Bakkt Holdings Q1 2026 Earnings Call - Bakkt Builds Regulated Stablecoin Infrastructure Ahead of U.S. Legislation

Cody, Moderator/Operator, Bakkt Holdings, Inc.: Hello there, and welcome to Bakkt’s first quarter 2026 earnings call. Joining me on the call today are Akshay Naheta, our Chief Executive Officer, and Karen Alexander, our Chief Financial Officer. Today’s discussion contains forward-looking statements within the meaning of the Federal Securities laws. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those reflected or implied. We refer you to the cautionary language in our earnings release, this presentation, and in our SEC filings, including the risk factors set forth in our most recent Form 10-K and our Form 10-Q for the period ended March 31st, 2026. Today’s discussion also includes references to non-GAAP measures, including EBITDA and adjusted EBITDA. Reconciliations and definitions for our operational metrics, Total Transacting Volume, Monthly Active Users, and strategic asset value are included in the appendix.

With that, I will turn the call over to our CEO, Akshay Naheta. Akshay?

Akshay Naheta, Chief Executive Officer, Bakkt Holdings, Inc.: Thank you, Cody, and hello, everyone. Thank you for joining us. Before I walk through the quarter, I wanted to frame the environment Bakkt is operating in because the most important point for investors right now is that we are in the early innings of a structural shift in the global payments architecture, and the ocean we are fishing in is far larger than any single competitor will capture. The global payment flows today sit in 3 distinct tiers. At the base, between $200 trillion-$300 trillion of annual cross-border and wholesale volume that moves across legacy rails. These rails are operational and systematically important, structurally slow, expensive, and constrained to banking hours. Above that, an application and payments layer has emerged over the past 15 years with Stripe, Circle, Chime, Revolut, BVNK, and others intermediating roughly $6 trillion of annual volume.

This layer modernized the user experience but sits on top of the same legacy rails. Bakkt Agent operates here, and the API is built on Bakkt’s regulated foundation, EU presence for cross-border expansion, and on and off-ramp coverage to more than 60 countries allows for real-time automated settlements. At the leading edge, regulated market infrastructure clears approximately $2 trillion of annual volume in digital assets. Bakkt Markets sits in this space with our pan-U.S. money transmitter licenses, the New York BitLicense, institutional-grade compliance with fiat to stablecoin conversions at scale. These three tiers will continue to coexist, and our view is that stablecoin infrastructure cannibalizes legacy rails over the next several years to become the connective layer between all three. We do not have to be the biggest fish in this ocean.

The space is large enough that a regulated infrastructure provider with disciplined capital allocation, along with durable rails, can build a material business without confronting any single incumbent head-on. That is the structural backdrop that investors should keep in mind. A short tour of the field as it stands today. On peers and capital deployment over the past 15 months, three of the most significant institutions in global payments have committed cap by conducting strategic M&A transactions. Stripe acquired Bridge for $1.1 billion in February 2025. Mastercard announced its acquisition of BVNK for $1.8 billion in March 2026. ConsenSys this month is the latest data point in the same direction. These are capital commitments by institutions whose cost of capital and regulatory scrutiny makes speculative allocation structurally unlikely. On regulatory architecture, 2 pieces of U.S. legislation define the operating environment going forward.

Signed in July 2025, established the federal framework for payment stablecoins. The OCC and FDIC issued proposed implementing rules earlier this year. Final regulations are required by July 18th, 2026, and the act becomes substantively by early 2027 with a defined 3-year transition window. The CLARITY Act, the companion piece on trading and on the trading and intermediary side, cleared the House in July 2025 and is now moving in the Senate with the yield compromise resolved on May 1st. Markup expected this month and the administration targeting passage by mid-summer. Both statutes raise the regulatory bar materially. They make the licensing footprint compliance posture and settlement infrastructure that took years to assemble as the same infrastructure the laws now require. That is a tailwind for new incumbents who built ahead of the rules.

