UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-39544

BAKKT HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware			98-1550750
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
10000 Avalon Boulevard, Suite 1000 Alpharetta, Georgia			30009
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (678) 534-5849

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol (s)

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

BKKT

The New York Stock Exchange

Warrants to purchase Class A Common Stock

BKKT WS

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒

As of May ~~6, 2022,~~5, 2023, there were ~~75,267,422~~89,395,877 shares of the registrant’s Class A common stock, ~~188,464,933~~183,279,887 shares of Class V common stock, and ~~7,140,829~~7,140,808 public warrants issued and outstanding.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	45
	Consolidated Balance Sheets	45
	Consolidated Statements of Operations	56
	Consolidated Statements of Comprehensive Loss	67
	Consolidated Statements of Changes in Stockholders’ Equity ~~and Mezzanine Equity~~	78
	Consolidated Statements of Cash Flows	9
	Notes to Unaudited Consolidated Financial Statements	1110
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4744
Item 4.	Controls and Procedures	4744
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	4945
Item 1A.	Risk Factors	4945
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4945
Item 3.	Defaults Upon Senior Securities	4945
Item 4.	Mine Safety Disclosures	4945
Item 5.	Other Information	4945
Item 6.	Exhibits	5046
	Signatures	5147

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Unless the context otherwise requires, all references to “Bakkt,” “we,” “us,” “our,” or the “Company” in this Quarterly Report on Form 10-Q (this “Report”) refer to Bakkt Holdings, Inc. and its subsidiaries.

~~The Company makes~~This Report contains forward-looking statements ~~in this Report~~within the meaning of the federal securities laws, which statements involve substantial risks and ~~in documents incorporated herein by reference. All~~uncertainties. Forward-looking statements ~~other than statements of present~~generally relate to future events or ~~historical fact included in or incorporated by reference in this Report, regarding the Company’s~~our future financial ~~performance,~~or operating performance. You can identify forward-looking statements because they contain words such as well as the Company’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Report, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would,” the negative of such terms, and other similar expressions are intended to identify forward-looking ~~statements, although not all forward-looking statements contain such identifying words.~~statements. These forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions and strategies regarding future events and are based on currently available information as to the outcome and timing of future events. ~~The Company cautions~~We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond ~~the~~our control, ~~of the Company and~~ incident to ~~its~~our business. Forward-looking statements in this Report may include, for example, statements about:

• our future financial performance;

• changes in the market for our products and services;

• the expected impacts from our acquisition of Apex Crypto, LLC ("Apex Crypto"); and

• expansion plans and opportunities.

These forward-looking statements are based on information available as of the date of this Report and management’s current expectations, forecasts and assumptions, and involve a number of judgments, known and/or unknown risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

You should not place undue reliance on these forward-looking statements. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, our actual results or performance may be materially different from those expressed or implied by these forward- looking statements. Some factors that could cause actual results to differ include, but are not limited to:

•

• our ability to grow and manage growth profitably;

•changes in our business strategy;

•changes in the market in which we compete, including with respect to our competitive landscape, technology evolution or changes in applicable laws or regulations;

•

• changes in the ~~digital asset~~ markets that we target;

•disruptions in the crypto market that subject us to additional risks, including the risk that banks may not provide

~~• changes~~banking services to ~~our relationships within the payment ecosystem;~~us;

•the possibility that we may be adversely affected by other economic, business, and/or competitive factors;

•the inability to launch new services and products or to profitably expand into new markets and services;

•

• the inability to execute our growth strategies, including identifying and executing acquisitions and our initiatives to add new ~~partners~~clients;

•our ability to successfully integrate the Apex Crypto business and ~~customers;~~employees, and to achieve the expected benefits from the acquisition;

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•our failure to comply with extensive government regulation, oversight, licensure and appraisals;

•uncertain regulatory regime governing blockchain technologies and crypto;

•the inability to develop and maintain effective internal controls and procedures;

•

• the exposure to any liability, protracted and costly litigation or reputational damage relating to our data security;

•

~~• the possibility that we may be adversely affected by other economic, business, and/or competitive factors;~~

• the impact of ~~the novel coronavirus pandemic;~~any goodwill or other intangible assets impairments on our operating results;

•the impact of any pandemics or other public health emergencies;

•our inability to maintain the listing of our securities on the NYSE; and

•other risks and uncertainties indicated in this Report, including those set forth under “Risk Factors.”

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Bakkt Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except ~~unit~~share data)


		Successor
		As of March 31, 2022 (Unaudited)		As of December 31, 2021			As of March 31, 2023 (Unaudited)		As of December 31, 2022
Assets	Assets					Assets
Current Assets:
Current assets:						Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	355,196	$	391,364	Cash and cash equivalents	$	50,834	$	98,332
Restricted cash	Restricted cash	16,500		16,500		Restricted cash	19,305		16,500
Cash held in escrow						Cash held in escrow	67,209		—
Customer funds	Customer funds	630		551		Customer funds	555		591
Available-for-sale securities						Available-for-sale securities	66,789		141,062
Accounts receivable, net	Accounts receivable, net	19,458		18,142		Accounts receivable, net	25,394		25,306
Prepaid insurance	Prepaid insurance	27,863		32,206		Prepaid insurance	18,490		22,822
Safeguarding asset for crypto						Safeguarding asset for crypto	26,055		15,792
Other current assets	Other current assets	8,395		4,784		Other current assets	7,624		6,060
Total current assets	Total current assets	428,042		463,547		Total current assets	282,255		326,465
Property, equipment and software, net	Property, equipment and software, net	10,679		6,121		Property, equipment and software, net	20,098		19,744
Goodwill	Goodwill	1,527,119		1,527,118		Goodwill	15,853		15,852
Intangible assets, net	Intangible assets, net	383,091		388,469		Intangible assets, net	54,428		55,833
Deposits with clearinghouse, noncurrent		15,151		15,151
Deposits with clearinghouse						Deposits with clearinghouse	15,309		15,150
Other assets	Other assets	19,917		13,879		Other assets	25,374		22,458
Total assets	Total assets	$	2,383,999	$	2,414,285	Total assets	$	413,317	$	455,502
Liabilities and Stockholders’ Equity
Liabilities and stockholders’ equity						Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	64,321	$	64,090	Accounts payable and accrued liabilities	$	49,018	$	66,787
Customer funds payable	Customer funds payable	630		551		Customer funds payable	555		591
Deferred revenue, current	Deferred revenue, current	4,385		4,629		Deferred revenue, current	3,823		3,972
Due to related party	Due to related party	367		617		Due to related party	509		1,168
Safeguarding obligation for crypto						Safeguarding obligation for crypto	26,055		15,792
Other current liabilities	Other current liabilities	3,193		3,717		Other current liabilities	4,313		3,819
Total current liabilities	Total current liabilities	72,896		73,604		Total current liabilities	84,273		92,129
Deferred revenue, noncurrent	Deferred revenue, noncurrent	4,120		4,819		Deferred revenue, noncurrent	2,719		3,112
Warrant liability	Warrant liability	14,996		17,424		Warrant liability	1,785		785
Deferred tax liabilities, net	Deferred tax liabilities, net	8,449		11,593		Deferred tax liabilities, net	—		—
Other noncurrent liabilities	Other noncurrent liabilities	18,251		12,674		Other noncurrent liabilities	26,277		23,402
Total liabilities	Total liabilities	118,712		120,114		Total liabilities	115,054		119,428
Commitments and Contingencies (Note 13)		0		0
Class A common stock ($0.0001 par value, 750,000,000 shares authorized, 57,164,488 shares issued and outstanding as of March 31, 2022 and 57,164,388 shares issued and outstanding as of December 31, 2021)		6		6
Class V common stock ($0.0001 par value, 250,000,000 shares authorized; 206,003,270 shares issued and outstanding as of March 31, 2022 and 206,271,792 shares issued and outstanding as of December 31, 2021)		21		21
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)
Class A common stock ($0.0001 par value, 750,000,000 shares authorized, 82,624,773 shares issued and outstanding as of March 31, 2023 and 80,926,843 shares issued and outstanding as of December 31, 2022)						Class A common stock ($0.0001 par value, 750,000,000 shares authorized, 82,624,773 shares issued and outstanding as of March 31, 2023 and 80,926,843 shares issued and outstanding as of December 31, 2022)	8		8
Class V common stock ($0.0001 par value, 250,000,000 shares authorized, 183,279,887 shares issued and outstanding as of March 31, 2023 and 183,482,777 shares issued and outstanding as of December 31, 2022)						Class V common stock ($0.0001 par value, 250,000,000 shares authorized, 183,279,887 shares issued and outstanding as of March 31, 2023 and 183,482,777 shares issued and outstanding as of December 31, 2022)	19		19
Additional paid-in capital	Additional paid-in capital	579,957		566,766		Additional paid-in capital	780,031		772,973
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(14)		(55)		Accumulated other comprehensive loss	(355)		(290)
Accumulated deficit	Accumulated deficit	(105,470)		(98,342)		Accumulated deficit	(690,423)		(676,447)
Total stockholders’ equity	Total stockholders’ equity	474,500		468,396		Total stockholders’ equity	89,280		96,263
Noncontrolling interest	Noncontrolling interest	1,790,787		1,825,775		Noncontrolling interest	208,983		239,811
Total equity	Total equity	2,265,287		2,294,171		Total equity	298,263		336,074
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,383,999	$	2,414,285	Total liabilities and stockholders’ equity	$	413,317	$	455,502

The accompanying notes are an integral part of these consolidated financial ~~statements~~statements.

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Bakkt Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

Successor Predecessor
Three Months Ended
March 31, 2022 Three Months Ended
March 31, 2021
Revenues:
Net revenues (includes related party net revenues of $20 and affiliate net revenues of $(26), respectively) (1)
$ 12,532 $ 8,145
Operating expenses:
Compensation and benefits 35,088 15,233
Professional services 4,675 913
Technology and communication 4,358 2,786
Selling, general and administrative 9,435 6,109
Acquisition-related expenses 516 7,820
Depreciation and amortization 5,851 2,794
Related party expenses (affiliate in Predecessor period) (1)
367 471
Other operating expenses 728 429
Total operating expenses 61,018 36,555
Operating loss (48,486) (28,410)
Interest income (expense), net 61 (49)
Gain from change in fair value of warrant liability 2,428 —
Other expense, net (462) (338)
Loss before income taxes (46,459) (28,797)
Income tax benefit (expense) 3,138 (23)
Net loss (43,321) $ (28,820)
Less: Net loss attributable to noncontrolling interest (36,193)
Net loss attributable to Bakkt Holdings, Inc. $ (7,128)
Net loss per share attributable to Bakkt Holdings, Inc.
Class A common stockholders per share:
Basic $ (0.12) (2)
Diluted $ (0.14) (2)

~~(1)As a result of the Business Combination, ICE and its affiliates are no longer our affiliates. Refer to Note 7 for our related party disclosures.~~

~~(2)Basic and diluted loss per share is not presented for the Predecessor period due to lack of comparability with the Successor period.~~


	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Revenues:
Net revenues (includes related party net revenues of $1 and $20, respectively)	$	12,986	$	12,532
Operating expenses:
Compensation and benefits	34,144		35,088
Professional services	2,378		4,675
Technology and communication	5,718		4,358
Selling, general and administrative	6,709		9,435
Acquisition-related expenses	776		516
Depreciation and amortization	3,063		5,851
Related party expenses	600		367
Restructuring expenses	4,251		—
Other operating expenses	795		728
Total operating expenses	58,434		61,018
Operating loss	(45,448)		(48,486)
Interest income, net	1,624		61
(Loss) gain from change in fair value of warrant liability	(1,000)		2,428
Other expense, net	(17)		(462)
Loss before income taxes	(44,841)		(46,459)
Income tax (expense) benefit	(18)		3,138
Net loss	(44,859)		(43,321)
Less: Net loss attributable to noncontrolling interest	(30,883)		(36,193)
Net loss attributable to Bakkt Holdings, Inc.	$	(13,976)	$	(7,128)

Net loss per share attributable to Class A common stockholders:
Basic	$	(0.17)	$	(0.12)
Diluted	$	(0.17)	$	(0.14)

The accompanying notes are an integral part of these consolidated financial statements.

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Bakkt Holdings, Inc.

Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)


		Successor		Predecessor
		Three Months Ended March 31, 2022		Three Months Ended March 31, 2021			Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Net loss	Net loss	$	(43,321)	$	(28,820)	Net loss	$	(44,859)	$	(43,321)
Currency translation adjustment, net of tax	Currency translation adjustment, net of tax	188		79		Currency translation adjustment, net of tax	22		188
Unrealized losses on available-for-sale securities, net of tax						Unrealized losses on available-for-sale securities, net of tax	(229)		—
Comprehensive loss	Comprehensive loss	$	(43,133)	$	(28,741)	Comprehensive loss	$	(45,066)	$	(43,133)
Comprehensive loss attributable to noncontrolling interest	Comprehensive loss attributable to noncontrolling interest	(36,046)				Comprehensive loss attributable to noncontrolling interest	(31,027)		(36,046)
Comprehensive loss attributable to Bakkt Holdings, Inc.	Comprehensive loss attributable to Bakkt Holdings, Inc.	$	(7,087)			Comprehensive loss attributable to Bakkt Holdings, Inc.	$	(14,039)	$	(7,087)

The accompanying notes are an integral part of these consolidated financial statements.

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Bakkt Holdings, Inc.

Consolidated Statements of Changes in Stockholders’ Equity ~~(Successor)~~

(in thousands, except ~~unit~~share data)

(Unaudited)


		Class A Common Stock			Class V Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity			Class A Common Stock			Class V Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
		Shares	$		Shares	$															Shares	$		Shares	$
Balance as of December 31, 2021	Balance as of December 31, 2021	57,164,388	$	6	206,271,792	$	21	$	566,766	$	(98,342)	$	(55)	$	468,396	$	1,825,775	$	2,294,171	Balance as of December 31, 2021	57,164,388	$	6	206,271,792	$	21	$	566,766	$	(98,342)	$	(55)	$	468,396	$	1,825,775	$	2,294,171
Share-based compensation (Note 10)		—	—		—	—		13,190		—		—		13,190		—		13,190
Unit-based compensation (Note 10)		—	—		—	—		—		—		—		—		1,118		1,118
Forfeiture and cancellation of common units (Note 10)		—	—		(268,522)	—		—		—		—		—		(60)		(60)
Exercise of warrants (Note 8)		100	—		—	—		1		—		—		1		—		1
Share-based compensation																				Share-based compensation	—	—		—	—		13,190		—		—		13,190		—		13,190
Unit-based compensation																				Unit-based compensation	—	—		—	—		—		—		—		—		1,118		1,118
Forfeiture and cancellation of common units																				Forfeiture and cancellation of common units	—	—		(268,522)	—		—		—		—		—		(60)		(60)
Exercise of warrants																				Exercise of warrants	100	—		—	—		1		—		—		1		—		1
Currency translation adjustment, net of tax	Currency translation adjustment, net of tax	—	—		—	—		—		—		41		41		147		188		Currency translation adjustment, net of tax	—	—		—	—		—		—		41		41		147		188
Net loss	Net loss	—	—		—	—		—		(7,128)		—		(7,128)		(36,193)		(43,321)		Net loss	—	—		—	—		—		(7,128)		—		(7,128)		(36,193)		(43,321)
Balance as of March 31, 2022	Balance as of March 31, 2022	57,164,488	$	6	206,003,270	$	21	$	579,957	$	(105,470)	$	(14)	$	474,500	$	1,790,787	$	2,265,287	Balance as of March 31, 2022	57,164,488	$	6	206,003,270	$	21	$	579,957	$	(105,470)	$	(14)	$	474,500	$	1,790,787	$	2,265,287

Balance as of December 31, 2022																				Balance as of December 31, 2022	80,926,843	8		183,482,777	19		772,973		(676,447)		(290)		96,263		239,811		336,074
Share-based compensation																				Share-based compensation	—	—		—	—		6,713		—		—		6,713		—		6,713
Unit-based compensation																				Unit-based compensation	—	—		—	—		—		—		—		—		542		542
Shares issued upon vesting of share-based awards, net of tax withholding																				Shares issued upon vesting of share-based awards, net of tax withholding	1,495,040	—		—	—		—		—		—		—		—		—
Exchange of Class V shares for Class A shares																				Exchange of Class V shares for Class A shares	202,890	—		(202,890)	—		345		—		—		345		(345)		—
Currency translation adjustment, net of tax																				Currency translation adjustment, net of tax	—	—		—	—		—		—		7		7		15		22
Unrealized losses on available-for-sale securities, net of tax																				Unrealized losses on available-for-sale securities, net of tax	—	—		—	—		—		—		(72)		(72)		(157)		(229)
Net loss																				Net loss	—	—		—	—		—		(13,976)		—		(13,976)		(30,883)		(44,859)
Balance as of March 31, 2023																				Balance as of March 31, 2023	82,624,773	$	8	183,279,887	$	19	$	780,031	$	(690,423)	$	(355)	$	89,280	$	208,983	$	298,263

The accompanying notes are an integral part of these consolidated financial statements.

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~~Bakkt Holdings, Inc.~~

~~Consolidated Statements of Changes in Members’ Equity and Mezzanine Equity (Predecessor)~~

~~(in thousands, except unit data)~~

~~(Unaudited)~~

Class A Voting Units Class B Voting Units Class B Warrant Class C Voting Units Accumulated Deficit Accumulated Other
Comprehensive Income Total Member's
Equity Incentive Units Total Mezzanine
Equity
Units $ Units $ Warrants $ Units $ Units $
Balance as of December 31, 2020 400,000,000 $ 2,613 182,500,000 $ 182,500 — $ 5,426 270,270,270 $ 310,104 $ (112,504) $ 191 $ 388,330 — $ 21,452 $ 21,452
Issuance of Class A voting units (Note 9) — 110 — — — — — — — — 110 — — —
Unit-based incentive compensation (Note 10) — — — — — — — — — — — — 870 870
Currency translation adjustment, net of tax — — — — — — — — — 79 79 — — —
Net loss — — — — — — — — (28,820) — (28,820) — — —
Balance as of March 31, 2021 400,000,000 $ 2,723 182,500,000 $ 182,500 — $ 5,426 270,270,270 $ 310,104 $ (141,324) $ 270 $ 359,699 — $ 22,322 $ 22,322

~~The accompanying notes are an integral part of these consolidated financial statements.~~

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Bakkt Holdings, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Successor Predecessor
Three Months Ended
March 31, 2022 Three Months Ended
March 31, 2021
Cash flows from operating activities:
Net loss $ (43,321) $ (28,820)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 5,851 2,761
Non-cash lease expense 334 365
Share-based compensation expense (Note 10) 13,190 —
Unit-based compensation expense (Note 10) 157 1,256
Recognition of affiliate capital contribution (Note 7) — 110
Amortization of customer consideration asset (Note 9) — 581
Deferred income tax benefit (3,144) —
Impairment of long-lived assets — 57
Gain from change in fair value of warrant liability (2,428) —
Cancellation of common units (Note 10) (60) —
Other 280 226
Changes in operating assets and liabilities:
Accounts receivable (1,316) 99
Prepaid insurance 4,343 348
Deposits with clearinghouse affiliate — 20,409
Accounts payable and accrued liabilities (1,683) 2,900
Due to related party (affiliate in Predecessor period) (1)
(250) (1,981)
Deferred revenues (943) (241)
Operating lease liabilities. 79 (321)
Customer funds payable 79 133
Other assets and liabilities (Note 10) (4,324) 1,144
Net cash used in operating activities (33,156) (974)
Cash flows from investing activities:
Capitalized internal-use software development costs and other capital expenditures (3,122) (4,054)
Net cash used in investing activities (3,122) (4,054)
Cash flows from financing activities:
Payment of finance lease liability — (31)
Proceeds from the exercise of warrants (Note 8) 1 —
Net cash provided by (used in) financing activities 1 (31)
Effect of exchange rate changes 188 79
Net decrease in cash, cash equivalents, restricted cash and customer funds (36,089) (4,980)
Cash, cash equivalents, restricted cash and customer funds at the beginning of the period 408,415 91,943
Cash, cash equivalents, restricted cash and customer funds at the end of the period $ 372,326 $ 86,963
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ — $ —
Non-cash operating lease right-of-use asset acquired 5,696 —
Supplemental disclosure of non-cash investing and financing activity:
Issuance of Class A voting units in exchange of capital contribution (Note 9) $ — $ 110
Capitalized internal-use software development costs and other capital expenditures included in accounts payable and accrued liabilities. 1,909 1,810
Reconciliation of cash, cash equivalents, restricted cash and customer funds to consolidated balance sheet:
Cash and cash equivalents $ 355,196 $ 70,248
Restricted cash 16,500 16,500
Customer funds 630 215
Total cash, cash equivalents, restricted cash and customer funds $ 372,326 $ 86,963

