Bakkt Holdings, Inc.

Greetings and welcome to the BACT Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I will now turn it over to Anne DeVries, Head of Investor Relations at BACT. Please go ahead.

Good morning and thank you for joining us for BACT's Third Quarter Earnings Call. Today's presentation, including the separate earnings call presentation that can be found at our investor relations website at investors.bac.com, contains certain statements about BAC that are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations of the management of BAC and are subject to absurdity and changes in circumstance, many of which are beyond BAC's control. which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. In addition, these statements are based on a number of assumptions that are subject to change. Please refer to our company's most recent current report on Form 8-K, filed on October 21, 2021, following the closing of our recent business combination for a more complete discussion on forward-looking statements and the risk factors applicable to our company. During today's presentation, in addition to discussing results that are calculated in accordance with generally accepted accounting principles, we will refer to certain non-GAAP financial measures. A reconciliation of such measures to the most comparable GAAP and certain related information can be found in our earnings release, which was recently filed this morning with the SEC. Joining me on today's call are Gavin Michael, Chief Executive Officer, and Drew Levin, Chief Financial Officer. After our prepared remarks, Gavin and Drew will be available for your questions. I'll now turn it over to Gavin.

Thanks, Anne. Good morning, everyone. Thank you for spending time with us this morning. It's my great pleasure to welcome everyone to our inaugural quarterly earnings call for Bakkt. My journey with Bakkt started in January of this year, shortly before the merger with VPC Impact Acquisition Holdings was announced. I'm proud of all that we have accomplished since we announced the transaction, particularly as we have worked through the close and the access to capital that our public listing will provide us. We began with the opportunity to help consumers, businesses and institutions manage their digital assets. These digital assets span cryptocurrency, loyalty points and rewards, gift cards, and expanding into newer asset classes. Consumers can't manage these assets easily. And importantly, businesses and merchants can't enable them to use across the channels in a way that their consumers might want to. Also, institutions seek the financial infrastructure and capabilities to access new markets, products, and digital asset ecosystems. BAC's vision is simple, to connect the digital economy. But how we got here today is important. And 2021 was a significant year for our company's journey. Early in 2021, we announced the merger with VPC Impact Acquisition Holdings. Leading up to being deemed effective by the SEC in mid-September, we launched our platform to the market. which includes a consumer app. We hired a diverse and highly skilled management team with a combination of backgrounds in fintech, crypto, banking, and loyalty. We spent the course of this year setting the foundation for our go-forward strategy. Our first fully integrated partner with Choice Hotels came onto the platform in Q3, and we've made recent announcements of significant partnerships with Finestra, Mastercard, and Fiserv. These are expected to further accelerate our growth and help us gain meaningful momentum heading into 2022. We're excited by the different creative and innovative ways partners are looking to engage with the backed platform. And the flexibility of our offerings is the key differentiator of our go-to-market strategy and a major theme of the way forward for us. And I'll talk about this a little bit later this morning. Our customers fall into three broad categories, consumers, businesses, and institutions. We allow consumers to access the digital assets they have earned or accumulated over time These assets include cryptocurrencies, merchant offers, loyalty points, and gift cards. Consumers can access the digital assets using our platform embedded within the ecosystems of our partners or by using our consumer app. They will also enjoy the option to earn crypto rewards or redeem rewards for crypto, unlocking the potential to achieve more value from their rewards and permitting the rewards to work harder for customers. For businesses, we are building and strengthening a growing network to tap into new opportunities for customer engagement. Businesses can leverage the backed platform to drive consumer loyalty and deepen relationships. By broadening the usage of rewards and loyalty points, they are further integrating their brand into a consumer's day-to-day life. And by innovating with crypto services and crypto rewards, they're appealing to a growing segment of digitally savvy consumers. Finally, we help reduce the financial liabilities associated with loyalty programs and enable new sources of consumer spending and loyalty programs that drive growth. For institutions, who seek the financial infrastructure and capabilities to access new markets, products, and digital assets. We provide greater regulatory clarity, better price discovery, and more effective risk management. Our platform has three complementary aspects. A loyalty redemption service, an alternate payment method, and our core digital asset marketplace. Our loyalty redemption service, an institutional-grade loyalty platform born out of our acquisition of Bridge2 Solutions in February of 2020, provides seamless and cost-effective alternatives for consumers to leverage their loyalty points. We have strong partnerships with leading brands and some of the most prominent financial institutions. We enable these companies to deliver consumer choice and convenience with alternate payment methods that allow consumers to spend the value of their digital assets across merchants and enable businesses to gain access to consumers' increased spending power. Our digital asset marketplace enables participants to seamlessly transact in a growing universe of digital assets. And it has applications for consumers, businesses, and institutions through our regulated, custodian, and trading solutions. Through our unique positioning at the intersection of loyalty, crypto, and payment, Our platform is built for the digital future that is growing exponentially. The BAT platform is our core differentiator. It's secure and fully regulated, born out of our heritage from iTunes. Our core technology