Prepared remarks
Hello, and welcome to BAC Second Quarter 2020 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a Q&A session. To ask a question during the session, you will need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to Cody Fletcher. Sir, you may begin.
Good afternoon, and welcome to BAC's second quarter 2020 Earnings Call. Joining me on the call are Akshay Naheta, our Chief Executive Officer; Daniel Ishag, our Chief Commercial Officer; and Karen J. 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, in 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 03/31/2026. Today's discussion also includes references to non-GAAP measures, including EBITDA and adjusted EBITDA. Reconciliations to their nearest GAAP measures along with definitions and methodology for our operational metrics—total transacting volume, monthly active users, and strategic asset value—are included in this presentation. With that, I will turn the call over to our CEO, Akshay Naheta. Akshay?
Thank you, Cody, and thank you all for joining us today. The clearest way to understand Bakkt today is as one platform powered by three complementary engines: Markets, Agent, and Global. Each engine addresses a significant opportunity on its own. But together, they create a compounding flywheel that can become more valuable with every product, client, and market we add. Bakkt Markets is the regulated infrastructure layer. It provides rails for payments, settlement, trading, and, over time, the tokenization of real-world assets. The financial system was not designed for continuous global activity. We are building infrastructure for a world in which value can move securely, programmatically, and around the clock. Bakkt Agent is the intelligence and distribution layer. It transforms that infrastructure into a simpler and more powerful financial experience. For our clients, it creates a single platform through which they can launch differentiated financial products and deepen their customer relationships. And for their customers, it can make managing and moving money dramatically more intuitive. Finally, Bakkt Global expands our strategic reach. It provides access to important markets, differentiated assets, and scaled distribution opportunities that would be slower and more capital intensive to build organically. As those positions develop, they can bring additional relationships, capabilities, and opportunities into the broader Bakkt platform. Beneath all three engines is the same shared foundation: regulatory compliance and KYC combined with programmable 24/7 stablecoin settlements. That common infrastructure is important because it means we are not building three separate businesses. We are building one integrated operating system. And that is where the flywheel becomes more powerful. Markets provides the rails. Agent brings intelligence, customers, and distribution onto those rails. And Global expands the assets, relationships, and markets that can connect to the platform. More distribution can generate more activity. More activity can make the infrastructure more valuable. And a stronger platform can support more products, partnerships, and strategic opportunities. Each engine gives back a meaningful way to win, and together, they create a platform designed to compound. With every product, client, and market we add, the system becomes more valuable and harder to replicate. Last quarter, I introduced the scorecard as a qualitative management view of our execution. It is not financial guidance. It is a disciplined way to show where Bakkt is progressing, where we are investing, and where our attention remains focused. The headline this quarter is clear: execution is accelerating across the platform. Every category is either stable or improved. Six of the eight categories are now at 75 or above. And the areas that required the greatest attention are also showing the fastest improvement. Partners and distribution increased 20 points, the largest movement on the page. Following the DTR close, we rebuilt the commercial organization, sharpened the offering, and advanced the integrations and partnerships required to bring more clients and more activity onto the platform. At 50, it remains our most important execution priority, but we are entering this next phase with a materially stronger commercial foundation, better visibility into upcoming activations, and growing confidence in the potential for flows to scale meaningfully as those integrations come online. Team and talent increased 15 points to 75. We have strengthened the leadership bench, made substantial progress integrating DTR into our platform, and aligned the organization around a clear set of commercial priorities. AI-enabled execution is also becoming increasingly embedded across the company, helping our teams operate with greater speed and leverage. That discipline is contributing directly to operational efficiency, which increased by 10 points. We are building a leaner, faster, and more scalable operating model—one designed to support substantially greater activity without creating the cost structure of a traditional financial institution. The broader foundation continues to strengthen. Regulatory is at 85. Infrastructure and technology are both at 80. With the DTR rails now in house and the Agent platform on track for the second half, financial strength remains at 75 percent, supported by our balance sheet with no long-term debt. Global network has increased to 75 percent as our strategic position and international relationships continue to develop. The important shift is the stage Bakkt has now reached. Much of the foundational build is in place. Our focus is increasingly moving toward external outcomes: launching new products, activating clients, and scaling transaction flows. Each engine has a clear ownership, and we intend to remain transparent and accountable for the progress we make. The foundation is in place. Execution is strengthening. And commercial activation is now the next major growth unlock. With that, let me turn the call over to Daniel to take you through Markets and Agent.
