Katapult(KPLT) - 2025 Q4 - Annual Results

Financial Performance - Gross originations for Q4 2025 were $77.9 million, an increase of 3.7% year-over-year, while total revenue reached $73.9 million, up 17.3%[6] - Net income for Q4 2025 was $19.8 million, a significant improvement from a net loss of $(9.6) million in Q4 2024[8] - Adjusted EBITDA for Q4 2025 was $5.4 million, compared to an Adjusted EBITDA loss of $(1.1) million in Q4 2024[11] - Total revenue for the year ended December 31, 2025, was $291.761 million, an increase from $247.194 million in 2024, representing a growth of approximately 18%[40] - Net income for the three months ended December 31, 2025, was $19.837 million, a significant recovery from a net loss of $9.569 million in the same period of 2024[40] - Net income for 2025 was $1.37 million, a significant recovery from a net loss of $25.92 million in 2024[44] - Adjusted EBITDA for 2025 was $12.38 million, compared to $4.77 million in 2024, reflecting a strong operational improvement[47] Revenue and Growth Metrics - In 2025, total lease applications grew approximately 45.0%, with around 2 million applications received[4] - The rental revenue for the year ended December 31, 2025, was $287.161 million, up from $243.978 million in 2024, marking an increase of approximately 18%[40] - Total revenue for 2025 reached $291.76 million, a 17.9% increase from $247.19 million in 2024[50] - Gross originations for FY 2025 totaled $278.4 million, up 17.3% from $237.3 million in FY 2024[52] - Q1 FY 2025 gross originations were $64.2 million, compared to $55.6 million in Q1 FY 2024, reflecting a 15.4% growth[52] - Q2 FY 2025 gross originations increased to $72.1 million, a slight rise from $55.3 million in Q2 FY 2024, marking a 30.9% increase[52] - Q3 FY 2025 gross originations were $64.2 million, up from $51.2 million in Q3 FY 2024, representing a 25.5% growth[52] - Q4 FY 2025 gross originations reached $77.9 million, compared to $75.2 million in Q4 FY 2024, indicating a 3.6% increase[52] Operational Efficiency and Cost Management - The company reported total operating expenses of $52.116 million for the year ended December 31, 2025, down from $53.872 million in 2024, indicating improved cost management[40] - Cash used in operations was $12.7 million in Q4 2025, a decrease from $28.5 million in Q4 2024[11] - Cash flows from operating activities improved to a net cash used of $11.93 million in 2025, compared to $32.57 million in 2024[44] Strategic Initiatives and Future Outlook - The pending merger with Aaron's and CCF Holdings is expected to create a premier omnichannel platform for nonprime consumers, with pro forma revenue exceeding $4 billion for the last twelve months as of Q3 2025[14] - The combined company is projected to have approximately $450 million in pro forma LTM Adjusted EBITDA as of Q3 2025, supporting long-term double-digit Adjusted EBITDA margin potential[14] - The company is focusing on expanding its market presence and enhancing product offerings to drive future growth[51] - Continued investment in new technologies and product development is expected to support long-term performance[51] - Strategic initiatives are being implemented to optimize operational efficiency and improve customer engagement[51] Financial Health and Liquidity - Cash and cash equivalents increased to $22.43 million in 2025 from $3.47 million in 2024[41] - Total current assets rose to $105.23 million in 2025, up from $90.37 million in 2024, indicating improved liquidity[41] - Total liabilities decreased to $118.04 million in 2025 from $139.97 million in 2024, showing a reduction in financial obligations[41] - The accumulated deficit decreased to $147.09 million in 2025 from $148.45 million in 2024, indicating a slight improvement in overall financial health[41] Risk Factors - The company anticipates challenges related to regulatory approvals and market conditions that could impact future transactions and growth initiatives[22] - The impact of rising inflation and interest rates is a significant risk factor that could affect consumer spending and overall business performance[22] Profitability Metrics - Gross profit for the year ended December 31, 2025, was $51.603 million, compared to $45.771 million in 2024, reflecting an increase of about 13%[40] - The company reported a gross profit of $51.60 million for 2025, up from $45.77 million in 2024, resulting in a gross margin improvement[50] - Adjusted gross profit, which accounts for variable operating expenses, is crucial for understanding the performance related to total revenue[33] - Write-offs as a percentage of revenue were 9.6% in Q4 2025, consistent with the company's long-term target range of 8% to 10%[11]