10-K: Bakkt Reports Deepening Losses Amid Strategic Digital Asset Shift

Bakkt, Inc. reported a significant decline in revenue and increased net losses for fiscal year 2025, driven by client departures, despite completing a strategic transformation to focus on digital asset infrastructure and securing new capital.

Summary

• Bakkt, Inc. completed a strategic transformation in fiscal year 2025, divesting non-core assets, simplifying its corporate structure, and investing in its core digital asset infrastructure platform.
• Revenue from continuing operations decreased by $1,105.8 million, or 32.1%, to $2,335.2 million in 2025, primarily due to decreased crypto trading volume and the loss of key clients Webull and Public.
• Net loss from continuing operations increased to $(97.658) million in 2025, compared to $(94.411) million in 2024.
• Total net loss for 2025 was $(132.232) million, up from $(103.447) million in 2024.
• Operating expenses decreased by $1,040.6 million, or 32.2%, primarily due to lower crypto trading costs corresponding to reduced revenue.
• Compensation and benefits expense increased by $41.3 million, or 114.4%, to $77.3 million, largely due to $47.1 million in non-cash compensation related to the Option Plan and $1.9 million in severance charges.
• Professional services expenses rose by $8.8 million, or 53.6%, to $25.3 million, driven by increases in legal and other professional fees.
• The company recorded a $26.9 million expense for Tax Receivable Agreement (TRA) settlements in 2025.
• A gain of $30.2 million was recognized from the change in fair value of warrant liabilities in 2025, contrasting with a $17.2 million loss in 2024.
• Other income, net, was $19.5 million in 2025, including a $14.0 million gain from a derivative asset and an $8.9 million gain from lease assignments, partially offset by losses on the sale of Bakkt Trust and convertible debentures.
• Net cash used in operating activities significantly increased to $(153.4) million in 2025, from $(21.2) million in 2024.
• Cash and cash equivalents stood at $27.0 million as of December 31, 2025, down from $39.0 million in 2024.
• Assets under custody decreased to $911.5 million as of December 31, 2025, from $2,301.9 million in 2024.
• Notional traded volume decreased to $2,323.0 million in 2025, from $3,446.6 million in 2024.
• Management believes current cash and cash equivalents, including proceeds from recent offerings, will be sufficient to fund operations for 12 months from the financial statement issuance date, but acknowledges significant uncertainty regarding revenue growth projections.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with low sentiment due to significant revenue decline, increased net losses, and the loss of major clients, which are critical operational setbacks. While strategic shifts and capital raises are positive steps, the explicit 'going concern' uncertainty and substantial cash burn overshadow these efforts, indicating a challenging financial position.

Positives

• Completed a strategic transformation, divesting non-core assets (Loyalty Business, Bakkt Trust) to focus on digital asset infrastructure.
• Streamlined corporate structure by eliminating the Up-C structure, resulting in a single class of common stock.
• Adopted an updated corporate investment policy to allocate capital into digital assets, including Bitcoin, signaling a clear strategic direction.
• Successfully raised approximately $48.125 million in gross proceeds from a registered direct offering in February 2026 and $75.0 million in gross proceeds from an equity offering in July 2025, providing crucial liquidity.
• Entered into an agreement to acquire Distributed Technologies Research Global Ltd. (DTR), a global stablecoin payment infrastructure provider, expected to expand capabilities.
• Successfully integrated Bakkt and DTR platforms for unified Know Your Customer (KYC) workflow and U.S.-based fiat onand off-ramp capabilities.
• Made a strategic investment in Bitcoin Japan Corporation, acquiring approximately 30% of its voting shares to expand institutional digital asset access in Japan.
• The digital asset market saw positive regulatory developments in 2025, including the GENIUS Act providing a federal framework for payment stablecoins and the SEC's rescission of Staff Accounting Bulletin 121.
• Maintained effective internal control over financial reporting as of December 31, 2025, with a previously identified material weakness remediated.
• Strong cybersecurity program managed by a dedicated CISO with extensive experience, including SSAE-18 SOC 1 Type II and SOC 2 Type II attestations and NYDFS Part 500 compliance.

