Gross Originations: Grew 15.4% to $64.2 million in Q1 2025. Revenue: Increased by 10.6% to $71.9 million in Q1 2025. Gross Margin: 19.9% in Q1 2025. Net Income: Loss from operations was $500,000 in Q1 2025. Adjusted EBITDA: $2.2 million in Q1 2025. Cash and Cash Equivalents: $14.3 million as of March 31, 2025. Outstanding Debt: $77.8 million on revolving credit facility as of March 31, 2025. Cash Generated from Operations: $3.4 million in Q1 2025. Repeat Customer Rate: 57.4% as of March 31, 2025. Net Promoter Score (NPS): 66% as of March 31, 2025. App Originations: Grew 42% to $37.9 million in Q1 2025. KPay Originations: $22.8 million, up approximately 57% in Q1 2025.

Warning! GuruFocus has detected 5 Warning Signs with KPLT.

Release Date: May 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Katapult Holdings Inc (NASDAQ:KPLT) reported a 15.4% year-over-year growth in gross originations for Q1 2025, surpassing their outlook of 11% growth. First quarter revenue exceeded expectations, achieving a 10.6% growth. The company's app marketplace has shown significant growth, with app originations increasing by 42% to $37.9 million. Katapult's Net Promoter Score (NPS) improved to 66%, and the repeat customer rate increased to 57.4%, indicating strong customer satisfaction and loyalty. The company has successfully expanded its merchant partnerships, adding Ashley Furniture and Bed Bath and Beyond to its roster, enhancing its marketplace offerings.

Negative Points

Katapult Holdings Inc (NASDAQ:KPLT) faced challenges in the home furnishings and mattress category, with Wayfair's gross originations remaining under pressure. The company is negotiating a maturity extension for its credit facility, indicating potential financial constraints. Gross profit for Q1 decreased to $14.3 million from $16.5 million the previous year, impacted by higher lease depreciation costs. Operating expenses increased by 17% year-over-year, driven by general and administrative costs and investments in growth initiatives. Adjusted EBITDA for Q1 was $2.2 million, below the company's outlook, primarily due to the timing of strong gross originations growth.

Q & A Highlights

Q: Can you explain the expected EBITDA growth for the second half of the year given the first quarter results? A: Nancy Walsh, Chief Financial Officer, explained that despite being break-even in Q2, Katapult anticipates achieving the $10 million EBITDA target for the year. This expectation is based on faster growth in the first quarter and anticipated strong growth in the second quarter, along with seasonal growth in Q4.

Story Continues

Q: What was the gross originations growth or decline for Wayfair specifically? A: Nancy Walsh noted that Wayfair, along with the home furnishings and mattress category, faced challenges. Wayfair accounted for about $17 million of gross originations, excluding what goes through Katapult's own marketplace.

Q: Are you looking for an extension or refinancing of the credit facility? A: Nancy Walsh stated that Katapult is negotiating with its existing lender for a comprehensive maturity extension amendment, which includes adjusting covenants and advance rates to align with the company's business plan.

Q: What is driving the momentum in Kpay, and how does it affect repeat customer rates? A: Derek Medlin, Chief Operating Officer, attributed the momentum to greenfield opportunities and increased share of wallet with existing customers. The app facilitates transactions and enhances customer experience, leading to higher repeat rates and lifetime value (LTV) from Katapult users.

Q: What are the expectations for gross originations growth in the second quarter and the full year? A: Nancy Walsh indicated that Katapult expects 25% to 30% gross originations growth in Q2, with full-year growth expected to exceed 20%. The fourth quarter is typically strong, contributing to the full-year target.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

View Comments