Bakkt Holdings’ Earnings Call: Crypto Focus and Challenges

Bakkt Holdings, Inc. Class A ((BKKT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Bakkt Holdings, Inc. recently held its earnings call, revealing a mixed sentiment as the company undergoes a strategic transformation. While there is significant growth in trading volumes and revenue, alongside cost reductions and an improved net loss, challenges remain with the non-renewal of a major contract with Webull and a decline in loyalty revenue.

Strategic Transformation to Crypto Focus

Bakkt is making a bold shift to become a pure play crypto infrastructure company. This transformation is marked by the appointment of a new co-CEO from Distributed Technologies Research (DTR) and plans to enter the cross-border stablecoin payments industry. This strategic pivot aims to position Bakkt at the forefront of the evolving crypto market.

Record-Breaking Crypto Trading Volumes

The company reported a remarkable increase in crypto trading volumes, reaching $1.78 billion in the fourth quarter. This represents a 465% sequential improvement and a staggering 778% year-over-year increase, highlighting Bakkt’s growing influence in the crypto trading space.

Significant Revenue Growth

Bakkt’s total revenues, net of crypto costs, saw a 6.6% year-over-year increase, totaling $17.8 million for the quarter. This growth underscores the company’s ability to generate increased revenue despite the challenges in the broader market.

Reduction in Operating Expenses

The company achieved a notable reduction in operating expenses, excluding crypto costs, which decreased by 69% year-over-year to $29.5 million. This cost-cutting measure is a positive step towards improving the company’s financial health.

Improvement in Net Loss

Bakkt reported an improvement in its quarterly net loss, which decreased by 48.7% year-over-year to $40.4 million. This reduction in net loss is a positive indicator of the company’s efforts to streamline operations and enhance profitability.

Webull Contract Non-Renewal

A significant challenge for Bakkt is the non-renewal of its contract with Webull, which accounted for approximately 74% of Bakkt’s crypto revenues for 2024. The contract will not be renewed effective June 2025, posing a potential revenue setback.

Loyalty Revenue Decline

Bakkt experienced a decline in net loyalty revenues, which decreased 8.3% sequentially and 26.5% year-over-year. This decline highlights the challenges in maintaining loyalty program revenues amidst the company’s strategic shift.

Anticipated Revenue Impact

The non-renewal of the Webull contract is expected to impact Bakkt’s revenue in the short term. The company is preparing to navigate this challenge as it continues to focus on its crypto-centric strategy.

Forward-Looking Guidance

Looking ahead, Bakkt’s management provided guidance for the first quarter of 2025, projecting total revenues between $1.03 billion and $1.28 billion. They anticipate gross crypto revenues ranging from $1.02 billion to $1.27 billion and net loyalty revenues between $8.5 million and $9.9 million. The company expects crypto costs to align with gross crypto revenue estimates and projects an available cash balance of $22 million to $26 million by the end of the quarter.

In summary, Bakkt Holdings, Inc. is navigating a transformative phase with promising growth in crypto trading volumes and revenue, alongside strategic cost reductions. However, challenges such as the Webull contract non-renewal and declining loyalty revenues pose hurdles. The company’s forward-looking guidance reflects cautious optimism as it continues to focus on its crypto-centric strategy.