On market macros, stablecoin settlement volume reached approximately $33 trillion in 2025, up 72% from $19 trillion in 2024. Cap stabilization is at an all-time high at approximately $320 billion at the quarter end, and the cross-border payments addressable market is projected to grow from $44 trillion today to approximately $67 trillion by 2030. Whatever share of this Bakkt converts into revenue over time, the absolute size is the key point to keep in mind. The field is taking shape, the rules are being written in our favor, and the work is purely focused on our ability to execute. Before walking you through the operating segments, I want to show you, as the CEO, view our progress against the internal milestones that we’ve set for ourselves. The categories on this slide are subjective and are the ones that I track personally.

The ratings are my own assessment informed by the leadership team. They’re qualitative, not financial, and they’re definitely not guidance. Internal and the disclosure on the slide and in the appendix set out the basis on which they should be read. We’ve created 8 categories across 3 bands. The foundation band categories scored at 75 or above, which is where the durable platform sits. Regulatory at 80 band, given our U.S. MTLs, the New York BitLicense, FinCEN registration, EU VASP. The infrastructure layer at 80, which includes now the DTR payment rails and settlement engine, which is now wholly in-house. Dual capabilities on the payments segment within the Bakkt infrastructure. Finally, financial strength and technology both at 75.

We have a debt-free balance sheet with $82.6 million of liquidity at the end of the quarter and continued cost discipline and efficiencies. Modular with the Bakkt Agent platform on track for a launch sometime in Q3. The in-progress band, which is in the range of 50-74, is where the work is moving but not finished. The global network at 70, with our presence in 60 plus jurisdictions, gated on partner activation and regulatory closure so that we can further expand the global network. The target is to reach over 90 jurisdictions by year-end. The team and talent at 60. A+ bench under Daniel and Ankit. AI leverage operationalizing across functions, DTR integration in flight.

On the operational efficiency front, we are at 50, which is despite meaningful cost resets over the last year, there is more that can be done on this, in this area and, with further assistance from technology enablement over the balance of the year. The active focus band, which is the categories below 40, is where the priority sits, which is the partners and distribution. At 30 is the lowest score on the page intentionally so. The sales organization has had to be rebuilt, and we made progress on that front, where through the close of DTR over the next 4 quarters, we are about to convert the bottom of the funnel substantially into real, recognizable revenues. We’re also building out our sales team, and I will delve into further details on that front as we go along this presentation.

1 direct point, the categories scored highest are the ones under direct management control. The categories that scored the lowest depend on partner activations, regulatory approvals, and sales cycle conversions on calendars we do not entirely control on our own. None of those will change overnight. They will change quarter by quarter, and this scorecard is a framework that I will use to update you as we go along for the rest of this year. Let’s go into the 3 engines that drive Bakkt. The business is organized around 3 growth engines and that framework is how we will update invest. Bakkt markets, which is our institutional-grade infrastructure for digital assets, which allows our partners to market in a quick and efficient manner.

Second is Bakkt Agent, which is our programmable money and AI-powered finance layer, which allows frictionless, intelligible interfaces to provide full-stack banking services to their respective consumers or network. Finally, Bakkt Global, which is our international expansion and value creation, which is run on a disciplined capital-light model. Turning to our first engine, Bakkt Markets. Bakkt Markets is a B2B business. Institutional sales cycles and regulated infrastructure are measured in quarters, not weeks. Counterparty onboarding, compliance review, integration testing, and treasury approvals are the sequence regardless of how compelling the underlying product is. The work has been to establish that sequence with a credible roster of clients and convert it to live volume. The current Bakkt Markets roster comprises institutional-grade counterparties operating the regulated assets across the U.S., Europe, and Asia. Clients we expect to come on board as they grow their own businesses at scale.

Volumes come from two sources, both fee and spread businesses that scale with notional throughput. The first is trading flow. Crypto services activity routed through partner platforms and settled across our rails. The second is payments flow, which in 3 stablecoin flows now powered by the DTR rails, which are wholly in-house. On the product market side, the technology upgrade schedule for the second half of 2026 expands the market surface materially. More than 200 available assets at rollout, social and copy trading, a new advanced trading engine, and an improved client interface. On the commercial side, we’d like to introduce Daniel Ishak, who joins us as the Chief Commercial Officer. Daniel built and led Geyser. He ran there, which was centered around institutional B2B sales discipline, partner integration sequencing, and relationship-driven pipeline conversion, is exactly the playbook that Markets needs at this stage.

