PART I. Financial Information [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The company presents its unaudited condensed consolidated financial statements and accompanying notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($K) | | :--- | :--- | :--- | :--- | | Total Assets | 90,584 | 93,171 | (2,587) | | Total Liabilities | 144,646 | 139,965 | 4,681 | | Total Stockholders' Deficit | (54,062) | (46,794) | (7,268) | | Cash and cash equivalents | 3,659 | 3,465 | 194 | | Restricted cash | 5,331 | 13,087 | (7,756) | | Property held for lease, net | 69,393 | 67,085 | 2,308 | | Revolving line of credit, net | 80,617 | 82,582 | (1,965) | | Term loan, net, current | 28,280 | 30,047 | (1,767) | | Derivative liability - new term loan | 3,558 | — | 3,558 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($K) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 71,886 | 58,863 | 13,023 | 22.1% | | Cost of Revenue | 60,718 | 48,935 | 11,783 | 24.1% | | Gross Profit | 11,168 | 9,928 | 1,240 | 12.5% | | Operating Expenses | 12,578 | 12,549 | 29 | 0.2% | | Loss from Operations | (1,410) | (2,621) | 1,211 | (46.2%) | | Net Loss | (7,835) | (6,888) | (947) | 13.7% | | Net Loss per Common Share | (1.63) | (1.61) | (0.02) | 1.2% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($K) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 143,832 | 123,924 | 19,908 | 16.1% | | Cost of Revenue | 118,315 | 97,508 | 20,807 | 21.3% | | Gross Profit | 25,517 | 26,416 | (899) | (3.4%) | | Operating Expenses | 27,463 | 25,237 | 2,226 | 8.8% | | Income (loss) from Operations | (1,946) | 1,179 | (3,125) | (265.1%) | | Net Loss | (13,523) | (7,458) | (6,065) | 81.3% | | Net Loss per Common Share | (2.87) | (1.75) | (1.12) | 64.0% | [Condensed Consolidated Statements of Stockholders' Deficit](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit) Stockholders' Deficit Changes (amounts in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Balances at Period End (Shares) | 4,447 | 4,570 | | Total Stockholders' Deficit | (46,794) | (54,062) | | Accumulated Deficit | (148,451) | (161,974) | | Issuance of warrants (Refinancing Agreement) | — | 3,934 | | Stock-based compensation expense (Six Months) | — | 1,930 | | Issuance of shares (litigation settlement) | — | 752 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (dollars in thousands, Six Months Ended June 30) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (3,196) | 1,352 | | Net cash used in investing activities | (660) | (337) | | Net cash (used in) provided by financing activities | (3,706) | 8,548 | | Net (decrease) increase in cash, cash equivalents and restricted cash | (7,562) | 9,563 | | Cash and cash equivalents and restricted cash at end of period | 8,990 | 38,374 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - Katapult operates a technology-driven lease-to-own platform for underserved U.S. non-prime consumers, with **revenue strongest in Q1** due to holiday originations and tax refunds[25](index=25&type=chunk)[26](index=26&type=chunk) - Key accounting estimates include property held for lease depreciation/impairment, derivative liability fair value, and deferred tax asset valuation[29](index=29&type=chunk)[30](index=30&type=chunk) Property Held for Lease and Cost of Revenue (dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property held for lease, net | 69,393 | 67,085 | | Cost of Revenue Component | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Depreciation expense for property held for lease | 41,473 | 34,441 | | Depreciation for early lease purchase options (buyouts) | 9,346 | 7,144 | | Depreciation for impaired leases | 7,300 | 5,932 | | Other | 2,599 | 1,418 | | **Total cost of revenue** | **60,718** | **48,935** | - On June 12, 2025, the company entered into a Refinancing Agreement, establishing a New Revolving Facility with an initial committed amount of **$110 million** and a New Term Loan with an initial principal amount of **$33 million**[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - The company's financial statements are prepared on a going concern basis, but rigorous covenants of the New Revolving Credit Facility **raise substantial doubt about its ability to continue as a going concern**[76](index=76&type=chunk) - Warrants to purchase **486,264 shares** of common stock were issued to Blue Owl with an exercise price of $0.01 per share[90](index=90&type=chunk)[91](index=91&type=chunk) - The DCA Litigation was settled for **$3.0 million**, and the Shareholder Litigation was settled for **$12.0 