Bakkt's crypto revenue tanks 70%; warrant gains drive record profit

The Transchem gain reflects a recognized but unrealized increase in the fair value of a warrant asset. Bakkt will remeasure it through earnings each period. A June 4 SEC filing shows Bakkt paid $9.4 million, equal to 25% of the subscription price, for 47.5 million Transchem warrants after they were allotted in June. The position was carried at $107.9 million on June 30. Bakkt would owe about $28.2 million more if it fully exercises the warrants within 18 months. The company cautioned that its aggregate Strategic Asset Value, which includes the Transchem position, does not represent market or liquidation value.

The operating picture moved the other way. Revenue fell 70% to $170.1 million from $568.1 million. Bakkt attributed the decline to client transitions and softer digital-asset trading volumes. Crypto costs and fee-related expenses totaled $169.3 million. Because Bakkt recognizes much of its crypto-services activity on a gross basis, the revenue figure is not equivalent to retained economics. The operating loss from continuing operations widened to $19.6 million from $16.1 million. Adjusted EBITDA, a non-GAAP measure, showed an $11.8 million loss compared with $9.8 million a year earlier. Management attributed the change to weaker net crypto-services economics and higher salary costs, partly offset by lower SG&A and a new equity-method loss.

Bakkt ended June with $50.7 million of cash and restricted cash and no long-term debt. First-half operations used $26.9 million of cash. Financing activities supplied $67.2 million, driven chiefly by equity offerings.