Summary Bakkt is undergoing a strategic overhaul, focusing on three operational engines: Bakkt Markets, Bakkt Agent, and Bakkt Global. BKKT’s Q1 FY26 results show $243.6M in crypto services revenue, reduced OpEx, and a strong $82.6M cash position with no long-term debt. The upcoming launch of Bakkt Agent is the key near-term catalyst, potentially boosting high-margin, SaaS-like revenue and driving BKKT toward breakeven EBITDA. I upgrade to a buy rating, contingent on timely Bakkt Agent launch and successful partner onboarding, but I also note fierce competition and execution risks. Bakkt ( BKKT ) deserves a revisit here since my last coverage in October. A few material updates have emerged for Bakkt, including a clearer digital asset business and the completion of the wind-down of the Loyalty business (which was a B2B services provider business, in which Bakkt managed corporate rewards programs where consumers could redeem points for travel and merchandise); that wind down has a fresh impact on financials, particularly along the expenses line. At the time I last covered Bakkt in October , the stock was trading around $46, following weeks of 170%+ rally, with analysts at Wall Street research firms like Benchmark reiterating a Buy and raising BKKT's near term price targets despite that extended rally at the time, which posed some risks. The Loyalty business wind-down was already underway at the time, and the prospect of major customer attrition was also beginning to surface as a clearer digital assets business emerged, including a push into stablecoin payments, crypto-enabled payment infrastructure, and broader infrastructure services like offering APIs to fintechs and neobanks. But I pointed out that the improved optics still warranted caution for several reasons, including Bakkt’s long history of volatility in revenues, where the cost of revenue sometimes exceeded revenue itself, which resulted in negative margins and gross losses and persistent net losses. While Bakkt was pitching its pivot to an asset-light, recurring-revenue model via offering payment and infrastructure services, I was cautious because that alone did not yet establish a competitive moat. I also noted that incumbents like Coinbase ( COIN ) Prime and heavily funded private giants like Fireblocks and Anchorage were already in competition for the exact same target clients. BKKT is down ~76% since my October coverage. The cautious call was a very appropriate one in hindsight. Wall Street firms that had embraced the momentum without a clearer fundamentals backing during last summer’s rally have had to repeatedly cut BKKT price targets again ( Benchmark cut BKKT price target in March from $40 to $22) and again (another cut from Benchmark about a week ago from $22 to $19) while reiterating what I’d call a fragile and “perma-bullish” Buy. BKKT is now trading around $11, and has seen volatility as it has a high 24-month beta of over 3.35 and a 5-year monthly beta of 5.86. This piece will take an updated look at Bakkt from the recently released Q1 FY26 results, the three new core business lines of the company, which Bakkt calls the “three engines” in the Q1 earnings presentation, as well as whether the restructuring is finally translating Bakkt into a more investable crypto infrastructure company. The New Bakkt’s Three Operational Engines The "three engines" are the growth pillars for Bakkt, as management debuted in the Q1 presentation. I want to approach this piece from an analytical angle of how the new “engines” truly recreate Bakkt and not just that management is putting old wine in new jars. Q1 investor deck On slide 5 of the Q1 earnings presentation (the source for the above infographic), management laid out the full scope of Bakkt's operational priorities moving forward, with its own self-assessment (a 100 point grading system) of each business aspect and how far or well it has progressed on each one, as seen in the infographic above. I also want to avoid rubber-stamping management’s internal grading of its business and rather focus on cross-referencing these self-reported grades and milestones where necessary and drawing our own conclusions based on the reality on ground in terms of financials, near term milestones, the broader competition and market reality, regulation, and execution capacity. Q1 investor deck In assessing the new Bakkt, I’ll begin with the most commercially active segment of the company today, Bakkt Markets. This is also the only segment actively generating meaningful revenue at the moment, bringing in $243.6 million in crypto services revenue for Q1 FY26. Bakkt describes the Bakkt Markets segment as "the institutional infrastructure for digital assets"; I call it Bakkt's trading engine . Through this updated Bakkt Markets business framework, Bakkt provides crypto trading and execution infrastructure to institutions, and monetizes B2B (business-to-business, where Bakkt serves financial institutions and enterprise clients directly) and B2B2C (business-to-business-to-consumer, where Bakkt's infrastructure is embedded into partner platforms that then serve end consumers) order routing, market-making, and OTC spreads. When clients utilize institutional-grade brokerage or crypto trading services via partner platforms, Bakkt earns a fee based on Trading Volume × Spread × Brokerage Fees. This is basically the revenue model of the Bakkt Markets segment. Q1 