8-K: Katapult Q2 Beats Outlook, Raises Full-Year Originations

Katapult Holdings, Inc. reported second-quarter gross originations, revenue, and Adjusted EBITDA above outlook, leading to a raised full-year gross originations forecast.

Summary

• Gross originations for the second quarter of 2025 increased by 30.4% year-over-year to $72.1 million, exceeding outlook.
• Total revenue for Q2 2025 grew 22.1% year-over-year to $71.9 million, also above outlook.
• Adjusted EBITDA for Q2 2025 was $0.3 million, an improvement from a $0.4 million loss in Q2 2024, and better than expected.
• Net loss for Q2 2025 was $7.8 million, an increase from $6.9 million in Q2 2024, primarily due to $1.0 million in one-time debt extinguishment expenses.
• The company raised its full-year 2025 gross originations outlook to grow between 20% and 25% year-over-year.
• Full-year 2025 revenue growth is reiterated at at least 20%, and Adjusted EBITDA is reiterated at at least $10 million.
• A new Refinancing Agreement with Blue Owl Capital was entered into on June 12, 2025, increasing the revolving line of credit by $20 million to $110 million, extending the maturity date to December 4, 2026, and reducing the interest rate on the revolving facility by approximately 150bps.
• The term loan interest rate was fixed at 18% as a payment-in-kind loan, with cash interest deferred and added to the loan balance.
• Katapult issued warrants to Blue Owl to purchase up to 486,264 shares of common stock and agreed to repay the term loan by June 30, 2026, or allow conversion into equity.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The company exceeded its Q2 outlook for key metrics, raised its full-year gross originations guidance, and successfully refinanced its debt with more favorable terms and increased liquidity. Operational highlights like app marketplace growth and KPay expansion are strong. However, the company still reported a net loss, albeit influenced by one-time expenses, and acknowledges ongoing challenges in the home furnishings category and macro uncertainties, which temper overall enthusiasm.

Positives

• Gross originations increased by 30.4% year-over-year to $72.1 million in Q2 2025, exceeding the company's outlook.
• Total revenue grew by 22.1% year-over-year to $71.9 million in Q2 2025, also above outlook.
• Adjusted EBITDA improved to $0.3 million in Q2 2025 from a $0.4 million loss in Q2 2024, surpassing expectations.
• The company raised its full-year 2025 gross originations outlook to 20% to 25% growth.
• The Katapult app marketplace is the single largest customer referral source, accounting for approximately 60% of Q2 gross originations, with app marketplace gross originations growing 56% year-over-year.
• Unique new customer base grew by approximately 40% year-over-year, while maintaining a high repeat customer rate of 58.4% and a Net Promoter Score (NPS) of 63.
• KPay gross originations grew approximately 81% year-over-year, representing 39% of total gross originations, with unique KPay customer count growing nearly 87% year-over-year.
• New merchant partners, including Sams Club, Guitar Center, and Pottery Barn, were launched in the Katapult app marketplace, expanding the KPay ecosystem to 39 merchants.
• The new Refinancing Agreement increased the revolving line of credit by $20 million to $110 million, extended the maturity date to December 4, 2026, and reduced the interest rate on the revolving facility by approximately 150bps.
• Fixed cash operating expenses remained nearly flat, increasing by only 0.6% year-over-year, demonstrating disciplined expense management.

Negatives

• Net loss increased to $7.8 million in Q2 2025 from $6.9 million in Q2 2024, primarily due to $1.0 million in one-time expenses related to debt extinguishment.
• Adjusted net loss slightly increased to $5.7 million in Q2 2025 compared to $5.4 million in Q2 2024.
• Write-offs as a percentage of revenue increased to 9.8% in Q2 2025 from 9.3% in Q2 2024, though still within the long-term target range of 8% to 10%.
• The company continues to navigate a challenging home furnishings and mattress category, which negatively impacted overall gross originations growth.
• Uncertainty surrounds the impact of tariff regulations on the macro environment.