~~(1)As a result of the Business Combination, ICE and its affiliates are no longer our affiliates. Refer to Note 7 for our related party disclosures.~~

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	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Cash flows from operating activities:
Net loss	$	(44,859)	$	(43,321)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,063		5,851
Non-cash lease expense	789		334
Share-based compensation expense	7,241		13,190
Unit-based compensation expense	680		157
Forfeiture and cancellation of common units	—		(60)
Deferred income taxes	—		(3,144)
Loss on disposal of assets	14		—
Loss (gain) from change in fair value of warrant liability	1,000		(2,428)
Other	243		280
Changes in operating assets and liabilities:
Accounts receivable	(88)		(1,316)
Prepaid insurance	4,332		4,343
Deposits with clearinghouse	(159)		—
Accounts payable and accrued liabilities	(15,991)		(1,683)
Due to related party	(659)		(250)
Deferred revenue	(542)		(943)
Operating lease liabilities	(592)		79
Customer funds payable	(36)		79
Other assets and liabilities	(1,677)		(4,324)
Net cash used in operating activities	(47,241)		(33,156)
Cash flows from investing activities:
Capitalized internal-use software development costs and other capital expenditures	(3,719)		(3,122)
Purchase of available-for-sale securities	(26,999)		—
Proceeds from the maturity of available-for-sale securities	101,048		—
Acquisition of Bumped LLC	(631)		—
Net cash provided by (used in) investing activities	69,699		(3,122)
Cash flows from financing activities:
Proceeds from the exercise of warrants	—		1
Net cash provided by financing activities	—		1
Effect of exchange rate changes	22		188
Net increase (decrease) in cash, cash equivalents, restricted cash, cash held in escrow and customer funds	22,480		(36,089)
Cash, cash equivalents, restricted cash, cash held in escrow and customer funds at the beginning of the period	115,423		408,415
Cash, cash equivalents, restricted cash, cash held in escrow and customer funds at the end of the period	$	137,903	$	372,326
Supplemental disclosure of cash flow information:
Cash paid for income taxes	—		—
Non-cash operating lease right-of-use asset acquired	$	3,776	$	5,696
Supplemental disclosure of non-cash investing and financing activity:
Capitalized internal-use software development costs and other capital expenditures included in accounts payable and accrued liabilities.	1,597		1,909
Reconciliation of cash, cash equivalents, restricted cash, cash held in escrow and customer funds to consolidated balance sheet:
Cash and cash equivalents	$	50,834	$	355,196
Restricted cash	19,305		16,500
Cash held in escrow	67,209		—
Customer funds	555		630
Total cash, cash equivalents, restricted cash, cash held in escrow and customer funds	$	137,903	$	372,326

The accompanying notes are an integral part of these consolidated financial statements.

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Bakkt Holdings, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1.Organization and Description of Business

Organization

VPC Impact Acquisition Holdings (“VIH”) was a blank check company incorporated as a Cayman Islands exempted company on July 31, 2020. VIH was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. ~~VIH’s sponsor was VPC Impact Acquisition Holdings Sponsor, LLC (the “Sponsor”).~~

The registration statement for VIH’s Initial Public Offering was declared effective on September 22, 2020. On September 25, 2020, VIH consummated the Initial Public Offering of 20,000,000 units (the “Units”), generating gross proceeds of $200.0 million. Simultaneously with the closing of the Initial Public Offering, VIH consummated the sale of 6,000,000 warrants (the “private placement warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $6.0 million. On September 29, 2020, the underwriters notified VIH of their intention to partially exercise their over-allotment option on October 1, 2020. As such, on October 1, 2020, VIH consummated the sale of an additional 737,202 Units, at $10.00 per Unit, and the sale of an additional 147,440 private placement warrants, at $1.00 per Private Warrant, generating total gross proceeds of $7.5 million.

Following the closing of the Initial Public Offering on September 25, 2020 and the partial exercise of the underwriter’s over-allotment on October 1, 2020, an amount of approximately $207.4 million ($10.00 per Unit) from the proceeds of the sale of the Units in the Initial Public Offering and the sale of the private placement warrants, net of transaction costs, was placed in a trust account (the “Trust Account”).

On October 15, 2021 (the “Closing Date”), VIH and Bakkt Opco Holdings, LLC (then known as Bakkt Holdings, LLC, ~~"Opco"~~“Opco”) and its operating subsidiaries consummated a business combination (the ~~“Business~~“VIH Business Combination”) contemplated by the definitive Agreement and Plan of Merger entered into on January 11, 2021 (as amended, the “Merger Agreement”). In connection with the VIH Business Combination, VIH changed its name to “Bakkt Holdings, Inc.” and changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware (the “Domestication”).

Unless the context otherwise provides, “we,” “us,” “our,” ~~“Bakkt,”~~“Bakkt”, the “Company” and like terms refer ~~(i) prior to the Closing Date, to Opco and its subsidiaries and (ii) after the Closing Date,~~ to Bakkt Holdings, Inc. and its subsidiaries, including Opco.

Immediately following the Domestication, we became organized in an umbrella partnership corporation, or “up-C,” structure in which substantially all of our assets and business are held by Opco, and our only direct assets consist of common units in Opco (“Opco ~~common units”~~Common Units”), which are non-voting interests in Opco, and the managing member interest in Opco.

In connection with the VIH Business Combination, a portion of VIH shares were exchanged for cash for shareholders who elected to execute their redemption right. The remaining VIH shares were exchanged for newly issued shares of our Class A common stock. Additionally, all outstanding membership interests and rights to acquire membership interests in Opco were exchanged for Opco ~~common units~~Common Units and an equal number of newly issued shares of our Class V common stock. The existing owners of Opco other than Bakkt are considered noncontrolling interests in the accompanying consolidated financial statements (the “financial statements”). ~~Refer~~

Description of Business

We provide, or are working to ~~Note 4~~provide, simplified solutions focused in the following areas:

Crypto

•Custody. Our institutional-grade qualified custody solution caters to more experienced market participants and also supports our ~~consolidated financial statements included in~~consumer-facing crypto business. Crypto that we custody is held by our ~~Annual Report on Form 10-K for~~subsidiary, Bakkt Trust Company LLC (“Bakkt Trust”), a limited purpose trust company that is supervised by the ~~year ended December 31, 2021 filed~~New York State Department of Financial Services (“NYDFS”) and governed by an independent Board of Managers.

•Crypto Connect. Bakkt Marketplace, LLC (“Bakkt Marketplace”) operates a platform that provides consumers, businesses and institutions with the ~~U.S. Securities~~ability to buy, sell and ~~Exchange Commission (the "SEC"~~store crypto in a simple, intuitive digital experience accessed via application programming interfaces (“APIs”) ~~on March 31, 2022 (the "Form 10-K") where~~or embedded web experience. We aim to enable businesses in various industries - such as fintechs, financial institutions and wallet providers - to provide their customers with the ~~Business Combination is described~~ability to transact in ~~detail.~~crypto directly in their trusted environments.

•Crypto Rewards. We are in the process of enabling customers of all sizes to offer loyalty and rewards to their customers in the form of crypto – either by earning crypto rewards, or by redeeming existing reward currencies, such as points or miles, into crypto.

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~~Our Class A common stock~~•Crypto Payouts. We are in the process of enabling consumers to automatically invest a portion of payments into crypto. Crypto payouts allow for new cases (for instance, for gig economy or marketplace participants such as freelancers, content providers, and ~~warrants are listed on the New York Stock Exchange under the ticker symbols “BKKT” and “BKKT WS,” respectively.~~delivery workers to receive their wages in crypto).

~~Description of Business~~

~~We offer a platform with three complementary aspects - a digital asset marketplace, a loyalty redemption service, and an alternative payment method.~~

~~Digital Asset Marketplace~~. ~~Our digital asset marketplace enables participants to seamlessly transact in a growing universe of digital assets and has applications for individual consumers, businesses and institutions. In~~ Bakkt Trust ~~Company LLC (“Bakkt Trust”~~operates, in conjunction with Intercontinental Exchange, Inc. ("ICE"), ~~we have an institutional-grade custodian for bitcoin and ether.~~ Bakkt Trust is a New York limited-purpose trust company that is chartered by and subject to the supervision and oversight of the New York Department of Financial Services (“NYDFS”). In September 2019, Bakkt Trust, along with ICE Futures U.S., Inc. (“IFUS”) and ICE Clear US, Inc. (“ICUS”), both of which are wholly-owned subsidiaries of ICE, brought to market an institutional-grade, regulated infrastructure for trading, clearing, and custody services for ~~bitcoin.~~physically-delivered bitcoin futures. Bakkt ~~Trust acts~~Marketplace holds a New York State virtual currency license (commonly referred to as a qualified custodian for bitcoin and ether, which enables Bakkt Trust to offer end-to-end regulated, physically-delivered bitcoin futures and options contracts to financial institutions and market makers. In addition, Bakkt Trust offers non-trading- related, standalone custody of bitcoin and ether to institutions and certain high net worth individuals in cryptoassets, subject to NYDFS regulatory oversight.

~~Loyalty Redemption~~. ~~Our institutional-grade loyalty redemption service provides seamless and cost-effective options for consumers to use their loyalty points.~~ Our loyalty redemption platform, which is cloud-based and delivered through major web browsers and mobile devices, connects loyalty programs to leading commerce partners allowing consumers to redeem a spectrum of loyalty currencies for merchandise, services and gift cards.

~~Alternative Payments~~. ~~Our alternative payments platform provides choice and convenience to both consumers and merchants. Through Bakkt Marketplace, LLC (“Bakkt Marketplace”~~"BitLicense"), ~~we have an integrated platform that enables consumers~~ and enterprises to transact in digital assets. Alternative payments users have a digital wallet that enables them to purchase, sell, convert, and or spend digital assets. Users can also use their digital wallet to spend fiat currency with various retailers and convert loyalty and rewards points into fiat currency. We have received money transmitter licenses from all states throughout the U.S. where such licenses are required ~~(other than Hawaii, where we do not presently operate) , have obtained a New York State virtual currency license,~~for the operation of its business, and ~~are~~is registered as a money services business with the Financial Crimes Enforcement Network of the United States Department of the Treasury. Bakkt Trust’s custody solution provides support to Bakkt Marketplace with respect to bitcoin and ether ~~functionality within the consumer app.~~functionality.

Loyalty

•We offer a full spectrum of content that customers can make available to their customers when redeeming loyalty currencies. Our redemption solutions span a variety of rewards categories including merchandise (such as Apple products and services), gift cards and digital experiences. Our travel solution offers a retail e-commerce booking platform, as well as live-agent booking and servicing. Our platform provides a unified shopping experience that is configurable for companies and their programs. Capabilities include a mobile-first user experience, a multi-tier construct to accommodate loyalty tiers, comprehensive fraud protection capabilities and a split-tender payments platform to accept both points and credit cards as a form of payment.

2.Summary of Significant Accounting Policies

Our accounting policies are as set forth in the notes ofto our Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022 (our "Form 10-K").

Basis of Presentation

As a result of the Business Combination, we evaluated if VIH or Opco is the predecessor for accounting purposes. In considering the foregoing principles of predecessor determination in light of our specific facts and circumstances, we determined that Opco is the predecessor for accounting purposes. The financial statement presentation includes the financial statements of Opco as “Predecessor” for periods prior to the Closing Date and the financial statements of the Company as “Successor” for the period after the Closing Date, including the consolidation of Opco.

The accompanying unaudited interim consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim consolidated financial statements include the accounts of the Company and our subsidiaries. All

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intercompany balances and transactions have been eliminated in consolidation. In addition, certain reclassifications of amounts previously reported have been made to the accompanying consolidated financial statements in order to conform to current presentation.

In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation have been included. The interim results for the three months ended March 31, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022,~~2023, or for any other future annual or interim period. These consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes thereto included in ~~the~~our Form 10-K.

Recently Adopted Accounting Pronouncements

~~Except as described below, for~~For the three months ended March 31, ~~2022,~~2023, there were no significant changes to the recently adopted accounting pronouncements applicable to us from those disclosed in Note 2 ofto the consolidated financial statements included in our Form 10-K.

On March 31, 2022, the ~~SEC~~Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin ("SAB") Number 121 ("SAB 121"), which provides the SEC staff’s view that it would be appropriate for an entity that has an obligation to safeguard ~~cryptoassets~~crypto held for platform users to record a liability and corresponding asset on its balance sheet at

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the fair value of the ~~cryptoassets.~~crypto. SAB 121 also added Section FF to SAB Topic ~~5;1~~5 to include interpretive guidance for entities to consider when they have obligations to safeguard ~~cryptoassets~~crypto held for their platform users. We ~~will need to adopt~~adopted the guidance in SAB 121 ~~no later than our Quarterly Report on Form 10-Q for~~during the quarter ~~ending~~ended June 30, 2022 with retrospective application as of January 1, 2022. ~~As a custodian of cryptoassets~~Refer to Note 18 for institutions and consumers, we are evaluating the financial reporting impact of the cryptoassets we hold for our platform users and expect the adoption of SAB 121 to result in the recognition of a liability associated with the obligation to safeguard cryptoassets under custody and a corresponding asset.additional information.

3.Revenue from Contracts with Customers

Disaggregation of Revenue

We disaggregate revenue by service type and by platform, respectively, as follows (in thousands):


		Successor		Predecessor
Service Type	Service Type	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		Service Type	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Transaction revenue, net(a)	Transaction revenue, net(a)	$	6,518	$	3,295	Transaction revenue, net(a)	$	7,473	$	6,518
Subscription and service revenue	Subscription and service revenue	6,014		4,850		Subscription and service revenue	5,513		6,014
Total revenue	Total revenue	$	12,532	$	8,145	Total revenue	$	12,986	$	12,532

(a)Amounts are net of ~~incentives,~~ rebates and ~~liquidity~~incentive payments ~~reductions related to the contribution agreement entered into between Bakkt and ICE in connection with ICE’s formation~~ of ~~Bakkt (“Contribution Agreement"), and consideration payable pursuant to an agreement with a strategic partner of approximately $0.3~~less than $0.1 million for the three months ended March 31, ~~2022~~2023, and ~~approximately $0.9~~$0.3 million for the three months ended March 31, ~~2021.~~2022. Included in these amounts are amounts earned from related parties of less than $0.1 million for both the three months ended March 31, ~~2022~~2023 and ~~amounts earned from affiliates~~March 31, 2022.


Platform	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Loyalty redemption platform	12,776		12,736
Crypto services(b)	210		(204)
Total revenue	$	12,986	$	12,532

(b)Amounts are net of rebates and incentive payments of less than $0.1 million for the three months ended March 31, ~~2021 (Note 7).~~

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Successor Predecessor
Platform Three Months Ended
March 31, 2022 Three Months Ended
March 31, 2021
Digital asset marketplace(b)
$ 79 $ 87
Loyalty redemption platform 12,736 8,529
Alternative payment platform(c)
(283) (471)
Total revenue $ 12,532 $ 8,145

~~(b)Amounts are net of incentives, rebates~~2023, and ~~liquidity payments and reductions related to the Contribution Agreement of less than $0.1 million for the three months ended March 31, 2022 and approximately~~ $0.3 million for the three months ended March 31, ~~2021.~~2022. Included in these amounts are amounts earned from related parties of less than $0.1 million for both the three months ended March 31, 2023 and March 31, 2022.

~~(c)~~We recognized revenue from foreign jurisdictions of $0.9 million for ~~Amounts are net of incentives~~the three months ended March 31, 2023, and ~~consideration payable pursuant to an agreement with a strategic partner of $0.3 million and $0.6~~$1.1 million for the three months ended March 31, ~~2022 and 2021, respectively.~~2022.

We have 1one reportable segment to which our revenues relate.

Deferred Revenue

Contract liabilities consist of deferred ~~revenues~~revenue for amounts invoiced prior to us meeting the criteria for revenue recognition. We invoice customers for service fees at the time the service is performed, and such fees are recognized as revenue over time as we satisfy its performance obligation. Contract liabilities are classified as “Deferred revenue, current” and “Deferred revenue, noncurrent” in our consolidated balance sheets. The activity in deferred revenue for the three months ended March 31, ~~2022~~2023 and ~~2021,~~March 31, 2022, respectively, was as follows (in thousands):

Successor Predecessor
Three Months Ended
March 31, 2022 Three Months Ended
March 31, 2021
Beginning of the period contract liability $ 9,448 $ 8,385
Revenue recognized from contract liabilities included in the beginning balance (1,322) (1,158)
Increases due to cash received, net of amounts recognized in revenue during the period 379 917
End of the period contract liability $ 8,505 $ 8,144

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	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Beginning of the period contract liability	$	7,084	$	9,448
Revenue recognized from contract liabilities included in the beginning balance	(1,119)		(1,322)
Increases due to cash received, net of amounts recognized in revenue during the period	577		379
End of the period contract liability	$	6,542	$	8,505

Remaining Performance Obligations

As of March 31, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations related to partially completed contracts is $24.4 million, comprised of $17.9 million of subscription fees and $6.5 million of service fees that are deferred. We recognize our subscription fees as revenue over a weighted-average period of 32 months (ranges from 1 month – 42 months) and our service fees as revenue over approximately 17 months.

As of March 31, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations related to partially completed contracts is $26.4 million, comprised of $17.9 million of subscription fees and $8.5 million of service fees that are deferred. We ~~will~~ recognize our subscription fees as revenue over a weighted-average period of 42 months (ranges from 3 months – 54 months) and our service fees as revenue over approximately ~~2 years.~~

As of March 31, 2021, the aggregate amount of the transaction price allocated to the remaining performance obligations related to partially completed contracts is $14.1 million, comprised of $5.9 million of subscription fees and $8.2 million of service fees that are deferred. We will recognize our subscription fees as revenue over a weighted-average period of 15.5 months (ranges from 1 month – 39 months) and our service fees as revenue over approximately 3 years.24 months.

Contract Costs

For the three months ended March 31, ~~2022~~2023 and ~~2021,~~March 31, 2022, we incurred no incremental costs to obtain and/or fulfill contracts with customers.

4.Business Combination and Asset Acquisition

Apex Crypto

On April 1, 2023 we completed the acquisition of 100% of the ownership interests of Apex Crypto, LLC ("Apex Crypto"). We expect to leverage Apex Crypto's proprietary trading platform and existing relationships with liquidity providers to provide a wider range of assets and competitive pricing to our customers. We expect to recognize goodwill from the acquisition due to the assembled, experienced workforce and anticipated growth we expect to achieve from Apex’s sales pipeline and product capabilities .The total consideration as measured at April 1, 2023 included $55.0 million in cash, approximately $9.1 million in Class A common stock payable based on Apex Crypto’s performance in the fourth quarter of 2022, and $12.2 million of cash paid for net working capital, which was predominantly cash held in banks. In addition, we may pay up to $100.0 million of our Class A common stock as additional consideration depending on Apex Crypto’s achievement of certain financial targets through 2025 (the "contingent consideration"). However, as of the acquisition date the Company does not anticipate paying the contingent consideration and no material fair value was attributed to the contingent consideration. The Company’s evaluation of the fair value of the contingent consideration and of the assets acquired and the liabilities assumed is preliminary. Accordingly, the adjustments to record the assets acquired and the liabilities assumed at fair value reflect the best estimates of the Company based on the information currently available and are subject to change once additional analyses are completed.

The following is a preliminary reconciliation of the fair value of consideration transferred in the acquisition to the fair value of the assets acquired and liabilities assumed.