Thank you, Akshay. Good afternoon, everyone. Before I turn to the platform, let me briefly share what I have seen in my first three months. Akshay has aligned product, engineering, compliance, and sales around the same commercial priorities, and that alignment is translating into faster, more coordinated execution. The market we are building into continued to expand this quarter. Stablecoin market capitalization reached an all-time high of approximately $320 billion in May 2026. Adjusted on-chain stablecoin volume reached approximately $1.79 trillion in June, a new monthly high. And global cross-border payment flows reached approximately $2.08 trillion in 2025. Against markets of this scale, focused adoption across priority client corridors and use cases can drive a step change in volume from our current base. Today, most of that money still moves through traditional correspondent banking. That means multiday settlement, intermediary fees, FX costs, failed transactions, and limited transparency. The further you move away from the major currencies, the more pronounced these problems become. That is exactly what our infrastructure has been built to address. Let me bring you up to date on where the platform stood at the end of the second quarter. There are four key numbers: one core KYC framework across the product set; access across more than 63 countries; support for 19 currencies; and connectivity across 10 public blockchains. Behind those numbers are four production APIs all live today. This quarter, we consolidated onboarding across the product suite. A client can complete the core compliance process once and use that foundation as it activates additional products, with product- and market-specific requirements applied where needed. The second is our stablecoin API, which provides the settlement rail from fiat to stablecoins and back again. Wire and ACH went live this quarter, closing the loop between traditional bank rails and stablecoin settlement within a single API. That gives clients faster settlement. More importantly, it gives them settlement speed they can turn into a commercial advantage for their own customers. The third is Zyra, our chat-native interface for cross-border payments. Zyra has supported live fiat payment corridors since last September and is now integrated into Bakkt's in-house payment stack. And the fourth is the Bakkt widget, our embeddable on- and off-ramp. Partners can integrate it directly into their own platforms and deliver the service within their existing customer experience. The widget combines the other APIs and demonstrates the strength of the platform. It is modular, but the modules work together. The principle is simple: integrate once, then activate what you need. One core integration, one common regulated foundation, and an expanding menu of products and services. The six offerings on the left are live and available today. They include our trading infrastructure, stablecoin OTC, digital asset OTC, our stablecoin on- and off-ramp, cross-border payments through the Zyra API, and the Bakkt widget. None of this is roadmap; these products are live and being sold today. For the second quarter, total transacting volume was $169 million. For the first half, TTV was approximately $410 million. Our current full-year 2026 TTV target remains approximately $2.5 billion, and we remain confident in achieving it. The movement in the second quarter was driven principally by lower trading activity. At the same time, payments entered TTV for the first time following the May 1 integration. The initial production volume is an important proof point. It demonstrates that the payments infrastructure is live, in-house, and processing real institutional and cross-border flow. We expect payments to become an increasingly important contributor to growth from here. The commercial problems we are solving are consistent across clients: reducing prefunding, shortening settlement times, improving traceability, and simplifying multiparty payouts. Those needs arise across supplier settlements, trade-related payments, global payroll, and contractor payments. Our infrastructure addresses them through one core integration across the markets and currencies we support. Achieving our full-year target requires a meaningful acceleration in the second half. Our confidence is based on a broader set of drivers now in place: six live offerings, payments contributing to TTV for the first time, and client integrations and activations already progressing through defined compliance, technical, and launch stages. The expected step-up does not depend solely on a recovery in trading activity. In addition to activating our previously described relationships, we are advancing further opportunities across payments, the widget, and Embedded Finance. I also want to be clear about the metric. TTV is the total notional value moving through our platforms, and the margin we earn varies by transaction type. These businesses generate fees and spreads on flow. As volume and product adoption scale, we expect the revenue opportunity to expand alongside them. The commercial organization is in place and selling today with senior coverage continuing