Core Viewpoint - Katapult Holdings, Inc. has announced a definitive agreement to merge with The Aaron's Company, Inc. and CCF Holdings LLC in an all-stock transaction, aiming to create a premier omni-channel platform for non-prime consumers, enhancing growth potential and financial solutions [1][2][3]. Strategic and Financial Rationale - The merger will create a trusted platform for non-prime consumers to access durable goods and innovative financial solutions tailored to their needs [3]. - The combined company will establish a scaled omni-channel business with approximately 3,000 retail touchpoints and leading digital capabilities [3]. - The financial profile of the combined entity is projected to include over $4 billion in pro forma LTM revenue and approximately $450 million in pro forma LTM Adjusted EBITDA, supporting long-term double-digit Adjusted EBITDA margin potential [3]. - The merger is expected to unlock significant synergies, including enhanced underwriting capabilities and operating efficiencies [3]. Leadership and Governance - The combined company will continue to operate under the Katapult brand, headquartered in Atlanta, Georgia, with Cory Miller as CEO and Russell Falkenstein as CFO [7]. - The board of directors will consist of nine members, including Kyle Hanson as Executive Chair, with a majority being independent [8]. Transaction Details - Upon closing, current Katapult stockholders will own 6% of the combined company, with Aaron's and CCF Holdings stakeholders owning the remainder [5]. - The transaction is expected to close in the first half of 2026, pending stockholder and regulatory approvals [5].

Core Insights - Katapult Holdings, Inc. reported a 25% year-over-year growth in gross originations for Q3 2025, marking the third consecutive year of growth, driven by increased application activity and a growing customer base [2][4][9] - The company secured a significant investment of $65 million from Hawthorn Horizon Credit Fund, which is expected to strengthen its balance sheet and support growth initiatives [3][8] - The company anticipates continued growth in gross originations and revenue for Q4 2025, despite macroeconomic challenges [10][14] Financial Performance - Gross originations reached $64.2 million in Q3 2025, a 25.3% increase from the previous year, with a notable 50% growth when excluding the home furnishings and mattress category [4][29] - Total revenue for Q3 2025 was $74.0 million, reflecting a 22.8% increase year-over-year [4][29] - The net loss for Q3 2025 was $4.9 million, an improvement from a net loss of $8.9 million in Q3 2024, primarily due to reduced litigation settlement expenses and compensation costs [5][29] Customer Engagement and Marketplace Activity - Total applications grew approximately 80% year-over-year, with 61% of gross originations originating from the Katapult app marketplace, which saw a 44% increase in gross originations [4][8] - The KPay conversion rate increased, leading to a 76% year-over-year growth in unique KPay customers, with KPay gross originations growing approximately 66% [4][8] - Customer satisfaction remained high, with a Net Promoter Score of 64 as of September 30, 2025 [4] Future Outlook - For Q4 2025, the company expects gross originations to grow between 15% and 20% year-over-year and revenue to increase by 21% to 23% [9][14] - Adjusted EBITDA is projected to be between $8 million and $9 million for the full year 2025, reflecting a more conservative outlook due to macroeconomic headwinds [10][14] - The company aims to leverage its improved capital structure and technology to capitalize on long-term growth opportunities in the underserved non-prime consumer market [10][14]