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($ in millions)
Cash consideration paid	55.0
Cash paid working capital and cash	12.2
Class A common stock at transaction close	9.1
Estimated fair value of Class A common stock contingent consideration	—
Total consideration	$	76.3
Current assets	21.3
Safeguarding asset for crypto	687.9
Property, equipment and software, net	0.1
Non-current assets	0.3
Intangible assets - developed technology	5.4
Intangible assets - customer relationships	11.0
Goodwill	47.7
Current liabilities	(9.5)
Safeguarding obligation for crypto	(687.9)
Net assets acquired	$	76.3

The following unaudited pro forma financial information presents the Company's results of operations as if the acquisition of Apex Crypto had occurred on January 1, 2022. The unaudited pro forma financial information as presented below is for illustrative purposes and does not purport to represent what the results of operations would actually have been if the acquisition of Apex Crypto occurred as of the date indicated or what the results would be for any future periods. The unaudited pro forma results reflect the step-up amortization adjustments for the fair value of intangible assets acquired, acquisition-related expenses, and share-based compensation expense for newly issued restricted stock units. Proforma net revenue for the three months ended March 31, 2023 and March 31, 2022 would be $458.4 million and $1,308.3 million, respectively. Proforma net loss for the three months ended March 31, 2023 and March 31, 2022 would be $48.2 million and $53.5 million, respectively.

Bumped Acquisition

On February 8, 2023, we acquired 100% of the units of Bumped Financial, LLC ("Bumped"), a broker-dealer registered with the SEC and the Financial Industry Regulatory Authority, Inc., for cash consideration of $631,000. Because of the limited scope of its historical operations we determined that substantially all of the purchase consideration in the transaction would be allocated to the in-place licenses Bumped held and as such have accounted for this as an asset acquisition.

4.5.Goodwill and Intangible Assets, Net

Changes in goodwill consisted of the following (in thousands):


	~~Successor~~
Balance as of December 31, ~~2021~~2022	$	~~1,527,118~~15,852
Foreign currency translation	1
Balance as of March 31, ~~2022~~2023	$	~~1,527,119~~


	~~Predecessor~~
~~Balance as of December 31, 2020~~	$	~~233,429~~
~~Foreign currency translation~~	~~(16)~~
~~Balance as of March 31, 2021~~	$	~~233,413~~15,853

No goodwill impairment charges have been recognized in the periods presented.

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Intangible assets consisted of the following (in thousands):


		Successor
		March 31, 2022								March 31, 2023
		Weighted Average Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Weighted Average Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Licenses	Licenses	Indefinite	$	241,320	$	—	$	241,320	Licenses	Indefinite	611		—		611
Trademarks / trade names	Trademarks / trade names	Indefinite	39,470		—		39,470		Trademarks / trade names	Indefinite	8,000		—		8,000
Technology	Technology	4.2	67,310		(7,407)		59,903		Technology	4.2	12,760		(3,720)		9,040
Customer relationships	Customer relationships	8	44,970		(2,572)		42,398		Customer relationships	8	44,970		(8,193)		36,777
Total	Total		$	393,070	$	(9,979)	$	383,091	Total		$	66,341	$	(11,913)	$	54,428


		Successor
		December 31, 2021								December 31, 2022
		Weighted Average Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Weighted Average Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Impairment	Net Carrying Amount
Licenses	Licenses	Indefinite	$	241,320	$	—	$	241,320	Licenses	Indefinite	$	241,320	$	—	(241,320)	$	—
Trademarks / trade names	Trademarks / trade names	Indefinite	39,470		—		39,470		Trademarks / trade names	Indefinite	39,470		—		(31,470)	8,000
Technology	Technology	4.2	67,310		(3,415)		63,895		Technology	4.2	67,310		(19,605)		(38,035)	9,670
Customer relationships	Customer relationships	8	44,970		(1,186)		43,784		Customer relationships	8	44,970		(6,807)		—	38,163
Total	Total		$	393,070	$	(4,601)	$	388,469	Total		$	393,070	$	(26,412)	(310,825)	$	55,833

Amortization of intangible assets for the three months ended March 31, 2023 and March 31, 2022 ~~and 2021,~~ was ~~$5.4~~$2.0 million and ~~$1.6~~$5.4 million, respectively, and is included in “Depreciation and amortization” in the statements of operations.

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Estimated future amortization for definite-lived intangible assets as of March 31, ~~2022 is~~2023 was as follows (in thousands):


		March 31, 2022			March 31, 2023
Year ending December 31:
Remainder of 2022		$	16,433
2023		21,811
Remainder of 2023				Remainder of 2023	$	6,158
2024	2024	21,871		2024	8,196
2025	2025	18,896		2025	8,173
2026	2026	7,628		2026	7,628
2027				2027	5,621
Thereafter	Thereafter	15,662		Thereafter	10,041
Total	Total	$	102,301	Total	$	45,817

5.6.Consolidated Balance Sheet Components

Accounts Receivable, Net

Accounts receivable, net consisted of the following (in thousands):


		Successor
		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Trade accounts receivable	Trade accounts receivable	$	14,177	$	11,404	Trade accounts receivable	$	19,074	$	16,284
Unbilled receivables	Unbilled receivables	3,995		5,448		Unbilled receivables	4,198		6,445
Other receivables	Other receivables	1,496		1,500		Other receivables	2,332		2,787
Total accounts receivable	Total accounts receivable	19,668		18,352		Total accounts receivable	25,604		25,516
Less: allowance for doubtful accounts	Less: allowance for doubtful accounts	(210)		(210)		Less: allowance for doubtful accounts	(210)		(210)
Total	Total	$	19,458	$	18,142	Total	$	25,394	$	25,306

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Other Current Assets

Other current assets consisted of the following (in thousands):

Successor
March 31, 2022 December 31, 2021
Prepaid expenses $ 8,395 $ 4,784
Total $ 8,395 $ 4,784

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	March 31, 2023		December 31, 2022
Prepaid expenses	$	7,624	$	6,060
Total	$	7,624	$	6,060

Property, Equipment and Software, Net

Property, equipment and software, net consisted of the following (in thousands):


		Successor
		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Internal-use software	Internal-use software	$	7,191	$	3,550	Internal-use software	$	5,510	$	4,383
Purchased software	Purchased software	23		17		Purchased software	99		99
Office furniture and equipment	Office furniture and equipment	19		19		Office furniture and equipment	2,307		2,303
Other computer and network equipment	Other computer and network equipment	3,874		2,991		Other computer and network equipment	4,867		4,732
Leasehold improvements	Leasehold improvements	778		277		Leasehold improvements	10,238		10,102
Property, equipment and software, gross	Property, equipment and software, gross	11,885		6,854		Property, equipment and software, gross	23,021		21,619
Less: accumulated amortization and depreciation	Less: accumulated amortization and depreciation	(1,206)		(733)		Less: accumulated amortization and depreciation	(2,923)		(1,875)
Total	Total	$	10,679	$	6,121	Total	$	20,098	$	19,744

For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, depreciation and amortization expense related to property, equipment and software amounted to approximately ~~$0.5~~$1.0 million and ~~$1.1~~$0.5 million, respectively, of which ~~$0.1~~$0.3 million and ~~$0.9~~$0.1 million, respectively, related to amortization expense of capitalized internal-use software placed in service.

Deposits with Clearinghouse

Deposits with clearinghouse ~~noncurrent,~~ consisted of the default resource contribution ~~(Note 7). The default resource contribution~~as described in Note 8, as well as other deposits with a different clearinghouse. Total deposits at clearinghouses amounted to ~~approximately~~$15.3 million and $15.2 million as of ~~each of~~ March 31, ~~2022~~2023 and December 31, ~~2021.~~

On January 19, 2021, ICUS self-certified a rule change with the CFTC, reducing Bakkt Trust’s financial contribution to the ICUS guaranty fund to approximately $15.2 million from $35.4 million. Following the two-week self-certification period, in which no comments were received from the CFTC, ICUS proceeded with the reduction. On February 3, 2021, ICUS returned $20.2 million to Bakkt Trust. The default resource contribution includes less than $0.1 million of cash margins held with ICUS.2022, respectively.

Other Assets

Other assets consisted of the following (in thousands):


		Successor					March 31, 2023		December 31, 2022
		March 31, 2022		December 31, 2021
Operating lease right-of-use assets (Note 16)		16,563		11,239
Operating lease right-of-use assets						Operating lease right-of-use assets	$	22,619	$	19,632
Other	Other	3,354		2,640		Other	2,755		2,826
Total	Total	$	19,917	$	13,879	Total	$	25,374	$	22,458

1716

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Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following (in thousands):


		Successor
		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Accounts payable	Accounts payable	$	12,265	$	10,646	Accounts payable	$	8,882	$	25,975
Accrued expenses	Accrued expenses	19,919		20,130		Accrued expenses	13,856		15,537
Purchasing card payable	Purchasing card payable	20,330		17,698		Purchasing card payable	14,104		10,686
Salaries and benefits payable	Salaries and benefits payable	6,482		13,349		Salaries and benefits payable	6,279		13,926
Other	Other	5,325		2,267		Other	5,897		663
Total	Total	$	64,321	$	64,090	Total	$	49,018	$	66,787

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):


		Successor					March 31, 2023		December 31, 2022
		March 31, 2022		December 31, 2021
Participation units liability, current (Note 10)		$	1,547	$	2,027
Participation units liability, current						Participation units liability, current	$	366	$	275
Current maturities of operating lease liability	Current maturities of operating lease liability	331		615		Current maturities of operating lease liability	3,323		3,014
Other	Other	1,315		1,075		Other	624		530
Total	Total	$	3,193	$	3,717	Total	$	4,313	$	3,819

Other Noncurrent Liabilities

Other noncurrent liabilities consisted of the following (in thousands):

Successor
March 31, 2022 December 31, 2021
Participation units liability, non-current (Note 10) $ 1,547 $ 2,027
Operating lease liability, noncurrent (Note 16) 16,704 10,647
Total $ 18,251 $ 12,674


	March 31, 2023		December 31, 2022
Operating lease liability, noncurrent	$	26,277	$	23,402
Total	$	26,277	$	23,402

6.7.Tax Receivable Agreement

On October 15, 2021, we entered into a Tax Receivable Agreement (the "TRA") with certain Opco ~~Equity Holders.~~equity holders. Each Opco common unit, when coupled with one share of our Class V common stock is referred to as a “Paired Interest.” Pursuant to the ~~Tax Receivable Agreement,~~TRA, among other things, holders of Opco common units may, subject to certain conditions, from and after April 16, 2022, exchange such Paired Interests for Class A common stock on a one-for-one basis, subject to the terms of the Exchange Agreement, including our right to elect to deliver cash in lieu of Class A common stock and, in certain cases, adjustments as set forth therein. Opco will have in effect an election under Section 754 of the Internal Revenue Code for each taxable year in which an exchange of Opco common units for Class A common stock (or cash) occurs.

The exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Opco. These increases in tax basis may reduce the amount of tax that we would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

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The ~~Tax Receivable Agreement~~TRA provides for the payment by us to exchanging holders of Opco common units of 85% of certain net income tax benefits, if any, that we realize (or in certain cases isare deemed to realize) as a result of these increases in tax basis ~~and certain other tax attributes of Opco and tax benefits~~ related to entering into the ~~Tax Receivable Agreement,~~TRA, including tax benefits attributable to payments under the ~~Tax Receivable Agreement.~~TRA. This payment obligation is an obligation of the Company and not of Opco. For purposes of the ~~Tax Receivable Agreement,~~TRA, the cash tax savings in income tax will be computed by comparing our actual income tax liability (calculated with certain assumptions) to the amount of such

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taxes that we would have been required to pay had there been no increase ~~(or decrease)~~ to the tax basis of the assets of Opco as a result of Opco having an election in effect under Section 754 of the Code for each taxable year in which an exchange of Opco common units for Class A common stock occurs and had we not entered into the ~~Tax Receivable Agreement.~~TRA. Such ~~increase or decrease~~change will be calculated under the ~~Tax Receivable Agreement~~TRA without regard to any transfers of Opco common units or distributions with respect to such Opco common units before the exchange under the Exchange Agreement to which Section 743(b) or 734(b) of the Code applies. As of March 31, ~~2022, no such exchanges have occurred, and as such, no value has~~2023, 22,678,761 Opco common units had been ~~recorded under~~exchanged for Class A common stock. Refer to Note 14 regarding the ~~Tax Receivable Agreement.~~contingency related to the TRA.

7.8.Related Parties

ICE Management and Technical Support

In December 2018, we entered into an intercompany services agreement with ICE to provide management and technical support services. For the three months ended March 31, 2022 and 2021, expenses of zero and $0.5 million, respectively, have been recorded in connection with this agreement and are reflected as “Related party expenses (affiliate in Predecessor periods)” in the statements of operations. Prior to the Business Combination, ICE also made various payroll distributions and payments to vendors on behalf of Opco and made unitary state income taxes on behalf of DACC Technologies, Inc., and Digital Asset Custody Company, Inc. (collectively with DACC Technologies, Inc., “DACC”).

Upon consummation of the VIH Business Combination, we entered into a Transition Services Agreement ~~(“TSA”~~(the “TSA”) with ICE, ~~which superseded the intercompany services agreement~~ pursuant to which ICE ~~will provide~~provides insurance, digital warehouse, data center, technical support, and other transition-related services in exchange for quarterly service fees ~~to be paid~~payable by us. We recognized $0.6 million and $0.4 million of expense related to the TSA for the three months ended March 31, 2023 and March 31, 2022, respectively, which is reflected as “Related party ~~expenses (affiliate~~expenses” in ~~Predecessor periods)” in~~ the consolidated statements of operations and “Due to related party ~~(affiliate in Predecessor period)”~~ in the consolidated balance sheets.

Triparty Agreement

The Digital Currency Trading, Clearing, and Warehouse Services Agreement ("Triparty ~~Agreement~~Agreement") provides for ~~IFUS~~ICE Futures U.S., Inc. ("IFUS") to list for trading one or more digital currency futures and/or options contracts, and for ~~ICUS~~ICE Clear US, Inc. ("ICUS") to serve as the clearing house to provide central counterparty and ancillary services for such contracts. The Triparty Agreement ~~also governs our PDF Contracts. Refer to Note 8 to our~~does not currently have a material effect on the consolidated financial ~~statements included in our Form 10-K for additional description of the Triparty Agreement.~~statements.

We recognized revenues related to the Triparty Agreement of less than $0.1 million for ~~each of~~both the three months ended March 31, ~~2022~~2023 and ~~2021,~~March 31, 2022, net of rebates and incentive payments (contra-revenue) of less than $0.1 million ~~and $0.3 million~~ for both the three months ended March 31, ~~2022~~2023 and ~~2021, respectively.~~March 31, 2022.

The Triparty Agreement also required Bakkt Trust to make, and, subject to certain limits, to replenish as needed a ~~$35.4 million default resource~~ contribution to ICUS, to be used by ICUS in accordance with the ICUS rules. ~~As described in Note 5, the~~The contribution requirement was ~~reduced to $15.0~~$15.2 million ~~in 2021.~~as of March 31, 2023 and March 31, 2022. The contribution is ~~included in the~~reflected as “Deposits with clearinghouse” ~~noncurrent balance. Interest earned on~~in the ~~contribution, net of certain fees and costs, is paid to Bakkt Trust from ICUS. We did not earn any interest for the three months ended March 31, 2022 and 2021.~~

Prior to the Business Combination, we also recognized a capital contribution for the cost of the trading and clearing services provided by IFUS and ICUS pursuant to the Contribution Agreement, which reduced revenue attributable

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to the Triparty Agreement by $0.1 million for the three months ended March 31, 2021 (Note 9). We did not recognize a material reduction in revenue related to this capital contribution for the three months ended March 31, 2022.consolidated balance sheets.

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had ~~$0.4~~approximately $0.5 million and approximately ~~$0.6~~$1.2 million, respectively, reflected as “Due to related party” in the consolidated balance sheets related to the TSA and Triparty Agreement. As of ~~each of~~ March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had ~~less than $0.1 million, as~~no amount recorded within “Accounts receivable, net” in the consolidated balance sheets related to the Triparty Agreement.

~~Other Contractual Relationships with ICE~~

Prior to the withdrawal of Bakkt Clearing’s ICUS membership on May 20, 2020, Bakkt Clearing was required to hold shares of ICE stock for ICUS membership privileges. These shares were carried at cost basis and evaluated periodically for impairment. In connection with the withdrawal of Bakkt Clearing’s ICUS membership, these shares were remeasured at fair value, with unrealized gains and losses being reflected as “Other income (expense), net” in the statements of operations. In June 2021, we sold all of our shares of ICE stock. During the three months ended March 31, 2021, we recorded an unrealized loss on the sale of shares of affiliate stock of approximately $0.1 million which is included in “Other expense, net”. We did not recognize a loss on the sale of shares of affiliate stock during the three months ended March 31, 2022.

8.9.Warrants

As of March 31, 2023 and December 31, 2022, there were ~~7,140,935~~7,140,808 public warrants outstanding. Public warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the public warrant. Each warrant entitles its holders to purchase one share of Class A common stock at an exercise price of $11.50 per share. The public warrants became exercisable on November 15, 2021. The public warrants will expire on October 15, 2026, or earlier upon redemption or liquidation. We may redeem the outstanding warrants when various conditions are met, such as specific stock prices, as detailed in the specific warrant agreements. The warrants are recorded as a liability and reflected as “Warrant liability” in the consolidated balance sheets.

During the three months ended March 31, 2023, we did not receive any proceeds from the exercise of the public warrants. During the three months ended March 31, 2022, we received less than $0.1 million in proceeds from the exercise

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of the public warrants. We recognized a loss from the change in fair value of the warrant liability during the three months ended March 31, 2023 of $1.0 million. We recognized a gain from the change in fair value of the warrant liability during the three months ended March 31, 2022 of $2.4 million.

9.10.Stockholders’ Equity

Preferred Stock

We are authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. The holders of a series of preferred stock shall be entitled only to such voting rights as shall expressly be granted thereto by the Certificate of Incorporation (including any certificate of designation relating to such series of preferred stock). As of March 31, ~~2022,~~2023, no shares of preferred stock have been issued.

Common Stock

Class A Common Stock

We are authorized to issue 750,000,000 shares with a par value of $0.0001 per share. Each holder of record of Class A common stock is entitled to one vote for each share of Class A common stock held ~~of record by such holder~~ on all matters on which stockholders generally or holders of Class A common stock as a separate class are entitled to vote, including the election or removal of directors (whether voting separately as a class or together with one or more classes of our capital stock). As of March 31, 2023 and December 31, 2022, there were ~~57,164,488~~82,624,773 and 80,926,843 shares of Class A common stock issued and ~~outstanding.~~

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outstanding, respectively.

Dividends

Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of Class A common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our Board out of funds legally available therefor. As of March 31, 2023, no dividends have been declared.

Liquidation

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of Class A common stock are entitled to share ratably in all assets remaining after payment of our debts and other liabilities, subject to prior distribution rights of preferred stock or any class or series of stock having a preference over the Class A common stock, then outstanding, if any.

Class V Common Stock

We are authorized to issue 250,000,000 shares with par value $0.0001 per share. These shares have no economic value but entitle the holder to one vote per share. ~~Each Opco common unit, when coupled with one share of our Class V common stock is referred to as a “Paired Interest.”~~ Paired Interests may be exchanged for one share of our Class A common stock or a cash amount in accordance with the Third Amended and Restated Limited Liability Company Agreement of Opco and the Amended and Restated Exchange Agreement. Holders of Paired Interests ~~become~~became eligible on April 16, 2022 under the Exchange Agreement ~~dated October 15, 2021,~~ to exchange their Paired Interests for Class A common stock or, at our election, cash in lieu thereof. ~~As of~~During the three months ended March 31, ~~2022, there were 206,003,270 shares of Class V common stock issued and outstanding.~~

~~Following the expiration of the~~ ~~six-month lock-up period on April 16, 2022,~~2023, holders of Paired Interests exchanged ~~an aggregate of 17.5~~0.2 million Paired Interests for our Class A common stock, and the Company did not elect to settle any such exchanges in cash. As of March 31, 2023 and December 31, 2022, there were 183,279,887 and 183,482,777 shares of Class V common stock issued and outstanding, respectively.

Dividends

Dividends ~~shall~~will not be declared or paid on the Class V common stock.

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Liquidation

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of Class V common stock shall not be entitled to receive any of our assets.

Restrictions

In the event that any outstanding share of Class V common stock ceases to be held directly or indirectly by a holder of a Opco common units, such share will automatically be transferred to us and cancelled for no consideration. We will not issue additional shares of Class V common stock, ~~after the effectiveness of the Certificate of Incorporation~~ other than in connection with the valid issuance or transfer of Opco common units in accordance with Opco’s Third Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”).

Noncontrolling Interest

The following table summarizes the ownership interest in Opco as of March 31, 2023 and December 31, 2022.