Risks

• Meeting future liquidity requirements and complying with restrictive covenants related to indebtedness.
• Potential impact of the conversion of the term loan into equity.
• Execution of business strategy and expanding information and technology capabilities.
• Ability to acquire and retain new and existing merchants and customers.
• Adoption and success of the mobile application featuring Katapult Pay.
• The timing and impact of growth initiatives on future financial performance.
• Anticipated occurrence and timing of prime lending tightening and its impact on results of operations.
• General economic conditions, including levels of employment, disposable consumer income, inflation, prevailing interest rates, consumer debt and availability of credit, consumer confidence, political conditions, and consumer perceptions of well-being and security.
• Willingness and ability of customers to pay for leased goods when due.
• Uncertainty of estimates of market opportunity and forecasts of market growth, including the home furnishings and retail environment.
• Risks related to the concentration of a significant portion of transaction volume with a single merchant partner, or type of merchant or industry.
• The effects of competition on future business.
• The impact of unstable market and economic conditions such as rising inflation and interest rates.
• Reliability of the platform and effectiveness of the risk model.
• Data security breaches or other information technology incidents or disruptions, including cyber-attacks, and the protection of confidential and personal information.
• Ability to attract and retain employees, executive officers, or directors.
• Ability to effectively respond to general economic and business conditions.
• Ability to obtain additional capital, including equity or debt financing, and servicing indebtedness.
• Ability to enhance future operating and financial results.
• Ability to anticipate rapid technological changes, including generative artificial intelligence and other new technologies.
• Compliance with laws and regulations applicable to the business, including those related to rental purchase transactions and privacy regulations.
• Ability to maintain and grow relationships with merchants and partners.
• Responding to uncertainties associated with product and service developments and market acceptance.
• The impacts of new U.S. federal income tax laws.
• Material weaknesses in internal control over financial reporting which, if not identified and remediated, could affect the reliability of financial statements.
• Successfully defending litigation.
• Litigation, regulatory matters, complaints, adverse publicity, and/or misconduct by employees, vendors, and/or service providers.
• Other events or factors, including those resulting from civil unrest, war, foreign invasions, terrorism, public health crises and pandemics, trade wars, or responses to such events.

Future Outlook

Katapult expects gross originations to increase by 25% to 30% year-over-year in the third quarter of 2025, with revenue growing 20% to 25% and Adjusted EBITDA between $3 million and $3.5 million. For the full year 2025, the company raised its gross originations growth outlook to 20% to 25% and reiterated expectations for at least 20% revenue growth and at least $10 million in positive Adjusted EBITDA. This outlook assumes no material impact from prime creditors tightening or loosening and no significant changes to the macro environment, with the home furnishings and mattress category not materially improving from 2024 performance. The company also expects to maintain strong credit quality through risk modeling enhancements, new merchant onboarding, and repeat KPay customer engagement.

Management Comments

• "We came out of the gate strong in 2025 and that momentum has continued into the second quarter. We are executing our strategy to turn the Katapult app marketplace into a premier shopping destination for lease-to-own consumers across the US, and this is driving across-the-board growth." Orlando Zayas, CEO of Katapult.
• "We are looking forward to a strong second half of the year and believe we are well positioned to create value for all of our stakeholders." Orlando Zayas, CEO of Katapult.
• "We made a lot of progress during the second quarter; from our operations to our capital structure we believe we have strengthened our foundation for continued growth." Nancy Walsh, CFO of Katapult.
• "From an operating perspective, we are continuing to grow the top-line without adding substantial ongoing expenses to the business, which is allowing us to deliver bottom-line improvements including better-than-expected Adjusted EBITDA for the second quarter." Nancy Walsh, CFO of Katapult.
• "We are also making progress strengthening our balance sheet and believe that our new Refinancing Agreement with Blue Owl is a substantial step toward the goal of building a balance sheet that supports our growth opportunities while helping us unlock the power of our financial model." Nancy Walsh, CFO of Katapult.

