KPLT - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Katapult First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] A question and answer session will follow the formal presentation.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. of President Vice Wright, Investor Relations. Bill may you begin. Sir,

Bill Wright

Chief to Thank With quarter first Officer. good Derek me Chief Karissa Welcome you, morning. the Medlin, Officer; XXXX Executive are Zayas, Katapult's Officer; Financial Orlando and Cupito, and today Chief Operating earnings conference call.

be will Q&A prepared remarks. following We today's for available

cautionary statements our like be and events expectations and financial otherwise. a we assumptions release and should I Before result everyone company's periodic obligation these future to differ this future subject to we would materially as of number most begin, from in call statements SEC regarding revise information, events that statements, in statements conjunction or and the publicly reports. those with considered whether remind beliefs, update earnings undertake factors reflect no to or as will contained a any law, contain that and forward-looking statements. recent of current management's of performance cause by results are may new actual Except any to required These

over non-GAAP measures the our descriptions to measures non-GAAP to our earnings and obtain of reconciliations of financial release, and the copy earnings for at Investor which adjusted information income. of and such financial Reconciliations website of During our Relations certain website refer contains company release, of which will as to of are Please a our provide www.ir.katapult.com. include measures to section This constitute certain EBITDA comparable call together Relations rules. a non-GAAP being performance, financial to adjusted Investor in should Orlando. GAAP our a call website. on replay and webcast will replacements nearest we considered today's with discussion available our under be non-GAAP turn and measures not Investor financial measures would the I These included be SEC to also additional read be GAAP today's like available section Relations measures in for results. now information measures. that recorded, the should GAAP are is These net

Orlando Zayas

Thanks, Bill.

We company who team a are and our during us I milestone become of the supported our as their thank be our Katapult entire call hard new first is history throughout have and in This Katapult. process. work a a the company public to dedication the major for hosting want journey as investors thrilled as public to old to today. well

very billion to by less Today, We goods are about to large position $XX penetration. durable thrilled consumers. to a be billion market nonprime approximately $XX annually Katapult's market the estimate purchased unique for X% with serve e-commerce we than

of to consumers secure due like disruptive struggle This furniture, lack get appliances at access tells be shop to can and low field. consumers credit thin year-end for beyond. talk scores, same a or and today's today technology barriers. providing help like significant to also to through lack The approximately laptops. a XXXX consumers expansion results, brief the overview with daily I'd our As retailers and to for that a financial they we off of us the Market things growth XXXX their the and empowers long-term discuss result, and Katapult high-quality Through our But consumers of can first, which by We Katapult. began continued in proprietary data to kick them story down provide essential for underserved the break see mission revenue call of as excited experience platform, shopping the solid we growth. our continued profitability our On first call, opportunity strong a XX% files simplifies that lives. data. quarter greenfield featured prime plans playing are about need items leveling

in. steps Katapult where Here's

customers and approve nonprime at checkout, for lease-to-own At provide lease of fee consumers to while consumer they're nominal owns others the flexible a that and others. can the transparent And time, options. chooses early and name the end item followed fits retailers best consumer underwriting use models option recurring Lenovo, whereby item. purchase payment any cancel with online. the a Mattress pay how return ever. the transparent the Wayfair, lease, or the As discounted options, is decline we consumers, by This shopping We fee we their payments. proprietary at a like Purple big lease charge this consumer clear exercise budget, never we partner and that The and late experience

to our success. integration retailers key Our is with

like and have shopping integration partnerships with to providers have partners customize capabilities strong select We platforms proprietary leading directly platform. time developed any credit with the Magento waterfall Shopify, and Affirm with like an

and Our to consumers, platform, customers transactions opportunity but past. could for the base that bring and access the in Not have that in strategic our not enabling transparency merchants not e-commerce our addressable would goal merchants is do world. new market incremental love a them ease shoppers a of we massive us the see open happened the as and partner the strong consumer effectively only because

what and of how about and our partners have the get why providing retail to looking of It's innovative is by consumers consumers need. helping us values to One transparent, want we're core they we're and products. empowering also them our enhance the say lives at consumers things financial and --