million**[97](index=97&type=chunk)[100](index=100&type=chunk)[104](index=104&type=chunk) Fair Value Measurements (dollars in thousands, June 30, 2025) | Metric | Carrying Amount | Fair Value | | :--- | :--- | :--- | | New Revolving Facility | 80,617 | 79,995 | | New Term Loan | 28,280 | 29,097 | | Derivative Liability - New Term Loan | 3,558 | 3,558 | | Warrant liability | 103 | 103 | - Subsequent to June 30, 2025, stockholders approved the issuance of shares for the Blue Owl Warrants and Term Loan Conversion, setting the Refinancing Agreement maturity date to December 31, 2026[115](index=115&type=chunk)[116](index=116&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting revenue growth from Katapult Pay, offset by declining margins, increased net losses, and liquidity challenges [OVERVIEW](index=29&type=section&id=OVERVIEW) - Katapult Holdings, Inc. operates a technology-driven lease-to-own platform that integrates with omnichannel retailers and e-commerce platforms to serve underserved U.S. non-prime consumers[121](index=121&type=chunk) [Key Performance Metrics](index=29&type=section&id=Key%20Performance%20Metrics) Gross Originations (dollars in thousands) | Period | 2025 | 2024 | Change ($K) | % Change | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | 72,138 | 55,311 | 16,827 | 30.4% | | Six Months Ended June 30 | 136,337 | 110,941 | 25,396 | 22.9% | - Wayfair's share of gross originations (excluding Katapult Pay) **decreased to 27%** for the three and six months ended June 30, 2025, down from 48% in the prior year periods[124](index=124&type=chunk)[126](index=126&type=chunk) - Katapult Pay's share of gross originations **increased to 39%** for the three months ended June 30, 2025 (from 28% in 2024) and to 37% for the six months (from 27% in 2024)[125](index=125&type=chunk)[127](index=127&type=chunk) [RESULTS OF OPERATIONS](index=31&type=section&id=RESULTS%20OF%20OPERATIONS) Total Revenue and Gross Profit (dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($K) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 71,886 | 58,863 | 13,023 | 22.1% | | Cost of Revenue | 60,718 | 48,935 | 11,783 | 24.1% | | Gross Profit | 11,168 | 9,928 | 1,240 | 12.5% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($K) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 143,832 | 123,924 | 19,908 | 16.1% | | Cost of Revenue | 118,315 | 97,508 | 20,807 | 21.3% | | Gross Profit | 25,517 | 26,416 | (899) | (3.4%) | - **Gross profit as a percentage of total revenue decreased** to 15.5% for Q2 2025 (from 16.9% in 2024) and to 17.7% for H1 2025 (from 21.3% in 2024)[140](index=140&type=chunk)[147](index=147&type=chunk) - Interest expense increased by **$0.7 million** for the three months and **$1.3 million** for the six months ended June 30, 2025, due to higher outstanding debt balances[143](index=143&type=chunk)[148](index=148&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP Financial Measures (dollars in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Adjusted Gross Profit | 9,211 | 8,296 | 21,703 | 23,143 | | Adjusted EBITDA | 322 | (377) | 2,562 | 5,253 | | Adjusted Net Loss | (5,659) | (5,445) | (9,015) | (4,462) | | Fixed Cash Operating Expenses | 9,159 | 9,102 | 19,561 | 18,492 | [LIQUIDITY & CAPITAL RESOURCES](index=36&type=section&id=LIQUIDITY%20&%20CAPITAL%20RESOURCES) - As of August 8, 2025, the combined principal balance outstanding under the New Revolving Facility and New Term Loan was approximately **$115.9 million**[158](index=158&type=chunk) Cash Flow Summary (dollars in thousands, Six Months Ended June 30) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | (3,196) | 1,352 | | Net cash used in investing activities | (660) | (337) | | Net cash (used in) provided by financing activities | (3,706) | 8,548 | | Cash, cash equivalents and restricted cash at end of period | 8,990 | 38,374 | - The company's financial statements are prepared on a going concern basis, but rigorous covenants of the New Revolving Credit Facility **raise substantial doubt about its ability to continue for one year**[166](index=166&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk from its variable and fixed-rate debt facilities, with a 100 basis point change significantly impacting annual interest expense - The New Revolving Facility accrues interest at a SOFR-based rate plus 7.00% per annum, resulting in an **11.9% interest rate** as of June 30, 2025[177](index=177&type=chunk) - The New Term Loan bears a **fixed interest rate of 18.0%** per annum, accruing as PIK interest weekly[178](index=178&type=chunk) - A hypothetical **100 basis point change** in interest rates would alter the annual interest expense by approximately **$0.8 million** for the New Revolving Facility and **$0.3 million** for the New Term Loan[179](index=179&type=chunk) - Inflation has indirectly impacted the business by **negatively affecting consumer spending** and the sales of key merchants[180](index=180&type=chunk) [ITEM 4. Controls and Procedures](index=40&type=section&id=ITEM%204.