Greetings, and welcome to the Bakkt Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in 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 Ann DeVries, Head of Investor Relations at Bakkt. Please go ahead.

Good morning, and thank you for joining us for Bakkt'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.bakkt.com will contain certain statements about Bakkt that are forward-looking statements. These statements are based on the current expectations of the management of Bakkt and are subject to uncertainty and changes in circumstances, many of which are beyond Bakkt'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 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. Furthermore, the presentation of the 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 reflects management's current estimates 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 LaBenne, Chief Financial Officer. After our prepared remarks, we will answer questions we received from our investors through the state 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, Ann. Good morning, everyone. It's my pleasure to discuss Bakkt’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’re 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 Bakkt. We focused on building the foundation for the company in advance by public listing, filing and activating partners and building our team and our capability. The numbers on this page illustrate the strong base we're working from today. The Bakkt platform is multifaceted and robust. We said this before, but we're truly just getting started and this set of metric 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 increased in person-to-person sending of crypto. Within our 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 with the strong and trusted partnerships that we already have with well-recognized and influential brands. Our key priorities remain consistent with what we share during our third quarter earnings call. We are connecting the digital economy at…

Thank you, Gavin, and good morning, everyone. I will now walk through our financial results for the quarter. Before we dive into the numbers, there are a few items to note regarding the presentation of our results for the quarter. On October 15th, we completed our business combination with VPC Impact Acquisition Holdings or VIH. As such, our results for the quarter are significantly impacted by the acquisition. First, I want to note that, we use the term predecessor to represent the results of that holding LLC prior to October 15. These results exclude any results from VIH. Successor represents the results of Bakkt Holdings Incorporated from October 15 to December 31, 2021, which is the post merger period. Combine represents the combination of predecessor and successor for the applicable period. This is a non-GAAP period. For future quarterly results, the presentation of results should be more straightforward. Turning to slide 15. We have our fourth quarter results separated into the predecessor and successor periods. Net Revenue in the fourth quarter of 2021 for the combined period, which is a non-GAAP figure was $13.7 million, which increased by $4.2 million, or 45% compared to the fourth quarter of 2020, primarily driven by strong activity for the loyalty redemption. During the quarter, we recognize certain significant items related to the business combination, which are largely non-cash. We had $52.6 million of operating expense in the predecessor period of the fourth quarter and $86 million of operating expense in the successor period. A substantial portion of this expense was related to the business combination, including non-cash compensation charges of $30.6 million and $47.6 million for predecessor and successor respectively, related to the issuance of Class B common stock of Bakkt to employees and directors in exchange for legacy interest in the acquired…

Thanks Drew. As I mentioned at the start of our presentation, our focus remains on executing on our strategic plan, growing new partnerships and activating existing partnerships through our B2B2C go-to-market model, deepening relationships with our existing partners to enable new customer engagement opportunities, investing in products and capabilities to support existing and new partnerships and evaluating and executing on potential expansion opportunities. We are well capitalized to execute on this strategic plan. As Drew mentioned, we ended the quarter with almost 400 million in liquidity and we will use that to fund our diversified revenue growth. With that, I'll turn it over to Ann to manage Q&A.

Thanks, Kevin. Let's move over to questions from the investor community. We're excited that we’re using Say [ph] technologies this quarter to engage more with our investors, particularly our retail shareholders. Leading into our Q&A session, we'll start by answering the top questions from Say ranked by the number of votes. Given the great volume of questions we have seen, we'll look to skip those questions that were addressed in our presentation. And we'll group together questions that share common themes. After that, we'll turn to live questions from the analyst community. Our first group of questions is around partnerships and comes from Brandon G. William K. Satish E., Kartikh I and others. They ask, what are some new partnerships the company is looking at by the end of 2022? Will you partner with large banks, such as Bank of America, JPMorgan Chase and Wells Fargo? How about institutions such as Apple, Amazon and Google?