	March 31, 2023			December 31, 2022
	Opco Common Units	Ownership %		Opco Common Units	Ownership %
Opco common units held by Bakkt Holdings, Inc.	82,624,773	31	%	80,926,843	31	%
Opco common units held by noncontrolling interest holders	183,279,887	69	%	183,482,777	69	%
Total Opco common units outstanding	265,904,660	100	%	264,409,620	100	%

The weighted average ownership percentages for the applicable reporting periods are used to attribute net loss and other comprehensive loss to the Company and the noncontrolling interest holders. The noncontrolling interest holders' weighted average ownership percentage for the three months ended March 31, 2023 was 68.9%.

Members’ Equity

Prior to the VIH Business Combination, Opco had three classes of voting units – Class A, Class B and Class C voting units – and incentive units granted under the Opco Incentive Equity Plan (the “Opco Plan”) ~~(Note 10)~~.

In connection with the VIH Business Combination, the Opco equity holders converted 400,000,000 Opco Class A voting units, 192,453,454 Opco Class B voting units, and 270,270,270 Opco Class C voting units to 189,933,286 shares of

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Class V common stock on a pro rata basis. Additionally, we issued 17,473,362 shares of Class V common stock related to the outstanding Opco incentive ~~units.~~

~~Issuance of Class B Warrant~~

On February 19, 2020, Opco issued a warrant to a strategic partner to purchase 15,000,000 of Opco’s Class B voting units (“Class B Warrant”), at an exercise price of $1.00 per unit, exercisable upon issuance, that expires 3 years from issuance.

~~On April 6, 2021, the strategic partner elected to net exercise its Class B Warrant in exchange for 9,953,454 of Class B voting~~ units.

Issuance of Class C Warrant

In May, 2020, Opco issued a warrant to a minority investor to purchase 3,603,600 of Opco’s Class C voting units (“Class C Warrant”), at an exercise price of $1.11 per unit. Refer to Note 10 to ~~our~~the consolidated financial statements included in our Form 10-K ~~where the Class C Warrant is described in detail.~~for additional information.

In connection with the VIH Business Combination, the modified warrant units automatically converted into the right to purchase 793,352 Paired Interests in Opco at an exercise price of $5.04 per Paired Interest. As of March 31, ~~2022,~~2023, 172,055 modified warrant units have vested but have not been exercised, and the remaining 621,297 warrant units have not vested or been exercised. ~~As of March 31, 2021, no warrant units had vested or been exercised.~~ No expenses were recorded during the three months ended March 31, ~~2022~~2023 and ~~2021,~~March 31, 2022, since the service conditions were not probable of being met in those periods.

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~~10.~~11.Share-Based and Unit-Based Compensation

2021 Incentive Plan

Our 2021 Omnibus Incentive Plan (the “2021 Incentive Plan”) became effective on the Closing Date with the approval of VIH’s shareholders and the Board of Directors. The 2021 Incentive Plan allows us to make equity and equity-based incentive awards to employees, non-employee directors and consultants. There are 25,816,946 shares of Class A common stock reserved for issuance under the 2021 Incentive Plan which can be granted as stock options, stock appreciation rights, restricted shares, restricted stock units ~~(RSUs)~~("RSUs"), performance stock units ~~(PSUs)~~("PSUs"), dividend equivalent rights and other share-based awards. No award may vest earlier than the first anniversary of the date of grant, except under limited conditions.

Share-Based Compensation Expense

During the three months ended March 31, 2023, we granted 4,511,371 RSUs to employees and directors. During the three months ended March 31, 2023, we did not grant any PSUs. During the three months ended March 31, 2022, we granted 6,969,070 RSUs and 4,865,378 PSUs, which represents 100% of the target award, to employees and directors of Bakkt and Bakkt Trust. The majority of these grants were related to initial employment agreements for executives, which were approved by the Compensation Committee of the Board of Directors.directors. We recorded ~~$13.2~~$5.9 million and $10.9 million of share-based compensation expense related to RSUs for the three months ended March 31, 2023 and March 31, 2022, ~~which~~respectively. We recorded $1.4 million and $1.7 million of share-based compensation expense related to PSUs for the three months ended March 31, 2023 and March 31, 2022, respectively. Share-based compensation expense for both RSUs and PSUs is included in “Compensation and benefits” in the consolidated statements of operations.

Unrecognized compensation expense as of March 31, 2023 and December 31, 2022 was ~~$55.8~~$27.9 million and $29.9 million, respectively, for the RSUs and PSUs. The unrecognized compensation expense as of March 31, 2023 and December 31, 2022 will be recognized over a weighted-average period of ~~2.72 years.~~

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2.02 years and 2.05 years, respectively.

RSU and PSU Activity

The following tables summarize RSU and PSU activity under the 2021 Incentive Plan for the three months ended March 31, ~~2022~~2023 (in thousands, except per unit data):

Successor
RSUs and PSUs Number of RSUs and PSUs Weighted Average Remaining Contractual Term (years) Weighted Average Grant Date Fair Value Aggregate Intrinsic Value
Outsanding as of December 31, 2021 2,142 $ 9.18
Granted 11,834 $ 4.33 $ 51,260
Forfeited (194)
Outsanding as of March 31, 2022 13,782 2.72 $ 5.08
Vested as of March 31, 2022 —


RSUs and PSUs	Number of RSUs and PSUs	Weighted Average Remaining Contractual Term (years)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding as of December 31, 2022	13,782	2.05	$	4.05
Granted	4,511		$	1.48	$	6,677
Forfeited	(763)
Vested	(2,451)
Outstanding as of March 31, 2023	15,079	2.02	$	3.28

During the three months ended March 31, 2023, we recorded $2.1 million of share-based compensation expense related to the accelerated vesting for certain employees that were terminated, which is included in “Restructuring expenses” in the consolidated statements of operations. We also recorded reversal of share-based compensation expense of $0.3 million during the three months ended March 31, 2023 for forfeitures of RSUs, primarily related to the Company's restructuring efforts.

The fair value of the RSUs and PSUs used in determining share-based compensation expense is based on the closing price of our common stock on the grant date.

~~Performance stock units~~

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PSUs provide an opportunity for the recipient to receive a number of shares of our common stock based on our performance during fiscal ~~year~~years 2022, 2023 and 2024, as measured against objective performance goals as determined by the Board. The actual number of units earned may range from 0% to 150% of the target number of units depending upon achievement of the performance goals. PSUs vest in three equal annual installments, subject to a catch-up provision over the three annual performance targets. Upon vesting, each performance stock unit equals one share of common stock of the Company. We accrue compensation expense for the PSUs based on our assessment of the probable outcome of the performance conditions.

Opco Plan

Preferred incentive units and common incentive units (collectively, “incentive units”) represent an ownership interest in Opco and are entitled to receive distributions from Opco, subject to certain vesting conditions. Opco classifies incentive units as equity awards on its consolidated balance sheets. Participation units, issued directly by Opco to Opco Plan participants, do not represent an ownership interest in Opco but rather provide Opco Plan participants the contractual right to participate in the value of Opco, if any through a cash payment upon the occurrence of certain events following vesting of the participation units. Because participation units are settled in cash, Opco classifies participation units as liability awards on its consolidated balance sheets. Refer to Note 11 to our consolidated financial statements included in our Form 10-K where the modifications to the Opco Plan are described in detail.

Upon consummation of the VIH Business Combination, the 76,475,000 outstanding preferred incentive units and 23,219,745 outstanding common incentive units were converted into 17,473,362 ~~Successor~~ common incentive units, and the 10,811,502 outstanding participation units were converted into 1,197,250 ~~Successor~~ participation units. Contemporaneously with the conversion, approximately one-third of the awards in the Opco Plan vested. ~~In November 2021, we made total payments of $5.2 million to settle the vested participation units.~~ The second tranche vested on the one-year anniversary of the Closing Date and the third ~~one-third tranches~~tranche will ~~generally~~ vest on the ~~one-year and~~ two-year anniversary ~~date~~ of the ~~closing, respectively,~~Closing Date, although under the terms of the Opco Plan, employees who are terminated without cause after the Closing Date will vest in the unvested portion of their awards immediately upon their termination date.

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Unit-Based Compensation Expense

Unit-based compensation expense for the three months ended March 31, 2023 and March 31, 2022, was as follows (in thousands):

~~Successor~~

~~Type of unit~~

~~Compensation Expense~~

~~Statement of Operations and Comprehensive Loss Classification~~

~~Balance Sheet Classification~~

~~Common incentive unit~~

~~1,058~~

~~Compensation and benefits~~

~~Noncontrolling interest~~

~~Participation unit~~

~~(961)~~

~~Compensation and benefits~~

~~Other noncurrent liabilities~~

~~Total~~

~~Unit-based compensation expense for the three months ended March 31, 2021, was as follows (in thousands):~~

~~Predecessor~~

~~Type of unit~~

~~Compensation Expense~~

~~Statement of Operations and Comprehensive Loss Classification~~

~~Balance Sheet Classification~~

~~Preferred incentive unit~~

~~507~~

~~Compensation and benefits~~

~~Mezzanine equity~~

~~Common incentive unit~~

~~363~~

~~Compensation and benefits~~

~~Mezzanine equity~~

~~Participation unit~~

~~386~~

~~Compensation and benefits~~

~~Other noncurrent liabilities~~

~~Total~~

~~1,256~~


Type of unit	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Common incentive unit	$	542	$	1,058
Participation unit	138		(961)
Total	$	680	$	97

Unrecognized compensation expense as of March 31, ~~2022~~2023 was ~~approximately $4.5 million and $0.5~~$0.8 million for common incentive ~~units and participation units, respectively.~~units. The unrecognized compensation expense will be recognized over a weighted-average period of ~~1.54~~0.54 years. There was no unrecognized compensation expense for participation units as of March 31, 2023.

Unrecognized compensation expense as of December 31, 2022 was $1.4 million for common incentive units. The unrecognized compensation expense will be recognized over a weighted-average period of 0.79 years. There was no unrecognized compensation expense for participation units as of December 31, 2022.

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Unit Activity

The following ~~tables summarize~~table summarizes common incentive unit activity under the Opco Plan for the three months ended March 31, 2023 (in thousands, except per unit data):


Common Incentive Units	Number of Common Incentive Units	Weighted Average Remaining Contractual Term (years)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding as of December 31, 2022	8,294	0.79	$	6.30	$	67,635
Granted	—
Forfeited	—
Exchanged	(203)
Outstanding as of March 31, 2023	8,091	0.54	$	6.30	$	65,980

The following table summarizes common incentive unit activity under the Opco Plan for the three months ended March 31, 2022 (in thousands, except per unit data):

Successor
Common Incentive Units Number of Common Incentive Units Weighted Average Remaining Contractual Term (years) Weighted Average Grant Date Fair Value Aggregate Intrinsic Value
Outsanding as of December 31, 2021 16,339 1.79 $ 6.30 $ 133,240
Granted —
Forfeited (269) $ 6.30
Outsanding as of March 31, 2022 16,070 1.54 $ 6.30 $ 131,050
Vested as of March 31, 2022 11,533 $ 94,049

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~~The following tables summarize preferred incentive unit and common incentive unit activity under the Opco Plan for the three months ended March 31, 2021 (in thousands, except per unit data):~~

Predecessor
Preferred Incentive Units Number of Preferred Incentive Units Weighted Average Remaining Contractual Term (years) Weighted Average Grant Date Fair Value Aggregate Intrinsic Value
Outsanding as of December 31, 2020 76,475 6.75 $ 0.42 $ 88,711
Granted —
Forfeited —
Outsanding as of March 31, 2021 76,475 6.5 $ 0.42 $ 141,058
Vested as of March 31, 2021 —

Predecessor
Common Incentive Units Number of Common Incentive Units Weighted Average Remaining Contractual Term (years) Weighted Average Grant Date Fair Value Aggregate Intrinsic Value
Outsanding as of December 31, 2020 26,833 6.75 $ 0.43 $ 25,760
Granted —
Forfeited —
Outsanding as of March 31, 2021 26,833 6.5 $ 0.43 $ 25,760
Vested as of March 31, 2021 —


Common Incentive Units	Number of Common Incentive Units	Weighted Average Remaining Contractual Term (years)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding as of December 31, 2021	16,339	1.79	$	6.30	$	133,240
Granted	—
Forfeited	(269)
Exchanged	—
Outstanding as of March 31, 2022	16,070	1.54	$	6.30	$	131,050

There were no participation units granted during the three months ended March 31, ~~2022 and 2021.~~2023 or March 31, 2022. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the total number of participation units outstanding ~~were 0.6~~was 0.2 million and ~~0.7~~0.2 million, respectively. The fair value of the participation units as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~3.1~~0.4 million and ~~4.1~~0.3 million, respectively. We made cash payments of less than $0.1 million to settle vested participation units during the three months ended March 31, 2023. We did not make any cash payments to settle vested participation units during the three months ended March 31, 2022. Participation units are settled in cash and the balance is recorded within other current liabilities and other noncurrent liabilities as described in Note 5.

~~The outstanding units under the Opco Plan were issued prior to the Business Combination and the plan was frozen upon execution of the merger agreement. No future units can be granted under this plan.~~6.

Determination of Fair Value

The fair value of incentive and participation units granted is calculated through a Monte Carlo simulation based on various outcomes. Opco determined that a Monte Carlo simulation was an appropriate estimation model because of the market ~~condition~~conditions associated with the vesting of the units. The determination of the fair value of the units is affected by Opco’s stock price and certain assumptions such as Opco’s expected stock price volatility over the term of the units, risk-free interest rates, and expected dividends, which are determined as follows:

•Expected term – The expected term represents the period that a unit is expected to be outstanding.

•Volatility – Opco has limited historical data available to derive its own stock price volatility. As such, Opco estimates stock price volatility based on the average historic price volatility of comparable public industry peers.

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•Risk-free interest rate – The risk-free rate is based on the U.S. Treasury yield curve in effect on the grant date for securities with similar expected terms to the term of Opco’s incentive units.

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•Expected dividends – Expected dividends is assumed to be zero as Opco has not paid and does not expect to pay cash dividends or non-liquidating distributions.

•Discount for lack of marketability – an estimated ~~two year~~two-year time to exit Predecessor awards and the ~~six month~~six-month lock-up restriction on Successor awards is reflected as a discount for lack of marketability estimated using the Finnerty model.

~~11.~~12.Net Loss per share

Basic earnings per share is based on the weighted average number of shares of Class A common stock issued and ~~outstanding during the Successor period.~~outstanding. Diluted earnings per share is based on the weighted average number shares of Class A common stock issued and outstanding and the effect of all dilutive common stock equivalents and potentially dilutive share-based awards ~~outstanding during the Successor period. For the Successor period, there~~outstanding. There is no difference in the number of shares used to calculate basic and diluted shares outstanding due to our net loss position. The potentially dilutive securities that would be anti-dilutive due to our net loss are not included in the calculation of diluted net loss per share attributable to controlling interest. ~~The anti-dilutive securities are included in the table below.~~

The following is a reconciliation of the denominators of the basic and diluted per share computations for net loss (in thousands, except share and per share data):


	~~Successor~~
	Three Months Ended March 31, 2022
~~Net Loss per share:~~
~~Numerator – basic and diluted:~~
~~Net loss~~	$	~~(43,321)~~
~~Less: Net loss attributable to noncontrolling interest~~	~~(36,193)~~
~~Net loss attributable to Bakkt Holdings, Inc. – basic~~	~~(7,128)~~
~~Net loss and tax effect attributable to noncontrolling interests~~	~~(28,787)~~
~~Net loss attributable to Bakkt Holdings, Inc. – diluted~~	$	~~(35,915)~~

~~Denominator – basic and diluted:~~
~~Weighted average shares outstanding – basic~~	~~57,164,421~~
~~Effect of dilutive securities:~~
~~Opco common units~~	~~201,453,166~~
~~Weighted average shares outstanding – diluted~~	~~258,617,587~~

~~Net loss per share – basic~~	$	~~(0.12)~~
~~Net loss per share – diluted~~	$	~~(0.14)~~


	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Net Loss per share:
Numerator – basic and diluted:
Net loss	$	(44,859)	$	(43,321)
Less: Net loss attributable to noncontrolling interest	(30,883)		(36,193)
Net loss attributable to Bakkt Holdings, Inc. – basic	(13,976)		(7,128)
Net loss and tax effect attributable to noncontrolling interests	—		(28,787)
Net loss attributable to Bakkt Holdings, Inc. – diluted	$	(13,976)	$	(35,915)

Denominator – basic and diluted:
Weighted average shares outstanding – basic	81,879,315		57,164,421
Weighted average shares outstanding – diluted	81,879,315		258,617,587

Net loss per share – basic	$	(0.17)	$	(0.12)
Net loss per share – diluted	$	(0.17)	$	(0.14)

Potential common shares issuable to ~~employee~~employees or directors upon exercise or conversion of shares under our share-based and unit-based compensation plans and upon exercise of warrants are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive.

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The following table summarizes the total potential common shares excluded from diluted loss per common share as their effect would be ~~anti-dilutive:~~anti-dilutive (in thousands):


			~~Successor~~
			~~Three Months Ended~~ As of March 31, ~~2022~~2023
RSUs and PSUs			~~13,781,817~~15,079
Public warrants			~~7,140,935~~7,141
Opco warrants			~~793,352~~793
Opco unvested incentive units			~~4,537,296~~2,130
Opco common units			181,150
Total			~~26,253,400~~206,293

~~12.~~13.Capital Requirements

Bakkt Trust is subject to certain ~~NYDFS~~ regulatory capital ~~requirements.~~requirements imposed by the NYDFS. These capital requirements require Bakkt Trust to maintain positive net worth at the greater of $15.0 million or the sum of the required percentage established for transmitted assets, cold wallet, and hot wallet custody assets. As of March 31, ~~2022~~2023 and ~~2021,~~December 31, 2022, Bakkt Trust had determined that $16.5 million ~~respectively~~ should be set aside to satisfy these requirements, which is reflected as “Restricted cash” in the consolidated balance sheets.

Bakkt Clearing, LLC ("Bakkt Clearing") iswas registered as a futures commission merchant (“FCM”) with the Commodity Futures Trading Commission (“CFTC”) and iswas a member of the National Futures Association (“NFA”). Bakkt Clearing iswas subject to CFTC Regulation 1.17 and the NFA capital requirements. Under these requirements, it iswas generally required to maintain “adjusted net capital” equivalent to the greater of $1.0 million or the sum of 8 percent of customer and noncustomer risk maintenance margin requirements on all positions, as defined. ~~These margin requirements may change from day to day, but~~On May 20, 2022, we withdrew Bakkt Clearing's registration with the CFTC and membership in the NFA, which was effective on June 20, 2022. Accordingly, as of March 31, ~~2022,~~2023, Bakkt Clearing ~~had adjusted net~~was no longer required to maintain capital ~~of $2.0 million.~~under the rules described above.

Bakkt Marketplace is required to maintain tangible ~~member’s~~net worth of a minimum amount. Several states have adopted the Model Money Transmission Modernization Act, which defined tangible net worth as the aggregate assets of a licensee excluding all intangible assets, less liabilities. In addition to the tangible net worth requirement, Bakkt Marketplace is also required to maintain tangible member's equity of a minimum amount, plus the amount of customer funds held in transit since it holds a number of money transmitter licenses and has a virtual currency license (or “BitLicense”) from the NYDFS, which subjects it to NYDFS’ oversight with respect to such business activities conducted in New York State and with New York residents. Tangible ~~member’s~~member's equity ~~means member’s~~is member's equity minus intangible assets, and asis equivalent to tangible net worth. Bakkt Marketplace is also required to maintain positive net worth equal to its wind-down costs, or expected costs associated with the orderly wind-down of the business. As of March 31, ~~2022~~2023 and December 31, ~~2021, tangible member’s equity~~2022, wind-down costs amounted to ~~approximately $5.6~~$6.1 million and ~~approximately $11.0~~$7.1 million, respectively.

As of March 31, 2023 and December 31, 2022, tangible net worth was $65.5 million and $27.7 million, respectively, which was in excess of wind-down costs, tangible net worth, and tangible member's equity requirements.

The minimum capital requirements to which our subsidiaries are subject may restrict their ability to transfer cash. We may also be required to transfer cash to our subsidiaries such that they may continue to meet these minimum capital requirements.