to expand in line with the opportunity set. We have six live offerings, integrations and activations are underway, and the mandate is clear: activate clients, grow volume, and execute. That brings me to the second engine, and I want to be precise about what Bakkt Agent is because it is the newest part of the story. Bakkt Agent is a B2B and a B2B2C platform. We do not sell directly to consumers. We sell to businesses, banks, fintechs, and brands, which use it to offer financial products to their own customers. Agent turns the regulated rails you have just seen into a simpler and more valuable customer relationship by connecting three layers. First, regulated rails: accounts, payments, cards, cross-border transfers. Second, financial intelligence: customer financial context used with the appropriate permissions to personalize the experience. And third, customer action: a simpler interface that turns insight into action. For the end customer, that can create a more useful financial experience. For our clients, it creates a stronger distribution model, deeper engagement, more financial activity, and more opportunities to generate value from their customer base. The client controls the customer experience and drives distribution. Bakkt provides the regulated rails and the intelligence underneath. The way I think about it is simple: the intelligence layer amplifies the value of every regulated rail beneath it. Agent is organized around three product paths. Embedded finance is commercially available today for partner integration. We expect co-branded card programs and NeoBank-as-a-Service to launch in Q4, subject to applicable approvals. First, Bakkt Agent's embedded finance: clients can embed accounts, payments, and international transfers into their existing experience through one modular platform—more than 63 countries, 19 currencies, 10 chains, one core KYC framework, and 24/7 stablecoin settlement. And you will see one more line on the card, targeted for Q4 of this year: a conversational interface on top of those rails designed to let a customer ask, understand, and act in plain language, with every action running through the same regulated APIs and secure authorization. For clients, it is a differentiated experience that would otherwise require assembling multiple technology, banking, and regulatory relationships. Second, co-branded card programs are designed around the client's brand and customer relationship, with issuing, payments, and loyalty supported by a regulated stack and banking partners. Third, NeoBank-as-a-Service is a full branded experience with accounts, savings, cards, rewards, and cross-border payments, while Bakkt operates the regulated infrastructure underneath. Availability will vary by client and market and remains subject to applicable regulatory, licensing, bank partner, and network requirements. The commercial logic is consistent: one modular regulated stack and multiple product paths that allow our clients to start with the capability they need and expand as their customers' relationships develop. The slide brings the product to life. It illustrates the branded end-user experience that NeoBank-as-a-Service is designed to deliver. A client's customers can get paid into a checking account, save toward goals, spend on cards with rewards, and send money across borders—all within the client's own app and brand. It is one branded experience with more opportunities to engage customers as they manage everyday money. And the experience is assembled from the same modular capabilities I have just described. Let me close the Agent story with the commercial logic behind the product set. This is a flywheel at the level of a single client. Markets provides the regulated rails, and Agent gives the client multiple ways to use those rails across a deeper customer relationship. The path shown here is illustrative. A customer can enter the product path that best fits their needs and expand as additional capabilities come online. The three steps are embed, engage, and expand. A client can embed accounts, payments, and international transfers inside its existing experience. It can then engage customers more frequently through a co-branded card program. And it can expand into a full branded neobank experience with accounts, savings, cards, rewards, and cross-border payments. Across those paths, the client uses the same core integration and regulated infrastructure with onboarding and KYC applied as required by product and market. The commercial opportunity expands in three ways. First, each additional product creates more opportunities for fees and transacting volume on the same core platform. Second, each product can add permitted financial context, helping make the next experience more relevant and better timed. And third, expanding an existing client relationship can be more efficient than acquiring a new one. Deeper product adoption can strengthen retention for our clients and their customers—and for Bakkt with its clients. This is the strategy: activate clients on the capabilities available today, expand each relationship over time, and continue adding new clients. With that, back to Akshay for Bakkt Global.
