Bakkt Holdings, Inc. (BKKT) Earnings

Management highlights

- Structural Market Context * Management frames the business as operating in the early stages of a long-term structural shift in global payments infrastructure, with three coexisting tiers: $200-$300 trillion in annual legacy cross-border/wholesale volume, a $6 trillion modern user experience layer that still runs on legacy rails (where Bakkt Agent operates), and a $2 trillion leading-edge regulated digital asset clearing layer (where Bakkt Markets operates). Management expects stablecoin infrastructure will gradually cannibalize legacy rails to become the unifying connective layer across all three tiers. * Recent large strategic acquisitions of stablecoin infrastructure providers by major global payments incumbents confirm the structural value of this space, per management. New U.S. federal stablecoin regulation (Genius Act and Clarity Act) is set to be finalized by mid-2026, with implementation starting in early 2027. The regulatory framework formalizes requirements that Bakkt already meets from its multi-year buildout of licensing, compliance, and settlement infrastructure, creating a competitive tailwind for the firm. * Market data: 2025 total stablecoin settlement volume hit ~$33 trillion, up 72% from 2024's $19 trillion, with total stablecoin market capitalization at an all-time high of ~$320 billion at Q1 end. The total cross-border payments addressable market is projected to grow from $44 trillion today to ~$67 trillion by 2030. - Internal Milestone Assessment * Management grades eight internal priority categories across three bands: Foundation (scores ≥75): Regulatory standing (80), infrastructure layer (80, DTR payment rails and settlement engine are now fully in-house), financial strength (75), technology (75). In-progress (50-74): Global network (70, currently active in 60+ jurisdictions, targeting >90 by year end), team and talent (60, DTR integration ongoing), operational efficiency (50, more improvement expected through 2026). Active focus (<40): Partners and distribution (30, lowest score, sales organization rebuild is complete, pipeline conversion to revenue is the near-term priority). - Segment Operational Updates * Bakkt Markets: A B2B institutional business with multi-quarter sales cycles focused on counterparty onboarding and conversion to live volume, with revenue from fees and spreads tied to notional trading and stablecoin payment throughput. A major H2 2026 product upgrade will expand available assets to over 200, add social/copy trading, a new advanced trading engine, and an improved client interface. Daniel Ishag joined as new Chief Commercial Officer to lead sales organization rebuild and pipeline conversion. In May 2026, the firm signed a strategic MOU with Zot, a privacy-first stablecoin payments provider for emerging markets, targeting growth from $300 million to $1 billion in annualized TPV by end 2026, with Bakkt providing U.S. regulatory coverage for Zot's enterprise clients across key emerging market remittance corridors. * Bakkt Agent: A programmable, AI-powered payments layer built on a modular, native stablecoin tech stack with low fixed operating costs, designed to generate strong operating leverage at scale. The segment's commercial model leverages Bakkt's existing regulated rails and 60+ country off-ramp coverage, partners with embedded, large-scale trusted distribution that Bakkt cannot replicate organically, and relies on partner-provided daily use cases to drive transaction volume. Initial launch focus is on telecom verticals in the U.S. and Europe, with active conversations in additional high-potential verticals. * Bakkt Global: Makes disciplined strategic investments in high-growth markets with durable demographic and digital adoption tailwinds and clear emerging regulatory frameworks. Bitcoin Japan Corporation is preparing to share its updated AI and Bitcoin economy strategy at its upcoming AGM. Regulatory approval is still pending for Bakkt's warrant investment in India's Transchem Limited; once approved, the firm plans a broker-dealer rollout and global tokenized investment program for the position.

Guidance

- Full year 2026 total transacting volume (TTV) across Bakkt Markets and Bakkt Agent is projected to reach approximately $2.5 billion as partner integrations activate and scale, with institutional payments volume from already integrated DTR counterparties expected to start contributing by the end of 2026. - Management targets expanding the number of supported compliant operating jurisdictions from 60+ to over 90 by the end of 2026. - No monthly active user guidance is provided for Bakkt Agent until product launch and definitive partner agreements are announced. - Management frames the business as having completed platform buildout, and having all required licenses, capital, and product readiness in place to enter an acceleration phase of revenue generation, with B2B sales cycles expected to unfold over quarters but targeting an accelerated delivery timeline.