Negatives

• Experienced a significant decrease in revenue from continuing operations by 32.1% in 2025, primarily due to reduced crypto trading volume.
• Net loss from continuing operations increased to $(97.658) million in 2025, indicating ongoing unprofitability.
• Lost major clients Webull and Public, which represented 40% and 17% of crypto services revenue in 2025, respectively, significantly impacting current and future revenue.
• Net cash used in operating activities increased substantially to $(153.4) million in 2025, highlighting significant cash burn.
• Cash and cash equivalents decreased to $27.0 million by year-end 2025, raising liquidity concerns despite recent capital raises.
• Assets under custody declined significantly from $2,301.9 million in 2024 to $911.5 million in 2025, reflecting reduced customer engagement or asset values.
• Notional traded volume decreased from $3,446.6 million in 2024 to $2,323.0 million in 2025, indicating a slowdown in platform activity.
• Ongoing litigation, including a class action complaint alleging false or misleading statements, poses financial and reputational risks.
• The company has a history of operating losses and an accumulated deficit of $905.2 million as of December 31, 2025, making future profitability uncertain.
• The 'going concern' evaluation highlights significant uncertainty associated with projected cash flows and the need for additional capital.

Risks

• Inability to realize anticipated benefits from investments and strategic transactions, including the DTR acquisition and international expansion.
• Business model is newly developed and may encounter additional risks and challenges as it grows, with no assurance of client or customer acceptance.
• Limited operating history and a history of operating losses, making future results difficult to forecast and raising doubts about achieving or sustaining profitability.
• Inability to attract, retain, or grow relationships with existing clients, particularly large clients, which could materially and adversely affect business.
• Substantial and increasingly intense competition worldwide in the digital asset industry, including from larger, more established companies and agile smaller entrants.
• Failure to meet service level commitments could negatively impact revenue and reputation, leading to contractual penalties or client loss.
• Operational, legal, and other risks related to reliance on third-party vendors for critical services, including potential disruptions or non-compliance.
• Inability to keep pace with rapid technological developments in digital assets and blockchain technology, potentially rendering products and services obsolete.
• Retained liabilities and other risks from the sale of Bakkt Trust and the Loyalty business, including potential legal claims or failure to realize expected benefits.
• Acquisitions, strategic investments, partnerships, or alliances may be difficult to integrate, divert management attention, dilute stockholder value, or fail to realize anticipated benefits.
• A significant decrease in the market value of digital asset holdings could adversely affect the ability to satisfy financial obligations, including debt financings.
• Financial results and stock price may be affected by extreme fluctuations in the price of digital assets, including Bitcoin, which are highly volatile.
• Exposure to risks associated with owning digital assets, such as lack of interest/dividends, control over decentralized networks, security breaches, and market manipulation.
• Potential loss of digital assets held through third-party custodians due to insolvency, theft, or security compromises.
• Limited ability to time purchases of Bitcoin and other digital assets due to high volatility.
• Operating results may be subject to significant fluctuations due to fair value accounting for digital assets under ASU 2023-08, potentially leading to adverse tax consequences.
• Disruptions in the digital asset market, including bankruptcies of service providers, could dampen liquidity and damage public perception.
• Perception among regulators and the public that digital assets facilitate illegal activity could harm reputation and business.
• Digital asset custodial solutions are subject to risks of theft, employee/vendor sabotage, system failures, and loss of private keys, with potentially inadequate insurance coverage.
• Uncertain and evolving regulatory regimes governing blockchain technologies and digital assets, with new laws or interpretations potentially altering business practices or imposing costly compliance measures.
• Uncertainty regarding a digital asset's status as a security, which could lead to regulatory scrutiny, investigations, fines, or penalties if assets on the platform are reclassified.
• Significant litigation risk and risk of regulatory liability and penalties, including costly and time-consuming defense of lawsuits and investigations.
• Potential classification as an 'investment company' under the Investment Company Act, which would impose burdensome compliance requirements and restrict activities.
• Failure to comply with anti-money laundering, counter-terrorism financing, anti-bribery, and anti-corruption laws and regulations, globally.
• Exposure to federal and state consumer protection laws and regulations, with potential for significant liability or private rights of action.
• Evolving privacy and data-related laws and requirements, including those related to AI and machine learning, may be expensive to comply with and lead to harm if not met.
• Inability to sufficiently protect proprietary intellectual property rights or disputes relating to the use of third-party intellectual property.
• Regulatory requirements upon a change of control of regulated subsidiaries may deter or delay investors.
• Changes in tax laws or their interpretations, or becoming subject to additional taxes, could negatively affect financial condition.
• Uncertainty in tax reporting and accounting for digital asset transactions, potentially leading to challenges by tax authorities and negative regulatory outcomes.
• Limitations on the ability to use net operating losses (NOLs) to offset future taxable income due to Section 382 of the Internal Revenue Code or state laws.
• Unrealized fair value gains on digital asset holdings may subject the company to the corporate alternative minimum tax (CAMT) under the Inflation Reduction Act of 2022.
• Exposure to governmental export control and trade sanctions laws and regulations, impairing international competition or leading to liability.
• Actual or perceived cyberattacks, security incidents, or breaches could result in serious harm to reputation, business, and financial condition.
• Systems failures and resulting interruptions in the availability of websites, applications, products, or services could harm the business.
• Risks associated with using open-source software inconsistent with policies or license terms, potentially leading to legal expenses or business disruption.
• Inability to produce timely and accurate financial statements if effective internal controls over financial reporting are not maintained.
• Inaccuracies in key operating metrics may harm reputation and negatively affect the business.
• Incorrect estimates or judgments relating to critical accounting policies could adversely affect results of operations.
• Limited experience of senior management in operating a public company, potentially diverting time from growth initiatives.
• Competition from Intercontinental Exchange (ICE) and its affiliates is not limited by the Certificate of Incorporation.
• ICE may exert significant influence over the company, and its interests may conflict with those of other stockholders.
• The price of securities may be volatile due to various factors, including changes in the digital asset industry, regulatory changes, and macroeconomic conditions.
• No current plans to pay cash dividends on common stock, meaning investors may not receive a return unless they sell shares at a higher price.

