Bakkt Holdings, Inc.

Greetings and welcome to the BACT fourth quarter 2021 earnings conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn it over to Anne DeVries, Head of Investor Relations at BACT. Please go ahead.

Good morning, and thank you for joining us for BAC's fourth quarter earnings call. Today's presentation, including the separate earnings call presentations that can be found at our investor relations website at www.investors.bac.com, will contain certain statements about BAC that are forward-looking statements. These statements are based on the current expectations of the management of VACs and are subject to uncertainty and changes in circumstance, many of which are beyond VACs 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 exceptions that are subject to change. Please refer to our company's current report on Form 8K filed on October 21st 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. Furthermore, the presentation of income tax benefit or expense for the successor portion of the fourth quarter of 2021, as well as items derived from such measure, like net loss, reflect management's current estimate for income tax benefit or expense, which is subject to change. For more information on this, the basis of presentation for our financial results and our non-GAAP measures, please refer to our earnings release, which was 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, we will answer questions we received from our investors through the SAIT Technologies platform. After that, Gavin and Drew will be available to answer questions from the analyst community. I'll now turn it over to Gavin.

Thanks, Anne. Good morning, everyone. It's my pleasure to discuss BAC's fourth quarter earnings for 2021. Since our last quarterly update, we've been hard at work on the objectives we set forth during that call. We are utilizing our extremely strong capital position to build scale with new and existing partners, drive growth through new capabilities, and invest in our business platform and infrastructure to create sustainable long-term shareholder value. Our vision remains unchanged to connect the digital economy. We power commerce by enabling consumers, businesses, and institutions to unlock value from digital assets. 2021 was truly a transformative year in this vision for VACT. We focused on building the foundation for the company in advance of our public listing, signing and activating partners, and building our team and our capabilities. The numbers on this page illustrate the strong base we're working from. Today, the bank platform is multifaceted and robust. We've said this before, but we're truly just getting started. And this set of metrics demonstrate the power of the platform we are starting from. In 2021, we saw 1.4 billion linked on our platform through the consumer app. More than 88 billion points redeemed across our platform. 82% quarterly growth in crypto trades, and 250% quarterly increase in person-to-person sending of crypto. With an employee base of almost 600, up more than 130% year-over-year, our team is helping to drive so much of this momentum. These metrics show the depth and breadth of our platform today. This shows that we are growing and scaling further from a position of strength. It's truly reflective of the strong and trusted partnerships that we already have with well-recognized and influential brands. Our key priorities remain consistent with what we shared during our third quarter earnings call. We are connecting the digital economy at the intersection of loyalty, crypto, and payments. We are continuing to build partnerships which align with our B2B2C go-to-market model. This approach enables us to scale quickly and efficiently, and we're enriching partner brands by bringing valuable experiences to their existing customers and potential growth opportunities with new customers. We have extensive relationships with companies that are household names, and we're deepening these relationships by seeking ways that we can partner across multiple backed product pillars. We're also aggressively investing in our products and capabilities to support existing and new partnerships. We remain focused on our four major product areas, crypto services, crypto rewards, paying with digital assets, empowering royalty, and making thoughtful decisions on where and how we make enhancements. And of course, we are evaluating and executing on potential expansion opportunities. which means continuing to grow our B2B2C partnerships and activating those that we've already announced, but also evaluating the landscape for growth in adjacent areas as opportunities arise. We continue to build and enhance our product capabilities for our partners, supported by our institutional-grade technology platform, which is the core of everything we do. Our crypto services, including buy-sell capabilities, supported by our regulated platform and secure custody, enable businesses to bring crypto to their customers directly in their trusted environments. We are leading the way in bringing crypto services to non-native crypto companies. With batch crypto rewards, brands can reward their customers in crypto every day as they spend. Whether within an existing loyalty program, through a credit or debit card, or a new way to earn, we are enabling unique brand experiences and an ability for consumers to passively acquire digital assets that have an opportunity to rise in value. As mass adoption of cryptocurrencies continue, crypto buyers are signaling a desire for these new rewards mechanisms. In fact, in our recent loyalty and reward study with 1,000 consumers, about half of the crypto buyers are interested in earning rewards in crypto instead of traditional rewards points. We see this trend continuing, and it's an important call to action for brands and businesses to quickly define their crypto strategies. Pay with digital assets represents a broad array of