%20Controls%20and%20Procedures) As of June 30, 2025, management concluded that the company's disclosure controls and procedures were effective, with no material changes in internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of June 30, 2025[182](index=182&type=chunk) - **No material changes** in internal control over financial reporting occurred during the six months ended June 30, 2025[183](index=183&type=chunk) PART II. Other Information [ITEM 1. LEGAL PROCEEDINGS](index=40&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company details its involvement in various legal proceedings, including settled lawsuits and an ongoing patent claim - The company is involved in various legal proceedings, with details provided in Note 9 to the Unaudited Condensed Consolidated Financial Statements[184](index=184&type=chunk) [ITEM 1A. RISK FACTORS](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks from its debt agreement, merchant concentration, consumer behavior, competition, and legal and compliance challenges - If the company triggers an event of default under the Refinancing Agreement, **obligations could accelerate**, materially impacting the business[186](index=186&type=chunk)[193](index=193&type=chunk)[196](index=196&type=chunk) - The New Term Loan and Blue Owl Warrants may result in **substantial dilution to stockholders**, with the Term Loan Conversion potentially issuing up to **21,378,017 shares**[186](index=186&type=chunk)[197](index=197&type=chunk) - The company has substantial indebtedness, with approximately **$113.6 million principal outstanding** under the Refinancing Agreement as of June 30, 2025[190](index=190&type=chunk)[198](index=198&type=chunk) - The Refinancing Agreement includes **restrictive and financial maintenance covenants** that could limit operations or growth strategies[190](index=190&type=chunk)[202](index=202&type=chunk) - A significant portion of gross originations is concentrated with **Wayfair (27% for Q2 and H1 2025)**, creating vulnerability[190](index=190&type=chunk)[205](index=205&type=chunk) - The company's success depends on customers making timely lease payments, which is influenced by factors affecting **non-prime consumer spending**[212](index=212&type=chunk) - Proprietary algorithms and decisioning tools may not accurately predict consumer behavior, potentially leading to **increased delinquencies and write-offs**[213](index=213&type=chunk)[214](index=214&type=chunk) - The company has a history of operating losses, with a net loss of **$13.5 million** for the six months ended June 30, 2025, and an accumulated deficit of approximately **$162.0 million**[227](index=227&type=chunk) - The company utilizes AI/ML in its business, which carries risks related to model design, data quality, and **evolving regulatory frameworks**[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) - The company is subject to **stringent and changing data privacy and security laws** (e.g., TCPA, CCPA, PCI DSS), which could increase compliance costs and risks[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - **Data security breaches or other security incidents** could result in regulatory investigations, litigation, fines, and reputational harm[259](index=259&type=chunk)[262](index=262&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - The company's auditors issued a **going concern opinion**, indicating substantial doubt about its ability to continue as an ongoing business[195](index=195&type=chunk)[283](index=283&type=chunk) - The price of the company's securities is **likely to be volatile** due to macroeconomic conditions, operating results, and other market factors[300](index=300&type=chunk)[301](index=301&type=chunk)[303](index=303&type=chunk) - Future sales of common stock could increase the number of shares eligible for public resale and result in **dilution to existing stockholders**[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=65&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company issued shares as part of class action lawsuit settlements, relying on Section 3(a)(10) of the Securities Act for these unregistered sales - On April 10, 2025, the company issued **54,024 