He’s leading the rebuild and will be converting our pipeline into actionable revenues. I want to give an example about one of the partner activations that we’ve onboarded over the last few weeks, which is Zoth. In May, we signed a strategic memorandum of understanding with Zoth, a privacy-first stablecoin solutions provider built for the agentic economy across South Asia and the Middle East and North Africa. There were three components. Partner Zoth currently processes approximately $300 million in annualized total payments volume. The partnership target is approximately $1 billion in annualized TPV by the year-end 2026, according to Zoth’s projections as enterprise corridors get activated over time. Second, the regulated layers throughout operate agent within Bakkt Financial Solutions, our PAN US money transmitter subsidiary. The structure puts Bakkt’s MTL footprint and FinCEN MSB registration around Zoth’s enterprise clients.

That regulatory wrapper is the asset Zoth’s clients are buying when they choose Bakkt. Third, the corridors live or activating USA to South Asia, the largest U.S. outbound remittance corridor, USA to Philippines and Nigeria, USA to the Middle East, covering the GCC expat workforce, and UAE to South Asia, the largest Middle East corridor, and sub-Saharan Africa across Uganda, Kenya, Ghana, and South Africa. The strategic point is direct cross-border stablecoin payments in emerging markets remittance by regulatory configuration. Bakkt’s licensing stack is the unlock that takes commercial pipelines from pilot to production along with Zoth’s regulatory coverage in these jurisdictions. A definitive commercial agreements are expected to follow in due course. Turning to the second engine, Bakkt Agent. Agent is the unit economics on each transaction are small. The cost base required to operate it is fixed and modest, and the arithmetic is straightforward.

At scale, modest take rates against fixed costs convert to meaningful net income. The execution priority is throughput, and the throughput will come from product activation increasing surface area of partners. With DTR now in-house, the payments capabilities that drive that throughput across B2B, P2P, and end user surfaces sit inside Bakkt and ramp on Bakkt’s roadmap. Agent is built on four pillars. The technology, programmability, and efficiency, and distribution. On the technology front, we have a modular tech stack which is engineered to scale without the architectural debt of incumbents. For programmability, our products are built for programmable finance rather than retrofitted into it. Stablecoin issuance, redemption, and on and off-ramp logic are native to our stack.

Finally, on efficiency and distribution with our low cost to serve decoupled from linear headcount growth, our flat operating costs against growing volume converts to operating leverage, which our partner networks, whose aggregate reach extends to hundreds of millions of users, subject to definitive partner agreements and product launches. Each pillar is a deliberate capital allocation decision. We expect Agent to compound the value that it creates for Bakkt over time. The Agent commercial model has 3 layers. The engine is Bakkt. Regulatory rails, licenses, custody, and settlement. Our 60-plus destination off-ramps and interact in more than 15 currencies across the different blockchain integrations, as well as same-day settlement, all owned by Bakkt. The catalyst is the partners. Concentrated markets where embedded distribution is available at scale, carrying trust and reach we could not replicate organically.

The value add is the utility, which is the daily use surfaces that drive volume back through Bakkt. Telecom illustrates the model. Telecom markets are concentrated. Two or three operators serve the majority of customers in most geographies. Initial launch focus is the U.S. and Europe, the embedded SIM connectivity, distribution, and utility in one motion. The eSIM API extension lets us extend the same capability to additional partners in parallel. Beyond telecom, we are in active conversations across additional verticals where the same model applies. We will share more as those are ready, activated, and announced. Finally, Bakkt Global, which is our third engine. These are markets where Bakkt is making strategic investments, where we see the long-term potential, the demographic and digital adoption tailwinds are durable, and we see a clear regulatory framework which is forming.

The two positions reported both as of March 31st, 2026. One is Bitcoin Japan Corporation, which is listed on the Tokyo Stock Exchange. It has a blended carrying value that has moved from approximately $11.5 million when we made our investment to $31.7 million at the end of the quarter. Bitcoin Japan Corporation is building its AI and Bitcoin economy and will detail its forward strategy at its upcoming AGM. On India, our position is structured through a warrant subscription in a company called Transchem Limited, which is listed on the Bombay Stock Exchange. We are still awaiting regulatory approvals on our investment into the Indian company.