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~~13.~~14.Commitments and Contingencies

401(k) Plan

We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Both Company and employee contributions to the 401(k) plan are discretionary. For the three months ended March 31, ~~2022~~2023 and ~~2021,~~March 31, 2022, we recorded approximately ~~$0.7~~$1.0 million and ~~$0.5~~$0.7 million, respectively, of expenses related to the 401(k) ~~plan.~~plan, which is included in "Compensation and benefits" in the consolidated statement of operations.

Tax Receivable Agreement

The Company is party to a TRA with certain Opco equity holders. As of March 31, 2023, the Company has not recorded a liability under the TRA related to the income tax benefits originating from the exchanges of Opco common units as it is not probable that the Company will realize such tax benefits. The amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of the Company in the future. Should the Company determine that the payment of the TRA liability becomes probable at a future date based on new information, any changes will be recorded on the Company's condensed consolidated statement of operations and comprehensive loss at that time.

Litigation

As described above, in October 2021, we completed ~~our~~the VIH Business Combination with ~~VPC Impact Acquisition Holdings (“VIH”),~~VIH, pursuant to which VIH changed its name to Bakkt Holdings, Inc. and the current directors and officers of the Company replaced the directors and officers in place prior to the VIH Business Combination. On April 21, 2022, a

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putative class action ~~complaint~~ was filed against Bakkt Holdings, Inc. and certain of its directors and officers prior to the VIH Business Combination in the U.S. District Court for the Eastern District of New York on behalf of certain purchasers of securities of VIH and/or purchasers of Bakkt Class A common stock issued in connection with the VIH Business Combination. On August 3, 2022, the Court appointed lead plaintiffs and lead counsel and on October 18, 2022, lead plaintiffs filed an amended complaint (the "Amended Complaint"). The ~~complaint~~Amended Complaint alleges that VIH made false or misleading statements and omissions of ~~purportedly~~ material fact in the registration statement and prospectus/proxy statement filing in connection with the VIH Business Combination and in other SEC filings made by VIH, in violation of federal securities laws in connection with disclosures relating to certain of VIH’s financial statements, ~~business, operations,~~accounting, and ~~compliance policies. The complaint alleges~~internal controls and that, the false or misleading statements and omissions were contained in the registration statement filed in connection with the Business Combination and in other SEC filings made by VIH. The complaint alleges thatas a result, VIH securities traded at artificially inflated ~~prices as a result of the allegedly misleading statements and omissions. Plaintiff seeks~~prices. Plaintiffs sought certification of a class of purchasers of (1) VIH/~~Bakkt~~Bakkt’s publicly traded securities between March 31, 2021 and November 19, 2021, ~~both dates inclusive~~ and/or (2) ~~Bakkt Class A common stock~~Bakkt’s publicly traded securities pursuant and/or traceable to the registration ~~statement filed in connection with the Business Combination and in such other SEC filings.~~statement. The ~~complaint seeks~~Amended Complaint sought damages, as well as ~~the plaintiff’s~~ fees and costs. ~~Bakkt intends to vigorously defend against the allegations. No allegations have been made against any current officer or director of Bakkt other than~~The Amended Complaint named as defendants only one current ~~board member, who~~director, and no current officers, of Bakkt. On March 14, 2023, the parties reached a settlement in principle. On April 12, 2023, the parties completed a stipulation of settlement resolving the litigation for $3.0 million, subject to Court approval. A motion for preliminary approval was ~~both an officer~~filed with the Court on April 17, 2023. We expect the settlement will be covered by our insurance less our contractual retention.

On February 20, 2023, a derivative action related to the foregoing class action was filed against Bakkt Holdings, Inc. and ~~director~~all of ~~VIH~~its directors in the U.S. District Court for the Eastern District of New York.

Prior to its acquisition by the Company, Apex Crypto received requests from the SEC for documents and ~~has continued as a director~~information about certain aspects of ~~Bakkt.~~its business, including the operation of its trading platform, processes for listing assets, the classification of certain listed assets, and relationships with customers and service providers, among other topics. Based on the ongoing nature of this matter, the outcome remains uncertain and the Company cannot estimate the potential impact, if any, on its business or financial statements at this time.

Other legal and regulatory proceedings have arisen and may arise in the ordinary course of business. However, we do not believe that the resolution of these matters will have a material adverse effect on our financial position, results of

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operations or cash flows. However, future results could be materially and adversely affected by new developments relating to the legal proceedings and ~~claims.~~claims

Commercial Purchasing Card Facility

We, through our loyalty business, ~~have~~had a purchasing card facility with a bank that we ~~utilize~~utilized for redemption purchases made from ~~merchant partners~~vendors as part of our loyalty redemption platform. Expenditures made using the purchasing card facility ~~are~~were payable monthly, ~~are~~were not subject to formula-based restrictions and dodid not bear interest if amounts outstanding ~~are~~were paid when due and in full. Among other covenants, the purchasing card facility ~~requires~~required us to maintain a month-end cash balance of $40.0 million. In January 2021, the purchasing card facility was extended to April 15, 2022 in order to facilitate a long-term agreement on more favorable terms to us.us. Bakkt Holdings, Inc. ~~serves~~served as the guarantor on behalf of our subsidiary under the commercial purchasing card facility. In April 2022, we further extended the maturity date of the purchasing card facility to August 12, 2022, to transition over to the purchasing card facility with Bank of America described below. The maturity date of the purchasing card facility was further extended as of August 12, 2022 to January 13, 2023. During September 2022, we paid off the majority of the remaining balance of the purchasing card facility. The purchasing card facility was closed during October 2022.

On April 7, 2022, we entered into a corporate card services agreement with Bank of America to provide a new purchasing card facility. Total borrowing capacity under the facility is ~~$35~~$35.0 million and there is no defined maturity date. Expenditures made using the purchasing card facility are payable monthly, are not subject to formula-based restrictions and do not bear interest if amounts outstanding are paid when due and in full. The purchasing card facility requires us to maintain a concentration account with the lender subject to a minimum liquidity maintenance requirement of $7.0 million as collateral along with the accounts receivable of our subsidiary, within the loyalty business. Bakkt Holdings, Inc. serves as the guarantor on behalf of our subsidiary under the commercial purchasing card facility.

We began using the purchasing card facility in August 2022.

Purchase Obligations

In December 2021, we entered into a ~~four-year~~four-year cloud computing arrangement which includes minimum contractual payments due to the third-party provider. During the three months ended March 31, 2023, we entered into a five-year strategic marketing agreement which required a committed spend. As of March 31, ~~2022,~~2023, our outstanding purchase obligations ~~consist~~consisted of the following future minimum commitments (in thousands):

Payments Due by Period
Less than 1 year 1-3 years 3-5 years More than 5 years Total
Purchase obligations $ 2,250 $ 8,750 $ 9,000 $ — $ 20,000


	Payments Due by Period
	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Purchase obligations	$	4,050	$	19,100	$	900	$	—	$	24,050

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~~14.~~15.Income Taxes

As a result of the VIH Business Combination, the Company acquired a controlling interest in Opco, which is treated as a partnership for U.S. federal income tax purposes, and in most applicable state and local income tax jurisdictions. As a partnership, Opco is not itself subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Opco is passed through to and included in the taxable income or loss of its partners, including the Company following the VIH Business Combination, on a pro rata basis. The Company's U.S. federal and state income tax ~~benefit (expense)~~expense primarily relates to the Company’s allocable share of any taxable income or loss of Opco following the VIH Business Combination. In addition, Opco’s wholly owned corporate subsidiaries that are consolidated for U.S. GAAP purposes but separately taxed for federal, state, and foreign income tax purposes as corporations are generating federal, state, and foreign income tax expense.

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Our effective tax rate of less than (0.1)% for the three months ending March 31, 2023 differs from statutory rates primarily due to the noncontrolling interest that is not taxed to the Company and the absence of taxable income available to realize the Company’s net operating losses and other deferred tax assets.

Our effective tax rate of 6.8% for the three months ending March 31, 2022 differs from statutory rates primarily due to the loss allocated to noncontrolling interest that is not taxed to the Company and the non-deductible fair value gains and losses related to the changes in our warrant liability.

Our effective tax rate of (0.1)% for the three months ending March 31, 2021 differs from statutory rates primarily due to the impact of losses in which no tax benefit is expected to be recognized. The income tax benefit during the period related to our operations in Canada.

Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Our realizability of our deferred tax assets, in each jurisdiction, is dependent upon the generation of future taxable income sufficient to utilize the deferred tax assets on income tax returns, including the reversal of existing temporary differences, historical and projected operating results and tax planning strategies. ~~We assessed~~As of March 31, 2023 and December 31, 2022, the Company believed it was not more likely that ~~certain of its~~not that the net deferred tax assets ~~were not more likely than not to~~would be ~~realized.~~realizable and thus has maintained a full valuation allowance.

The effects of uncertain tax positions are recognized in the consolidated financial statements if these positions meet a “more-likely-than-not” threshold. For those uncertain tax positions that are recognized in the consolidated financial statements, liabilities are established to reflect the portion of those positions it cannot conclude “more-likely-than-not” to be realized upon ultimate settlement. The Company had no unrecognized tax benefits or related interest and penalties accrued ~~for the period ended~~as of March 31, 2023 or December 31, 2022 ~~and 2021, respectively.~~.

~~15.~~16.Fair Value Measurements

Financial assets and liabilities that are measured at fair value on a recurring basis are classified ~~entirely~~ as Level 1 and Level 2 as follows (in thousands):


		Successor									As of March 31, 2023
		As of March 31, 2022									Total		Level 1		Level 2		Level 3
Assets:										Assets:
U.S. Treasury debt securities										U.S. Treasury debt securities	$	66,789	$	66,789	$	—	$	—
Safeguarding asset for crypto										Safeguarding asset for crypto	26,055		—		26,055		—
Total Assets										Total Assets	$	92,844	$	66,789	$	26,055	$	—
		Total		Level 1		Level 2		Level 3
Liabilities:	Liabilities:									Liabilities:
Safeguarding obligation for crypto										Safeguarding obligation for crypto	$	26,055	$	—	$	26,055	$	—
Warrant liability—public warrants	Warrant liability—public warrants	$	14,996	$	14,996	$	—	$	—	Warrant liability—public warrants	1,785		1,785		—		—
Total Liabilities	Total Liabilities	$	14,996	$	14,996	$	—	$	—	Total Liabilities	$	27,840	$	1,785	$	26,055	$	—


	As of December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets:
U.S. Treasury debt securities	$	141,062	$	141,062	$	—	$	—
Safeguarding asset for crypto	15,792		—		15,792		—
Total Assets	$	156,854	$	141,062	$	15,792	$	—

Liabilities:
Safeguarding obligation for crypto	$	15,792	$	—	$	15,792	$	—
Warrant liability—public warrants	785		785		—		—
Total Liabilities	$	16,577	$	785	$	15,792	$	—

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Successor
As of December 31, 2021
Total Level 1 Level 2 Level 3
Liabilities:
Warrant liability—public warrants $ 17,424 $ 17,424 $ — $ —
Total Liabilities $ 17,424 $ 17,424 $ — $ —

~~Our public warrant liability is valued based on quoted prices in active markets and is classified within Level 1.~~

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivables, unbilled accounts receivables, due from related party, deposits with clearinghouse, due to related party, accounts payable and accrued liabilities, and operating lease obligations approximate their fair values due to their short-term nature. The balance of deposits with clearinghouse not invested in U.S. government securities are in the form of cash, and therefore approximate fair value.

Our investments in debt securities consist of U.S. Treasury debt securities held in the custody of a major financial institution. As of March 31, 2023, the Company’s investment in available-for-sale debt securities was determined to be a Level 1 investment based on quoted prices in active markets and was recorded in the consolidated balance sheet at fair value.

The fair value of the safeguarding obligation for crypto and the corresponding safeguarding asset for crypto was determined using the mid-point of a bid-ask spread in the market we determine to be the principal market for the related crypto as of March 31, 2023, which we determined was a Level 2 input.

Our public warrant liability is valued based on quoted prices in active markets and is classified within Level 1.

~~16.~~17.Leases

The Company leases real estate for office space under operating leases and office equipment under finance leases. AsOn March 15, 2023, we signed an amendment to our Scottsdale, Arizona lease that extended the lease term. The amended lease has a term of ~~March~~90 months and total fixed lease payments over the term of the amended lease are $5.7 million. During the year ended December 31, 2022, we entered into a new real estate lease for office space in New York, New York, that commenced on January 31, 2022. The lease has a term of 94 months and the total fixed lease payments over the term of the lease are $7.3 million. On April 25, 2022, we ~~do not have any active finance leases.~~signed a lease agreement for call center office space in Alpharetta, Georgia. On May 12, 2022, we executed our option to lease additional space for the Alpharetta call center. The call center lease commenced on June 3, 2022. The lease has a term of 47 months and total fixed lease payments over the term of the lease are $5.9 million. We consider a lease to have commenced on the date when we are granted access to the leased asset. Several of these leases include escalation clauses for adjusting rentals.

~~During the three months ended~~ As of March 31, ~~2022,~~2023, we also entered into a new real estate lease for office space in New York, New York, that commenced on January 31, 2022.The lease has a term of 94 months and the total fixed lease payments over the term of the lease are $7.3 million.do not have any active finance leases.

Our real estate leases have remaining lease terms as of March 31, ~~2022~~2023 ranging from 1337 months to ~~126~~114 months, with ~~one~~three of our leases containing an option to extend the term for a period of 5 years exercisable by us, which we are not reasonably certain of exercising at commencement. None of our leases contain an option to terminate the lease without cause at the option of either party during the lease term. Certain of our equipment leases ~~contain options~~provide us with the option to purchase the asset at the fair market ~~value, available with the Company.~~value.

Certain of our real estate leasing agreements include terms requiring us to reimburse the lessor for its share of real estate taxes, insurance, operating costs and utilities which we account for as variable lease costs when incurred since we have elected to not separate lease and non-lease components, and hence are not included in the measurement of lease liability. There are no restrictions or covenants imposed by any of the leases, and none of our leases contain material residual value guarantees.

The discount rates for all of our leases are based on our estimated incremental borrowing rate since the rates implicit in the leases were not determinable. Our incremental borrowing rate is based on management’s estimate of the rate of interest we would have to pay to borrow on a fully collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

We have elected the practical expedient under which lease components would not be separated from the non-lease components for all our classes of underlying assets. Accordingly, each lease component and the non-lease components related to the lease component are accounted for as a single lease component. The weighted average remaining lease term for our operating leases was ~~111.4~~approximately 91 months, and the weighted average discount rate for our operating leases was ~~5.0%. We were not party to any short-term leases during the periods presented.~~

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~~17.~~5.3%. We were party to short-term leases during three months ended March 31, 2023 and March 31, 2022, which resulted in less than $0.1 million of rent expense, respectively.

18. Safeguarding Obligation For Crypto

We provide bitcoin and ether custody services for our consumer platform users and for standalone custody customers. We do not own crypto held in a custodial capacity on behalf of our customers. We hold the cryptographic key information on behalf of our custodial customers. We also maintain the internal recordkeeping of those assets and are obligated to safeguard the assets and protect them from loss or theft.

As of March 31, 2023, we have a safeguarding obligation for crypto of $26.1 million. The safeguarding liability, and corresponding safeguarding asset for crypto on the balance sheet, are measured at the fair value of the crypto held for our customers. We are not aware of any actual or possible safeguarding loss events as of March 31, 2023. Therefore, the safeguarding obligation for crypto and the related safeguarding asset for crypto are recorded at the same amount.

We are responsible for holding the following crypto on behalf of our customers as of March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023		December 31, 2022
Bitcoin	$	25,941	$	15,717
Ether	114		75
Safeguarding obligation for crypto	$	26,055	$	15,792

Safeguarding asset for crypto	$	26,055	$	15,792

19.Investment in Debt Securities

We have investments in certain debt securities, which we record at fair value and present as "Available-for-sale securities" in the consolidated balance sheets.

Unrealized gains and temporary losses, net of related taxes, are included in accumulated other comprehensive income (loss) ("AOCI"). Upon realization, those amounts are reclassified from AOCI to earnings. The amortization of premiums and discounts on the investments are included in our results of operations. Realized gains and losses are calculated based on the specific identification method. We classify our investments as current or noncurrent based on the nature of the investments and their availability for use in current operations.

The cost basis and fair value of available-for-sale debt securities with unrealized gains and losses included in “Accumulated other comprehensive loss” in the consolidated balance sheets were as follows (in thousands):


	March 31, 2023						December 31, 2022
Available-for-sale securities	Cost Basis		Unrealized Gains/(Losses), net		Fair Value		Cost Basis		Unrealized Gains/(Losses), net		Fair Value
Government debt
U.S. treasury bonds	66,954		(165)		66,789		141,003		59		141,062
Total available-for-sale securities	$	66,954	$	(165)	$	66,789	$	141,003	$	59	$	141,062

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	March 31, 2023				December 31, 2022
Available-for-sale securities in an unrealized loss position	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government debt
U.S. treasury bonds:
Less than 12 months(1)	$	39,744	$	(211)	$	39,574	$	(381)
12 months or more(1)	—		—		—		—
Total available-for-sale securities	$	39,744	$	(211)	$	39,574	$	(381)

(1) Indicates the length of time that individual securities have been in a continuous unrealized loss position.

The unrealized losses on our investments in government debt securities relate to changes in interest rates since the time of purchase. We do not intend to sell the investments, and it is not likely that we will be required to sell the investments before recovery of their respective amortized cost basis. In addition, there were no credit losses on these investments as of March 31, 2023.

The cost basis and fair value of available-for-sale debt securities at March 31, 2023, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.


	March 31, 2023
	Cost Basis		Fair Value
Due in one year or less	$	66,954	$	66,789
Due after one year through five years	—		—
Total debt securities - available-for-sale	$	66,954	$	66,789

20.Subsequent Events

On April 25, 2022, we signed a lease agreement to expand the office space of our call center in Alpharetta, Georgia. The lease has a term of 48 months and total fixed lease payments over the term of the lease are approximately $3.1 million.

We have evaluated subsequent events ~~and transactions~~ and determined that no other events or transactions, other than those disclosed above, met the definition of a subsequent event for ~~purpose~~purposes of recognition or disclosure in ~~these~~the accompanying consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations should be read together with the accompanying consolidated financial statements and related ~~notes.~~notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which is incorporated herein by reference. References in this section to “we,” “us,” “our,” “Bakkt” or the “Company” and like terms refer to ~~(i) Bakkt Opco Holdings, LLC and its subsidiaries (the “Predecessor”) for the three months ended March 31, 2021 (referred to herein as a "Predecessor Period") and (ii)~~ Bakkt Holdings, Inc. and its subsidiaries ~~(the “Successor”)~~ for the three months ~~ended~~ending March 31, ~~2022 (the “Successor Period”),~~2023, unless the context otherwise requires. Some of the information contained in this discussion and analysis or set forth elsewhere in this document, including information with respect to our plans and strategy for our business, includes forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those factors discussed above in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A. Risk Factors.”

Overview

In this section and elsewhere in this Report, we use the following terms, which are defined as follows:

•Client means businesses with whom we contract to provide services to customers on our platform, and includes financial institutions, hedge funds, merchants, retailers, and other businesses (except in the accompanying notes to the consolidated financial statements, where we refer to revenue earned from customers, instead of clients. The term customers is in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers.)

•Cryptoassets (or crypto) means an asset that is built using blockchain technology, including cryptocurrencies, stablecoins, and other tokens. Our ~~mission is~~platform enables transactions in certain supported cryptocurrencies.

•Customer means an individual user of our platform. Customers include customers of our loyalty clients who use our platform to ~~power commerce~~transact in loyalty points, as well as customers of our clients who transact in crypto through, and have accounts on, our platform (except as defined for ASC 606 purposes above).

•Loyalty points means loyalty and/or reward points that are issued by ~~connecting~~clients to their customers.

Founded in 2018, Bakkt builds technology that connects the digital economy ~~across asset classes~~by offering one ecosystem for ~~consumers, business~~crypto and ~~institutions.~~loyalty points. We enable our clients to deliver new opportunities to their customers through software as a service (“SaaS”) and API solutions that unlock crypto and drive loyalty, powering engagement and performance. The ~~digital asset ecosystem~~global market for crypto, while nascent, is ~~broad, including cryptoassets, loyalty~~rapidly evolving and rewards points, gift cards, in-game assets, and non-fungible tokens (“NFTs”). We are working to unlock new ways to participate in the growing digital economy by expanding access to, and improving liquidity for, digital assets.expanding. We believe we are opportunistically positioned at the center of this digital asset ecosystem, with approximately 0.7 million transacting accounts on our platform for the three months ended March 31, 2022. We define “transacting accounts” as unique accounts that perform transactions on our platform each month, which is indicative of how users across our platform use our services.

