Matters:** The article specifies how pre-closing tax returns will be handled, allocates responsibility for transfer taxes (**50%** Parent, **50%** Purchaser), and outlines procedures for tax contests and the allocation of the purchase price for tax purposes[235](index=235&type=chunk)[240](index=240&type=chunk)[243](index=243&type=chunk) - **Employee Matters:** Establishes non-solicitation covenants for **one year** post-closing, where neither party will solicit certain employees from the other, and obligates the Purchaser to make employment offers to specified "Available Employees"[228](index=228&type=chunk)[229](index=229&type=chunk) - **No Solicitation:** The Parent agrees not to solicit, negotiate, or entertain any alternative acquisition proposals for the Acquired Entities until the closing or termination of this agreement[259](index=259&type=chunk) [Article VIII: Conditions to the Purchase and Sale](index=60&type=section&id=ARTICLE%20VIII.%20CONDITIONS%20TO%20THE%20PURCHASE%20AND%20SALE) This article outlines the specific conditions that must be satisfied or waived by both the Purchaser and Parent before the transaction can be completed, with failure potentially leading to termination - **Conditions to Purchaser's Obligation:** Key conditions include the accuracy of the Seller's representations and warranties, performance of covenants, execution of the Pre-Closing Assignment, and delivery of various documents like the Escrow and Transition Services Agreements[262](index=262&type=chunk) - A critical financial condition for the Purchaser is that the Cash on Hand of the Acquired Companies at closing must be no less than **$11,000,000**, plus adjustments for Estimated Working Capital and Estimated Indebtedness[263](index=263&type=chunk) - A significant condition for the Purchaser is that at least **80%** of a specified group of "Available Employees" must accept their employment offers[262](index=262&type=chunk)[263](index=263&type=chunk) - **Conditions to Parent's Obligation:** Key conditions for the Parent include the accuracy of the Purchaser's representations, Purchaser's performance of its covenants, and delivery of executed documents such as the Escrow Agreement, Transition Services Agreement, and the Braintree Note[265](index=265&type=chunk)[266](index=266&type=chunk) [Article IX: Survival; Indemnification](index=63&type=section&id=ARTICLE%20IX.%20SURVIVAL%3B%20INDEMNIFICATION) This article defines post-closing remedies for breaches, establishing survival periods for representations and warranties, outlining indemnification obligations, procedures for claims, and crucial limitations like deductibles and caps - **Survival Periods:** General representations and warranties survive for **one year** post-closing, while "Fundamental Representations" (e.g., organization, capitalization, authority) survive until the statute of limitations expires plus **60 days**[268](index=268&type=chunk) - **Indemnification by Parent:** The Parent agrees to indemnify the Purchaser for losses arising from breaches of representations/warranties, breaches of covenants, all "Indemnified Taxes," and claims related to Transaction Expenses or pre-closing Indebtedness[269](index=269&type=chunk) Limitations on Parent's Indemnification for General Representations | Limitation | Amount | Description | | :--- | :--- | :--- | | **De Minimis Threshold** | $15,000 | A single claim must exceed this amount to be considered | | **Aggregate Deductible** | $60,000 | The total of all qualifying claims must exceed this amount before any indemnification is paid Once met, payment is from the first dollar | | **Indemnification Cap** | $1,000,000 | The maximum aggregate amount the Parent will pay for breaches of general representations | - **Exclusive Remedy:** Except in cases of Fraud or for seeking equitable relief (like specific performance), the indemnification process outlined in this article is the sole and exclusive remedy for any breaches of the agreement after closing[285](index=285&type=chunk)[286](index=286&type=chunk) [Article X: Termination](index=68&type=section&id=ARTICLE%20X.%20TERMINATION) This article specifies the conditions under which the Equity Purchase Agreement can be terminated by either party before closing, outlining the consequences and surviving obligations - The agreement can be terminated by: - Mutual written consent of all parties - Either party if a final, non-appealable court order prohibits the transaction - The Parent if the Purchaser commits a material breach and fails to begin curing it within **20 days** - The Purchaser if the Acquired Companies commit a material breach and fails to begin curing it within **20 days**[288](index=288&type=chunk) - If the agreement is terminated, it becomes void with no further liability, except for certain surviving provisions (like confidentiality) and liability for any fraud or willful and material breach that occurred prior to termination[289](index=289&type=chunk) [Article XI: General Provisions](index=69&type=section&id=ARTICLE%20XI.%20GENERAL%20PROVISIONS) This article contains standard legal clauses governing the agreement's interpretation and enforcement, covering notices, governing law, dispute jurisdiction, jury trial waiver, fees, and legal representation - **Governing Law and Jurisdiction:** The agreement is governed by the laws of the State of Delaware, and the parties submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware for any disputes[303](index=303&type=chunk)[304](index=304&type=chunk) - **Fees and Expenses:** Generally, each party pays its own costs, but upon closing or termination (unless due to Purchaser's breach), the Parent agrees to pay the Purchaser's counsel fees up to an aggregate amount of **$600,000**[298](index=298&type=chunk) - **Waiver of Jury Trial:** All parties irrevocably waive their right to a trial by jury for any controversy arising under the agreement[305](index=305&type=chunk) - **Legal Representation:** The agreement acknowledges that Wilson Sonsini Goodrich & Rosati, P.C. represented the Parent and Acquired Companies, with the Purchaser waiving conflict of interest and agreeing that attorney-client privilege for pre-closing communications belongs to the Parent[311](index=311&type=chunk)[312](index=312&type=chunk) [Exhibits](index=77&type=section&id=Exhibits) This section includes ancillary documents such as the Braintree Note, Escrow Agreement, and Transition Services Agreement, which are integral to the overall transaction - **Exhibit A - Braintree Note:** This is the form of a promissory note from the Issuer (Project Labrador Holdco, LLC) to the Seller (Bakkt Opco Holdings, LLC), related to the Braintree Loan Amount and specifying terms of payment, interest, and subordination to senior debt[322](index=322&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - **Exhibit B - Escrow Agreement:** This agreement details the terms under which Acquiom Clearinghouse LLC will act as the Escrow Agent, holding the Escrow Funds and disbursing them according to joint instructions from the Purchaser and Parent or as otherwise specified[340](index=340&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - **Exhibit C - Transition Services Agreement (TSA):** This agreement outlines the services that the Seller will provide to the Purchaser (and vice-versa) for a transitional period post-closing to ensure business continuity, covering scope, compensation, performance standards, and term (an initial **ten months**, with a possible **three-month** extension)[368](index=368&type=chunk)[370](index=370&type=chunk)[412](index=412&type=chunk)

Stock Performance - Bakkt stock plummets 40% [1] Financial Offering - Bakkt announces pricing of $75 million public offering [1] Investment Strategy - Public offering intended to buy Bitcoin [1]

🚨LATEST: Bakkt Holdings sold its loyalty services business to focus on being a "pure-play crypto" company.It also plans to raise $75M to purchase Bitcoin and other digital assets. https://t.co/kEqzh3qyn6 ...