shares** of common stock in connection with a class action lawsuit settlement[320](index=320&type=chunk) - On June 13, 2025, the company issued **29,793 shares** of common stock in connection with another class action lawsuit settlement[320](index=320&type=chunk) - Both issuances were **unregistered sales of equity securities**, made in reliance upon Section 3(a)(10) of the Securities Act[320](index=320&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=65&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported[317](index=317&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=65&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) No mine safety disclosures were reported for the period - No mine safety disclosures were reported[321](index=321&type=chunk) [ITEM 5. OTHER INFORMATION](index=66&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No Rule 10b5-1 trading plans were reported for the period - No Rule 10b5-1 Trading Plans were reported[322](index=322&type=chunk) [ITEM 6. EXHIBITS](index=66&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and officer certifications - The exhibits include the Second Amended and Restated Certificate of Incorporation, Form of Warrant to Purchase Stock, and the Amended and Restated Loan and Security Agreement[323](index=323&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are also included[323](index=323&type=chunk) [SIGNATURES](index=68&type=section&id=SIGNATURES) The report was duly signed on behalf of the registrant by the Chief Financial Officer on August 13, 2025 - The report was signed by Nancy Walsh, Chief Financial Officer, on August 13, 2025[329](index=329&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2025, gross originations grew by 30.4% year over year to $72.1 million, exceeding the top end of the outlook range [6][29] - Revenue for Q2 2025 increased by 22.1% to $71.9 million, surpassing the expected growth of 17% to 20% [6][31] - Adjusted EBITDA was slightly above breakeven at over $300,000, compared to expectations of breakeven [6][34] Business Line Data and Key Metrics Changes - Total app originations grew by 56% to $43.1 million, with approximately 60% of gross originations starting in the app marketplace [9][29] - KPay originations accelerated to approximately 81% year over year, totaling $28.3 million [9][20] - Unique new customers increased by approximately 40%, contributing to a total customer base growth of about 32% [10][13] Market Data and Key Metrics Changes - Gross originations for the top 25 merchants grew by 28% in Q2, with a notable 65% growth when excluding the largest merchant, Wayfair [30][31] - Direct and waterfall merchants accounted for approximately 61% of total gross originations, with a growth of about 11% [22][23] - Excluding home furnishings and mattress categories, gross originations grew by 62% year over year [29][30] Company Strategy and Development Direction - The company aims to build a successful two-sided marketplace for lease-to-own consumers, focusing on consumer engagement, merchant engagement, referral partnerships, and improving unit economics [11][28] - The strategy includes enhancing the consumer journey and experience to drive engagement and conversion [15][19] - The company is actively working on partnerships to drive top-of-funnel traffic and referrals [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of customers despite macroeconomic factors and expects write-offs to remain within the targeted range of 8% to 10% [44][45] - The company is raising its 2025 outlook for gross originations to a growth range of 25% to 30% [41][42] - Management is closely monitoring macroeconomic headwinds and is prepared to adapt to changes in economic policies [27][41] Other Important Information - The company completed a refinancing agreement that increased liquidity and reduced interest rates on its revolving line of credit [38][39] - Cash used for operations in Q2 2025 was $3.2 million, compared to $1.4 million generated in Q2 2024 [40] Q&A Session Summary Question: What drove the year-over-year increase in lease merchandise charge-off rate? - Management noted fluctuations in quarterly results are not concerning as they remain within the targeted range [44][45] Question: What does the pipeline look like for new partners? - The pipeline is strong, with interest from various segments, including auto and home furnishings [47][48] Question: What strategies are being implemented to drive higher application activity? - The company has focused on digital marketing and customer referral strategies to attract new customers [52][54] Question: What is the competitive environment like regarding pricing and credit? - Management indicated stability in the competitive landscape and emphasized optimizing pricing for conversion and repeat rates [55][57]