Through our institutional-grade platform, we offer four key pillars to our partners and customers. These include: crypto services, through which we enabling crypto buy and sell capabilities for platform partners, banks and credit unions and other providerswell-positioned to provide ~~to their customers, as well as crypto~~innovative, multi-faceted product solutions ~~for institutions; crypto rewards, for partners to enable their customers to earn rewards in or redeem existing rewards into crypto; digital asset payments for paying~~and grow with ~~or getting paid in assets like crypto; and a wide range of loyalty redemption services for large financial institutions, merchants such as apple and travel and entertainment providers.~~

~~We believe that our~~this evolving market. Our platform is uniquely positioned to ~~offer each of these four pillars to our partners and institutions~~power commerce by ~~utilizing a combination of three complementary aspects – a digital asset marketplace, a loyalty redemption service, and an alternative payment method.~~

•~~Digital Asset Marketplace.~~ ~~Our digital asset marketplace is designed to enable participants to seamlessly transact in digital assets and has applications for individual~~enabling consumers, ~~enterprises (whom we define as consumer-facing merchants, retailers,~~brands, and financial ~~institutions),~~institutions to better manage, transact with and ~~institutional investors.~~ ~~Intercontinental Exchange, Inc. (“ICE”), our controlling shareholder prior to the Business Combination, has decades of experience building institutional products and solutions.~~ We leveraged that expertise to build an institutional-grade custodian for bitcoin and ether, Bakkt Trust Company LLC (“Bakkt Trust”), which is regulated by the New York Department of Financial Services (“NYDFS”). This custodian, marketed as the Bakkt Warehouse, provides custody services that anchor the first end-to-end regulated and physically-delivered bitcoin futures and options contracts (“PDF Contracts”), which are traded on ICE Futures U.S., Inc. (“IFUS”) and cleared on ICE Clear US, Inc. (“ICUS”), and also provides custody services to institutions and certain high net-worth individuals on a standalone basis as approved by the NYDFS. Our custodian also operates as the backbone of many of our consumer- and enterprise-focused offerings. For example, it enables consumers to use our app to transactmonetize crypto in bitcoin in real-time. In the future, contingent upon achieving the necessary regulatory approvals and/or partnering with an existing licensed broker-dealer, we plan to add the ability to transact in securities such as derivatives, and ETFs. We believe that our institutional-grade infrastructure underpins our ability to expand and scale consumer solutions. We earn revenue in the digital asset marketplace by providing standalone custody services for cryptoassets assets for our

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institutional customers, which we recognize on a pro rata basis over the term of the custody contract. Separately, as a result of our Triparty Agreement with IFUS and ICUS (the “Triparty Agreement”), we earn the net revenues for providing stand-ready custody services to IFUS and ICUS in connection with the offering of PDF Contracts. Our standalone custody revenue and revenue recognized under the Triparty Agreement are currently immaterial. ~~For more information, see Note 2 to our audited consolidated financial statements included in our Form 10-K.~~exciting new ways.

•~~Loyalty Redemption~~. Leveraging our acquisition of Bridge2 Solutions (as described below), our loyalty redemption capabilities support enterprises with leading loyalty and rewards programs (which we call “loyalty partners”), such as Citibank, Delta Air Lines, United Airlines, Choice Hotels, Wells Fargo Bank, Bank of America and Mastercard. While many loyalty partners have very popular loyalty programs, the points that are outstanding to customers represent material liabilities on the loyalty partners’ balance sheets. Our redemption capabilities, particularly our exclusive arrangements with leading consumer brands, provide seamless and cost-effective alternatives for consumers to spend their loyalty points and enable loyalty partners to reduce these financial liabilities. We earn and recognize Loyalty Redemption revenue through a combination of: (i) platform subscription fees, which are fixed fees charged for access to our platform and customer support services, and which are recognized on a straight-line basis over the related contract term as the customer receives benefits evenly throughout the term of the contract; (ii) transaction fees for processing transactions on our platform, which are recognized in the period in which the related transaction occurs; (iii) revenue share fees, which are rebates from third-party commerce merchants, and which are recognized in the period in which the related transaction occurs; and (iv) service fees related to the implementation and customization of new services on our loyalty platform, which are recognized on a straight-line basis, beginning when the new service is operational, over the longer of the remaining anticipated customer life and the estimated useful life of our internally developed software. Our Loyalty Redemption revenue represents substantially all of our current revenue. ~~For more information, see Note 2 to our audited consolidated financial statements included in our Form 10-K.~~

•~~Alternative Payment Method~~. Our platform delivers consumer choice and convenience with an alternative payment method that allows consumers to spend the value of their digital assets with merchants in our ecosystem and also enables merchants to gain access to consumers’ increased spending power, tapping into the trend for alternative payment methods. Merchants, such as Starbucks, that accept our alternative payment method can displace transactions off existing payment card infrastructure, which results in significant reductions in payment fees and, over time, faster settlement. We earn and recognize alternative payment method revenue through a merchant discount rate (or percent of the transaction tender) at the time of each transaction and these transaction fees are reduced by consideration payable to a customer, when applicable. ~~For more information, see Note 2 to our audited consolidated financial statements included in our Form 10-K.~~

~~Our Platform~~

Our platform is built to operate ~~at the intersection of~~across various cryptoassets ~~loyalty and payments,~~ and offers ~~partners~~clients the flexibility to choose some or all of our capabilities, and the manner in which these capabilities are enabled for consumers, based on their needs and objectives. Some ~~partners~~clients may choose to enable our capabilities directly in their experience, while others may want a “ready-to-go” storefront and leverage capabilities such as our consumer app. Our core platform and infrastructure is built to provide integrations for crypto buy/sell trading, loyalty redemption, payments and exchange, and supports these use cases regardless of where the consumer experience lives.web-based technology. Our institutional-grade platform, born out of ~~ICE,~~our former parent company, Intercontinental Exchange, Inc. (“ICE”), supports "know your customer" ("KYC"), anti-money laundering ("AML"), and other anti-fraud measures to combat financial ~~crime.~~crime.

Recent Developments

~~Key Factors Affecting Our Performance~~

~~Attractiveness~~On February 8, 2023, we acquired 100% of ~~Platform~~

~~We primarily generate revenue when users~~the units of ~~our platform buy, sell, convert, spend and send digital assets through~~Bumped Financial, LLC ("Bumped"), a broker-dealer registered with the ~~platform, and our success depends in part on transaction volume. Business growth will come from growing users~~SEC and the ~~transaction fees associated with users buying, selling, converting and spending with digital assets, and the~~Financial Industry Regulatory Authority, Inc., for cash consideration of $631,000.

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~~margin~~On November 2, 2022, we entered into a definitive agreement with Apex Fintech Solutions, Inc. ("AFS") pursuant to which we agreed to acquire all of the membership interests of Apex Crypto, a financial technology company with an integrated crypto trading platform, for consideration consisting of an initial purchase price of $55.0 million in cash, up to $45.0 million in shares of our Class A common stock that may be earned if Apex Crypto achieves certain profitability growth targets for the fourth quarter of 2022, and up to an additional $100.0 million in shares of our Class A common stock depending on Apex Crypto's achievement of certain financial targets through 2025. On November 2, 2022, we and certain parties related to the seller also entered into a Stockholders' Agreement whereby such counterparties agreed to certain lock-up, standstill, and short sale restrictions. The acquisition closed on April 1, 2023. Apex Crypto's profitability in the fourth quarter of 2022 resulted in the issuance of $9.0 million in shares of our Class A common stock based on the earn-out target mechanics. This acquisition is expected to provide immediate scale and meaningful transaction volume from Apex Crypto's active partner base. We expect to leverage Apex Crypto's proprietary trading platform and existing relationships with liquidity providers to provide a wider range of assets and competitive pricing to our customers. In connection with ~~consumer purchases and~~ the ~~sale~~integration of ~~cryptoassets. We will look~~Apex Crypto, we expect to ~~grow~~delist certain of the crypto assets currently traded on Apex Crypto's platform.

Key Factors Affecting Our Performance

Growing Our Client Base

Our ability to increase our ~~base of active and transacting users to grow these~~ revenue ~~streams.~~

~~In addition, growing partners~~stream depends on ~~our platform increases~~ our ability to grow ~~revenue streams.~~clients on our platform. We collaborate with leading brands and have built an extensive network across numerous industries including financial institutions, merchants and travel and entertainment. To date, management has been focused on building through ~~partners~~clients within a business-to-business-to-consumer (“B2B2C”) model. Our goal is to provide these ~~partners~~clients opportunities to leverage our capabilities either through their existing environment or by leveraging our platform. ~~Expanding the platform capabilities leveraged~~Our acquisition of Apex Crypto complements our B2B2C growth strategy by ~~our partner set, as well as expanding with new partners, will be key to~~broadening our business partnerships to fintechs and revenue growth. We expect that revenues related to loyalty redemption transactions, cryptoasset trades, subscriptions and services will be significant drivers of our business. The risks and uncertainties related to each such revenue generating activity~~are largely the same. Specifically, to the extent we are unable~~neo-banks. Our ability to grow our ~~partner~~client and revenue base ~~and/or organically grow our active~~through the Apex Crypto acquisition is dependent on successful integration of the businesses post-transaction close.

Product Expansion and transacting user base (who buy, sell, convert and spend with digital assets, and from whom we can earn the margin paid in connection with consumer purchases and sale of cryptoassets), or to the extent the cost of such growth (including our average customer acquisition cost)Innovation

The crypto marketplace is ~~greater than we anticipate, the corresponding growth of our business may occur more slowly than we expect, or may not occur at all.~~rapidly evolving. Our ability to ~~execute on~~continue innovating our ~~business plan is dependent on successfully executing on several key components of our business, principally including: (i)~~platform will increase the ~~technological success of our platform; (ii) the integration~~attractiveness of our platform ~~with~~to clients. Our ability to meet the ~~platforms~~capability demands of our ~~partners; (iii) growth~~clients will allow us to continue to grow revenue.

Competition

The crypto marketplace is highly competitive with numerous participants competing for the same clients. We believe we are uniquely positioned with our ability to provide capabilities around emerging cryptoassets alongside loyalty points on a single, highly secure, institutional-grade technology platform.

General Economic and Market Conditions

Our performance is impacted by the strength of the overall macroeconomic environment and crypto market conditions, which are beyond our control. Negative market conditions hinder client activity, including extended decision timelines around implementing crypto strategies. In 2022, the crypto markets were impacted by, among other things, significant volatility in cryptoasset prices, bankruptcies of several cryptocurrency exchanges, regulatory actions and adverse publicity. Although we did not have any exposure to the companies that halted activities in 2022, we were nonetheless impacted by the broader conditions in the ~~number~~crypto markets. In addition, during 2022 and ~~diversity~~2023, macroeconomic conditions—including rising interest rates, spikes in inflation rates and market volatility, along with geopolitical concerns, including the war in Ukraine and the sanctions and other measures that have been and continue to be imposed in response to the war—created uncertainty and volatility in the global economy. We expect the macroeconomic environment and the state of the ~~loyalty brands, associated merchants~~crypto markets to remain dynamic in the near-term, and ~~retailers,~~we will continue to monitor macroeconomic and ~~cryptocurrencies~~crypto market conditions, and ~~other digital assets~~the potential impacts that ~~we support; and (iv)~~any of the foregoing may have on our ~~resulting ability to create a network effect with growth in active and transacting users.~~business.

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Regulations in U.S. ~~markets~~Markets

We are subject to many complex, uncertain and overlapping local, state and federal laws, rules, regulations, policies and legal interpretations (collectively, “laws and regulations”) in the markets in which we operate. These laws and regulations govern, among other things, consumer protection, privacy and data protection, labor and employment, anti-money laundering, money transmission, competition, and marketing and communications practices. These laws and regulations will likely have evolving interpretations and applications, particularly as we introduce new products and services and expand into new jurisdictions.

We are seeking to bring trust and transparency to ~~digital assets.~~crypto. We will progressively be subject to laws and regulations relating to the collection, use, retention, security, and transfer of information, including the personally identifiable information of our clients and all of the users in the information chain. We have developed and frequently evaluate and update our compliance models to ensure that we are complying with applicable restrictions.

We continue to work with regulators to address the emerging global landscape for ~~digital assets.~~crypto. As investment continues, the intersection of technology and finance will require ongoing engagement as new applications emerge. ~~Digital assets~~Cryptoasset and distributed ledger technology have significant, positive potential with proper collaboration between industry and regulators.For more information around regulations, please see “Item 1. Business”.

~~COVID-19 Impacts~~Safeguarding Obligation Liability and Safeguarding Asset Related to Crypto Held for Other Parties

InAs detailed in Note 18 in the unaudited consolidated financial statements included in this Report, upon the adoption of Staff Accounting Bulletin 121 (“SAB 121”), we recorded a safeguarding obligation liability and a corresponding safeguarding asset related to the crypto held for other parties. As of March ~~2020,~~31, 2023, the ~~World Health Organization declared~~safeguarding obligation liability related to cryptoassets held for other parties was approximately $26.1 million. We have taken steps to mitigate the ~~COVID-19 outbreak~~potential risk of loss for the crypto we hold for other parties, including holding insurance coverage specifically for certain crypto incidents and using secure cold storage to store the vast majority of crypto that we hold. SAB 121 also asks us to consider the legal ownership of the crypto held for other parties, including whether the crypto held for other parties would be available to satisfy general creditor claims in the event of our bankruptcy.

The legal rights with respect to crypto held on behalf of third parties by a ~~global pandemic. The COVID-19 pandemic has adversely affected global economic activity~~custodian, such as us, upon the custodian’s bankruptcy have not yet been settled by courts and are highly fact-dependent. However, based on the terms of our terms of service and applicable law, in ~~2020, contributed~~the event that we were to ~~significant declines~~enter bankruptcy, we believe the crypto that we hold in custody for users of our platform should be respected as users’ property (and should not be available to satisfy the claims of our general creditors). We do not allow users to purchase crypto on margin, and ~~volatility in financial markets. The COVID-19 pandemic had an impact~~crypto held on our ~~business during~~platform does not serve as collateral for margin loans. We hold crypto in custody for users in one or more omnibus crypto wallets; we do not presently utilize third-party custodians. We hold cryptographic key information and maintain internal record keeping for the ~~year ended December 31, 2020, primarily~~crypto we hold in custody for users, and we are obligated to secure such assets from loss or theft. Our contractual arrangements state that ~~it (i) decreased revenue~~our customers and clients retain legal ownership of the crypto custodied by us on their behalf; they also benefit from ~~our loyalty~~the rewards and ~~travel businesses, and (ii) impacted our ability to expand our relationships~~bear the risks associated with ~~existing loyalty partners, and to conclude relationships with new loyalty partners, whose businesses similarly~~their ownership, including as a result of any price fluctuations. We have been ~~adversely affected~~monitoring and will continue to actively monitor legal and regulatory developments and may consider further steps, as appropriate, to support this contractual position so that in the event of our bankruptcy, the crypto custodied by us should not be deemed to be part of our bankruptcy estate. We do not expect potential future cash flows associated with the ~~pandemic. During 2021,~~crypto safeguarding obligation liability.

Key Performance Indicators

We use two key performance indicators (“KPIs”) that are key to understanding our business ~~operations started~~performance, as they reflect the different ways we enable clients to ~~recover from~~engage with our platform.

•Transacting accounts. We define transacting accounts as unique accounts that perform transactions on our platform each month. We use transacting accounts to reflect how users across our platform use the ~~impacts~~variety of ~~the pandemic. Our business operations have continued to recover in 2022 from the impacts of the pandemic, including revenue from the loyalty and travel business.~~

~~Business Combination~~

On October 15, 2021, Bakkt (f/k/a VPC Impact Acquisition Holdings, a Cayman Islands exempted company (“VIH”)) and VIH completed the Business Combination contemplated by the Merger Agreement. Pursuant to the Merger

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~~Agreement, VIH acquired a majority voting interest in Bakkt Opco Holdings, LLC (“Opco”) through a series of mergers, with Opco becoming a direct subsidiary of VIH. In connection with~~services we offer, such as redeeming loyalty points for travel or merchandise, buying and selling crypto to facilitate everyday purchases, or converting loyalty points to cash or gift cards. There were 0.7 million unique monthly transacting accounts during the ~~completion of the Business Combination, VIH changed its jurisdiction of incorporation from the Cayman Islands~~three months ending March 31, 2023.

•Digital asset conversion volume. This KPI refers to the ~~State~~dollar value of ~~Delaware~~transaction volume across our platform, including loyalty redemption and ~~changed its name to “Bakkt Holdings, Inc.”~~

~~The Business Combination resulted in Bakkt continuing as~~crypto buy/sell transactions. Our loyalty point and notional traded crypto volume was $193 million during the surviving entity and being organized as an umbrella partnership corporation, or “up-C,” structure in which substantially all our assets and business are held by Opco and its subsidiaries, with the existing owners of Opco being considered as noncontrolling interests in the audited consolidated financial statements.

Upon completion of the Business Combination, VIH was deemed the accounting acquirer and Opco the accounting acquiree. Under the acquisition method of accounting, VIH’s assets and liabilities retained their carrying values and the assets and liabilities associated with Opco were recorded at their fair values measured as of the acquisition date. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill. In connection with the Business Combination, all outstanding membership interests and rights to acquire membership interests in Opco were exchanged for an aggregate of 208,200,000 Opco Common Units and an equal number of newly issued shares of our Class V common stock, par value $0.0001 per share (“Class V common stock”), which are non-economic, voting shares of the Company, of which 207,406,648 are outstanding and 793,352 reserved for issuance upon the exercise of a warrant agreement. Each Opco Common Unit, when coupled with one share of our Class V common stock is referred to as a “Paired Interest.” Paired Interests may be exchanged for one share of our Class A common stock or a cash amount in accordance with the Third Amended and Restated Limited Liability Company Agreement of Opco, and the Exchange Agreement between the Company and certain holders of Bakkt Common Units, dated as of October 15, 2021. Following the Closing, the Company owned approximately 20.3% of the Opco Common Units and with the remaining Opco Common Units being owned by the equity owners of Opco prior to the Merger.

~~As a result of the Business Combination, our financial results are broken out between the Predecessor periods (January 1, 2021 through~~three months ending March 31, ~~2021) and~~2023.

Results of Operations

The following table is our consolidated statements of operations for the ~~Successor period (January 1, 2022 through~~three months ended March 31, ~~2022).~~2023 and March 31, 2022, respectively, (in thousands):

~~Our Corporate Structure~~

We own and consolidate entities formed during the year ended December 31, 2019, including Bakkt Trust and Bakkt Marketplace. We also own and consolidate entities that were acquired during the year ended December 31, 2019, including DACC Technologies, Inc., Digital Asset Custody Company, Inc. (collectively with DACC Technologies, Inc., “DACC”), and Bakkt Clearing, LLC (“Bakkt Clearing”), formerly known as Rosenthal Collins Group, L.L.C. We continued to operate these entities through fiscal year 2021 and also acquired Bridge2 Solutions in February 2020.

Bakkt Trust is a New York limited-purpose trust company that is chartered by and subject to the supervision and oversight of the NYDFS. In September 2019, Bakkt Trust, along with IFUS and ICUS, both of which are wholly-owned subsidiaries of ICE, brought to market an institutional-grade, regulated infrastructure for trading, clearing, and custody services for bitcoin. Bakkt Trust acts as a qualified custodian for bitcoin, which enables Bakkt Trust to offer end-to-end regulated, physically-delivered bitcoin futures and options contracts to financial institutions and market makers. In addition, Bakkt Trust has been approved by the NYDFS to offer non-trading- related, standalone custody of bitcoin and ether to institutions and certain high net worth individuals in cryptoassets, subject to NYDFS regulatory oversight.