Future Outlook

The company's long-term strategy is to build and scale an integrated financial infrastructure platform through Bakkt Markets, Bakkt Agent, and Bakkt Global, expanding trading and payment infrastructure, developing AI-driven financial services software, and investing in regulated international entities. This strategy aims to support institutional adoption of digital asset trading, stablecoin payments, and related financial services. The company intends to continue investing in its platform to provide best-in-class products and services, including digital asset enhancements like staking, lending, and advanced trading, and will evaluate additional strategic acquisitions. Management believes current cash and cash equivalents, including proceeds from recent offerings, will be sufficient to fund operations for 12 months, but acknowledges significant uncertainty regarding revenue growth rates for new products and markets in the rapidly evolving digital asset environment.

Management Comments

• "We believe in cultivating an entrepreneurial culture, built on the pillars of transparency, ownership, and accountability."
• "We are prioritizing the scaling of Bakkt's AI-powered financial agentic platform designed to simplify global money movement and stablecoin-based payments."
• "We believe digital assets and distributed ledger technology have significant, positive potential with proper collaboration between industry and regulators."
• "Management believes that the Company's cash and cash equivalents will be sufficient to fund Bakkt's operations for 12 months from the date of these financial statements are issued."

Industry Context

StockSavvy.ai notes that Bakkt's strategic transformation aligns with broader industry trends towards institutional adoption of digital assets and the increasing regulatory clarity in the space. The passage of the GENIUS Act and the SEC's rescission of SAB 121 are significant tailwinds, potentially paving the way for greater integration of stablecoins and digital assets into traditional finance. The focus on Real World Assets (RWA) tokenization and agentic payments reflects an industry shift from purely speculative trading to utilitarian economic infrastructure. However, the digital asset market remains highly competitive and volatile, with ongoing regulatory scrutiny and the risk of new entrants, which could challenge Bakkt's ability to differentiate and grow its market share.

