Bakkt CEO Gavin Michael said the crypto services firm was “seeing strong traction with new custody and crypto trading clients,” in a call with Water Tower Research on Wednesday.
By broadening its client network and being prudent with its capital allocation, Bakkt is also seeing improved gross profit margins, Michael added.
Bakkt acquired the crypto brokerage platform Apex in April. Combined with Bakkt’s recent collaborations with financial services company Plaid and institutional digital assets custody firm Fireblocks, this is providing a strong pipeline of prospective clients, Michael said.
Bakkt outlined plans to expand internationally in July, targeting the UK, EU, Hong Kong and Australia where it said there was greater clarity on crypto regulations compared to the U.S. The firm sees its international expansion as a “great momentum maker into 2024,” Bakkt's CFO Karen Alexander added.
“We're expanding into international markets alongside our clients with Latin America expected to launch in the fourth quarter and other markets like the U.K., European Union, Hong Kong and Australia to follow,” Michael said.
The company also sees the evolving ETF products in the market as an opportunity to solidify its position in the crypto custody space. “So whilst we're signing up new custody clients, we're focused on using this momentum when we look at initiatives like the ETF products that are happening, we see that as just opening up the market for us,” Michael said.
Bakkt's Q2 earnings
In a return to the company’s roots, Bakkt highlighted a renewed push into crypto custody when reporting its Q2 earnings last week, with the Apex acquisition being part of those plans.
The company's qualified sales opportunities for custody saw a tenfold increase in the first half of 2023 compared to the latter half of 2022. This momentum is driven by interest from family offices, registered investment advisers and corporate treasury functions, Michael said on the call.
Despite facing a challenging quarter in the market, Bakkt managed to outperform, with a decrease in trading volume of 25% compared to the market's 40%, Alexander added, arguing it demonstrated the resilience of customers acquired through the Apex acquisition.
Bakkt’s stock price is currently trading at $1.30 per share.
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