the underserved For sleep she in that they recently heart afford a bed to our be obtain to item. able example, to mission. is have consumers gone ticket of because been We said She have told so to didn't items without large the bed Katapult consumers outright, need. would us a had X years ability a buy the the enable "I to mattress a of never our again." to she us, This sleeping me gave in opportunity able one

will there our "I us review. minutes, was Karissa, provide quarter QX expand million, Thank for wrote, mission. and CFO, We let our performance Katapult this, revenue pay is and add of as now satisfied $XX.X upstairs on me, wasn't full first quarter our and a merchants. my in relationships give motivates and more validates growth portable a we merchant really with by can highlights. budget room this receive conditioner XXXX not needed like details Another my first I you." was room. many but able some also increase Total and My an an for to comfortably but our you XX% testimonies originations continue me air I for which for few strong give fixed, in driven more only customer year-over-year, existing new one. to inspires price sit

the new addition current growth $X.X Financial high-quality XXXX, you, income reflecting nonprime program of the the drives up business our Like operating inherent innovating and us repeat microeconomic up solutions Our our QX adjusted move that of what operating summary, market. growth. million in are EBITDA have dynamic In demonstrated QX, we will combination world in this we believe many million have time leverage continue solutions relationships quarter model QX is the and eager vision as grow built million, line delivering XXXX. to profitable. business continue we to to margins high be to $X.X XXX% growth our same that from in retailers, and And our growth building with is post My XXXX lease in was both first strong. through increasing rate. expect being more year-over-year. for the the the consumer purchase especially and was the to was pandemic differentiates top our Katapult. while is the that net new inclusion our what our of attractive offering $XX.X see expense rapidly about environment is our And outpacing extraordinary XXX% in ability revenue in We financial customer is at

for as As consumer a credit be result, the the government as programs year. stimulus will closely balance trends, of we well spending conditions monitoring

are strategy the these our consumers deliver partners. platforms prime to originations Katapult up interest both to merchants, will that timing about It and business excited is and We merchants e-commerce note and onboard in from and of length to growing our ramp it for partners takes in and value partners the important the impact and revenue. confident to

Derek? we transparent over through be that continue. on experience, model, Chief financial growth Katapult's discuss and at to Officer, same variability, driving inclusion will a anticipate while squarely remain time to they know our enabling and shareholder foundation will Derek to there value. consumer growth a strategy. it focus and need created we we've goals while our turn business durable the that, may I'll Operating Medlin, solid obtain that So With some customers

Derek Medlin

Orlando. Thanks,

Motorola and opportunity onboarded retailers key consumers. including you expanded XX against Mac financial growth see other we to merchants, and results, As from provide options new seizing quarter, the know, the strategies can well that you nonprime like names for first payment are executed we our in QX. In e-commerce Simply our

for easy Katapult it website incorporate make platforms their merchants is option checkout pace really merchants adding and of Our exciting. new our on as to a

rate general addition assets mentioned new on XX% like our saw purchase award-winning our Katapult the sales typically This consumers, Katapult solution rate, Orlando Like technology our includes digital we of This our engage about originations top allows and lease on quarter merchant their attract consumers earlier, XXXX, well. maniacal service. are focus consumers total new capabilities In love. penetration year-over-year. deliver This growth which XX volume, of we to collaboration sales built to coming first board outpace transaction of our and rate is model. things merchants using data-centric the and first and data during the expand grew existing existing growth our merchants' to merchants growth serving technology

incredible efforts with continue our our relationships to on build focus consumers. invest and that experience long-term an will delivering We

of as from results year-end the quarter. we first improved end a XXXX concrete to high this of of Promoter our the excited example XX I'm that Net have the Score of As report focus, XXs the to at

for share, approach driver our to giving additional a is these volume metrics consumer-oriented our Beyond to merchants. generate

for a will Our key continue and at opportunities to our driven year, to trust that our us our first, looking is by expanding existing to several X to will average is their new we next deepening sign new customers growth launch consumers our want for Katapult strategy to shopping to by and identify consumers. for The We make omnichannel growth existing easy as same-store consumer Katapult want multiple will for available over at data develop years where e-comm opportunities channel a new that mutual our and the Every insights We'll parties consumer partners. capabilities initiatives: and programs base strong our per third, we at use X.X, to it possible strong activities. our open adding attractive to continue and merchants, outpaced to engage will optimizing as lease current continues forward look consumers. new the be merchants our with all and offerings shop; online merchants merchant for second, for merchants we product are sales consumers and relationships grow, table. sites; platforms the avenues continue to that aimed our continue make of