investor deck The new model is an operational overhaul and re-engineers Bakkt's unit economics because this is more capital-efficient than the previous retail-focused strategy where Bakkt chased transaction fees mainly through the now-defunct Bakkt app, chasing high-volume but low-margin gross retail transaction flow where procurement costs regularly wiped out gross spreads. This, together with the legacy Loyalty business and the fact that the old framework offered a rather rigid product suite primarily focused on the physical delivery of Intercontinental Exchange ( ICE ) Bitcoin futures, meant Bakkt was bound to face capitulation. When the CME Group ( CME ) launched cash-settled Bitcoin futures in 2017 , which has an architecturally different settlement loop from Bakkt’s asset-heavy derivatives product, they took all the volume. Bakkt’s product capitulation has cut across most of the legacy operations. The retail-focused Bakkt app has been discontinued , and Bakkt Bitcoin futures contracts on ICE U.S. were delisted alongside all Bitcoin Options contracts because institutional volume was virtually nonexistent. Even after abandoning retail and futures, Bakkt tried to survive by being an institutional digital asset custodian (Bakkt Warehouse/Bakkt Trust); and that too didn't go well, as they completely transferred the asset-heavy Bakkt Trust Company over to ICE due to the regulatory capital burden of running a regulated trust company. Q1 investor deck The updated Bakkt Markets business model seems to have internalized the lessons from the past failures. One of the new selling points is that Bakkt is leveraging a broader range of crypto assets to monetize better market opportunities and embeds Bakkt on an API-driven backend among institutional enterprise platforms. Bakkt is rolling out over 200 crypto assets in its tech upgrade (as disclosed in the Q1 investor deck), to be accessed via partner networks like Fireblocks and Swan (as stated in the preceding infographic), which is a direct contrast to the legacy consumer-focused Bakkt app interface where Bakkt attempted to onboard retail clients directly. What ties this whole turnaround thesis together, and for which Bakkt itself boasts a high self-assessment of 80/100 in the first infographic I shared in this piece, is the regulatory and compliance moat Bakkt has built over the years and through the tough times. For me, that is the single most important value proposition for Bakkt, because left with the 200+ crypto offering alone or the white-label API offering, competitors are well positioned to squeeze them out. This regulatory and compliance portfolio is the connective fabric that ties the three engines together, in my view. Bakkt has accumulated pan-U.S. money transmitter licenses ((MTLS)) since the days of the DACC acquisition and now holds such licenses in 50 U.S. states, which laid the groundwork, alongside the New York BitLicense. Then there's the more recent European Union VASP authorization that came in automatically with the acquisition of DTR (Distributed Technologies Research Global Ltd). Q1 investor deck This regulatory and compliance portfolio is also the backbone for the Bakkt Agent engine (which I refer to as Bakkt’s payment engine ), which Bakkt says is launching in June this year (next month). The unique value proposition here is that new institutional B2B/B2B2C clients do not need to spend years applying for their own BitLicense. Instead, they integrate into Bakkt's backend infrastructure via APIs and legally inherit the right to conduct transactions as an "Authorized Agent" under Bakkt's active license to facilitate crypto trading, stablecoin payments, custody-linked transfers, and other digital asset transactions within a regulated framework. This basically gives these institutional clients a turnkey passthrough into regulated crypto infrastructure. As history has proven, getting a BitLicense approval directly from the NYDFS could prove to be an exhaustive bureaucratic process. Past fiascos in the crypto industry have also shown that traditional banks and FinTechs face serious counterparty risks when launching or dealing with digital asset products directly. The FTX collapse of 2022 and the Silvergate and Signature bank runs after that are some of the few defining events that come to mind. This backdrop is the catalyst for Bakkt Agent adoption. And the company's ties to ICE also mean it potentially gets better institutional trust, which gives it an immediate seat at the table with Fortune 500 companies that might view independent startups that offer the same crypto infrastructure services as having more operational risk. The shift we are witnessing from traditional financial firms is also the broader catalyst for the Bakkt Agent engine. Stablecoin infrastructure is rapidly moving mainstream. And this wave is now spilling into traditional finance companies, with a giant like MasterCard ( MA ) securing its own New York BitLicense just yesterday and plans to offer B2B settlement infrastructure for stablecoins, cross-border settlements, and tokenized deposits. This proves that the addressable market for the Bakkt Agent engine is valid and potentially massive. Q1 investor deck Bakkt is entering the stablecoin and cross-border remittance space with an ambitious pipeline. There is already a signed MoU with fintech firm Zoth earlier this month, aimed at channeling cross-border