Katapult (KPLT) Q2 2025 Earnings Call August 13, 2025 08:00 AM ET Speaker0Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Catapult Holdings Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.I would now like to turn the call over to Jennifer Cohen Coe, Head of Investor Relatio ...

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]