Bakkt Holdings, Inc.

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 call is being recorded. I will now turn the call over to Anne DeVries, Head of Investor Relations at FACT. Please go ahead.

Good evening, and thank you for joining us for BAC's fourth quarter earnings call. Today's presentation, including the separate earnings call presentation that can be found at our investor relations website at www.investors.bac.com, will contain certain forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. For a more complete discussion on forward-looking statements and the risks and uncertainties related to BAC's business, please refer to its filings with the Securities and Exchange Commission. 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. 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 afternoon with SEC. Joining me on today's call are Andy Main, that's incoming Chief Executive Officer, and Karen Alexander, Chief Financial Officer. After our prepared remarks, we will answer questions we received from our investors through the SAFE Technologies platform. After that, Andy and Karen will be available to answer questions from the analyst community. I'll now turn it over to Andy.

Thank you, Anne. Anne, good evening, everyone. It's great to speak to you on my first BAC earnings call. Let me firstly start off by saying how excited I am to be BAC's CEO. I want to thank you for being here today and for your ongoing interest in BAC. Seeing it's our first time together, I thought I should do a quick introduction with a focus on my most recent experience. I've been working in digital platforms, championing technologies and selling products for the bulk of my career. Starting in 2013, I was the head of Deloitte Digital and over seven years grew that business from a startup into a multi-billion dollar business and a globally recognized brand. After that, in 2020, I moved on to become Ogilvy's global CEO, where I led a rapid turnaround of a then-lagging business to become the world's leading creative agency in just two years, one year ahead of market expectations. I have also been a BACT board member since October 2021. I've certainly gained a lot of satisfaction from achieving the ambitions of those businesses. So that's enough about me, and now on to talking about BACT. So on page four, I'm excited to share my perspectives on the business. Let's first start by talking about what's happening in the markets. 2023 undoubtedly brought some challenges, and as the market spent the first half of the year rebounding from the industry events of 2022. But with the new milestones, like the approval of spot Bitcoin ETFs and new record Bitcoin price highs, we finally began to see strong tailwinds. In Q1 2024, we are already seeing higher transaction volumes from our retail clients as their target audiences and customers are showing greater interest in crypto. So we're cautiously optimistic that with all the positive developments we have seen in crypto, the markets will continue to stabilize and improve. Moving on to BACT. We have a strong foundation and I'm very proud of what the company has accomplished to date. Our team has spent significant time and resources developing the BAT platform. And I can say with confidence that our products are in a strong position. We have robust custody and trading solutions that appeal to both institutional and retail clients, who along with BAT are positioned to benefit from the positive market turn. My perspective on our clients and partnerships is that we are well positioned to grow from the strong base. We provide a strong value product proposition to clients and emphasize that we offer the leading client experience in the industry. For example, taking as little as a few weeks to activate our solutions for our clients. This speed of activation makes BAT a strong partner for growth. And in fact, BAT, your partner for growth, is the North Star of our business, which we will amplify and demonstrate via our behavior in the marketplace. Next, I'd like to address what this moment means for the company. The reason the board appointed me as CEO is because BAC is at an inflection point. Given our strong position with the BAC platform, the focus at this particular inflection point is now to scale the business. And to build on what I said as part of my introduction, I've got the experience in commercializing powerful product platforms, scaling young businesses, and being market, client, and partner focused. And the board believes that these are some of the ingredients and the skills that BACT needs now. In addition to the inflection point around scale, we're also at a financial inflection point. We were pleased to quickly close the transaction of our recent capital raise and can confidently say that the proceeds and the other available cash alleviate the conditions that initially raised doubt about our ability to continue as a going concern. This additional capital significantly adds to our balance sheet and will help fund the future of our business, providing stability as we continue to focus on executing for our clients and partners, broadening our network and driving revenue. I understand the circumstances of the transaction have resulted in dilution of our stock, which has contributed to the drop in our share price. As we've recently received notice from the New York Stock Exchange that our stock price does not currently meet the minimum share price requirement, I want to assure folks that we are committed to remaining publicly listed. We understand disappointment and frustration in response to this recent news, but it's important to know that this notice does not result in immediate delisting. To resolve this issue, we plan to pursue a reverse stock split, which we subject to shareholder vote. Ultimately, we strongly believe that this capital raise is the best path forward to scale our business and drive back towards profitability. Now is the time for growth, and the good news is that I believe we have the right platform, the right products, the right strategy, and the right team in place to make that happen. We are laser focused on enhancing shareholder value by executing on top line growth and being disciplined about costs. We will focus on scaling the business by driving efficient and focused execution. Over time, you'll see us shift our business mix to include more recurring revenue streams, which is not only great for our clients, but helps back a longer term predictable client relationships. We'll also focus on prudent expense management to demonstrate strong operational performance. I believe there are several opportunities we can focus on to fine tune our operations and put us on that path towards profitability. Together, these actions will accelerate our drive towards self sustainable growth. Lastly, I look forward to capitalizing on the market opportunity in crypto. We see that the demand environment is improving, which is driving increased volumes through the BAT platform. And I'm very excited about the position we are in. Moving on to slide five, I'd like to elaborate on the overall strength and efficiency of the BAT platform, which we've spent years investing in, is unique in the market and differentiates us from most other crypto providers. When you look at why our clients choose Bakkt, there are three compelling reasons I'd like to walk through today. First and foremost, Bakkt stands out because of her status as a highly regulated public company listed on the New York Stock Exchange. Our clients can have confidence that Bakkt will prioritize the safety of their assets. And let's not forget about the Bakkt Trust. Our custody solution is operated under BAC Trust Company LLC, NYDFS regulated