stack is digitally asset native and allows for use cases across asset and transaction types. The growing ecosystem continues to create more and more and broader opportunities for consumers to transact. Our capabilities are built to scale and support enterprise and consumer users across crypto, loyalty and payments with 24-7 customer support. Our primary business model is B2B2C, where we acquire consumers via partners rather than focusing on accessing consumers directly. And yet, the end user will recognize our service and capabilities based on their uniqueness and differentiation in market. As our recent announcements show, we are working to build out our network of partners. Our goal is to provide these partners opportunities to leverage BAC's capabilities. either through their existing channels or by leveraging our consumer experiences. We will grow users by marketing into the customer base of our partners and deepening their engagement with our capabilities through co-marketing campaigns across our partners' channels and owned channels. We're truly just getting started, but what we're seeing so far is that the B2B2C construct enables us to scale faster and gain users more efficiently than a direct-to-consumer strategy. Importantly, this flexibility of our platform enables consumers to utilize a variety of backed offerings in the way that is most attractive to them. We may see some customers lean into our crypto capabilities while another enjoys the discounted gift card offers, while others simply want to redeem points for merchandise or cash. It's that type of variability that helps drive our relevance across a broad array of consumer segments. I want to lean into the flexibility theme and discuss what this looks like and the opportunities that abound this emerging and evolving space. The momentum of the Bax platform is all about its power holistically. You know, it means that every account and action that is happening across all of our capabilities, the Bax platform is built to operate at the intersection of crypto, loyalty, and payment. And partners select an array of our capabilities based on their needs and objectives. And what that looks like will intentionally vary from partner. We've discussed this framework as a company previously, but we're just so excited that with our newly announced partners across a variety of industries, we'll soon see these experiences come to life. we enable a significant amount of partner choice. Some may choose to keep their consumers entirely in their own experience. But others may need a ready-to-go storefront and leverage the backed app to meet this need. Partners can choose to fully embed our capabilities within their digital environment, or take specific backed platform capabilities like crypto buy, sell, hold, and spend entirely powered by backed. As I shared with our B2B2C go-to-market strategy, we expect most people will connect with us through companies' brands and brand experiences that they already know and trust. and are really part of their everyday lives. These account and transaction interactions are expected to be a strong driver of our growth and traction on our platform. And they clearly demonstrate the power of the B2B2C model. We connect the digital economy by enabling consumers to invest, convert, spend and pay, send and redeem digital assets. Customers can buy and sell Bitcoin, and as we announced last week, very soon Ether on our secure, regulated and scalable platform. For us, we enable broad access in a simple and intuitive digital experience. which can either be embedded in a partner's experience or accessed via our consumer app. We lead the way in providing crypto as a service to non-crypto native companies, an area with significant wide open space and increasing demand as we see crypto adoption broaden across markets. A major transformation to existing rewards programs is already underway, and BACT will enable businesses to offer crypto rewards to their customers. Customers may earn and redeem crypto, which will be available for rewards programs, credit cards, and other merchant programs through our partners. This approach allows businesses to deepen their customer relationships. and drive increased loyalty, while creating a new pathway to crypto through passive acquisition for millions of Americans. We've introduced new ways to access digital assets. Consumers can use crypto or other digital assets to make everyday purchases. BACT enables businesses to create choice and convenience with their existing rewards points and digital assets, or new ones like crypto. This is particularly striking since we're bringing liquidity to assets that were previously illiquid. As consumers use points, miles, or crypto to pay, they're seeing greater value in their brand loyalty. Finally, we offer a full spectrum of options for redeeming loyalty points, including travel, gift cards, Apple products, and more. We recognize that businesses want to offer consumers choice, innovation, and convenience. And the BAT platform was constructed with this in mind. Perhaps most importantly, these capabilities are complementary. and can be taken advantage of within a very flexible construct. Partners can choose a combination of these and work with us to make sure that the resulting offer works for the objective that they have for their program. We already have powerful partnerships in integration. We have deep relationships with and connections into a significant portion of the premier loyalty partners in North America with an addressable market of over 100 million consumers. And we have focused much of our time, energy and resource over the past few months, engaging these partnerships and signing new ones to enable growth in the coming quarters. We believe these connections will provide self-reinforcing network effects, like partners co-marketing our platform to their customers to deepen customer loyalty. And we're seeing momentum in partnering with companies across consumer financial services, travel and entertainment, retail, and platform companies such as banking and customer loyalty platform. And as you can clearly see, partners can choose to work with us across all of our offerings or really just select those services that align most to their client's demand. So let's go through a few examples of the capabilities we discussed on slide 10 and how we will activate them with partners. Offering crypto as a service expands the availability of crypto capabilities to partners and their customers while alleviating the operational and regulatory considerations that they would face in building the offering in-house. In late October, we