Industry Context

Katapult operates in the e-commerce-focused financial technology sector, specifically targeting underserved U.S. non-prime consumers with lease-to-own solutions. The company's strategy to grow its app marketplace and KPay offerings aligns with broader trends of digital payment innovation and expanding access to credit for diverse consumer segments. The filing notes that lease-to-own solutions have historically benefited when prime credit options become less available, suggesting a potential tailwind in a tightening credit environment. However, the company acknowledges a challenging home furnishings category and uncertainty regarding tariff regulations, indicating specific industry headwinds.

Comparison to Industry Standards

• The filing does not explicitly detail specific comparable companies, projects, or results for direct comparison to industry standards. However, the company's Net Promoter Score (NPS) of 63 indicates strong customer satisfaction, which is a positive benchmark for consumer-facing financial services.
• The company's write-offs as a percentage of revenue at 9.8% are within its long-term target range of 8% to 10%, suggesting a managed credit risk profile relative to its internal benchmarks for the non-prime lending sector.

Corporate Governance

Legal Proceedings

• The company incurred 'litigation settlement and other related expenses' of $0.178 million in Q2 2025 and $0.437 million for the six months ended June 30, 2025.
• The 'Risk Factors' section mentions the risk of 'successfully defend litigation' and 'litigation, regulatory matters, complaints, adverse publicity and/or misconduct by employees, vendors and/or service providers', indicating ongoing or potential legal exposures, but no new specific proceedings are detailed.

Related Party Transactions

• In consideration for the new Refinancing Agreement, Katapult issued warrants to Blue Owl Capital, the lender, giving them the option to purchase up to 486,264 shares of common stock. This is a transaction with a significant financial partner.

Stakeholder Impact

• **Shareholders**: Potential for increased share price due to positive operational performance and raised outlook. Potential dilution from warrants issued to Blue Owl Capital. Improved financial stability from debt refinancing.
• **Customers**: Enhanced shopping experience and expanded merchant network through the Katapult app marketplace and KPay, offering more options for underserved non-prime consumers.
• **Lenders (Blue Owl Capital)**: New, more favorable terms for the revolving credit facility and term loan, including extended maturity and reduced interest rates on the revolving line, along with equity upside via warrants.
• **Employees**: Continued growth and operational improvements may lead to job stability and potential opportunities within the company.
• **Merchant Partners**: Expansion of the KPay ecosystem and new integrations (e.g., Sams Club, Guitar Center, Pottery Barn) provide increased sales opportunities and consumer engagement.

Next Steps

• Continue to introduce new merchants to the Katapult App Marketplace during the rest of 2025.
• Execute planned marketing campaigns to drive consumer engagement.
• Focus on ongoing enhancements to risk modeling to maintain strong credit quality.
• Continue to expand relationships with merchant-partners through new waterfall integrations and monetization strategies.
• Repay the term loan by June 30, 2026, or allow Blue Owl to convert it into equity.

Key Dates

Recommendation

While Katapult demonstrated strong operational momentum in Q2 2025, exceeding revenue and originations outlooks and raising full-year guidance, the company continues to report a net loss. The successful debt refinancing improves liquidity and extends maturities, which is a significant positive for financial stability. However, the business still faces challenges in the home furnishings category and broader macroeconomic uncertainties. The potential conversion of the term loan into equity also presents a future consideration for shareholders. Given the mix of positive growth and improved capital structure against persistent net losses and specific market headwinds, a 'hold' recommendation is appropriate for a seasoned investor, suggesting observation of sustained profitability and navigation of market challenges before a stronger conviction.

Keywords

e-commerce, financial technology, lease-to-own, fintech, non-prime consumers, retail, consumer finance, KPLT, Katapult Pay, earnings, refinancing