Executive Summary / Key Takeaways

• Pure-Play Digital Asset Focus: Bakkt Holdings (NYSE:BKKT) has undergone a profound transformation, divesting its non-core Loyalty business and Custody operations to emerge as a pure-play digital asset infrastructure company, concentrating on crypto trading, stablecoin payments, and a Bitcoin treasury strategy. This strategic reset, largely completed by Q4 2025, aims to drive sustainable profitability and growth.
• Technological Edge in Programmable Money: Central to Bakkt's future is its partnership with Distributed Technologies Research (DTR), integrating AI-powered stablecoin payment infrastructure. This collaboration is set to launch "Bakkt Agent" for chat-based, cross-border transfers to over 90 countries, and "Brokerage-in-a-box 2.0" with expanded crypto support (over 200 coins) and advanced trading features, positioning Bakkt at the forefront of programmable finance.
• Strengthened Financial Foundation: The company has significantly recapitalized its balance sheet, raising approximately $100 million in new capital between Q2 and Q3 2025 and eliminating all long-term debt, including convertible debentures and the ICE Credit Facility. This disciplined financial management provides a robust foundation for future growth initiatives.
• Positive Adjusted EBITDA and Revenue Growth: Bakkt reported strong Q3 2025 results with GAAP revenue of $402.2 million, a 27.1% year-over-year increase driven by higher crypto trading volumes. Adjusted EBITDA reached $28.7 million, a significant improvement from a $20.4 million loss in Q3 2024, demonstrating the scalability and efficiency of its evolving business model.
• Competitive Moat and Growth Outlook: Despite client losses (Webull, Public Platform LLC) impacting near-term crypto services revenue, Bakkt's regulatory licenses (including a New York BitLicense and nationwide money transmitter licenses), institutional-grade infrastructure, and strategic international expansion (e.g., Japan Bitcoin treasury strategy) create a durable competitive advantage in a rapidly expanding digital asset market.

Bakkt's Strategic Rebirth: Fueling the Digital Economy with Core Crypto Infrastructure

Bakkt Holdings, Inc. (NYSE:BKKT), founded in 2018, is undergoing a profound strategic transformation, repositioning itself as a pure-play digital asset infrastructure company. This evolution places Bakkt at the nexus of a generational shift in global finance, where Bitcoin's ascent as a digital store of value, the rapid transformation of banking and payments by AI and stablecoins, and the tokenization of real-world assets are reshaping how value is created, moved, and stored. Bakkt's vision is to be the trusted bridge between traditional and digital finance, enabling seamless value transfer in an increasingly AI-driven economy.

The total addressable market for digital asset infrastructure is enormous, with only a fraction of an estimated $700 trillion in global assets currently residing on blockchain rails. Stablecoins alone now settle over $30 trillion annually, surpassing Visa , and are projected to command 20% of cross-border payments (or $64 trillion) by 2032, up from 3% ($5.85 trillion) in 2024. This growth is fueled by consumer demand for faster, cheaper payments, a favorable regulatory environment, and the U.S. aiming to become a global crypto capital.

Bakkt's journey has been marked by significant strategic pivots. Initially focused on a broader approach including Bitcoin futures and loyalty tokenization, the company has decisively shifted towards a B2B-centric model. This strategic realignment, largely completed by the end of Q4 2025, involved divesting non-core assets like its Loyalty business and Bakkt Trust Company, streamlining operations, and refocusing entirely on building a leading regulated digital asset infrastructure platform.

Technological Differentiation and Innovation: The Engine of Programmable Finance

Bakkt's core technological differentiation lies in its institutional-grade, regulated infrastructure, which is now being significantly enhanced by its partnership with Distributed Technologies Research (DTR). This collaboration is designed to integrate DTR's cutting-edge AI and stablecoin payment technology with Bakkt's existing platform, creating a robust ecosystem for programmable money.