stablecoin remittance volume into Bakkt’s regulated rails. Zoth has a target annualized Total Transacting Volume of $1 billion for FY26E. If Bakkt Agent launches smoothly next month and converts these prospective MoUs into definitive, fee-generating SaaS high-margin agreements, the high-margin platform fees and FX conversion cuts will flow through to Bakkt's unit economics. But if there are delays to the launch of Bakkt Agent next month, that could trigger further downside for BKKT. The Future Financial Outlook for Bakkt if Execution Goes as Planned Q1 results were promising despite the decline in revenue, which is driven by lower retail crypto trading volumes in the core Bakkt Markets business. Total controllable OpEx was reduced by $12 million in Q1. Q1 investor deck The balance sheet is also $82.6 million cash strong with zero long-term debt. Q1 headline revenue came in at $243.6 million, which puts TTM revenue at ~$1.52 billion. This is why BKKT is so cheap on a P/S and EV/Sales basis. Data by YCharts But I consider the very low P/S and EV/sales multiples a phantom metric, because it is a distortion of GAAP crypto reporting, which forces firms like Bakkt to book the entire face value of the digital asset transactions as the gross top-line. The actual take rate captured by Bakkt is typically much lower. Q1 investor deck Bakkt is targeting $2.5 billion for FY26E Total Transacting Volume for the Bakkt Markets engine, which is reported as gross revenue. At the current market cap, that would make Bakkt's forward sales multiples much lower. If we go by the true underlying net revenue with a standard ~1.5% take rate applied to the segment's $2.5 billion year-end volume target, we get the more realistic revenue of $37.5 million. Based on this adjusted revenue, BKKT’s more accurate baseline forward P/S would be around 13x to 14x ($512 million market cap / $37.5 million revenue). There is bound to be more contribution to the top line from the Bakkt Agent engine launching next month. Bakkt, in the Q1 investor deck, did not put out any estimated figures for FY26E volume or revenue for that business line. I will also refrain from speculating here and just state broadly that if no execution delays occur, that Bakkt Agent engine will potentially boost the total top line, and the margins will also get more attractive since Bakkt Agent would be generating more of SaaS-like revenue, which commands higher margins of up to 75% (going by industry standard). Adjusted EBITDA reconciliation (Q1 investor deck ) The shrinking controllable OpEx also means any incremental revenue flows straight to the bottom line. Processing higher volume also typically requires almost no headcount increase or massive infrastructure scaling, because of the cloud-native API architecture of the Bakkt Agent platform. Applying even a standard take rate of 1.5% across Zoth’s $1 billion volume pipeline generates $15.0 million in pure net B2B software and FX spread revenue ($1 billion TPV x 1.5%). Applying an industry-standard 75% gross margin potentially generates $11.25 million in fresh gross profit ($15 million revenue x 75%) to flow down the financial stack. Because Bakkt's quarterly controllable opex run-rate has already been structurally optimized, if it gets locked in at ~$18.57 million (which is $74.3 million annualized), this potentially delivers $11.25 million in incremental EBITDA, hacking away the vast majority of the current $(13.7) million Adjusted EBITDA deficit to a near-breakeven $(2.45) million, meaning any additional fintech or corporate remittance pilots layered on top would potentially push Bakkt into positive Adjusted EBITDA. Risks and Takeaway Competition and execution remain the key risks to the current thesis. The Buy thesis in this piece is anchored on the near certainty that the top line is about to see a boost with the launch of Bakkt Agent, and the quality of the revenue mix is about to see improvement. Unforeseen delays in product launch timelines could immediately weaken the Buy thesis. Competition remains fierce, especially in the stablecoin infrastructure segment, which is one of the addressable markets with high monetization potential for Bakkt Agent. I've mentioned that a giant like MasterCard just got its NY BitLicense approved, and this shows the level of competition firms like Bakkt potentially face from already well-capitalized traditional finance incumbents that are now expanding their own regulated digital asset infrastructure stack and licenses portfolio. Bakkt’s updated business model does not translate directly to an easy path to scale. The launch of Bakkt Agent next month is the major near term catalyst. The Buy conviction hinges on that launch. In Bakkt's self assessment score from the first infographic I shared in this piece, the lowest graded area (with a score of 30/100) is the Partners and Distribution channel, which Bakkt highlights as its primary focus area. This is one area I believe investors should also monitor in subsequent updates, because how MoUs are converted to binding commercial contracts, and partners are onboarded are the other catalysts for BKKT moving forward beyond the launch of Bakkt Agent next month. The Q1 updates show that the regulatory licenses, the product suite, and the tech stack and infrastructure are all in place; turning these into revenue streams is the final step to Bakkt's long-sought success story.