Thanks for the question. I'm happy to take that one. Our focus remains on signing new partners and deepening our relationships with existing partners. We have a strong pipeline of new partners seeking new ways to engage their millions of customers. Our use cases around crypto services, crypto rewards, payments and loyalty are resonating with large partners and our reach through our current partners exceeds a 100 million customers. As you can imagine, these partnership discussions are highly confidential, and we can't disclose potential partners. But we are focused on building this pipeline as the year progresses. We also have relationships with many of the institutions that were mentioned. We power loyalty programs for many of the top banks in the country are only to key partner for us as well as our store funds enable consumers to redeem rewards points for their products. We're excited about these existing relationships and we'll continue to explore ways to provide even more value to our partners and their customers.

Our next question comes from Travis D. He wants to know if Bakkt will be buying any crypto and holding it as an asset for investment?

Thanks. I'm happy to take that question. Bitcoin and ether are held in custody for institutional customers or we execute back to back transactions for consumers to keep a small amount of Bitcoin and ether as treasury stock to facilitate consumer transactions when the markets are closed and back to back transactions aren't possible. We're still considering how to invest the proceeds from our recent deal funding, we may consider holding more crypto as an investment. We are exploring extending margin based on these holdings for consumers and businesses as well.

Thanks, Drew. Next Rajiv S. asked what would be the main focus for Bakkt in 2022, getting more partnerships or activating existing partnerships in production for both? Gavin, do you want to take this one?

Yes, sure. Really, it's all of it. We outlined in our earnings presentation, our key priorities, building out and activating partnerships, deepening relationships with our existing partners, investing in products and capabilities to support existing and new partnerships and executing on expansion opportunities. These continue to be our focus going forward. And through the balance of the year, you'd expect to see us activate many of our new and existing partnerships and capabilities and bring on more partners to continue to drive growth on the platform.

Thanks, Kevin. Next, we received a number of questions around competition, from Jason Deane, Sarah K [ph] and others. They ask, as crypto becomes more widely accepted, many new businesses are starting to pop up in this industry. What are some things back to this plan for the future to stay ahead of the path?

Yes. Great question. We believe our platform is uniquely positioned to help these businesses, institutions and brands offer crypto in ways that make sense for their business model and customers. There are many recent examples of companies who are starting to offer crypto by itself. And we know the competition in this space is intense. Our differentiator lies without platform at the intersection of crypto, royalty and payments and our B2B2C, go-to-market model. Importantly, the connection points between these capabilities help us to really create innovative products that we take to our partners, crypto rewards and crypto payouts and disbursement a few examples of this. And we've seen strong traction in our pipeline with the conversations that we have underway. Importantly, our B2B2C model allows us to scale more efficiently enroll across in a direct-to-consumer model. So we will continue to leverage this unique positioning and the backing of our secure, stable platform to innovate and expand on our product offerings appropriately.

Next up, we received some questions about the employee base from Isaac C [ph] and others. Can you talk about the focus of the team and our locations across the country?

Our people are truly at the core of what we do. And we have a great team with expertise across fintech, crypto, payments and royalty to execute on our vision. People would strong experiencing, growing and scaling and running businesses. We talked earlier in our presentation about having almost 600 employees. We've been very focused on bringing in new complementary talent and building our team. We grew headcount by 134% from the prior year across our sites that are really located in key talent pools across the US, in Atlanta, in New York, in San Francisco, and in Scottsdale to name a few. We will continue to focus on expanding our team as appropriate to execute on our strategy and drive growth to the company.

A number of questions came in around the stock price, specifically Brandon G [ph] asks. Why did your price tank from $50 to $3? Drew?

Sure. I can take this one. While we actively monitor and we are aware of our stock prices, it’s fluctuates over time. We have no control over the market price, and do not intend to make it a practice to comment on it. Having said that, we understand that the stock has been very volatile since our public listing. Our stock price reached its highest level in October, shortly after our transaction was completed, which I also tracked with the announcement of several key partnerships. We saw subsequent declines in the stock price, which we believe largely coincided with overall market volatility impacting stocks related to crypto, growth, tech, and de-specs. In December where pipe shares were released to the market, we saw a larger decline which we in part attribute to related selling activity and then almost 3x increase of available flow. All of this said, we continue to be excited about the future and executing on our vision. We are laser-focused on the near term activities to drive future growth in our company.

Next, we have a number of marketing teams questions. Investors want to know will they start to see Bakkt in commercials and advertising? What is the plan to get Bakkt out there and more widely known?