	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Revenues:
Net revenues (includes related party net revenues of $1 and $20, respectively)	$	12,986	$	12,532
Operating expenses:
Compensation and benefits	34,144		35,088
Professional services	2,378		4,675
Technology and communication	5,718		4,358
Selling, general and administrative	6,709		9,435
Acquisition-related expenses	776		516
Depreciation and amortization	3,063		5,851
Related party expenses	600		367
Restructuring expenses	4,251		—
Other operating expenses	795		728
Total operating expenses	58,434		61,018
Operating loss	(45,448)		(48,486)
Interest income, net	1,624		61
(Loss) gain from change in fair value of warrant liability	(1,000)		2,428
Other expense, net	(17)		(462)
Loss before income taxes	(44,841)		(46,459)
Income tax benefit (expense)	(18)		3,138
Net loss	$	(44,859)	$	(43,321)
Less: Net loss attributable to noncontrolling interest	(30,883)		(36,193)
Net loss attributable to Bakkt Holdings, Inc.	(13,976)		(7,128)

Net loss per share attributable to Class A common stockholders.
Basic	$	(0.17)	$	(0.12)
Diluted	$	(0.17)	$	(0.12)

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~~The below graphic illustrates the structure of the physically-delivered bitcoin futures and options and custody offerings.~~

Bakkt Marketplace has created an integrated platform that enables consumers and enterprises to transact in digital assets. Bakkt Marketplace users have a digital wallet that enables them to purchase, sell, convert, and or spend digital assets. Users can also use their digital wallet to spend fiat currency with various retailers and convert loyalty and rewards points into fiat currency. Bakkt Marketplace has received money transmitter licenses from all states throughout the U.S. where such licenses are required, has obtained a New York State virtual currency license, and is registered as a money services business with the Financial Crimes Enforcement Network of the United States Department of the Treasury. Bakkt

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~~rust’s custody solution provides support to Bakkt Marketplace with respect to bitcoin and ether functionality within the consumer app.~~

~~Bakkt Clearing is registered as a futures commission merchant (“FCM”) with the Commodity Futures Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”).~~

~~Bakkt’s white label loyalty redemption platform is largely carried on by its subsidiary, Bridge2 Solutions, LLC, which Bakkt acquired in February 2020.~~

~~Our Relationship with ICE and the Triparty Agreement~~

Prior to the consummation of the Business Combination, we were an indirect majority-owned subsidiary of ICE. ICE is a global market infrastructure provider with a history of developing and implementing leading technologies. ICE operates exchanges, clearinghouses, and listing venues for the financial markets alongside offering data-driven technology services to support the trading, lending, investment, risk management, and connectivity needs of customers. In building our platform, ICE and minority investors contributed capital and assets valued at approximately $483 million prior to the Business Combination, leveraging ICE’s leading competency of creating and operating market infrastructure. Upon our formation, ICE made a cash capital contribution and granted us the right to access ICE’s existing futures and clearing platforms.ICE also partners with us with respect to certain institutional product offerings.

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~~Results of Operations~~

~~The following table is our consolidated statements of operations for the Successor period and the Predecessor periods (in thousands):~~

Successor Predecessor
Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
Revenues:
Net revenues(1)
$ 12,532 $ 8,145
Operating expenses:
Compensation and benefits 35,088 15,233
Professional services 4,675 913
Technology and communication 4,358 2,786
Selling, general and administrative 9,435 6,109
Acquisition-related expenses 516 7,820
Depreciation and amortization 5,851 2,794
Related party expenses (affiliate in Predecessor period)(2)
367 471
Impairment of long-lived assets — —
Other operating expenses 728 429
Total operating expenses 61,018 36,555
Operating loss (48,486) (28,410)
Interest income (expense), net 61 (49)
Gain from change in fair value of warrant liability 2,428 —
Other income (expense), net (462) (338)
Loss before income taxes (46,459) (28,797)
Income tax benefit (expense) 3,138 (23)
Net loss $ (43,321) $ (28,820)
Less: Net loss attributable to noncontrolling interest (36,193)
Net loss attributable to Bakkt Holdings, Inc. (7,128)
Net loss per share attributable to Bakkt Holdings, Inc.
Class A common stockholders per share:
Basic $ (0.12) (3)
Diluted $ (0.14) (3)

~~(1)The revenue for the three months ended March 31, 2022 and 2021 includes net revenues from related party of $20 and net revenues from affiliate of $(26), respectively.~~

~~(2)As a result of the Business Combination, ICE and its affiliates are no longer our affiliates.~~

~~(3)Basic and diluted loss per share is not presented for the Predecessor period due to lack of comparability with the Successor period.~~

Three Months Ended March 31, ~~2022 (Successor)~~2023 compared to Three Months Ended March 31, ~~2021 (Predecessor)~~2022

Financial Summary

The three months ended March 31, ~~2022~~2023 included the following notable items relative to the three months ended March 31, ~~2021:~~2022:

•Revenue increased ~~$4.4~~$0.5 million, or ~~54%~~4%, primarily driven by ~~strong~~an increase transaction revenue from the loyalty redemption business; and

•Operating expenses ~~increased $24.5~~decreased $2.6 million ~~or 67%,~~ primarily driven by ~~increases in non-cash compensation~~lower depreciation and ~~headcount.~~amortization and reduced marketing expenses.

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Revenue


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Net revenues	Net revenues	$	12,532	$	8,145	$	4,387	53.9	%	Net revenues	$	12,986	$	12,532	$	454	3.6	%

Net Revenues

Net revenues consist of transaction revenue and subscription and service revenue. We receive revenue when consumers use our services to buy, sell, and redeem crypto and loyalty points. We generate revenue across our platform in the following key areas:

•Subscription and service revenue: We receive a recurring subscription revenue stream from client platform fees as well as service revenue from software development fees and call center support.

•Transaction revenue: We generate transaction revenue through loyalty redemption volumes where we receive a percentage fee based on the volume and from crypto buy/sell trades where we earn a spread on both legs of the transaction.

Our revenue has seasonality and is ~~net~~typically higher in the fourth quarter, driven by holiday spending and the booking of ~~incentives, rebates~~travel. Revenue generated from our crypto services has been immaterial to date. However, we expect that transaction and ~~liquidity payments under~~subscription revenue from crypto trades will be significant drivers of our business, and we expect those revenues to increase as we grow our client base and our customers. As a result, over time, we expect loyalty revenue, which has been the ~~Triparty Agreement, reductions in connection with~~source of substantially all of our revenue historically, to decrease as a percentage of overall revenue as the ~~contribution agreement entered into between Bakkt~~revenue from our other product and ~~ICE in connection with ICE’s formation of Bakkt (the “Contribution Agreement”), and consideration payable to a customer pursuant to an agreement with a strategic partner.~~service offerings grows.

Net revenues increased by ~~$4.4~~$0.5 million, or ~~53.9%~~3.6%, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The increase was comprised of ~~$3.2~~$1.0 million of increased transaction revenue, ~~and $1.2~~offset by $0.5 million of ~~increased~~decreased subscription and service revenue. The increase in transaction revenue was primarily driven by ~~$2.5 million from~~ higher customer activity in our loyalty redemption services business. The ~~increase~~decrease in subscription and service revenue was ~~primarily~~ related to ~~the addition of new services for an existing loyalty customer.~~reduced development services.

Operating Expenses

Operating expenses consist of compensation and benefits, professional services, technology and communication expenses, selling, general and administrative ~~expense,~~expenses, acquisition-related expenses, depreciation and amortization, affiliate expenses, impairment of indefinite-lived intangible assets, long-lived assets, and goodwill, restructuring charges, and other operating expenses.

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Compensation and Benefits


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Compensation and Benefits	Compensation and Benefits	$	35,088	$	15,233	$	19,855	130.3	%	Compensation and Benefits	$	34,144	$	35,088	$	(944)	(2.7	%)

Compensation and benefits expense include all salaries and benefits, compensation for contract labor, incentive programs for employees, payroll taxes, share-based and unit-based compensation and other employee related costs. Compensation and benefits expense is the most significant component of our operating expenses, and we expect ~~that our compensation and benefits expense~~this will continue to ~~increase~~be the case after the restructuring actions we took in ~~absolute dollars~~the fourth quarter of 2022 and the first quarter of 2023.

Headcount increased year over year across functions as we ~~continue to expand our business, as described below.~~

~~Headcount has increased, and will continue to increase, across functions to further strengthen~~invested in strengthening our service offerings and ~~enhance~~enhancing our systems, processes, and controls. ~~We intend~~Our restructuring actions have re-set our expense base to ~~grant equity awards~~meet current market demand, and we expect to limit future hiring and leverage the team we have built to date as ~~part of the compensation package for new employees. We~~well as our Apex Crypto acquisition to execute our growth strategy. Accordingly, we expect that our compensation and expenses will decrease as a percentage of our revenue over time. Compensation and benefits ~~increased~~decreased by ~~$19.9~~$0.9 million, or ~~130.3%~~2.7%, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~increases~~a decrease of ~~$4.0~~$6.6 million in ~~additional salaries, wages~~non-cash compensation and ~~benefits, $1.5~~incentive bonuses and a decrease of $2.6 million in contract labor for software development ~~and $12.6~~costs, partially offset by an increase of $5.6 million in ~~non-cash compensation~~salaries, wages and ~~incentive bonuses. As a newly public company, we issued restricted stock units (“RSUs”)~~benefits and $2.6 million in the fourth quarter of 2021 that will vest in the second quarter of 2022. These awards accounted for $9.1 million of the total share-based compensation during the three months ended March 31, 2022 period. As we typically grant RSUs with a three-year vesting period, the impact of share-based compensation expenses is expected to be reduced in future periods.

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capitalized software development costs.

Professional Services


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Professional Services	Professional Services	$	4,675	$	913	$	3,762	412.0	%	Professional Services	$	2,378	$	4,675	$	(2,297)	(49.1	%)

Professional services expense includes fees for accounting, legal and regulatory fees. Professional services ~~increased~~decreased by ~~$3.8~~$2.3 million, or ~~412.0%~~49.1%, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~ 2022. The ~~increase~~decrease was primarily due to ~~increases~~a decrease of ~~$1.1 million in professional and other fees, $1.9~~$1.3 million in audit and tax fees, ~~and $0.8~~$0.6 million in legal fees and $0.4 million in other professional fees.

Technology and Communication


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Technology and Communication	Technology and Communication	$	4,358	$	2,786	$	1,572	56.4	%	Technology and Communication	$	5,718	$	4,358	$	1,360	31.2	%

Technology and communication costs represent all non-headcount related costs to deliver technological solutions. Such costs principally include amounts paid for software licenses and software-as-a-service arrangements utilized for operating, administrative and information security activities, fees paid for third-party data center hosting arrangements, and fees paid to telecommunications service providers and for telecommunication software platforms necessary for operation of our customer support operations. These costs are driven by ~~customer~~client requirements, system capacity, functionality and redundancy requirements.

Technology and communications expense also includes fees paid for access to external market data and associated licensing costs, which may be impacted by growth in electronic contract volume, our capacity requirements, changes in the number of telecommunications hubs, and connections with customers to access our electronic platforms directly. Technology and communications expense increased by ~~$1.6~~$1.4 million, or ~~56.4%~~31.2%, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The increase was primarily due to an increase of ~~$1.4~~$1.2 million in hardware and software license fees.

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Selling, General and Administrative


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Selling, General and Administrative	Selling, General and Administrative	$	9,435	$	6,109	$	3,326	54.4	%	Selling, General and Administrative	$	6,709	$	9,435	$	(2,726)	(28.9	%)

Selling, general and administrative expenses include marketing, advertising, business insurance, rent and occupancy, bank service charges, dues and subscriptions, travel and entertainment, rent and occupancy, and other general and administrative costs. Our marketing activities primarily consist of web-based promotional campaigns, promotional activities with ~~partners,~~clients, conferences and user events, and brand-building activities. Selling, general and administrative expenses do not include any headcount cost, which is reflected in the compensation and benefits financial statement line item. Our selling, general and administrative expenses will continue to increase in absolute dollars to support the projected growth in our business and requirements of being a public company, including increased insurance premiums and disclosure processes. However, we expect these costs will decrease as a percentage of our revenue in future years as we gain improved operating leverage from our projected revenue growth.

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Selling, general and administrative costs ~~increased~~decreased by ~~$3.3~~$2.7 million, or ~~54.4%~~28.9%, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~increases of $4.0~~a $2.9 million ~~in insurance expense and $0.4 million in rent, partially offset by a~~ reduction of marketing ~~expenses of $1.7 million. The~~expenses. In 2022, the majority of marketing expenses ~~are~~were web-based promotional ~~campaigns.~~campaigns associated with our direct to consumer app, which we retired in the first quarter of 2023. We expect ~~to increase~~ marketing efforts ~~as part of~~going forward to reflect our ~~broader growth initiatives, which is expected to result in increased selling, general~~B2B2C focus and ~~administrative expenses in future periods.~~we will scale investments up or down depending on market conditions and opportunities.

Acquisition-related Expenses


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Acquisition-related expenses	Acquisition-related expenses	$	516	$	7,820	$	(7,304)	(93.4	%)	Acquisition-related expenses	$	776	$	516	$	260	50.4	%

Acquisition-related expenses ~~decreased~~increased by ~~$7.3~~$0.3 million, or ~~93.4%~~50.4%, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. Acquisition-related expenses for the three months ended March 31, ~~2021~~2023 consist of fees for investment banking advisors, lawyers, accountants, tax advisors and public relations firms ~~directly~~ related to the ~~Business Combination, which did not recur during the three months ended March 31, 2022.~~acquisitions of Apex Crypto and Bumped. The amount and timing of acquisition-related expenses is expected to vary across periods based on potential transaction activities.

Depreciation and Amortization


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Depreciation and amortization	Depreciation and amortization	$	5,851	$	2,794	$	3,057	109.4	%	Depreciation and amortization	$	3,063	$	5,851	$	(2,788)	(47.6	%)

Depreciation and amortization expense consists of amortization of intangible assets from business acquisitions, internally developed software and depreciation of purchased software and computer and office equipment over their estimated useful lives. Intangible assets subject to amortization consist primarily of acquired technology and ~~customer~~client relationships from the VIH Business Combination. Depreciation and amortization ~~increased~~decreased by ~~$3.1~~$2.8 million, or ~~109.4%~~47.6%, for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~increases~~lower net book values of ~~$3.2~~intangible assets after impairments were recorded in 2022.

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Restructuring Expenses


($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Restructuring expenses	$	4,251	$	—	$	4,251	n/m

Restructuring expenses of $4.3 million related to the step-up in basis of the technology and customer relationships acquired in connection with the Business Combination, partially offset by a decrease of $0.1 million related to amortization of trade names during the three months ended March 31, ~~2021, which is no longer amortizable following the Business Combination in 2021.~~2023 consist of severance costs and accelerated vesting of non-cash compensation as part of our business simplification initiatives to focus on capabilities with strong product market fit and scalability.

~~Gain~~(Loss) gain from Change in Fair Value of Warrant Liability


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change	($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Gain from change in fair value of warrant liability		$	2,428	$	—	$	2,428	n/m
(Loss) gain from change in fair value of warrant liability									(Loss) gain from change in fair value of warrant liability	$	(1,000)	$	2,428	$	(3,428)	n/m

~~Table~~We recorded a loss of ~~Contents~~

$1.0 million during the three months ended March 31, 2023 for the change in fair value on the revaluation of our warrant liability associated with our public warrants. We recorded a gain of $2.4 million during the three months ended March 31, 2022 for the change in fair value on the revaluation of our warrant liability associated with our public warrants. ~~This is a~~These are non-cash ~~gain~~losses and isgains and are driven by fluctuations in the market price of our public warrants.

Other ~~expense,~~income (expense), net


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change		($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Other expense, net		$	(462)	$	(338)	$	(124)	36.7	%
Other income (expense), net										Other income (expense), net	$	(17)	$	(462)	$	445	(96.3	%)

Other ~~expense,~~income (expense), net primarily consists of non-operating gains and losses. During the three months ended March 31, ~~2022,~~2023, we had ~~other~~ expense of ~~$0.5~~less than $0.1 million ~~as compared~~primarily related to ~~other expense of $0.3 million for~~foreign currency translation. During the three months ended March 31, ~~2021. The increase in other~~2022, we recorded expense of ~~$0.1~~$0.5 million ~~was~~ primarily ~~driven by~~related to foreign currency ~~transaction losses.~~

translation.

Income tax benefit (expense)


		Successor		Predecessor
($ in thousands)	($ in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		$ Change		% Change	($ in thousands)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		$ Change		% Change
Income tax benefit (expense)	Income tax benefit (expense)	$	3,138	$	(23)	$	3,161	n/m	Income tax benefit (expense)	$	(18)	$	3,138	$	(3,156)	n/m

Income tax expense during the three months ended March 31, 2023 primarily consists of current state tax expense related to certain state jurisdictions wherein we are required to file income tax returns during the period. Income tax benefit during the three months ended March 31, 2022 primarily consists of deferred tax benefit from net loss allocated to Bakkt Holdings, Inc. during the period.

Liquidity and Capital Resources

Our predecessor principally financed its operations through equity financings in the form of capital contributions from its members and, to a lesser degree, from customer revenues. In addition, in 2018, ICE contributed certain developed assets and rights to use exchange and clearing licenses enabling Bakkt to commence operations. In connection with the closing of the Business Combination, our predecessor’s cash position was supplemented by $532.4 million, which included $325.0 million in proceeds from the closing of a private placement of shares of our Class A common stock and $207.4 million that had previously been held in trust.

As of March 31, ~~2022,~~2023, we had ~~$355.2~~$50.8 million and ~~$16.5~~$19.3 million of cash and cash equivalents and restricted cash, ~~respectively, which amounts included~~respectively. As of March 31, 2023, we also had $67.2 million of cash in escrow for the ~~net proceeds raised in connection with the Business Combination, the amounts used to fund redemptions in connection with the Business Combination and the amounts received upon exercise~~funding of the ~~public warrants through such date.~~Apex acquisition, which closed on April 1, 2023. Additionally, as of March 31, 2023, we had $66.8 million of available-for-sale debt securities that mature over the next 3 to 6 months. Cash and cash equivalents consist of cash deposits at banks and money market funds. Restricted cash is held to satisfy certain minimum capital requirements pursuant to regulatory requirements.

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We intend to use our unrestricted cash and proceeds from maturity of available-for-sale debt securities to (i) ~~increase~~maintain our sales and marketing efforts and activate crypto clients, (ii) ~~expand~~maintain our research and product development efforts, and (iii) ~~maintain and expand~~optimize our technology infrastructure and operational support. We expect to limit future hiring and leverage the team we have built to date as well as our Apex Crypto acquisition to execute our growth strategy. Excluding the cash purchase price to acquire Apex Crypto, we expect our cash usage in 2023 to decline from 2022 levels driven by the combined impact of increased revenue and expense reductions related to the completion of large-dollar investments in 2022 and benefits from restructuring actions. In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies or intellectual property rights. However, we have no agreements or commitments with respect to any such acquisitions or investments at this time.

Our expected uses of ~~the~~ available funds ~~from the Business Combination~~ are based upon our present plans, objectives and business condition. We have not determined all of the particular uses for the available funds, and

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management has not estimated the amount of funds, or the range of funds, to be used for any particular purpose. As a result, our management retain broad discretion over the available funds.

Our future cash requirements will depend on many factors, including our revenue growth rate, the timing and extent of hiring and associated overhead to support projected growth in our business, sales and marketing costs to drive revenue growth, and software development investments to continue adding features and functionality to our technology platforms to align with market needs. We ~~continue to accelerate our hiring plans along with increasing our marketing and promotional efforts, which we~~ expect to ~~continue~~augment our personnel with employees acquired in the ~~near future.~~Apex Crypto transaction. We ~~may also enter into arrangements to acquire or invest~~believe that we substantially completed the necessary investment in ~~complementary businesses, services, and technologies~~our platforms in 2022, which ~~will likely require~~enables us to ~~increase~~simplify our ~~cash consumption.~~

~~In addition, we have evaluated~~organization and focus on the ~~impact of the COVID-19 pandemic on~~core capabilities that are critical to our ~~liquidity and capital needs, and we anticipate that its effects will be largely neutral.~~strategy.