Thank you, Daniel. The third engine is Bakkt Global with our strategic investments in Japan and India. Japan gives Bakkt a foothold in major private capital and innovation ecosystems where access to issuers, private market opportunities, and local partners can be as valuable as the capital itself. The strategic fit is direct. BitGo Japan creates local access, relationships, and potential asset supply. Bakkt Markets provides the durable technology and regulated infrastructure we are building to support the tokenization, settlement, and distribution of eligible private market assets. Rather than building a private markets footprint from scratch, we can leverage BitGo Japan's partnerships to participate in this large and growing opportunity in a capital-efficient way. India represents the distribution side of the same strategy. Through Transchem, which we expect to be renamed in due course subject to required approvals, we are pursuing a broker-led approach that can include acquisitions and strategic partnerships to build scaled local distribution across India's rapidly expanding investor market. Bakkt's role is to create the global asset pipeline and tokenization stack—eligible private market and other real-world assets delivered through regulated local channels and ultimately experienced by consumers from a modern, Bakkt-powered investment platform. Bakkt Agent can make that experience far simpler, helping customers discover, understand, transact in, and manage global investment opportunities through an intuitive financial interface. The end state is powerful. Japan can build differentiated access to private markets and real-world assets. India can build scaled consumer distribution. Bakkt connects both with its Markets infrastructure, Agent experience, and Global operating stack. These are not passive holdings. These are important footholds in a much larger platform opportunity. This slide is deliberately straightforward. It shows the increase in the illustrative value of our strategic investments in Japan and India, including amounts currently reported in our financial statements and cash previously received. We invested in these markets strategically, and a significant portion of the increase is reflected in Bakkt's reported financial position. Both markets have independent governance and strong local management teams, who are executing for the long term. That reflects the capital discipline behind our approach—targeting investments in strategically important platforms that can create meaningful upside without requiring us to build every capability or market position from scratch. But we see this as an early marker, not the end state. As we execute on the strategy, build scale across Markets and Agent, and as these positions develop into operating platforms with deeper asset access and distribution, we believe the value they create for Bakkt shareholders will compound over the long term. What is visible on this slide today is only the beginning of the opportunity ahead. Last quarter, we introduced one primary KPI for each engine, and here's where we stand. For Bakkt Markets, total transacting volume was $410 million for the first half, including payments volume alongside trading for the first time, and we continue to expect approximately $2.5 billion for the full year. For Bakkt Agent, monthly active users: we are not reporting any MAUs today because the relevant Bakkt Agent products do not have activity that is meaningful yet. But this quarter, we are setting the first marker. Jared on the launch plan—our Chief Product Officer, Ankit Khemka, and the product team—have laid out an initial target of 25,000 monthly active users by year-end. Embedded Finance is commercially available for partner integration now. Commercial end-user launches and the MAUs that come with them begin as partners activate. The other drivers are on the calendar: NeoBank-as-a-Service targeted for the fourth quarter, and our cross-border corridors, including flows into India and South Asia, ramping in the second half. To be clear about what the number is, this is our year-end monthly target, not an annual average. For Bakkt Global, strategic asset value was $119 million as of June 30. We have revised the definition of SAV this quarter to align it directly with our financial statements. It now consists of the $10.6 million equity method carrying value for our Japan investment and $107.9 million fair value of the Transchem warrants. There are no internal valuation models or additional components. The KPI reconciles directly to the amounts reported in the financial statements in our 10-Q. We will report TTV and SAV consistently each quarter, and we expect to begin reporting MAUs quarterly once the relevant Bakkt Agent activity is meaningful, so you can follow activation and scale as it happens. With that, I will turn the call over to Karen to review the financial results.
Karen?
Thank you, Akshay. The financial takeaway for the quarter is straightforward. Bakkt reported GAAP net income of $80.8 million. Diluted EPS for the quarter was $1.94 per share. This is a strong reported GAAP result and an important milestone as we build a more valuable, full-stack financial platform. We ended the quarter with $50.7 million of cash and restricted cash and no long-term debt. That gives us meaningful flexibility to continue investing in commercial activation with discipline. We now have six live commercial offerings, $410 million of total transacting volume in the first half, and a current full-year 2026 TTV target of approximately $2.5 billion. Based on the integrations and customer activations underway, we remain confident in achieving that target. The Transchem fair value remeasurement is reflected in our GAAP results and is fully disclosed in our materials. The broader point is that Bakkt enters the second half with a stronger platform, growing commercial momentum, and a clear path to greater flows as customer activations ramp. We believe those flows can scale meaningfully from here, supported by the still-early adoption of stablecoins across global trading and settlements. This reconciliation is provided for transparency and comparability; the prior year is presented on the same continuing operations basis. You will see one new line: $3.6 million of transaction-related advisory fees are excluded from adjusted EBITDA and are not expected to recur at this level. Our focus is on translating the platform, integrations, and client pipeline we have built into higher levels of activity and operating leverage as activations ramp. In closing, we have delivered a strong reported result and have made material progress in the first half toward building Bakkt into a financial operating system for the AI and token economy. We are investing across regulated infrastructure, intelligence, and distribution to deliver higher-value solutions and tools to our customers. We entered the second half with a stronger platform, clear commercial momentum, and substantial room to scale. With that, let's go to Q&A. Cody, back to you.
Questions and answers
Thank you. Then wait for your name to be announced. To withdraw your question, please press star 11 again. First question comes from the line of Brian Robbins with Clear Street. Your line is open.
So you have made some significant headway during the quarter. I was wondering if you could take a step back and tell us how you see the business evolving further over the next 12 months?