Ann I'll take that one. Our marketing strategy aligns with our business strategy. We are focused on investing marketing dollars in the following areas; B2B where we are building out content and product marketing campaigns against our core products and rolling out those products through our activations in 2022. We're working on consumer facing incentives delivered through our partners, bonus points or crypto for their first transaction. Consumer facing digital marketing with a focus on testing incentives and messages that we believe will help us with partner activation and case study. And then finally, we're also exploring brand sponsorships with pilots who can help us drive awareness and activate core elements of our business model around crypto, rewards, and payments.

Next, we have a few questions around the regulatory landscape. [indiscernible] asks, how will the incoming crypto regulation announcement coming from the Biden administration affect your future plans and growth?

Another great question. From the very beginning, Bakkt is always prioritize safety, security, and compliance as the cornerstones of its products and services. None of that has changed. We are pleased to see increased attention on the crypto space from the White House and from regulators at every level and believe that ultimately, greater regulatory clarity will benefit discipline players in the crypto ecosystem. As we continue to expand our platform, we will do so with the same emphasis on compliance that we've always had.

We have time for one more questions from the platform. A few investors would like to know about our plans to expand internationally?

Our primary focus is to leverage our partnerships to scale our business first in the US. We believe staying focused on execution initially is critical to the achievement of our long-term strategy and will provide us with opportunities to expand later down the road. That being said, we are being really thoughtful about building relationships with new partners and our platform allows to scale for the right opportunities. Many of our existing partners have strong international capabilities. So, over time, we will evaluate together the potential for international expansion through these partnerships. We're confident that there will be ample opportunities to pursue international growth over time and we're going to be careful and deliberate on how we approach these decisions.

Thank you. And with that, I would now like to turn the call back over to the operator to open up the phone line to take questions from the analyst community.

Thank you. [Operator Instructions] And our first question today comes from Trevor Williams of Jefferies. Trevor, please go ahead. Your line is open.

Great. Thanks. Good morning, guys. I wanted to ask on the revenue guidance for the year just between all the new partner wins and what I'm assuming that how -- in the pipeline that you're expecting to convert just – kind of what level of visibility you have into the $60 million to $80 million in terms of what you might consider being already booked. How much growth do you need from the existing basic partners you have versus new wins to get into that range? Really just trying to understand what needs to happen to be at the low end or the high end of the range? Any help there would be great. Thanks.

Yes. Sure. Absolutely. Hey, Trevor, this is Drew. The way that the guidance is set up we're going to ramp throughout the year in terms of revenue growth. So the early part of the year is really going to be your existing portfolio of partners and the new partners that we've already announced wrapping in. And on top of that, in fact, half of the year, there's an expectation that we'll continue to sign partners, execute on them and have revenue growth related to those, in particular in the -- the newer products crypto buy-sell and other products as well. So there is embedded in there an expectation of continued growth in partners and executing on the model that we've articulated over the course of the year.

Okay, perfect. That makes sense. And then just on your transacting accounts. I think the initial guide had been for 9 million active users by the end of year one post close. Just curious if there's any updated thinking on that for 2022? And any initial takeaways, now that you've been in the market for a few months co-marketing with the existing partner base, just anything narrative stood out so far on that front, it will be great? Thank you.

Yes, sure. I'll take the first part of that. And I think it's, you know, in terms of transacting accounts versus users, which were, it was in the original merger model. We've changed the metric. And I think we've talked about this last quarter, but I'll reiterate for everyone. We've changed the metric because transacting accounts really captures the activity across the entire platform. And on top of that, it's more of a metric of users that is only two active revenue activities versus users who sign up for an app. And given the app is still very important to us but some of our new partnerships that we've announced may not transact primarily through the app. The transacting account metric becomes, I think, much more relevant for investors going forward. We obviously think to guide on transacting accounts and there will be a lot of volatility and where that number ends over the course of the year. We certainly expect it to grow rapidly, but depending on when partner implementations happen, how many new partners we signed and what the customer ramp curve looks like, there can be some variability in that number going forward. But the plan is absolutely to grow that number at a rapid pace, in line with what we've discussed previously.

Okay. Perfect. That makes sense.

Thank you. And our next question today comes from Owen Lau of Oppenheimer. Owen, please go ahead. Your line is open.