opportunities, we enable using digital assets like crypto and points for payment. But we're also seeing strong traction with disbursements and payout capabilities in crypto. We're enabling crypto disbursements so that businesses can pay gig workers, marketplace sellers, and creators in crypto when they receive a payment. we can enable a simple embedded experience during key moments of money decision making. We expect younger generations and tech savvy consumers to engage with crypto in this new way. And our capabilities provide an important differentiator to platforms that are competing for scale with customers and workers alike. Our platform has been built from the start to power loyalty programs. Large financial institutions and loyalty programs alike take advantage of our turnkey solutions to drive consumer loyalty and engagement. Consumers can access a full spectrum of travel and experiences, Apple and other merchandise and gift cards through our developed storefronts. The strength of the platform that we have in loyalty is a very strong differentiator for us, both in our deep expertise in understanding loyalty and in our valued relationships with large and established partners that are seeking to redefine brand loyalty in a post-pandemic retail market. Our capabilities set up numerous differentiated use cases for partners and consumers alike, We can walk through just a few. We are connecting crypto experiences to trusted banks and credit unions, truly bringing crypto to mainstream. Adoption of crypto is already here, and we are the connection between consumer financial services and crypto. We make this embedded capability seamless for our partners. We're connecting crypto rewards to consumers' daily spending and enabling brands to offer redemption or earn in crypto capabilities, providing their customers with choice and yield opportunities. We're bringing crypto to the gig economy and the disbursements universe more broadly, from crypto rewards for customers to enabling workers, creators, and sellers to elect for portions of their payment to be received in crypto. We believe this segment is ripe for crypto and we're focused on scaling our partner set in this space. We're connecting loyalty programs to consumer choice and delight, creating opportunities for flexibility, connection, and alignment with other brands. And moments of surprise and delight can go a long way with consumers and the choices they make. We're truly helping brands set themselves apart We're connecting payment options to drive commerce from paying with your digital assets like rewards points or value earned through crypto. Payments are a natural extension to the digital asset ecosystem that enables brands to further integrate into consumers' everyday lives. And our custody service remains the backbone of our crypto offerings. Our unique capabilities differentiate us. specifically our state-of-the-art physical and cyber security and institutional-grade technology and governance. Custody is a key enabler for us to serve as a valuable partner to a variety of businesses across the industry, particularly as we see unprecedented institutional demand for cryptocurrencies. Going deeper on our crypto partnerships with trusted banks and credit unions, In Q4, we announced strategic and important platform partners that enable us to access and serve thousands of regional, local, and community banks across the country via a set of repeatable processes and integrations. Our work in activating their networks is already well underway. In December, we were pleased to announce the first member bank in Manusquam Bank, and have subsequently added great names like Hanover Bank and Valiance Bank to our growing roster. These partners will be making cryptocurrency access simple and approachable within the digital banking environment their clients know and trust. And that is enabling the banks to participate in this space and break into new customer segments like younger generations, the crypto curious, the crypto newbies, Our capabilities embed in their platforms, creating an easy bridge for consumers to invest with even small amounts and to be able to transact and view their crypto in the context of their broader financial lives. Our services go much further than fully embedded crypto experiences. They extend to customer service, marketing support, and educational content to drive usage and customer engagement. We're excited to help these and many more financial institutions deliver crypto services to their customers and associate their brands with innovation, new opportunities for customer acquisition, and really prepare for potential futures of money. Crypto experiences are at the doorstep of the gig economy and offer new and exciting opportunities for so many different segments of payment recipients to engage with new digital assets. Our platform can enable using your crypto or other digital assets to pay for food or daily groceries, like in our newly announced partnership with bringthedat.com. but also enables payouts and disbursements in crypto for a variety of use cases. These include for those gig workers or side hustlers, for marketplace payments or gaming, or even for payroll and a new take on employee rewards. We're working to give businesses more opportunities to leverage new digital assets in their ecosystem and really set themselves apart from the competition. And our capabilities are built to scale and repeat across partners, starting with Bring Me That, which we announced in December. Backed will be integrated as a payment option within the company's digital channels, allowing customers to pay with cash, participating points, or crypto that they hold in our consumer wallets. In addition, we'll launch our crypto payout capabilities to enable drivers working with BringMeThat.com to select crypto as a payment method via BACT. Our capabilities create key differentiators for platform, marketplace, and