Once that has been approved by the regulators, we will update further on the strategy for the company going forward. From an illustrative perspective, the mark-to-market value at the quarter end was approximately $44.3 million. The forward plan for the India position includes a broker-dealer rollout and a program of global and tokenized investments subject to regulatory timelines. The 3 core KPIs going forward that I believe investors should track are as follows. For Bakkt Markets, the KPI is Total Transacting Volume, the aggregate notional flow across the markets and agents platform. In 2026, our TTV was approximately $241 million, and our year-end estimate is approximately $2.5 billion as partner integrations activate and scale.

With DTR now in-house, institutional payments volume from counterparties already integrated with the DTR stack will begin by the conference of the year. For Bakkt Agent, the KPI is Monthly Active Users, the direct measure of platform adoption, and the lead indicator for transaction frequency. Reporting begins once we’ve launched the product, and we will further update on guidance for the Monthly Active User as we are ready to announce the partnerships and launch the platform. Lastly, on Bakkt Global, the KPI strategic asset value, the aggregate value generated by the investment strategy incorporating mark-to-market valuations on listed holdings, cash proceeds realized, and any unrealized gains. At the end of Q1, that value sat at approximately $76 million against approximately $21 million of capital commitments across both the Japanese and Indian investments.

Strategic asset value read in accordance with GAAP and does not represent realized returns and is subject to market and foreign exchange risks. Methodology and reporting timeline for all three KPIs are set out in the appendix. With that, I will hand the call to Karen to walk over the financials.

Karen Alexander, Chief Financial Officer, Bakkt Holdings, Inc.: Thank you, Akshay. The Q1 2025 comparable period in our filings reflects Bakkt as a different company. The loyalty business, divested in October 2025 and reported as a discontinued operation since the third quarter of last year, was a meaningful component of the historical cost base and a meaningful detractor from operating profitability. Stripped out, what we are left with is a clean, focused operating platform. The platform we will execute the three-engine strategy from. The numbers on this slide should be read in that light. The cost-based picture is the more useful framing, and it is the picture on the slide in front of you. Q1 2025, as reported, reflects the Bakkt of 15 months ago, with loyalty inside the consolidated cost base. Total controllable OpEx on a reported basis was $31.1 million.

The loyalty divestiture removed approximately $12.2 million of quarterly controllable operating expense from the run rate. On a continuing operations basis, Q1 2025 controllable OpEx was $18.9 million. Q1 2026 controllable OpEx was $18.6 million, materially in line with the continuing operations comparative, despite approximately $2.5 million of incremental professional services expense tied to the DTR acquisition and Bakkt Global investment activity. The line items share the same picture. Compensation and benefits, technology and communication, SG&A, and other operating expenses all decreased year-over-year, reflective of our cost restructuring efforts through 2025. On the capital position, as of March 31, 2026, cash equivalents, and restricted cash totaled $82.6 million, principally reflecting $66.8 million of net cash provided by financing activities. The company has no long-term debt and no non-controlling interest. Two takeaways.

1, the cost base is a fraction of what it was, and on a like-for-like basis, the company is operating on the cost base it intends to scale from with further improvements to come. 2, the balance sheet is clean and debt-free, and capital is sized to execute the 3-engine strategy that Akshay outlined. With that, I’ll return the call to Akshay for closing remarks.

Akshay Naheta, Chief Executive Officer, Bakkt Holdings, Inc.: Thank you, Karen. Let me close where I started. The fintech sector is large and is akin to an ocean. The sums of money moving across global payments, the rate at which stablecoin infrastructure is being adopted by the largest institutions in the world, and the regulatory architecture that the GENIUS Act and the CLARITY Act are now layering over that adoption, those forces taken together describe a structural shift, the size of which leaves room for everyone to play. We do not intend to be the largest company. This will not be a winner-takes-all sector. Any company with the right combination of technology, regulatory standing, and talent can build a material business while allowing others enough room to build their own. Bakkt, I believe, has a material advantage on two of those three dimensions today, and we are building hard on the third.