Comparison to Industry Standards

• Bakkt's reported 733% year-over-year growth in adjusted stablecoin payment volume in 2025, reaching an annualized rate of $10.2 trillion by early 2026, significantly outpaces PayPal's $1.6 trillion, indicating strong performance in a key growth area compared to established payment processors.
• The strategic initiatives by NYSE and NASDAQ to provide tokenized securities platforms facilitating 24/7 trading demonstrate a broader industry move towards tokenization of Real World Assets, positioning Bakkt's focus on digital asset infrastructure as aligned with leading exchanges.
• Bakkt's nationwide regulatory coverage, including a NYDFS BitLicense and money transmitter licenses in 46 states, positions it favorably against many unregulated or less comprehensively licensed digital asset platforms, offering a competitive advantage in compliance and trust.
• The company's use of multiple third-party custodians (Fireblocks Trust Company, Coinbase Custody Trust Company, BitGo) and self-custody for select assets, along with SOC 1 certifications, reflects an institutional-grade approach to security, comparable to best practices in the broader financial services industry for asset safeguarding.

Management Changes

Corporate Governance

Legal Proceedings

• On December 15, 2025, the company filed a complaint in Delaware state court against Project Labrador Holdco, LLC (Roman) seeking approximately $10 million and attorneys fees for breaches of the Loyalty business purchase agreement. Roman filed counterclaims on February 27, 2026.
• On April 2, 2025, a putative class action complaint was filed in the U.S. District Court for the Southern District of New York against the company and certain current and former officers, alleging false or misleading statements and omissions related to client non-renewals (Webull and Bank of America N.A.). The company intends to vigorously defend the matter.
• On June 6, 2025, a stockholder derivative complaint (Kaivani v. Alexander, et. al.) was filed in the U.S. District Court for the Northern District of Georgia, asserting claims for breach of fiduciary duty, unjust enrichment, and securities law violations, based on similar allegations as the class action. This complaint was voluntarily dismissed without prejudice on June 27, 2025.
• In July 2025, the Board received demand letters from three shareholders (including Mr. Kaivani) regarding the alleged misconduct, with two shareholders agreeing to pause consideration pending resolution of the federal securities litigation.

Related Party Transactions

• Acquisition of Distributed Technologies Research Global Ltd. (DTR) on January 11, 2026, where Akshay Naheta, the Chief Executive Officer of Bakkt, is the sole beneficial owner of DTR. The consideration involves issuing 31.5% of Bakkt's fully diluted common stock to DTR owners.
• Commercial Agreement with DTR, owned by Mr. Naheta, entered on July 31, 2025, for integration of payment processing technology and digital asset trading solutions. No payments were made under the agreement as of December 31, 2025.
• Sale of Bakkt Trust to Intercontinental Exchange Holdings, Inc. (ICE), a significant stockholder, for $1.5 million cash plus assumption of $3.0 million regulatory capital requirement, closed on May 15, 2025.
• Termination of a revolving credit facility with ICE on July 30, 2025, after drawing down and repaying $5.0 million in March and June 2025, respectively.
• Marketing agreements entered in August 2025 with a family member of an executive for branding, website management, public relations, and social media services, totaling approximately $0.2 million in fees.
• Tax Receivable Agreement (TRA) Amendment with ICE and Akshay Naheta on October 16, 2025, resulting in a $26.9 million expense for TRA settlement, with ICE and Mr. Naheta receiving Class A Common Stock and Preferred Stock, respectively, in exchange for their TRA rights.
• Previous Transition Services Agreements with Apex Fintech Solutions, Inc. (AFS) and ICE, which have since terminated, for technical support and other services.