Thanks, Brian. We have continued to maintain the year-end target on our total transacting volume at $2.5 billion. As the commercial team has expanded and we have attracted great talent to that team over the past quarter, we believe that volume will ramp up significantly next year. At this time, we are not going to give financial guidance for next year, but if you assume the trend that we are forecasting going into year-end, I think that trend will accelerate even faster going into next year. In terms of capital allocation, as you look across our product portfolio and seek to deploy incremental dollars, which areas do we find most attractive? At this time, our entire commercial offering is fully connected and integrated in one framework. We are spending a lot of time attracting the right talent to the organization to scale and activate the different relationships that we have to grow transacting volume because, at the end of the day, that is what translates into revenue and earnings for us. From my perspective, I do not think there are any major new financial capital allocations on the horizon other than those we have already disclosed. Our heads-down focus is on executing the opportunities and client activations that are currently underway.
All right. Thanks for that color.
Thank you. Please stand by for our next question. Our next question comes from the line of Mark Palmer with Benchmark. Your line is open.
Yes, thank you, and thanks for taking my question. I wanted to ask about the monetization of total transacting volume, especially given that you have six live offerings. How should we think about the blended take rate of those combined offerings, and how does the take rate differ across each of them? Thank you.
Yeah. So the best way to think about this, Mark, is that when you're looking at stablecoin-related volume overall, particularly for G3 currencies—dollars, euros, and sterling—you are looking at very slim margins and take rates that range from a few basis points up to low-teens basis points. The real margin opportunity comes in the cross-border payments use cases. Our platform is live in over 63 countries and executes in over 19 currencies. There, the margins can range from anywhere between roughly 50 basis points to close to 1.5 percentage points. We have not provided a blended take-rate guidance, but starting next quarter you should begin to see more evidence of where that number lands.
Good evening. As we start solving payment problems around the world, as I mentioned, we are active in 60-plus countries and are seeing significant demand across a number of emerging markets for cross-border payments. That is where we are positioned to take advantage of higher margins. Because we have an integrated offering, we are able to solve customer problems quickly without multiple onboardings, and those efficiencies are starting to scale into meaningful savings for our partners. Over the coming quarters, we look forward to keeping you updated.
Thank you.
Thank you. Ladies and gentlemen, at this time, I would like to turn the call back over to Cody for more questions.
So before we close, we wanted to address some questions we hear most often from our retail investor community. These are drawn from our followers on X and some other public channels. First one here is for Daniel. Daniel, what progress has Bakkt made since completing the DTR acquisition?
Hi there. We closed the DTR acquisition on April 30. In just two months, we have consolidated onboarding, launched wire and ACH funding, brought the payments infrastructure completely in house, and included payments in TTV for the first time. As mentioned earlier in the call, we now have six live commercial offerings connected through one integration framework. And we have strengthened the commercial organization with exceptional talent this quarter. The core foundation is integrated. Our focus now is activating new clients and scaling the associated volume.
Great. Thank you, Daniel. The second one is for Akshay, around Bakkt Global. How should shareholders think about the strategic and financial value of Bakkt Global?
Bakkt Global: the investments we made there have already created significant shareholder value for Bakkt shareholders, but the strategic opportunity is much broader than the financial gains we've realized so far. Japan expands our access to private markets and associated real-world asset tokenization opportunities. India provides a scaled distribution platform. Together, Bakkt Global allows us to connect supply and demand: the global asset pipeline and tokenization stack from Markets with scaled local distribution through Agent. We believe these investments can compound substantially in value for Bakkt shareholders over the long term as the respective operating platforms scale. The strategic benefits and the associated revenue benefits that Bakkt derives from Markets and Agent will become more visible as these platforms grow. What is visible today is only the beginning of the opportunity ahead. These investments tie directly into the overall Bakkt strategy and add value through both supply-side and demand-side opportunities we are creating across India and Japan.
Brilliant. Okay. Thank you. And our last question here—probably the most common—when do you expect to be operationally breakeven?
The core platform is in place, and as we've described in our prepared remarks, the activity we expect will grow substantially across the rails we have built. We expect meaningful operating leverage without recreating the cost base of a traditional financial institution. We are not providing a precise date today; however, based on the current execution plan and the client activations that are already underway, my expectation is that we will reach EBITDA breakeven during the fourth quarter, at some point during Q4 of 2020. That expectation depends principally on the timing and scale of these activations and the visibility we have on them, but I believe we are well positioned to achieve that important milestone by then.
All right. Thank you, Akshay and Daniel and Karen, and operator, back to you for closing.
Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.