Summary Bakkt is undergoing a strategic transformation, divesting legacy businesses and focusing on crypto services, stablecoin payments, and Bitcoin treasury initiatives. BKKT's second-quarter revenue rose 13% year-over-year, but core operations remain unprofitable, with net losses and negative free cash flow still lingering. Recent asset sales and equity raises have improved liquidity, while new leadership and board appointments have sparked renewed market optimism. Given ongoing operational shifts and improved fundamentals, I rate BKKT as a hold, pending proof that its transformation will curb cash burn and sustain liquidity. I've been bearish on Bakkt Holdings, Inc. ( BKKT ) on the back of what's been consistent quarters of net losses, negative free cash flow ("FCF'), and a declining liquidity balance against its crypto operations that have not had a healthy stock market fit. However, in a new market zeitgeist where fundamentals seem to be simply suggestions to be replaced by vibes, BKKT has seen its common equity rally heavily in response to a deluge of positive news. The ticker is set to expand its board with the addition of Mike Alfred, an IREN Limited ( IREN ) board member and founder of Alpine Fox, a bitcoin-focused private investment fund. IREN owns and operates data centers for AI and mines Bitcoin ("BTC"). The stock rallied heavily on the news, moving to a more than 3-year high, perhaps with the view being that the addition of a new board member will be able to help reverse years of operational decline and compounding losses. Data by YCharts Akshay Naheta, who joined BKKT in March as co-CEO, was also named sole CEO and President. Naheta was previously a senior executive at SoftBank Group ( OTCPK:SFTBY ), leading on the company's public equity investments and working on some large tentpole deals, including an investment in Nvidia ( NVDA ) when he joined the Tokyo-based multinational investment company in 2017, before leaving in 2021 to create Distributed Technologies Research. He joined BKKT earlier this year. BKKT reported fiscal 2025 second-quarter revenue of $577.88 million , up 13% over its year-ago comp. Total operating expenses expanded by 12% year-over-year to come in at $596.37 million. Bulls would be right to highlight that this still drove a net loss of $14.7 million that was lower than the year-ago figure, with negative EPS down by 51 cents year-over-year. BKKT's trailing twelve-month FCF position is still negative, but the company is seeing an upswing. Bakkt Holdings Fiscal 2025 Second Quarter Form 10-Q Free Cash Flow, Liquidity, And New Operations BKKT's second-quarter results are in some ways legacy financials. The company is going through a metamorphosis, divesting its loyalty business for $11 million in a definitive agreement set to close in the third quarter. Critically, the loyalty business, while broadly higher margin than BKKT's core crypto services revenue, was seeing year-over-year declines in revenue. Revenue for the segment during the second quarter dipped by 23% over its year-ago quarter. The money from the sale should help bolster a cash, cash equivalents, and restricted cash position, which stood at $61.45 million as of the end of the second quarter. Data by YCharts BKKT also completed the sale of Bakkt Trust to Intercontinental Exchange ( ICE ) for proceeds of around $4.5 million, generating a loss on the sale of around $2.3 million. The firm in transition also sold 6.75 million of its common shares and warrants post-period end in July to raise $75 million to further develop its BTC as a treasury strategy. The sales were of immaterial operations, and BKKT's highly unprofitable core crypto services business will remain the primary driver of its fundamentals. Bakkt Holdings Fiscal 2025 Second Quarter Presentation Bakkt Holdings Fiscal 2025 Second Quarter Management communicated during the second quarter earnings call that their strategy will hinge on three pillars: (1) Brokerage-in-a-box; (2) Stablecoin payments; and (3) Bitcoin as a treasury. BKKT acquired the domain name ("bitcoin.co.jp") last week in a move management stated will help build the third pillar. While issuing a business wire for a domain name seems unnecessary, BKKT wants to signal to the market that it's a different company. This has underpinned the shift in vibes for a ticker that once had to engineer a 1-for-25 reverse stock split and whose liquidity has been weighed down by back-to-back quarters of negative FCF. Data by YCharts FCF also seems to be on an upswing, which, when aggregated with the recent asset sales, does provide a healthier fundamental backdrop for BKKT. Shareholders seem to be ignoring the dilution for now, with the BKKT also recently redeeming a $25 million outstanding 0.00% convertible debenture due June 18, 2026. BKKT always held little debt, with the recent move helping plump up liquidity. The primary risk continues to coalesce around the direction of FCF and just how deep a cash runway the equity offering, existing cash position, and the proceeds from the sale of the loyalty business will form. Conclusion Do I still think BKKT is a sell? This isn't clear. The ongoing rally could have some legs. The CEO will have to prove to the market that the transformation can stem historical cash burn and maintain healthy liquidity levels. Investing in BTC as part of a corporate treasury strategy only works until the market tips back bearish and focus again shifts to underlying fundamentals. I'm rating BKKT as a hold against the clearer shift in operations.