Depending on the foregoing and other factors that may affect our business in the future, we may be required to seek additional capital contributions or debt financing in the future. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

The following table summarizes our cash flows for the periods presented (in thousands):

Successor Predecessor

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021
Net cash flows used in operating activities $ (33,156) $ (974)
Net cash flows used in investing activities $ (3,122) $ (4,054)
Net cash flows provided by (used in) financing activities $ 1 $ (31)


	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Net cash used in operating activities	$	(47,241)	$	(33,156)
Net cash provided by (used in) investing activities	$	69,699	$	(3,122)
Net cash provided by financing activities	$	—	$	1

Operating Activities

Since our inception, we have yet to achieve positive cash flow from operations. Our primary uses of cash include compensation and benefits for headcount-related expenses, investment in software and product development of our technology platforms, ~~most significantly our platform,~~ and associated non-headcount technology and communication cost to develop, operate and support our customer-facing technology platforms.

Net cash flows used in operating activities of $47.2 million for the three months ended March 31, 2023 was primarily related to our net loss of $44.9 million and net cash outflows resulting from changes in our operating assets and liabilities of $15.4 million, offset by non-cash charges of $13.0 million. Net cash outflows from changes in our operating assets and liabilities for the three months ended March 31, 2023 resulted primarily from a $16.0 million decrease of accounts payable and accrued liabilities, which was partially offset by a decrease in prepaid insurance of $4.3 million. The non-cash charges primarily consisted of share-based compensation of $7.2 million and depreciation and amortization of $3.1 million.

Net cash flows used in operating activities of $33.2 million for the three months ended March 31, 2022 ~~was~~is primarily related to our net loss of $43.3 million and changes in our operating assets and liabilities of $4.0 million, offset

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by non-cash charges of $14.2 million. The non-cash charges ~~for the combined 2021 period~~ primarily consisted of share-based compensation of $13.2 million and depreciation and amortization of $5.9 million, offset by a gain from change in fair value of warrant liability of $2.4 million. Net cash outflows from changes in ~~our~~ operating assets and liabilities ~~for the three months ended March 31, 2022~~ resulted primarily from an increase in accounts receivables of $1.3 million, a decrease of accounts payable and accrued liabilities of $1.7 million and an increase in other assets and liabilities of $4.3 million, which were partially offset by a decrease in prepaid insurance of $4.3 ~~million.~~million

Investing Activities

Net cash flows ~~used in operating~~provided by investing activities of ~~$1.0~~$69.7 million for the three months ended March 31, 2021 is primarily attributable to our net loss of $28.8 million, offset by non-cash charges of $5.4 million and changes in our operating assets and liabilities of approximately $22.5 million. Non-cash charges primarily2023 consisted of ~~$1.3~~the receipt of $101.0 million of ~~unit-based compensation expenses and $2.8 million of depreciation and amortization. Net cash inflows from changes in operating assets and liabilities resulted~~proceeds from the ~~return~~sale of ~~a deposit with our clearinghouse affiliate of $20.4 million, a $2.9 million increase in accounts payable and accruals and a $1.1 million increase in other assets and liabilities, which were~~available-for-sale securities, partially offset by a ~~$2.0~~the purchase of $27.0 million ~~decrease in amounts due~~of available-for-sale debt securities, $3.7 million of capitalized costs of internally developed software for our technology platforms and $0.6 million cash used to ~~affiliates.~~

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~~Investing Activities~~acquire Bumped.

Net cash flows used in investing activities of $3.1 million for the three months ended March 31, 2022 consisted of capitalized costs of internally developed software. ~~Capital~~Capitalized expenditures were ~~primary~~primarily related to capitalized expenses associated with internally developed software for our technology platforms.

~~Net cash flows used in investing~~Financing Activities

We did not have any financing activities ~~of $4.1 million for~~during the three months ended March 31, ~~2021 consisted of capitalized costs of internally developed software and other capital expenditures.~~

~~Financing Activities~~2023.

Net cash flows provided by financing activities of less than $0.1 million for the three months ended March 31, 2022 resulted from proceeds from the exercise of public warrants.

~~Net cash flows used in financing activities of less than $0.1 million for the three months ended March 31, 2021 resulted from payments for capital leases during the period.~~

Tax Receivable Agreement

Concurrently with the completion of the VIH Business Combination, we entered into a Tax Receivable Agreement ("TRA") with certain Bakkt Equity Holders. Pursuant to the ~~Tax Receivable Agreement,~~TRA, among other things, holders of Bakkt Common Units may, subject to certain conditions, from and after April 16, 2022, exchange such Common Units (along with a corresponding number of shares of our Common Stock), for Class A common stock on a one-for-one basis, subject to the terms of the Exchange Agreement, including our right to elect to deliver cash in lieu of Class A common stock and, in certain cases, adjustments as set forth therein. Bakkt will have in effect an election under Section 754 of the Internal Revenue Code for each taxable year in which an exchange of Bakkt Common Units for Class A common stock (or cash) occurs.

The exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Bakkt. These increases in tax basis may reduce the amount of tax that we would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

The ~~Tax Receivable Agreement~~TRA provides for the payment by us to exchanging holders of Bakkt Common Units of 85% of certain net income tax benefits, if any, that we realize (or in certain cases is deemed to realize) as a result of these increases in tax basis ~~and certain other tax attributes of Bakkt and tax benefits~~ related to entering into the ~~Tax Receivable Agreement,~~TRA, including tax benefits attributable to payments under the ~~Tax Receivable Agreement.~~TRA. This payment obligation is an obligation of the Company and not of Bakkt. For purposes of the ~~Tax Receivable Agreement,~~TRA, the cash tax savings in income tax will be computed by comparing our actual income tax liability (calculated with certain assumptions) to the amount of such taxes that we would have been required to pay had there been no increase ~~(or decrease)~~ to the tax basis of the assets of Bakkt as a result of Bakkt having an election in effect under Section 754 of the Code for each taxable year in which an exchange of Bakkt Common Units for Class A common stock occurs and had we not entered into the ~~Tax Receivable Agreement.~~TRA. Such ~~increase or decrease~~change will be calculated under the ~~Tax Receivable Agreement~~TRA without regard to any transfers of Bakkt Common Units or distributions with respect to such Bakkt Common Units before the exchange under the Exchange Agreement to which Section 743(b) or 734(b) of the Code applies. As of March 31, ~~2022, no such exchanges have occurred.~~2023, 22,678,761 Opco common units were exchanged for Class A common stock. Based on the

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Company's history of taxable losses, the Company has concluded that it is not probable to expect cash tax payments in the foreseeable future and as such, no value has been recorded under the TRA.

Contractual Obligations and Commitments

The following is a summary of our significant contractual obligations and commitments as of March 31, ~~2022~~2023 (in thousands):


		Payments Due by Period											Payments Due by Period
		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total			Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Purchase obligations(1)		$	2,250	$	8,750	$	9,000	$	—	$	20,000
Future minimum operating lease payments(2)		(2,642)		5,537		5,765		14,536		23,196
Purchase obligations(1)												Purchase obligations(1)	$	4,050	$	19,100	$	900	$	—	$	24,050
Future minimum operating lease payments(2)												Future minimum operating lease payments(2)	4,551		10,794		7,471		13,601		36,417
Total contractual obligations	Total contractual obligations	$	(392)	$	14,287	$	14,765	$	14,536	$	43,196	Total contractual obligations	$	8,601	$	29,894	$	8,371	$	13,601	$	60,467

(1)Represents minimum commitment payments under a four-year cloud computing ~~arrangement.~~arrangement and a separate five-year marketing partnership.

(2)Represents rental payments under operating leases with remaining non-cancellable terms in excess of one year.

Additionally, we, through our loyalty business, ~~have~~had a purchasing card facility with a bank that we ~~utilize~~utilized for redemption purchases made from ~~merchant partners~~vendors as part of our loyalty redemption platform. Expenditures made using the purchasing card facility ~~are~~were payable monthly, ~~are~~were not subject to formula-based restrictions and dodid not bear interest if amounts outstanding ~~are~~were paid when due and in full. Among other covenants, the purchasing card facility ~~requires~~required that we maintain a month-end cash balance of $40.0 million. In January 2021, the purchasing card facility was extended to April 15, 2022 in order to facilitate a long-term agreement on more favorable terms for us. In April 2022, we further extended the maturity date of the purchasing card facility to August 12, 2022, to transition over to the purchasing card facility with Bank of America described below. The maturity date of the purchasing card facility was further extended as of August 12, 2022 to January 13, 2023. During September 2022 we paid off the majority of the remaining balance of the purchasing card facility. The purchasing card facility was closed during October 2022.

On April 7, 2022, we entered into a corporate card services agreement with Bank of America to provide a new purchasing card facility. Total borrowing capacity under the facility is $35 million and there is no defined maturity date. Expenditures made using the purchasing card facility are payable monthly, are not subject to formula-based restrictions and do not bear interest if amounts outstanding are paid when due and in full. The purchasing card facility requires us to maintain a concentration account with the lender subject to a minimum liquidity maintenance requirement of $7.0 million as collateral along with the accounts receivable of our subsidiary, within the loyalty business. Bakkt Holdings, Inc. serves as the guarantor on behalf of our subsidiary under the commercial purchasing card facility. We began using the purchasing card facility in August 2022.

Non-GAAP Financial Measures

We use non-GAAP financial measures to assist in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that presenting non-GAAP financial measures is useful to investors because it (a) provides investors with meaningful supplemental information regarding financial performance by excluding certain items that we believe do not directly reflect our core operations, (b) permits investors to view performance using the same tools that we use to budget, forecast, make operating and strategic decisions, and evaluate historical performance, and (c) otherwise provides supplemental information that may be useful to investors in evaluating our results.

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We believe that the presentation of the following non-GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures provided herein, provides investors with an additional understanding of the factors and trends affecting our business that could not be obtained absent these disclosures.

Adjusted EBITDA

We present Adjusted EBITDA as a non-GAAP financial measure.

~~Table of Contents~~

We believe that Adjusted EBITDA provides relevant and useful information, which is used by management in assessing the performance of our business. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, acquisition-related expenses, share-based and unit-based compensation expense, goodwill and intangible assets impairments, restructuring charges, changes in the fair value of our warrant liability and certain other non-cash and/or non-recurring items that do not contribute directly to our evaluation of operating ~~results.~~results and are not components of our core business operations. Adjusted EBITDA provides management with an understanding of earnings before the impact of investing and financing transactions and income taxes, and the effects of aforementioned items that do not reflect the ordinary earnings of our operations. This measure may be useful to an investor in evaluating our performance. Adjusted EBITDA is not a measure of our financial performance under GAAP and should not be considered as an alternative to net income (loss) or other performance measures derived in accordance with GAAP. Our definition of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

In addition to the items above, Adjusted EBITDA as a non-GAAP financial measure also excludes interest income (expense) and other income (expense), and income tax (expense) benefit, as these items are not components of our core business operations.

Non-GAAP financial measures like Adjusted EBITDA have limitations, should be considered as supplemental in nature and are not meant as a substitute for the related financial information prepared in accordance with GAAP. ~~These limitations include the following:~~

•Share-based and unit-based compensation expense, which has been excluded from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy;

•the intangible assets being amortized, and property and equipment being depreciated, may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments; and

•~~non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs.~~

~~Because of these limitations, the~~The non-GAAP financial measures should be considered alongside other financial performance measures, including net loss and our other financial results presented in accordance with GAAP.

The following table presents a reconciliation of net loss, the most directly comparable GAAP operating performance measure, to our Adjusted EBITDA for each of the periods indicated (in thousands):

Successor Predecessor

Three Months Ended
March 31, 2022 Three Months Ended
March 31, 2021
Net loss (43,321) (28,820)
Depreciation and amortization 5,851 2,794
Interest (income) expense (61) 49
Income tax (benefit) expense (3,138) 23
EBITDA (40,669) (25,954)
Acquisition-related expenses 516 7,820
Share-based and Unit-based compensation expense 13,347 1,256
Gain from change in fair value of warrant liability (2,428) —
ICE transition services expense 367 —
Cancellation of common units (60) —
Adjusted EBITDA (28,927) (16,878)

~~Table of Contents~~


	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Net loss	$	(44,859)	$	(43,321)
Depreciation and amortization	3,063		5,851
Interest income, net	(1,624)		(61)
Income tax expense (benefit)	18		(3,138)
EBITDA	(43,402)		(40,669)
Acquisition-related expenses	776		516
Share-based and unit-based compensation expense	7,921		13,347
Cancellation of common units	—		(60)
Loss (gain) from change in fair value of warrant liability	1,000		(2,428)
Restructuring expenses	4,251		—
ICE transition services expense	600		367
Adjusted EBITDA loss	$	(28,854)	$	(28,927)

Adjusted EBITDA loss for the three months ended March 31, ~~2022~~2023 decreased by ~~$12.0~~less than $0.1 million or ~~71.4%~~(0.3)% as compared to the three months ended March 31, ~~2021.~~2022. The ~~decrease~~increased loss was primarily due to a ~~$7.9~~$5.6 million increase in ~~compensation~~salaries, wages and benefits resulting from ~~an increase in~~higher headcount to support the projected growth in our business, partially offset by a ~~$3.8~~$2.7 million ~~increase professional services including fees for accounting, legal and regulatory fees, and a $3.3 million increase~~reduction in selling, general and administrative expenses as part of our efforts to ~~support the projected growth~~exercise prudent expense management, as well as a $2.3 million reduction in ~~our business and requirements~~professional services fees.

Table of ~~being a public company, including increased insurance premiums and disclosure processes.~~Contents

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and apply judgments that affect the reported amounts. ~~We base~~In our notes to the audited consolidated financial statements, we describe the significant accounting policies used in preparing the consolidated financial statements. Our management has discussed the development, selection, and disclosure of our critical accounting policies and estimates ~~on historical experience, as appropriate,~~with the Audit Committee of our Board of Directors. For further information about our critical accounting policies and ~~on various other assumptions that we believe~~estimates, refer to ~~be reasonable under the circumstances. Changes~~“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ~~the~~our Form 10-K. There have been no material changes to our critical accounting policies and estimates ~~are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by~~since our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows may be affected.Form 10-K.

~~Due~~Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to ~~the COVID-19 pandemic and the military conflict in Eastern Europe, there has been uncertainty and disruption in the global economy and financial markets, which requires us to~~ make ~~certain~~ estimates and assumptions that affect the amounts reported in our audited consolidated financial ~~statements.~~ statements and accompanying notes. We base our estimates and assumptions on various judgments that we believe to be reasonable under the circumstances. The significant estimates and assumptions that affect the financial statements may include, but are not limited to, those that are related to income tax valuation allowances, useful lives of intangible assets and property, equipment and software, fair value of financial assets and liabilities, determining provision for doubtful accounts, valuation of acquired tangible and intangible assets, the impairment of intangible assets and goodwill, and fair market value of Bakkt common units, incentive units and participation units. ~~We have assessed the impact~~Actual results and ~~are not aware of any specific events or circumstances that required an update to our~~outcomes may differ from management's estimates and assumptions ~~or materially affected the carrying value of our assets or liabilities as of the date of issuance of this Report. These estimates~~and such differences may ~~change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.~~

For a description of our critical accounting policies and estimates, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K. There have been nobe material ~~changes~~ to our ~~critical accounting policies and estimates since our Form 10-K.~~

consolidated financial statements.

Recently Issued and Adopted Accounting Pronouncements

Recently issued and adopted accounting pronouncements are described in Note 2 in the unaudited consolidated financial statements included in this Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be

disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC.

Changes in Internal Control Over Financial Reporting

There were no changes ~~in the system of~~to our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended March 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4844

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time we are subject to legal proceedings and claims arising in the ordinary course of business. Based on our current knowledge, we believe that the amount or range of reasonably possible losses will not, either individually or in the aggregate, have a material adverse effect on our business, results of operations, or financial condition.

Prior to its acquisition by the Company, Apex Crypto received requests from the SEC for documents and information about certain aspects of its business, including the operation of its trading platform, processes for listing assets, the classification of certain listed assets, and relationships with customers and service providers, among other topics. Based on the ongoing nature of this matter, the outcome remains uncertain and the Company cannot estimate the potential impact, if any, on its business or financial statements at this time.

The results of any litigation cannot be predicted with certainty, and an unfavorable resolution in any legal proceedings could materially affect our future business, results of operations, or financial condition. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

For additional information on our ongoing legal proceedings, please refer to Note 14 in our unaudited consolidated financial statements included in this Report.

Item 1A. Risk Factors.

In addition to the information set forth in this Report, ~~on Form 10-Q,~~ you should carefully consider the risk factors and other cautionary statements described under the heading “~~Item~~“Item 1A. Risk ~~Factors~~”Factors” included in our Form 10-K, which could materially affect our businesses, financial condition, or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or future results. There have been no material changes in our risk factors from those described in our Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

~~-49-~~45

Item 6. Exhibits.

Incorporated by Reference

Exhibit

Number

Exhibit

Number

Description

Form

File No.

Exhibit

Filing Date

Exhibit

Number

Description

Form

File No.

Exhibit

Filing Date

2.1

Amendment No. 1 To Membership Interest Purchase Agreement, dated as of March 30, 2023, by and among the Company, Bakkt Marketplace, Apex Fintech Solutions Inc. and Apex Crypto, LLC.

8-K

001-39544

2.2

April 3, 2023

3.1

Certificate of Incorporation of the Company, as currently in effect

8-K

001-39544

3.1

October 21, 2021

3.1

Certificate of Incorporation of the Company, as currently in effect

8-K

001-39544

3.1

October 21, 2021

3.2

By-laws of the Company, as currently in effect

8-K

001-39544

3.2

October 21, 2021

3.2

By-laws of the Company, as currently in effect

8-K

001-39544

3.2

October 21, 2021

4.1

Registration Rights Agreement, dated as of April 1, 2023, by and between Bakkt Holdings, Inc. and Apex Fintech Solutions Inc.

8-K

001-39544

4.1

April 3, 2023

10.1+*

Form of Performance Unit Agreement under the Bakkt Holdings, Inc. 2021 Omnibus Incentive Plan.

10.2+*

Form of Executive Officer Restricted Stock Unit Agreement under the Bakkt Holdings, Inc. 2021 Omnibus Incentive Plan.

31.1*

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.1*

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1†

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.1†

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2†

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2†

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.INS*

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (embedded within the Inline XBRL document)

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

+ Indicates a management contract or compensatory plan or arrangement.

† These exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Bakkt Holdings, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filings.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Bakkt Holdings, Inc.

Date: May ~~12, 2022~~11, 2023	By:	/s/ Gavin Michael
		Gavin Michael
		Chief Executive Officer, President and Director (Principal Executive Officer)

Date: May ~~12, 2022~~11, 2023	By:	/s/ ~~Andrew LaBenne~~Karen Alexander
		~~Andrew LaBenne~~Karen Alexander
		Chief Financial Officer (Principal Financial Officer)

Date: May 11, 2023	By:	/s/ Chip Goodroe
		Chip Goodroe
		Chief Accounting Officer (Principal Accounting Officer)


	Class A Voting Units			Class B Voting Units			Class B Warrant			Class C Voting Units			Accumulated Deficit		Accumulated Other Comprehensive Income		Total Member's Equity		Incentive Units			Total Mezzanine Equity
	Units	$		Units	$		Warrants	$		Units	$								Units	$
Balance as of December 31, 2020	400,000,000	$	2,613	182,500,000	$	182,500	—	$	5,426	270,270,270	$	310,104	$	(112,504)	$	191	$	388,330	—	$	21,452	$	21,452
Issuance of Class A voting units (Note 9)	—	110		—	—		—	—		—	—		—		—		110		—	—		—
Unit-based incentive compensation (Note 10)	—	—		—	—		—	—		—	—		—		—		—		—	870		870
Currency translation adjustment, net of tax	—	—		—	—		—	—		—	—		—		79		79		—	—		—
Net loss	—	—		—	—		—	—		—	—		(28,820)		—		(28,820)		—	—		—
Balance as of March 31, 2021	400,000,000	$	2,723	182,500,000	$	182,500	—	$	5,426	270,270,270	$	310,104	$	(141,324)	$	270	$	359,699	—	$	22,322	$	22,322


Predecessor
Preferred Incentive Units	Number of Preferred Incentive Units	Weighted Average Remaining Contractual Term (years)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outsanding as of December 31, 2020	76,475	6.75	$	0.42	$	88,711
Granted	—
Forfeited	—
Outsanding as of March 31, 2021	76,475	6.5	$	0.42	$	141,058
Vested as of March 31, 2021	—


	Successor
	As of December 31, 2021
	Total		Level 1		Level 2		Level 3
Liabilities:
Warrant liability—public warrants	$	17,424	$	17,424	$	—	$	—
Total Liabilities	$	17,424	$	17,424	$	—	$	—