8-K: Katapult Holdings Reports Strong Q1 2025 Results, Driven by App Marketplace Growth

Katapult Holdings, Inc. announced a 15.4% increase in gross originations and a 10.6% increase in revenue for the first quarter of 2025, exceeding expectations and driven by growth in the Katapult app marketplace.

Summary

• Katapult Holdings, Inc. reported its financial results for the first quarter ended March 31, 2025.
• Gross originations increased by 15.4% to $64.2 million.
• Excluding the home furnishings and mattress category, gross originations grew 51% year-over-year.
• Total revenue increased by 10.6% to $71.9 million.
• The company experienced a net loss of $5.7 million, compared to a net loss of $0.6 million in the first quarter of 2024.
• Adjusted EBITDA was $2.2 million, compared to $5.6 million in the first quarter of 2024.
• The company ended the quarter with $14.3 million in cash and cash equivalents, including $8.3 million of restricted cash.
• Write-offs as a percentage of revenue were 9.0%, within the company's long-term target range of 8% to 10%.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting strong growth in key metrics and reiterating full-year guidance. However, the net loss and decrease in Adjusted EBITDA temper the overall sentiment.

Positives

• Gross originations increased by 15.4% year-over-year.
• Total revenue increased by 10.6% year-over-year.
• The Katapult app marketplace is a significant driver of growth, accounting for approximately 59% of gross originations.
• Customer satisfaction remains high, with a Net Promoter Score of 66.
• KPay is experiencing substantial growth, with originations up approximately 57% year-over-year.
• The company is reiterating its full-year 2025 guidance, expecting at least 20% growth in gross originations and revenue.

Negatives

• The company reported a net loss of $5.7 million for the first quarter of 2025, compared to a net loss of $0.6 million for the first quarter of 2024.
• Adjusted EBITDA decreased to $2.2 million from $5.6 million in the first quarter of 2024.
• Total operating expenses increased 17.3% in the first quarter.

Risks

• The company is navigating a challenging macroeconomic environment, particularly within the home furnishings category.
• The company's outlook assumes that gross originations for the home furnishings and mattress category do not improve materially from 2024 performance.
• The company's ability to refinance its indebtedness and continue as a going concern is a risk.
• The company faces risks related to factors affecting consumer spending, such as employment levels, disposable income, and inflation.
• The company's concentration of transaction volume with a single merchant partner or type of merchant or industry poses a risk.

Future Outlook

Katapult expects a 25% to 30% year-over-year increase in gross originations and a 17% to 20% year-over-year increase in revenue for the second quarter of 2025. The company reiterates its full-year 2025 guidance, expecting at least 20% growth in gross originations and revenue, and at least $10 million in positive Adjusted EBITDA.

Management Comments

• Orlando Zayas, CEO of Katapult, stated that 2025 is off to a strong start and the company is well-positioned to achieve its full-year targets.
• Nancy Walsh, CFO of Katapult, noted that the first quarter came in stronger than the company's outlook and they are successfully growing the top-line without meaningfully increasing the expense base.

Industry Context

Katapult operates in the e-commerce-focused financial technology sector, providing lease-to-own solutions for underserved, non-prime consumers. The company believes that lease-to-own solutions historically benefit when prime credit options become less available.

Comparison to Industry Standards

• Katapult's growth in gross originations and revenue aligns with the broader trend of increasing adoption of alternative financing solutions in the e-commerce space.
• Companies like Affirm and Klarna, which offer buy-now-pay-later services, have also experienced significant growth in recent years, indicating a strong demand for flexible payment options.
• Katapult's focus on the non-prime consumer segment differentiates it from some of its competitors, allowing it to tap into a large and underserved market.

Stakeholder Impact

• Shareholders can expect continued growth in gross originations and revenue.
• Consumers will have access to a growing network of merchant partners through the Katapult platform.
• Merchants can leverage Katapult's platform to reach a broader customer base and drive sales.

Next Steps

• The company will continue to execute on its consumer and merchant initiatives.
• Katapult plans to introduce new merchants to the Katapult App Marketplace during 2025.
• The company will focus on ongoing enhancements to its risk modeling and onboarding high-quality new merchants.

Key Dates

Keywords

Katapult, lease-to-own, e-commerce, financial technology, gross originations, revenue, Adjusted EBITDA, KPay, app marketplace, financial results