The upcoming "Brokerage-in-a-box 2.0" represents a comprehensive technology upgrade planned for rollout over the second half of 2025. This enhancement will dramatically expand the platform's capabilities, increasing the number of supported crypto coins from approximately 50 to over 200. It will also feature an upgraded trading engine, introduce social features like copy trading, and integrate yield generation capabilities. A redesigned user interface will improve client experience, and the platform will support tokenization use cases across broader assets, aligning with the pending Digital Asset Market Clarity Act of 2025. These upgrades are expected to significantly enhance monetization opportunities while maintaining Bakkt's speed to market and compliance standards.

Furthermore, the "Bakkt Agent" platform, powered by DTR's AI-first modular stack, is poised to transform global payments. This white-label solution will enable chat-based transfers, allowing users to send, receive, and convert funds through natural interactions like voice commands or text messages. The private beta, launched in Q2 2025, initially supported transfers to over 36 countries, with plans to expand to more than 90 countries in high remittance corridors in Asia and Latin America within the next few quarters. This technology aims to deliver instant FX conversion and lightning-fast settlement, dramatically reducing the days-long settlement times typical in traditional cross-border transactions. The "so what" for investors is clear: these technological advancements are designed to create a scalable, capital-light SaaS platform with multiple monetization channels in a rapidly expanding market, offering superior efficiency and user experience compared to legacy systems.

Strategic Pillars and Competitive Positioning

Bakkt's strategy is built upon three core growth engines: Bakkt Markets, Bakkt Agent, and Bakkt Global.

Bakkt Markets serves as the foundation, providing institutional-grade infrastructure for digital assets. It connects clients to liquidity, market-making, and regulated custody through its nationwide money transmission licenses and a New York BitLicense. This segment generates B2B and B2B2C revenue through market-making OTC spreads, trading volume, and lending fees. While the crypto marketplace is highly competitive, Bakkt differentiates itself through its robust regulatory compliance and institutional-grade platform, which is designed for security and scalability.

Bakkt Agent is the programmable finance platform, leveraging stablecoins and AI agents for seamless cross-border payments. This segment aims to earn revenue from stablecoin on-ramp/off-ramp transaction volume, spreads, and FX conversion. Bakkt does not aim to compete head-on with large card networks like Visa (V) or peer-to-peer systems like Zelle. Instead, it positions itself as the "picks and shovels layer," providing the regulated infrastructure that allows the broader ecosystem to operate securely and at scale. This approach addresses critical gaps in compliance, custody, payment rails, and integration with TradFi, which Bakkt believes are not fully met by existing solutions.

Bakkt Global drives international expansion through a minority investment model. This strategy provides shareholders with indirect exposure to Bitcoin through publicly listed entities in select jurisdictions that adopt a Bitcoin treasury strategy. Bakkt earns recurring custody and management fees by acting as a regulated provider to these entities. The first such investment is in Japan, with the acquisition of approximately 28% of MarushoHotta Co., Ltd. (MHT) for $11.5 million, which is now expected to be rebranded as Bitcoin Japan Corporation. This investment, valued at approximately $79.50 million as of September 30, 2025, demonstrates the potential for significant NAV accretion. Other target jurisdictions include South Korea and India. This model creates a durable competitive moat by focusing on markets with high barriers to entry in terms of regulatory licensing and market trust.

Compared to direct competitors like Coinbase , Robinhood , Block (SQ), and PayPal (PYPL), Bakkt's strength lies in its deep institutional focus and regulatory-first approach. While Coinbase (COIN) offers a broader consumer suite and Robinhood (HOOD) excels in retail accessibility, Bakkt's B2B2C model and integration with traditional financial systems via its Intercontinental Exchange heritage provide a unique value proposition for enterprises. Bakkt's emphasis on secure, compliant solutions for businesses, particularly for crypto custody and stablecoin payments, allows it to lead in strategic adaptability for institutional clients. However, it may lag in retail market penetration and overall product diversity compared to its larger, more established rivals.