Business Overview - Katapult operates a lease-to-own solution connecting consumers and merchants for omnichannel transactions[6] - The company's mission is to enable consumers to acquire durable goods and connect retailers with engaged consumers[11] - Katapult estimates a total US addressable market of $50-60 billion for underserved consumers[26] Financial Performance - Gross originations grew by 30.4% year-over-year in Q2 2025[20] - Revenue increased by 22.1% year-over-year in Q2 2025[20] - Adjusted EBITDA was $0.3 million in Q2 2025, exceeding the breakeven outlook[20] - Total app originations have reached $300.3 million since the launch of the app marketplace in Q1 2023[35] - KPay originations grew 81% year-over-year in Q2 2025, representing approximately 39% of total gross originations[20, 36] Customer Base and Engagement - Approximately 990,000 applications were approved in the last twelve months[10] - Repeat customers accounted for 58.4% of gross originations in Q2 2025[14, 20, 44] - Total application volume grew by over 91% year-over-year in Q2 2025[17, 20] Marketplace and Merchant Partnerships - The platform includes over 200 merchants[10, 42] - Approximately 60% of Q2 2025 gross originations started in the app marketplace[20, 31, 33, 35]

Financial Performance - Total revenue for Q2 2025 reached $71.9 million, marking a 22.1% increase compared to the previous year[7]. - Total revenue for Q2 2025 was $71.886 million, a 22% increase from $58.863 million in Q2 2024[37]. - Total revenue for the first half of 2025 was $143.832 million, an increase of 16.1% from $123.924 million in the first half of 2024[46]. - Gross originations for Q2 2025 were $72.1 million, representing a 30.4% increase year-over-year, with a 62% growth excluding the home furnishings and mattress category[7]. - Gross originations for Q2 2025 were $72.1 million, compared to $55.3 million in Q2 2024, marking a 30.4% increase[47]. - KPay gross originations increased approximately 81% year-over-year in Q2 2025, accounting for 39% of total gross originations[3]. - Adjusted EBITDA for Q2 2025 was $0.3 million, an improvement from an Adjusted EBITDA loss of $0.4 million in Q2 2024[7]. - Adjusted EBITDA for the first half of 2025 was $2.562 million, down from $5.253 million in the first half of 2024[43]. - Adjusted gross profit for Q2 2025 was $9.211 million, compared to $8.296 million in Q2 2024, reflecting an increase of 11%[45]. - Gross profit for Q2 2025 was $11.168 million, compared to $9.928 million in Q2 2024, reflecting a 12.5% increase[37]. Customer Metrics - Unique new customer base grew by approximately 40% year-over-year, while repeat customer rate was 58.4% of gross originations[2][3]. - Customer satisfaction remained high with a Net Promoter Score of 63 as of June 30, 2025[3]. Losses and Expenses - Net loss for Q2 2025 was $7.835 million, compared to a net loss of $6.888 million in Q2 2024, indicating a 13.8% increase in losses[37]. - Adjusted net loss for Q2 2025 was $5.659 million, compared to an adjusted net loss of $5.445 million in Q2 2024[43]. - Operating expenses for Q2 2025 totaled $12.578 million, slightly up from $12.549 million in Q2 2024[45]. - The company incurred $1.145 million in debt refinancing costs in Q2 2025, while there were no such costs in Q2 2024[45]. - Stock-based compensation expense for Q2 2025 was $864,000, down from $1.552 million in Q2 2024[43]. Cash and Liabilities - The company ended Q2 2025 with total cash and cash equivalents of $9.0 million, including $5.3 million of restricted cash[7]. - Cash and cash equivalents at the end of Q2 2025 were $3.659 million, up from $3.465 million at the end of 2024[38]. - Total current liabilities increased to $143.876 million as of June 30, 2025, from $138.693 million at the end of 2024[38]. - The company’s accumulated deficit as of June 30, 2025, was $161.974 million, compared to $148.451 million at the end of 2024[38]. Future Outlook - The company expects gross originations to grow between 20% and 25% for the full year 2025, with revenue growth anticipated at 20% to 25%[10][11]. Write-offs - Write-offs as a percentage of revenue were 9.8% in Q2 2025, within the company's long-term target range of 8% to 10%[7]. Shareholder Information - Weighted average common shares outstanding increased to 4.813 million in Q2 2025 from 4.286 million in Q2 2024[37].