Thank you and good morning. And thank you for taking my questions. Could you please add a little bit more color on how you want to enable an open loop crypto wallets? How is it going to be different from the open loop platform offered by other crypto companies? Thank you.

Good morning, Owen, its Gavin. Thanks. Thanks for the question. So when we think about the way in which we are establishing our ecosystem, we see requests from our partners to be able to work in a hybrid environment. So we see some that want to be able to offer an open loop to be able to allow people to bring their crypto into their environment. Whilst they have that ability and wanted to be able to control how that crypto flows through their ecosystem. So you can imagine us working with banks who want to be able to allow their customers who already have existing crypto holdings to bring it into their offering. And then to be able to have them control a little bit more of about how that coin gets used. So we think that we're in a unique position to be able to offer a full spectrum of offerings for those who want completely open loop, is what we've been talking about this morning, versus those that want to be able to create new and innovative solutions, and really attract back the customers that have existing crypto holding somewhere else into their environment. And the way the platform is structured with our custodial services underpinning it, we believe we're in a unique position to offer that.

Got it. That's very helpful. And then Drew, maybe in terms of the cash bending guidance in 2022, could you please talk about a key area of investments? Is it related to product development or personnel or tech and infrastructure or compliance? How much of that is maybe non-recurring? Thank you.

Yeah. Yeah, absolutely. And the answer is yes, yes, yes and yes. But to give you a little more detail, it's -- there will be investment in headcount, both for sales and tech development over the course of the year. There will be a ramp in marketing spend over the course of the year for implementing and co-marketing with new partners and driving users to the platform. The product development will definitely be a ramp. I think that ramp will actually -- is actually happening now. And then, I think, the product roadmap over time, as it continues to evolve, will determine if that is more of a higher spend and we level off, or if we should continue to invest and to continue developing new products. But that's why there's some width or there's some range in terms of the guidance of how much cash we're going to use this year. And I would say, as we see opportunities in front of us that maybe we don't have visibility to right now. We would certainly invest even more in exciting opportunities if we saw the opportunity to do that. So we raised this cash to invest heavily in the business and grow it rapidly. We're certainly not going to shy away from opportunities to use the cash to generate shareholder return in the future.

God it. If I may just add one more, quick one, which is, can you please give us an update on the progress of activating your partnerships such as MasterCard and Fiserv? What are the remaining hurdles? Thank you.

Thanks, Owen. Look, I’ll take that one. As we said in the presentation, we're making really strong progress on the ability for us to be able to work with these platform partners that we announced in Q4. As we – as we're working with them, we're finding and seeing some terrific expansive opportunities, and we mentioned by the work we're doing with Finastra and spread out capabilities into their banking platform. You're seeing fruits from the Fiserv relationship already. And then a MasterCard, we're really working to closely enable this passive acquisition of cryptocurrency, this notion of crypto reward. We've already built the core foundation for the world's functionality. And we're really focused on establishment connectivity with the work that we're doing in conjunction with MasterCard, to be able to use them as a distribution partner. We're also working to continue to drive the ability for us to attract partners throughout B2B2C see model. We're working very closely with them to be able to bring our capabilities and remember our partners have an addressable market of well over 100 million users. And that's what we're aiming to leverage as we think about these integration points with Finastra, with Fiserv and with MasterCard.

Thank you, Gavin. Thanks.

Thank you. [Operator Instructions] And our next question comes from Kevin Dede of H.C. Wainwright. Kevin, please go ahead, your line is open.

Thank you. Thank you. It's Kevin Dede, H.C. Wainwright. I was hoping you could elaborate a little bit on your customer acquisition via partnerships. Is there a step involved in combining or taking your partner's, customers and adding them to your group? I know, Drew reference transaction accounts. I'm wondering, if you could just sort of add a little color to that?

