Katapult(US:KPLT)2025-05-15 13:00Financial Data and Key Metrics Changes - Q1 gross originations grew 15.4% year over year to $64.2 million, exceeding the outlook of 11% growth [6][28] - First quarter revenue increased by 10.6% to $71.9 million, slightly above expectations, marking the eighth consecutive quarter of year-over-year growth [28] - Gross profit for Q1 was approximately $14.3 million, with a gross margin of 19.9%, down from $16.5 million the previous year [29][30] - Write-offs as a percentage of revenue were 9%, an improvement from Q4 performance and within the target range of 8% to 10% [30] Business Line Data and Key Metrics Changes - KPay originations increased by approximately 57% to $22.8 million, representing 35% of total gross originations [12][28] - Total app originations grew 42% to $37.9 million, with 59% of gross originations starting in the app marketplace [9][12] - The percentage of leases under $300 in value increased to 31%, up from 24% the previous year [17] Market Data and Key Metrics Changes - Gross originations for the top 25 merchants grew 13% during the quarter, despite challenges faced by the largest merchant, Wayfair [28][45] - Excluding home furnishings and mattress categories, Q1 gross originations grew 51% year over year [28] 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 [9] - New partnerships with merchants like Ashley Furniture and Bed Bath and Beyond were established, expanding the KPay enabled merchant roster to 35 [18] - The company is exploring new partnership avenues to expand customer engagement and broaden the application pool [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year goals despite macroeconomic headwinds, emphasizing a strong start to 2025 [9][23] - The company anticipates gross originations growth of at least 20% for the full year, with Q2 expectations of 25% to 30% growth [38][39] - Management is actively negotiating a maturity extension amendment for their credit facility to align with the business plan [36][49] Other Important Information - Total cash and cash equivalents as of March 31, 2025, were $14.3 million, including $8.3 million of restricted cash [36] - Cash generated from operations for Q1 2025 was $3.4 million, an increase from $2 million in Q1 2024 [37] 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 to achieve $10 million in EBITDA [42][44] Question: Gross originations growth for Wayfair - Management confirmed that Wayfair had $17 million in gross originations for Q1, facing challenges in the home furnishings category [45][46] Question: Credit facility maturity and refinancing plans - Management stated they are negotiating with existing lenders for a comprehensive maturity extension amendment to align with the company's business plan [48][49] Question: KPay growth and market share - Management attributed KPay's growth to a large total addressable market and effective customer engagement strategies [53][54] Question: Repeat customer rates through KPay - Management noted that KPay users exhibit a higher lifetime value and repeat purchase rates compared to other segments [56][60] Question: Q2 growth expectations - Management indicated that they are tracking at 20% growth in Q2 and expect trends to continue into the back half of the year [62][64]