Core Insights - Katapult Holdings, Inc. reported strong financial performance in Q2 2025, with a 30% increase in gross originations and a 22% rise in revenue year-over-year, indicating robust growth momentum [2][4][6] - The company is raising its full-year 2025 gross originations outlook, expecting growth between 20% and 25%, driven by a strong customer base and expanding merchant partnerships [7][10] Financial Performance - Gross originations for Q2 2025 reached $72.1 million, a 30.4% increase compared to Q2 2024, with KPay gross originations growing by approximately 81% year-over-year [4][10] - Total revenue for Q2 2025 was $71.9 million, reflecting a 22.1% increase from the previous year [4][39] - Adjusted EBITDA improved to $0.3 million in Q2 2025, compared to a loss of $0.4 million in Q2 2024 [9][37] Customer Metrics - The unique new customer base grew by approximately 40% year-over-year, with a repeat customer rate of 58.4% for Q2 2025 [2][4] - Customer satisfaction remained high, with a Net Promoter Score (NPS) of 63 as of June 30, 2025 [4] Operational Highlights - Approximately 60% of gross originations in Q2 2025 originated from the Katapult app marketplace, which saw a 56% year-over-year growth in gross originations [4][6] - KPay's unique customer count grew nearly 87% year-over-year, with 39% of total gross originations transacted using KPay [4][6] Refinancing and Capital Structure - Katapult entered a new Refinancing Agreement with Blue Owl Capital, increasing its revolving line of credit to $110 million and extending the maturity date to December 4, 2026 [5][11] - The interest rate on the revolving line of credit was reduced by approximately 150 basis points, enhancing the company's liquidity position [5][11] Market Outlook - The company anticipates continued growth in 2025, supported by a large addressable market of underserved, non-prime consumers, particularly as lease-to-own solutions become more attractive in a tightening credit environment [6][7] - The outlook for the home furnishings and mattress category remains cautious, with expectations that performance will not improve materially from 2024 [8]

Group 1 - Momentum investing contrasts with the traditional strategy of "buy low and sell high," focusing instead on "buying high and selling higher" [1] - Identifying the right entry point for fast-moving stocks can be challenging, as they may lose momentum if future growth does not justify their high valuations [1] - Investing in bargain stocks that have recently shown price momentum may be a safer strategy [2] Group 2 - Katapult Holdings, Inc. (KPLT) has shown significant price momentum, with a four-week price change of 48.8% [3] - KPLT has gained 61.7% over the past 12 weeks, indicating strong long-term momentum [4] - The stock has a beta of 1.75, suggesting it moves 75% more than the market in either direction [4] Group 3 - KPLT has a Momentum Score of B, indicating a favorable time to invest [5] - The stock has a Zacks Rank 2 (Buy), supported by upward revisions in earnings estimates [6] - KPLT is trading at a Price-to-Sales ratio of 0.21, suggesting it is undervalued at 21 cents for each dollar of sales [6] Group 4 - KPLT appears to have significant growth potential and is part of a broader list of stocks that meet the 'Fast-Paced Momentum at a Bargain' criteria [7] - There are over 45 Zacks Premium Screens available to help identify winning stock picks based on various investing styles [8]

Company Announcement - Katapult Holdings, Inc. will release its second quarter 2025 financial results before the market opens on August 13, 2025 [1] - A conference call and webcast will be held at 8:00 AM ET on the same day to discuss these results [1] Investor Relations - A live audio webcast of the conference call will be available on the Katapult Investor Relations website [2] - A replay of the call will also be accessible on the investor relations website following the event [2] Company Overview - Katapult is a technology-driven lease-to-own platform that collaborates with omni-channel retailers and e-commerce platforms [3] - The company focuses on providing purchasing solutions for underserved U.S. non-prime consumers through point-of-sale integrations and a mobile app featuring Katapult Pay™ [3] - Katapult aims to offer a simple, fast, and transparent process for consumers who may not have access to traditional financing [3]