Our technology stack is modular, programmable, and now with DTR in-house, unified across markets and Bakkt Agent. We believe that stack will be a key enabler in a larger share of regulated stablecoin volume as the market shifts onto the rails GENIUS and CLARITY now define. On regulatory infrastructure, our footprint across the U.S. and Europe gives us a license to operate efficiently more than 60 jurisdictions. Finally, on team and talent, we are now 1 team under 1 roof. The DTR team has joined Bakkt. With Daniel Ishak coming on as the Chief Commercial Officer, leading the rebuild of the sales organization, along with Ankit and me, product and engineering teams, we are operating as 1 unified platform.

We are attracting and hiring A-plus talent to the company. The intellectual capital of this company has materially increased. The bench is the right bench for the stage we are in. In front of us is what we’ve discussed here today, volume and quality customers. With Daniel leading the commercial organization, we hope to be converting leads, closing the bottom of the funnel, and signing definitive agreements of the pipeline built over the past year. The product is now ready, the license stack is in place. The capital is in place. While sales cycles and B2B regulated infrastructure are measured in quarters, we hope to be delivering on an accelerated timeline going forward. The platform is built. At the beginning of our acceleration phase.

Excited about the opportunities ahead, and we will keep you abreast of the momentum as it builds. Thank you for your time. Operator, we are ready to take questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mark Palmer of Benchmark. Your line is open, Mark.

Mark Palmer, Analyst, Benchmark: Yes, thank you. Thank you for taking my questions. With regard to the closing of the DTR deal, what integration remains or needs to be done at this point? Of course, as you just mentioned, the personnel are all migrating. But what actual integration work with regard to stablecoin infrastructure in particular still needs to be done?

Akshay Naheta, Chief Executive Officer, Bakkt Holdings, Inc.: Thank you, Mark. With regards to the integrations, you know, there was a delay in the vote, which delayed the transaction for about 4 to 5 weeks. Be that as it may, the integration work is primarily on the compliance stack and the finance and treasury stack. Whereas most of the client-facing integrations, which are the APIs, and we’re converting the APIs into SDKs that are compliant with the U.S. We need to adhere to with the regards to the U.S. MTLs.

Those are the integrations that are left because as you can appreciate that until the acquisition hadn’t closed, just given the GDPR, an equivalent, you know, data protection requirements, as well as from a cybersecurity perspective, we couldn’t give access to the systems and different technology stacks that were within the DTR stack to be migrated to Bakkt. Now that the Chinese wall is basically broken down, we now are able to fully migrate both the Bakkt and the DTR platforms onto one regulated compliance stack as well as ensure that all of the data and the transaction volume data is also over the next few weeks, will be able to flow seamlessly within the Bakkt systems from an accounting perspective and so on.

Mark Palmer, Analyst, Benchmark: Thank you. With regard to regulatory approvals, obviously, you’ve already got a strong regulatory footprint in the U.S. and Europe. Looking at the rest of the world, what regulatory approvals are you currently pursuing, and what is the status of those?

Akshay Naheta, Chief Executive Officer, Bakkt Holdings, Inc.: We are not pursuing any other regulatory approval relates to payments processing business because we work with other regulated partners. Remember, all our focus is on the remittance corridor, which is we’re focused on originating cross-border volume from Europe and the U.S. and focused on remitting that into work with only other regulated players, banks, payment service providers, and so on in those respective jurisdictions. In terms of regulatory, we don’t need any further regulatory approvals to operate in that space. In terms of every new jurisdiction that we go into, there are very specific requirements that are needed to be. Records that need to be maintained locally with the regulated partner there as to who’s sending the money and the source of funds and so on. That mechanism is built on a jurisdiction by jurisdiction basis.

So far, We’re able to process transactions into 60 jurisdictions around the world, 60 countries around the world. We hope that by the end of the year, we get to more than 90 countries around the world. We are fully compliant in terms of being able to transmit the required data for processing payments within those 60 countries.

Mark Palmer, Analyst, Benchmark: Thanks very much.

Operator: Thank you. As I show no further questions in queue, that does conclude the Q&A portion of our call and the conference for today. Thank you for participating. You may now disconnect.