announced a partnership with MasterCard that is designed to make it easier for merchants, banks, and fintechs in the U.S., to offer their consumers to buy, sell, and hold digital assets in custodial wallets. We are also working with MasterCard to streamline the issuance of MasterCard debit and credit cards by banks and credit unions with the option of crypto reward capabilities that are entirely powered by the BATS platform. In addition, we are integrating with MasterCard loyalty solutions to create new and unique opportunities for consumers to earn crypto and to create fungibility between loyalty points, crypto, and other digital assets. We are so incredibly excited about this partnership, not only because MasterCard is a preeminent player in technology and payments, but because we view the crypto reward space as a tremendous opportunity that will take shape in new and innovative ways that our partnership is uniquely positioned to win. Mastercard serves more than 20,000 financial institutions with 2.9 billion in use worldwide. And together, we can chart a new path for crypto and give businesses and consumers new ways to earn, pay and transact. We just couldn't be more excited about the opportunities on the horizon with Mastercard. Given the multifaceted nature of the Mastercard announcement, we thought it was important to pause quickly on the potential use cases that we're working towards with Mastercard And to provide more insights into what this might look like, we might see a partner bank offer crypto rewards, rewards that are easily confirmed by the partner, like double rewards on backed partner spend. Overall, it becomes an easy first step into crypto, which leads to broader promotional and reward opportunities. Partner banks are increasingly competing with a broader group of fintechs in an ongoing race to create compelling offers. These banks can join the crypto movement without having to build in-house capabilities and increase customer acquisition and engagement while appealing to a younger customer demographic with more innovative offerings. Another recently announced crypto service partner, Finestra, will enable consumers to buy, sell, store, and spend a range of cryptocurrency via the backed platform. These capabilities will be available to customers of community banks and credit unions as part of Finestra's Fusion Digital Banking solution. Finestra solutions are used by more than 5,000 financial institutions in the Americas alone. The functionality, which will soon be available, will also enable financial institutions to offer their account holders access to the growing crypto market without having to leave their existing trusted banking environment. The extension of the BAC's platform digital asset capabilities into partner ecosystems will be an important offering for us going forward. Many community banks and credit unions are interested in offering their customers innovative new opportunities, and BAC's robust digital marketplace helps to seamlessly integrate crypto, cash management, money transfer, and wallet capabilities. Our modern user experience and API-enabled platform make the BACT platform an attractive solution for financial institutions seeking an intuitive, tightly integrated, low-risk solution to offer crypto services. Starbucks continues to be a strategic partner for BACT. in developing practical and trusted applications for customers to convert their digital assets into U.S. dollars for use at Starbucks. Starbucks has integrated the backed platform as a payment method for customers to reload their Starbucks card in the Starbucks app. You can see this in the visual. Today, backed is a payment method on your Starbucks app. We believe Payment integration grows in importance as consumers earn, track, manage, and spend their digital assets. Our payment capabilities will take a different form in our integration with Fiserv and their carrot omnichannel ecosystem, allowing businesses to pursue new options for merchant acceptance, payout, royalty programs and transactions with crypto and digital assets. Our most recent collaboration is with Choice Hotels to expand the utility of the company's rewards program. Starting early in September, Choice Privileges members can convert their rewards points to cash and then use that cash to buy cryptocurrency even use it online or in store anywhere Apple Pay or Google Pay is accepted. We're seeing early signs of success with this partnership, including considerable benefits over any direct-to-consumer marketing efforts. Specifically, our conversion rates are higher and the cost to acquire a consumer about 50% lower. and we're seeing higher return engagement from these customers. More broadly than this, our brand is embedded in the Choice Hotels brand environment, and we're partnering on evergreen marketing campaigns and incentives. Similarly, over the summer, we announced a partnership with Wyndham Rewards to allow program members to link, view, and redeem their Wyndham's rewards points. This is expected to be live within the back gap before the end of the year. The results we are seeing provide a peek into what we can see when we have several live partners with ongoing and evergreen co-marketing campaigns. Each partner we work with provides valuable learning that we can take through to improving the next implementation. Our deep expertise in loyalty services and redemptions really sets us apart as we look to connect across a variety of digital assets. We have innovative and unique ways to support redemption options where customers can convert rewards into merchandise, unique experience, hotel stays, or travel. this part of the platform has seen significant momentum with growing numbers of loyalty conversions and redemption. We support several large financial institutions and airlines, such as Wells Fargo and United Mileage Plus, in managing their rewards programs. We manage an online Apple store that is all priced in miles or points or really any of the assets that we support on the platform. Expanding these redemption opportunities across our platform and across digital assets will be a key part of our growth strategy with new and existing partners. In the last 12 months, we've had over 12 million visitors to our loyalty redemption services, and it's driven approximately 500 million in annual redemption volume, notable given the return to travel we've seen through 2021. I hope this provides a better understanding of our business and the momentum we have going forward. It's now my great pleasure to turn it over to Drew Laban, our CFO, to discuss our third quarter financial results. Drew, over to you.