Segment performance

Bakkt restructured its business into three operating segments (growth engines) following the October 2025 divestment of its legacy loyalty business, which was a material historical cost driver. On a continuing operations basis, Q1 2026 total controllable operating expenses came in at $18.6 million, which is roughly in line with the Q1 2025 continuing operations figure of $18.9 million, even after accounting for $2.5 million in incremental professional service costs tied to the DTR acquisition and Bakkt Global investment activity. Aggregate year-over-year cost cuts across compensation and benefits, technology and communication, SG&A, and other operating expense categories reflect 2025 cost-structuring efforts. As of Q1 end 2026: 1. Bakkt Markets (institutional regulated digital asset infrastructure): No separate full-period revenue was reported; the segment recorded Q1 2026 total transacting volume (TTV) of approximately $241 million. 2. Bakkt Agent (programmable stablecoin payments layer): The product has not yet launched, so no financial performance figures are available for this period. 3. Bakkt Global (international strategic investments): The aggregate marked-to-market strategic asset value of the segment's two core positions was $76 million at Q1 end, against total capital commitments of $21 million across both investments. Bitcoin Japan Corporation (Tokyo Stock Exchange-listed) held a carrying value of $31.7 million, while the Transchem Limited (Bombay Stock Exchange-listed) Indian warrant position had a marked-to-market value of $44.3 million as of quarter end. The company held total cash, cash equivalents, and restricted cash of $82.6 million as of March 31, 2026, with no long-term debt and a clean, debt-free balance sheet.

Risks & headwinds

- B2B regulated infrastructure sales cycles and partner activation timelines are measured in quarters and are not fully under Bakkt's control, so conversion of existing pipeline to revenue will progress gradually quarter over quarter rather than changing overnight. - Strategic asset values reported for Bakkt Global are marked-to-market unrealized valuations, subject to market volatility and foreign exchange risk, and do not represent guaranteed realized returns. - The pending U.S. Clarity Act still requires Senate passage, with final outcome dependent on legislative progress that is not fully under Bakkt's control. - Expansion to additional new jurisdictions requires ongoing compliance buildout with local regulatory requirements alongside partner onboarding work, which introduces execution risk. - Forward-looking results are subject to general market and regulatory risks that could cause actual outcomes to differ materially from management projections, as disclosed in the company's SEC filings.

Analyst Q&A

• Q: Now that the DTR acquisition has closed and personnel have migrated, what integration work for the stablecoin infrastructure remains incomplete?

  A: The 4-5 week transaction delay from the vote postponement meant pre-close integration work was limited by data protection and cybersecurity rules that prevented cross-system access pre-close. Remaining work includes merging the DTR and Bakkt platforms onto a single unified regulated compliance stack, plus integration of the finance and treasury functions. The remaining core technology work is converting existing client-facing DTR APIs into SDKs that meet U.S. money transmitter license compliance requirements, and transitioning transaction volume and accounting data to flow seamlessly within Bakkt's unified systems over the next few weeks.

• Q: Beyond the existing U.S. and European regulatory footprint, what new global regulatory approvals is Bakkt currently pursuing, and what is their status?

  A: Bakkt does not pursue additional direct regulatory approvals for payments processing in new jurisdictions, as it operates via partnerships with already regulated local entities (banks and payment service providers) for in-country processing. The firm currently supports compliant transaction processing into 60 countries, with local compliance processes for required customer and source of funds reporting already in place for these markets. Bakkt targets expanding this footprint to over 90 supported countries by the end of 2026, building out jurisdiction-specific compliance requirements on a rolling basis alongside partner activation.