Yeah. Sure. Good morning, Kevin. Thanks for the question. So when we think about the way in which we're working, you've heard us focus a lot on the repeatability of the platform that we're building that's important to the scale that Drew was referencing. So, we expect to see the impact of our partners in the second half of this year. We really started to – as we announced the partners that we bring them on board. We are focus very much on closing the gap between the announcement and then when we see the impact of them in our financials. We expect to see that in the second half. When we think about the work that we're doing to enable our partners we're not just providing with the technology backbone to be able to execute the services that we're working with them, whether they'd be on the crypto buy/sell side, whether it be through crypto rewards work that we're doing, or the newer pieces that we've been talking about the pay-out and the dispose of crypto. We're also providing them with marketing with customer care, with the ability for them to able to educate their customers, because the partners we're working with as deploying our services, to be able to deepen the relationships that they have with their existing customers. And I think this is a key acquisition moment for them to able to grow their businesses. So we expect to be able to see the impact of these partnerships in the latter half of this year. But we're also working to create something that is scalable and repeatable so that as the partner starts to get announced, we start to reduce the barrier to entry into our ecosystem. And a lot of the work that, Drew was referencing in terms of the investments have really been focused on making that happen.

Okay. So a partner bank joins do those customer accounts become Bakkt customer accounts as they start to execute?

[indiscernible]

Okay. Drew, I know you touched on this a little bit, but you just went on to discuss the difference between users and transactional accounts, do you have an update on the current level of transactional accounts now and how that may have changed since the end of the year.

Yeah. The transacting accounts are in the presentation, we had 867,000 transacting accounts in the quarter, so those are users that have done a transaction on the broader Bakkt platform.

Do you monitor -- yeah. Apologies. Apologies. Apologies. Do you monitor how those transactional accounts change in terms of size and use of the Bakkt platform?

Yes, yes. We, I mean, we see how many of them are doing loyalty redemption, how many of them are doing crypto buy-sell, all the different activities.

Would you think you offer at some point, a metric, a KPI that represents how each -- how the, I guess maybe the average transactional account increases?

You mean in terms of let's call it the notional amount of the transaction, that what you're referring to. So, for example, if you look at the other KPI, the digital asset conversion volume, that's the notional amount of transaction that's happening. So you could actually take those numbers and divide the two, and I'm not saying that's an exact way to do it. But you would get a relative scale of the notional transaction amount that is happening, and there's certainly seasonality to that number as well. So please just keep that in mind as you're working that math.

Understood. I was trying to trying to drill in and somehow come to some sort of an ARPU like metric.

Yes, yes, yes.

Yeah. And I think…

Okay.

…we're now on our first quarter of officially reporting as a public company, and we're moving into growing new part of our business. So I think over time as that is occurring, we'll consider, which KPIs provide the best information on performance as we evolve on that front.

So Gavin, maybe a little more detail on the banks you announced in the December quarter, Valiance and Manasquan, were those sought through your marketing efforts, or they come to you through Fiserv. And can you talk a little bit about how you've been able to integrate them into the Bakkt platform or vice versa?

Yeah. Sure, Kevin, at the moment, we have two routes to market, we work for our platform partnerships. And we work direct. The ones that we're talking about right now has been coming through our partnership relationships. When we think about the way that we work, we're building a repeatable set of processes that allow us to embed our capabilities in their digital banking applications. So as you saw in the charts that we show an illustrative example of what that experience looks like. So you'll be able to see your crypto balances sitting right next to your check account, your savings account, and we're driving to build a set of surrounding processes in terms of marketing, user education and customer care to be able to help banks like Manasquan, Valliance, Hanover scale quickly and bring customers into the new offering.

Okay. Fair enough. Fair enough. Could you talk about the tokens on your platform and how you decide which ones you can support? Are they strictly just the brainiest ones? And what sort of designs do you have on increasing the number that you accept?

Hey, Kevin look, thanks for the continued dialogue. We mentioned that we are improve -- increasing the exposure beyond Bitcoin and Ether that are on our platform today. We have to work in conjunction with our regulatory approval processes and agreements plays a very important role in what we do. And we're looking for coins and tokens that have sufficient liquidity and demand in them to be used by our partners. But we also recognize that our partners and our platform needs to provide consumer choice and convenience. And using our safe and secure and regulated platform to make those available, seems like the right direction for our product to move in hence the announcements this morning.

Thank you for your questions. We have no further questions on the line. So I'll hand back over to Ann DeVries for any closing remarks.

Thank you, everyone for attending our earnings call this morning. We look forward to connecting with you again soon.

Thank you. Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect your lines.