Financial Performance and Liquidity

Bakkt's financial performance in Q3 2025 reflects the early successes of its strategic transformation. The company reported GAAP revenue of $402.2 million, a 27.1% increase year-over-year, primarily driven by improved crypto trading volumes. Crypto costs and execution, clearing, and brokerage fees increased proportionately, with crypto costs rising by $84 million (26.8%) and execution, clearing, and brokerage fees by $1.8 million, reflecting higher crypto transaction volume.

Despite these costs, Bakkt achieved a significant milestone with Adjusted EBITDA reaching $28.7 million in Q3 2025, a substantial improvement from a $20.4 million loss in Q3 2024. This was primarily due to a $43.5 million net earnings impact from the fair value of a derivative instrument and a $6.7 million reduction in various operating expenses. Operating expenses, excluding crypto costs and execution, clearing, and brokerage fees, were roughly flat at $26.7 million, demonstrating cost discipline following restructuring initiatives.

For the nine months ended September 30, 2025, crypto services revenue increased by $381.3 million (23%) to $2.04 billion. Adjusted EBITDA loss for the nine-month period decreased by $57.9 million (113.7%) compared to the prior year, further underscoring the positive impact of the strategic changes.

On the liquidity front, Bakkt has significantly strengthened its balance sheet.
As of September 30, 2025, the company held $58.3 million in cash and cash equivalents and $6.1 million in restricted cash.

Between Q2 and Q3 2025, Bakkt raised approximately $100 million in new capital, including $75 million in gross proceeds from a public offering of common stock and pre-funded warrants in July 2025. Crucially, the company has eliminated all long-term debt, redeeming its convertible debenture in September 2025 and terminating the ICE (ICE) Credit Facility in July 2025.

This debt-free position, coupled with over $120 million in tax loss carryforwards, provides a strong financial foundation and flexibility for future growth.

Outlook and Risks

Bakkt's management anticipates completing its transformation by the end of Q4 2025, shifting focus from restructuring to acceleration in 2026. The company plans to release detailed 2026 Key Performance Indicators (KPIs) ahead of an Investor Day scheduled for Q1 2026. These KPIs will be driven by metrics such as trading volume and spreads for Bakkt Markets, stablecoin transaction volume and FX conversion rates for Bakkt Agent, and NAV accretion and recurring fees for Bakkt Global.

However, the path forward is not without risks. Bakkt faces ongoing challenges from the highly competitive crypto marketplace, where some clients may develop their own technology. The company experienced significant client losses in 2025, with Webull (representing 74% of 2024 crypto services revenue) and Public Platform LLC (representing 18% of crypto services revenue for the nine months ended September 30, 2025) reducing or terminating their agreements. The offboarding of Public Platform LLC customers, completed in October 2025, is expected to result in a decline in crypto services revenue starting in Q4 2025.

Regulatory uncertainty remains a pervasive risk, despite a generally more favorable political climate for digital assets. Changes in laws or reclassification of digital assets could adversely impact Bakkt's business. Operational risks include potential fraud, security failures, cyber-attacks, and dependence on third-party custodians. The company is also subject to a putative class action lawsuit alleging false or misleading statements regarding client non-renewals, which it intends to vigorously defend.

Conclusion

Bakkt Holdings stands at a pivotal juncture, having executed a comprehensive strategic overhaul to become a focused digital asset infrastructure provider. The divestiture of non-core businesses, the elimination of long-term debt, and a significant capital raise have forged a leaner, more agile, and financially robust company. Its technological advancements, particularly in AI-powered stablecoin payments through the DTR partnership and the upgraded Brokerage-in-a-box platform, position Bakkt to capitalize on the burgeoning programmable money ecosystem.

While the company faces competitive pressures and the near-term impact of client departures, its strong regulatory foundation, institutional focus, and strategic international expansion initiatives create a compelling investment thesis. The shift towards diversified, recurring revenue streams across its Markets, Agent, and Global segments, coupled with disciplined capital allocation, suggests a clear trajectory towards sustainable profitability. Investors should closely monitor the rollout of new products, the announcement of key distribution partnerships, and the forthcoming 2026 KPIs as Bakkt aims to complete its transformation and accelerate growth in the evolving digital economy.