Bakkt’s Earnings Disappoint, but Focus on Customers Has Potential

The market wasn’t kind to Bakkt Thursday (Feb. 17), taking about 1.5% off its stock after an earnings presentation that, while complex after going public via special purpose acquisition company (SPAC), showed reasonable success in building out its business with some big-name partnerships.

While it’s had been seen primarily as a cryptocurrency exchange, Bakkt is growing into something potentially more interesting, a payments firm that aims to make it easy to pay with anything — crypto, loyalty program points, airline miles, gift cards, cash and even in-game currencies and nonfungible tokens (NFTs). That means consumers spending at the point of sale (POS), but also companies paying out those various digital assets, which is why Bakkt calls itself a “B2B2C” company as its looking to own the whole payer.

That’s the pitch, and Bakkt does have star-power clients in Starbucks, Apple and most recently Wyndham.

However, aside from its before-and-after finances presentation, the company also turned off investors, according to reports, because it switched from measuring “active users” — meaning people who downloaded the app — to “transacting accounts,” which counts customers actively using their accounts.

But more to the point, it “really captures the activity across the entire Bakkt platform,” said Bakkt CEO Gavin Michael. “It’s more of a metric of users that is linked to active revenue activities versus users who sign up for an app.”

On the B2B side of its business, a fair number of new partners use its payments, trading and loyalty points distribution services through their own interface, he said.

At least in crypto, that’s a reasonable distinction, as many crypto-curious newcomers will sign up for an exchange account more to see what it’s about. Or they will try out a variety of providers before settling on one. The same applies in the loyalty industry, where point abandonment is a huge problem — and not just in programs aimed at shopping cart abandonment.

The Little Guy Too

One interesting thing that came up several times in the crypto payments vein is Bakkt’s attention to small, independent players as well as big corporate clients.

“We are connecting crypto experiences to trusted banks and credit unions truly bringing crypto to mainstream,” Michael said.

Saying that its research showed that half of all consumers are at least interested in having rewards paid out in crypto, Michael added that “adoption of crypto is already here. And we are the connection between consumer financial services and crypto. We’re connecting crypto rewards to consumers daily spending and enabling brands to offer redemption or earn in crypto.”

The same thing applies in payments, where he said the firm is focused on growing its business among corporate customers “bringing crypto to the gig economy and the disbursement 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.”