Stakeholder Impact

• **Shareholders**: Experience significant dilution from recent and planned equity issuances (Feb 2026 offering, July 2025 offering, DTR acquisition). Face substantial risk due to ongoing operating losses, cash burn, and 'going concern' uncertainty. Potential for further stock price volatility due to market conditions and litigation. The Up-C collapse simplifies the equity structure.
• **Employees**: Impacted by restructuring efforts, including severance costs and reductions in force. Benefit from share-based compensation plans (RSUs, PSUs, stock options) designed to align incentives with company performance. The company had 48 full-time employees as of December 31, 2025.
• **Customers**: Directly affected by client offboarding (e.g., Webull, Public), potentially requiring them to transition their digital asset holdings or find alternative platforms. Benefit from enhanced KYC/AML workflows and fiat on/off-ramp capabilities through DTR integration. Digital assets held on platform are subject to security and operational risks.
• **Clients (Financial Institutions, Fintechs, etc.)**: Face risks if Bakkt fails to meet service level commitments or if the digital asset market experiences disruptions. Benefit from Bakkt's plug-and-play platform, regulatory compliance, and expanding digital asset offerings. The loss of major clients like Webull and Public indicates challenges in client retention.
• **Regulatory Authorities**: Continue to exert significant oversight, with Bakkt subject to extensive and evolving regulations (money transmission, virtual currency, consumer protection, AML, cybersecurity). The company's compliance efforts and legal proceedings are under constant scrutiny.

Next Steps

• Complete the acquisition of Distributed Technologies Research Global Ltd. (DTR), subject to shareholder vote and customary closing conditions.
• Expand digital asset capabilities to include staking, lending, and advanced trading services for institutional clients.
• Launch a new trading platform with advanced capabilities, potentially utilizing BakktX technology for an institutionally-focused ECN.
• Continue to evaluate additional strategic acquisitions that offer compelling benefits for the business.
• Apply for and obtain required licenses under California's Digital Financial Assets Law (DFAL) prior to its effective date of July 1, 2026.
• Monitor and review guidance from the California Department of Financial Protection and Innovation (DFPI) clarifying the DFAL's scope and interpretation.
• Actively pursue alternative customer and partner relationships to mitigate the effect of client offboarding on future segment performance.
• Continue to invest in new compliance measures and potentially significant retroactive compliance efforts due to anticipated IRS guidance on tax reporting and withholding obligations for customer digital asset transactions.
• Address the lawsuit filed against Project Labrador Holdco, LLC (Roman) seeking approximately $10 million and attorneys fees.
• Defend vigorously against the putative class action complaint alleging false or misleading statements and omissions.

Key Dates

Recommendation

Bakkt's 2025 financial results show a severe deterioration in performance, with a 32.1% revenue decline and an increased net loss from continuing operations. The loss of two major clients, Webull and Public, which collectively accounted for 57% of 2025 crypto services revenue, is a critical blow to its revenue base. The substantial increase in net cash used in operating activities to $(153.4) million and the significant drop in assets under custody highlight a severe cash burn and declining platform engagement. While the strategic transformation, DTR acquisition, and recent capital raises are attempts to pivot and secure liquidity, the explicit 'going concern' warning indicates fundamental doubts about the company's ability to sustain operations without further financing. The ongoing litigation adds another layer of uncertainty and potential cost. For a seasoned investor, the current financial distress, coupled with the high-risk nature of the digital asset market and significant client churn, presents an unfavorable risk-reward profile, warranting a strong sell recommendation despite any long-term strategic potential.

Keywords

Digital Assets, Cryptocurrency, Stablecoins, Blockchain, Fintech, Financial Infrastructure, SEC Filing, 10-K, Bakkt Markets, Bakkt Agent, Bakkt Global, Regulatory Compliance, Cybersecurity, Risk Management, Corporate Governance, Investment Policy, DTR Acquisition, Loyalty Business Sale, Bakkt Trust Sale, Capital Raise, Net Loss, Revenue Decline, Client Loss, Going Concern, Bitcoin Japan Corporation, GENIUS Act, SAB 121, CLARITY Act, Real World Assets, Agentic Payments