Financial Performance - Total revenue for the three months ended March 31, 2025, was $71,946,000, representing an increase of $6,885,000 or 10.6% compared to $65,061,000 in the same period in 2024[107] - Rental revenue increased by $6,936,000 or 10.8% to $71,078,000 for the three months ended March 31, 2025, compared to $64,142,000 in 2024[107] - Gross profit decreased to $14,349,000 for the three months ended March 31, 2025, down $2,139,000 or 13.0% from $16,488,000 in the same period in 2024[107] - Net loss for the three months ended March 31, 2025, was $5,688,000, an increase of $5,118,000 or 897.9% compared to a net loss of $570,000 in 2024[107] - Adjusted gross profit for the three months ended March 31, 2025, was $12,492,000, down from $14,847,000 in the same period in 2024[119] - Adjusted EBITDA for the three months ended March 31, 2025, was $2,240,000, a decrease of $3,390,000 or 60.3% from $5,630,000 in 2024[121] - Adjusted net income (loss) for the same period was $(3.356) million, a decrease from an adjusted net income of $0.983 million in 2024[123] Operating Expenses - Operating expenses increased by $2,197,000 or 17.3% to $14,885,000 for the three months ended March 31, 2025, compared to $12,688,000 in 2024[115] - Fixed cash operating expenses increased to $10.402 million in Q1 2025 from $9.390 million in Q1 2024, reflecting a rise of approximately 10.8%[124] Cash Flow and Liquidity - Cash provided by operating activities increased by $1.5 million to $3.438 million in Q1 2025 compared to $1.980 million in Q1 2024[130] - As of May 12, 2025, the company had total cash on hand of $12.8 million, including $7.1 million of unrestricted cash, raising concerns about its ability to repay loans at maturity[126] - The company had a combined principal balance outstanding of approximately $113.3 million related to the RLOC and term loan, both maturing within twelve months[125] - The company experienced a decrease in net proceeds from the RLOC of $4.9 million, contributing to a change in cash used in financing activities of $12.2 million in Q1 2025 compared to Q1 2024[132] Debt and Interest Rates - The interest rate on the RLOC increased from 7.5% to 8.5% per annum, with the current rate at 12.9% as of March 31, 2025[141] - The interest rate on the Term Loan was 18.4% as of March 31, 2025, which includes 6.00% PIK interest[142] - The company is currently seeking to refinance its loans prior to maturity in June 2025, which raises substantial doubt about its ability to continue as a going concern[126] Originations and Write-offs - Gross originations for the three months ended March 31, 2025, were $55,630,000, a decrease of $8,569,000 or 15.4% from $64,199,000 in the same period in 2024[99] - Write-offs as a percentage of total revenue were 9.0% for the three months ended March 31, 2025, compared to 8.4% in the same period in 2024, remaining within the target range of 8% to 10%[109] - Katapult Pay represented 35% of gross originations during the three months ended March 31, 2025, up from 26% in the same period in 2024[100]

Core Insights - Katapult Holdings, Inc. reported strong financial results for Q1 2025, with gross originations of $64.2 million, representing a year-over-year increase of 15.4% [5][40] - The company achieved a total revenue of $71.9 million, up 10.6% from the previous year [5][39] - CEO Orlando Zayas expressed confidence in the company's growth trajectory, highlighting a 57% increase in KPay originations and strong engagement within the Katapult app marketplace [3][5] Financial Performance - Gross originations for Q1 2025 were $64.2 million, a 15.4% increase compared to Q1 2024 [5][40] - Total revenue reached $71.9 million, marking a 10.6% increase year-over-year [5][39] - Operating expenses rose by 17.3%, leading to a net loss of $5.7 million for Q1 2025, compared to a net loss of $0.6 million in Q1 2024 [5][12] Customer Engagement and Market Position - Approximately 59% of gross originations in Q1 2025 originated from the Katapult app marketplace, which is the largest customer referral source [5] - The repeat customer rate was 57.4%, indicating strong customer loyalty [5] - KPay gross originations grew by approximately 57% year-over-year, with 35% of total gross originations transacted using KPay [5] Business Outlook - Katapult expects gross originations to grow at least 20% for the full year 2025, reiterating its guidance despite challenges in the home furnishings category [8][7] - The company plans to introduce new merchants to the Katapult App Marketplace throughout 2025, aiming to capture a larger share of the underserved non-prime consumer market [7][8] - The outlook assumes no significant changes in the macroeconomic environment and does not account for potential impacts from prime creditors [8][9]

Financial Data and Key Metrics Changes - Gross originations grew 15.4% year over year to $64.2 million in Q1 2025, marking the tenth consecutive quarter of growth [26][27] - Revenue for Q1 2025 was $71.9 million, reflecting a 10.6% increase year over year, and this was the eighth consecutive quarter of year-over-year growth [27] - Gross profit for Q1 was approximately $14.3 million, with a gross margin of 19.9%, down from $16.5 million the previous year [28][29] - Write-offs as a percentage of revenue were 9%, an improvement from Q4 performance and within the target range of 8% to 10% [29] Business Line Data and Key Metrics Changes - KPay originations increased by approximately 57% to $22.8 million, representing 35% of total gross originations [12][9] - Total app originations grew 42% to $37.9 million, with 59% of gross originations starting in the app marketplace [9][7] - The number of customers with more than one active lease grew nearly 60% year over year, with over 28% of the customer base having multiple leases [11] Market Data and Key Metrics Changes - Gross originations for the top 25 merchants grew 13% in Q1 2025, despite challenges faced by the largest merchant, Wayfair, which reported $17 million in gross originations [22][44] - Excluding home furnishings and mattress categories, gross originations grew 51% year over year [27] Company Strategy and Development Direction - The company is focused on four top initiatives: consumer engagement, merchant engagement, referral partnerships, and improving unit economics and capital structure [7] - New partnerships and marketing strategies are being developed to drive sales and enhance the customer experience [24][19] - The company is exploring new pathways for partnerships to expand customer engagement and brand awareness [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year goals despite macroeconomic headwinds, emphasizing strong Q1 results and positive growth momentum [6][23] - The company anticipates gross originations growth of at least 20% for the full year 2025, with revenue growth expected to be at least 20% as well [38][37] Other Important Information - The company is actively negotiating a maturity extension amendment for its credit facility, with a temporary waiver of certain covenant breaches in place [35][36] - Cash generated from operations for Q1 2025 was $3.4 million, an increase from $2 million in Q1 2024 [36] Q&A Session Summary Question: Clarification on EBITDA expectations - Management explained that despite breakeven expectations in Q2, they anticipate strong growth in the second half of the year, leading to a total of $10 million in EBITDA [40][42] Question: Performance of Wayfair - Management confirmed that Wayfair faced challenges, reporting $17 million in gross originations for Q1 2025 [44][45] Question: Credit facility maturity - Management stated they are negotiating with existing lenders for a comprehensive maturity extension amendment [47] Question: KPay growth and customer engagement - Management highlighted that KPay is driving significant growth and customer engagement, with higher lifetime value from KPay users [51][54] Question: Second quarter performance expectations - Management indicated that they expect gross originations growth in Q2 to be between 25% to 30% [60][61]