payroll companies to attract workers and users with new and exciting payment and rewards options. As I mentioned earlier, we continue to connect businesses to secure crypto custody as the backbone of our crypto services. We are a regulated custodian for both Bitcoin and Ether, and our warm and cold asset storage is rebalanced between tiers to minimize the risks associated with warm storage. For additional layers of protection, our warm and cold wallets are built on secure wallet architectures, along with multi-zone physical security, including bank-grade vaults. We also hold insurance policies against these assets. Our custody partners span a wide set of businesses and financial institutions at a time when the crypto market continues to expand at a robust pace. leading reputable companies to diversify their custody of assets. Recently, we announced the custody partnership with Nexo, a leading digital asset exchange and trading institution. We're pleased that Nexo and many others continue to trust our solutions as they diversify their asset bases. Staying at the forefront of crypto custody helps inform and enable our broader crypto use cases for businesses, and consumers. In our Q3 earnings, we talked about the capabilities we enable for customers to engage with their loyalty points in brand new ways. We continue to build on this capability with new partners, and our partnership with Wyndham is another great example of this. We went live with Wyndham Rewards in Q4, enabling members to link their account within the backed app to instantly convert their points to cash. Once converted, members could choose to deposit funds into their bank account, send them to a friend, purchase discounted gift cards, or use them online and in-store for purchases via both Apple Pay and Google Pay, among other options like purchasing cryptocurrency. Since launch, we've seen some great response with a nearly 30% increase in download to registration conversion, a 30% lower cost per acquisition, and five times activation of the backed card versus the overall population. We continue to see reinforcement of the attractiveness of using your points and digital assets to transact in new ways. As we work with a variety of partners, who will support brands and businesses in driving customer loyalty and growth. We're making rapid progress with the platform partners that we announced in Q4. As we continue to move forward and work closely, we're truly excited about the expanse of opportunity. With Fiserv, we've seen some early wins with the rollout of our crypto services with multiple banks, and we're further integrating buy-sell capabilities into their bank networks. We're also partnering to build crypto payout functionality across their client set. With Finestra, we're currently integrating crypto buy-sell capabilities into their bank network and engaging in conversations with prospective partners. These activities are foundational to our activation with each of these partners, but they are also relevant more broadly. You know, from a scaling perspective, this work enables us to expand much more quickly from here and build upon our momentum. We are building repeatable processes with broad market application, processes that enable us to achieve scale quickly, such that deepening with existing partners and activating new ones becomes easily repeatable. Our platform is engineered for scale. Everything from our backend technology, embedded experiences, and customer care easily scale and allow partners to rapidly deploy our services. We are aggressively investing in our products and capabilities, leveraging our strong capital position to invest in and scale the business. Our teams are hard at work on our payout and disbursement capabilities. Earlier, we talked about this in the context of our partner, Bring Me That, but we see payout functionality being relevant to gig economy platforms, marketplaces, payroll companies, gaming, gambling, and beyond. We will be enabling open-loop crypto wallets so that consumers can deposit and withdraw crypto, starting with Bitcoin, without conversion to fiat. This enables us to access the entire network of Bitcoin owners today, leveraging our payment or buy-sell capabilities, regardless of where they originated their crypto transactions. This has great application for many new partners as well who want to engage in the open-loop environment. We will also be expanding beyond Bitcoin and Ether to offer additional cryptocurrencies and stablecoins on our platforms. The specific timing of this will, of course, be subject to regulatory approvals, but we recognize that consumers value choice, and that is what we want to provide. We will stay true to our roots of offering a small number of well-controlled coins, prioritizing a handful of the largest and most liquid. We are continuing to invest in our loyalty business with rewards and point innovations. We are launching Pay With Points capabilities that are applicable to partners broadly. We are enhancing our Apple and our merchandise storefronts to more easily allow for consumer choice and convenience. And we continue to enhance our travel capabilities with more self-serve opportunities to make transacting with us through our partners even easier and to reduce the costs for our partners. We know that enabling real-time funding is necessary for our platform across our own experiences and experiences embedded in partner applications. It is critical for us to make it easy for customers to use our services instantly without having to wait for the deposit to clear. Very soon, real-time funding will be live on our platform, both for transactions within the app but also to the platform more broadly. I appreciate the opportunity to talk about our focus set of activities over the last quarter at FACT. I'll now turn it over to Drew Levine, our CFO, to discuss our fourth quarter and full year 2021 financial results.