merger million and plan accelerate capital. As part growth. our company initiatives of invest our to use expand capital in with the in to incremental moat $XX that We will this FinServ, received our

have XXXX, of $XX talent with earmarked expanding have targeted teams to and we investment. our technology we million Related marketing begun new sales, for strategic process this resources this hires. For and the investment,

increase and platforms commercial with loyalty. e-commerce loyalty also These offers promotions, on technology integration we'll merchants access experience. These functionality lastly, top merchant and merchant Katapult and sales; our and accelerate new consumer will expansion merchant so waterfalls, competitive consumer that and cycle program; include rate life to and digital increase testing marketing Katapult our continuously down our include to also, improve make our pull-through are consumer doubling strategies programs new we and the consumer be that and integrations priority initiatives in we our of lender improving speed product an initiatives advantage enhance the and of our investing with to merchant and experience. believe expand additional offerings We

Commerce Salesforce opportunity great growth. a integrations, Cloud point-of-sale will For our provide another roster example, of platform that we to the added recently e-commerce for

Now discuss our I off Karissa will financials. hand it to to

Karissa Long

Thanks, Derek.

and Katapult past I me everyone's future appreciation over months. support begin, the Before echo excitement for of let Orlando's about the several my

Now turning to our results.

XXXX. million, year-over-year of of revenue first $XX.X quarter, in was versus total increase QX $XX.X an the million XX% For

over gross metric reporting going will $XX.X of more gross Our is originations, strong continued lease originations be believe increase underlying million, gross [Audio in defined to million net growth Gross in public subsequent a originations our as in in business GMV payment agreements as or with period were entered XXXX. continuously revised we in retail and performance do as revenue up gross we associated Gross Gap] and report due price growth Katapult consistent to revenue from was greater referred by QX originations this merchandise the purchase are through merchandise value, have originations industry as how platform. Starting reporting the fluctuations. our represent volume as driven lease XXXX into of XX% is the are the representative during $XX.X merchandise originations volume. and and earned. otherwise periods the with Also peers the forward, seasonal not returns line of

expenses was XX.X% service lease continuously QX due we have to a primarily were servicing points, costs, in of reevaluate XX% our and million volume depreciation up which represent million as revenue the year-over-year. combination of QX in these compared call to to XXXX XXXX, company to transactions testament collections expectations we with curves. up highest our are year prior customer expenses to $X.X for and and QX acceleration However, that is quarter only depreciation a $XX.X million is despite $XXX,XXX despite historically to A XX%. up accelerated third-party to consumer $XX.X $XXX,XXX for we XXX for metric with increased traditional our margin $XXX,XXX believe the for shopping. of follow versus lowest slightly our scale in in and XXXX result primarily scalability a Gross increased ability held volume lease renegotiate of and the and is of XXXX, which to of declined million increasing $XX.X input. retailer holiday in and center, and service the XXXX, on were operating in originations quarter is We property QX XX.X% transaction gross costs QX business. XXXX, which operating account continuously and the million QX were volume curves a both directly for call Total follows: our center XX% transformation the associated QX how period. being from were of our useful the place up. breakdown basis this for were fees for QX down $X.X driven XXXX assessing the is take year, our investors as the $X.X million the communicate the trends with consumers. use digital fees business FinServ buyout Gross slight in seasonality This profit operations ongoing costs XXXX, XXXX, QX in This the in XXXX Professional our from Underwriting continue period. improving due significantly quarter attributed consulting totaled in merger in the by line to of every QX QX the favorably platform. QX that