custodian. We keep BAC's custody and trading functions separate to provide additional protection and minimize potential conflicts of interest. BAC's custody entity maintains a separate and independent board solely focused on upholding safe and effective operations. our experience and expertise in the complexity of security and compliance give our clients the peace of mind that they deserve and they need and in fact we continue to invest heavily in these areas and incorporate the latest standards and best practices and a great example of this is a recently launched collaborative custody which addresses single point of failure risk the second compelling reason why clients choose us is that we partner with clients to enable their growth. Crypto moves fast, and so does our ability to scale up and grow quickly when the markets shift. The BAC platform is very versatile, and we work closely alongside our clients to help their product offerings grow, which creates a compelling growth life wheel for BAC's own business. And the third reason why clients choose BAC is that we help solve for accessibility Our experience across both traditional finance and crypto means that we can help our clients navigate both worlds seamlessly. BAC serves as the on-ramp to crypto for our clients. So in turn, they can offer dynamic, flexible solutions for their customers. Moving along to slide six. In the year ahead, we're going to be laser focused on three strategic priorities. Firstly, growing our client network. and going deeper with existing relationships. Secondly, expanding our products, solutions, and the bat ecosystem. And thirdly, currently managing our expenses. Let me just touch on each of these very quickly. So what does that look like in practice on the client side? Well, that means continuing to execute on our land and expand strategy, expanding our business internationally, forming new relationships globally, and growing a network of crypto-native neobank and fintech clients. On the product side, not only will we be bringing back products to more businesses, but we'll also expand our product offering by introducing complementary institutional crypto capabilities, such as collaborative custody and institutional trading. And as we do this, a major driver is to strengthen and extend the BAT ecosystem through greater focus on our marketplace relationships with our business partners and then on the expense side you know we're going to clearly grow our business while prudently managing expenses we've already made progress on this front and we're going to continue to identify opportunities to strategically allocate capital and manage our operating costs so these three strategic priorities are how we will accomplish our goals of creating sustainable shareholder value and reinvigorating our investors' confidence in us. Moving on to slide seven, I'd like to talk about retail crypto trading as a driver of our growth in 2024. Our crypto trade offering is a dynamic platform that allows us to offer a suite of solutions, including trade, coin transfer, and fee on ramps. Throughout 2023, we strengthened our product offering and signed new clients to our retail trading network, which positions us to drive revenue in 2024. We'll be providing our advanced end-to-end capabilities to new retail clients, including notable crypto native names like Mobilum and Bitgen. International expansion also continues to be a key focus when it comes to scaling our business. We recently shared that we've gone live at the digital brokerage SogoTrade in Hong Kong and Singapore, both very fast moving crypto hubs. We continue to expand the long-term relationship with Happy, a stock trading platform. We're now live together in Brazil, Guatemala, and Spain, which builds already on live capabilities in Argentina and Mexico. Since these recent expansions, we've also gone live in Taiwan. which will broaden our reach in Asian markets even further. As we enter new international markets, we're working with our clients to cater to their preferences and position backed technology and offering to meet each market's demands. This includes investing in the support of new coin pairs in order to lay the groundwork for more trading volume as we expand. We have built a broad network of clients that allows us to take advantage of the tailwinds we've seen industry-wide. Our notional trading volumes have been very strong this month, with March quarterly volume up over 206% from Q4 2023. Our client assets under custody also continues to trend upwards, having recently surpassed 1 billion US dollars. The crypto industry has undoubtedly been volatile over the past few years, but I believe we're beginning to see indicators that the trading environment is improving and BAT is well positioned to take advantage of this positive market shift. Moving ahead to slide eight, let's talk about how we will further expand our institutional crypto capabilities, which will provide significant opportunities for growth. Since back we launched our custody platform in Q4, we witnessed the industry reach important milestones, such as the SEC approval for spot Bitcoin ETFs. This has led to astonishing institutional interest in growth in crypto. For our institutional client segment, BAC's highly secure and compliance-first approach to crypto, as well as our institutional-grade custody foundation, uniquely positions us. For example, I'm very excited to share that BAT just signed an agreement and intends to provide our secure custodial services to a new Bitcoin ETF provider, 7RCC. And their investment manager launching an ETF combining Bitcoin and carbon credits. We are in advanced discussions with other Bitcoin ETF providers as well. We also serve as a custodian for newly signed client BlockWire. a full-stack fintech infrastructure platform that has a focus on payments, but also offers custody, trading, and banking. We've also been appointed as a custody provider for 2 Prime, an SEC registered investment advisor that works with family offices, institutions, and corporate treasuries seeking exposure to digital assets. The company has an expertise in risk management and utilizes bespoke investment strategies for each client. Our custody solution is highly sticky and we will build incremental higher margin solutions on the stack. For example, we've added additional capabilities to our institutional crypto offerings. BAT is now available as a key agent for unchained enterprise collaborative custody product. This model helps Bitcoin holders increase security when safeguarding their assets through the use of a vault. secured by multiple institutional key agents. By enabling access to our NYDFS regulated custody through unchanged unique platform, we've created a simple and efficient way for us to continue to scale our custody business. We are also actively working to launch our own high performance institutional trading venue, also known as an electronic communications network or ECN. For those not familiar, an ECN is a technology-based solution that enables streamlined high-speed access, lower costs, and lower latency to spot crypto transactions for institutional clients. Collaborative Custody and ECN are perfect examples of high-demand products that can be developed at speed by taking advantage of the investment in consumable services that already exist on the back platform. In turn, this further sharpens our competitive edge and enables opportunities for high-quality revenue streams at low costs with minimal capital requirements, driving us towards profitability. I'm excited to share more about our growing capabilities throughout 2024. Now, I'm going to turn it over to Karen, who will speak about our financial results. So, Karen, over to you.