accelerated company. Bad expenses expected was collection decreased accounts XXXX company QX achieving to debt total and This as XXXX, this by provision reminder, net $X.X the reoccur. of was operating compared QX income. suspended taxable to of XXXX, $X.X expected data federal of consists negotiate trajectory the are product for due rates XXXX. for ending expense primarily increase Provision which December income driver compared was for XXXX taxes a have receivable temporarily $X.X expense generated QX XXXX. the QX to administrative Taxable a QX increased to on nature for income term period, QX analytics administrative tax as expense where year-over-year in This up fees debt income qualifying we of X.X% at to to in was proportional primarily QX the charge-off is X.X% underwriting of during XXXX was an $X for carryforwards increase QX to companies been X% for driven lower XX, debt was in decreased decreased General QX $X.X due the onetime well of total a million million XXXX. scale. in in in balance total December of Bad to primary XXXX. were to XXXX. million XXXX be taxable debt of This capabilities. loss of a in to XXXX, QX Interest as primarily certain the the X.X% in the stating XX%. as and $X.X disallowed. recovery. and ended by due our a QX result activities in This to months on continue company's QX XXXX. XXXX. million of costs software fees interest not payment $X,XXX Technology in added million to of year to As provisions compared for million Bad on compared driven XXXX increase reduction March was was capitalization is X.X% expense facilities generating growth and expense XXXX revenue as for $X.X estimated a million for XX, total that of to was for development revenue primarily to primarily This origination from in as to closing in increase are due in was taxes million The for increase expense other of uncollectible compared in and enhance in net XXXX, XXXX. million XXXX to greater depreciation in million note a XXXX. state X better these due support an able percentage proportion headcount $XX,XXX second our we XXXX QX to the revenue and where $X.X were states over which is taxes $X.X in revenue other performance. principal offset Interest our QX increase and and of volume was flat percentage $XX related X% to expense both QX California, half over debt This is was income General the by of XXXX rates compared decreasing XX% percentage

increase an million Our $X.X GAAP $X.X first XXX% XXXX. the net the for income of first million, from was quarter of quarter in

the recruiting is valuation, expense, and basis interest liability in Turning QX first to costs. quarter before for onetime XXX% quarter Adjusted QX employee warrant representing and is XX.X% XXXX amortization impairments cost costs, of in net valuation, XXXX over in and investor-related million, points of expense, our as Adjusted depreciation of benefit EBITDA the of transaction million, changes employee costs EBITDA was was compared first other Adjusted costs stock-based up metrics. in as from EBITDA an $X.X XXXX. to expense, expense, costs. net income XXXX. matter was $XX.X XXXX. compensation $X.X provision liability first million defined for the costs quarter increase income Adjusted warrant expense, XXX onetime recruiting compensation income matter non-GAAP a investment-related tax income increase and XX.X%, changes defined net Adjusted net and transaction income stock-based margin before for

cash Moving by cash of and $X.X to operating $XX.X XXXX. at million. available net sheet in had and the activities provided March balance We positive million liquidity XX,

million. warrants Our of $XXX.X was debt total costs and debt issuance outstanding net

$XXX current to balance in bringing financial which million, capital flexibility structure. million XXXX our increased QX will be infusion part cash $XX as by FinServ merger, an our approximately Our the incremental balance enhances and cash of cash

Looking ahead to QX results.

will just completed from shaping as we do unique color to is we you a and comping year. formally the the that noise don't a there want in plan are company, second FinServ of numbers some how quarter believe result give issue we the to up. on last guidance Thus, also period that we quarterly be to basis the anticipate on a public we as some we transaction While regular

will In vesting retail was to EBITDA. XXXX employees stores total, $XX for relates of the KPIs, of In back very stock and QX year in closed that expense. period. the under relation unique last transaction, net options will charge estimating ago, business the to part, RSUs was be are income be triggered nation, orders. transaction-related stay-at-home QX our non-GAAP and of in week the A the plus but adjusted the and the assistance government brick-and-mortar originations. First, most and were The a unique bonuses recognized general via a our XXXX administrative impact a to added GAAP for that metrics in was online combination as it transactions adjusted growth we one-time to and of circumstances merger led Cares at stimulus net income million ultimately, will Act merchants checks. of our surge providing these our Many completion

for as a did we to result, the the traditional are and it QX calendar highest lower in origination XXXX resulted for follow a normalized not comes we In anticipate typically we a when and last gross see. more quarter for volume, As expecting of year result, year-over-year that seasonality XXXX, first retailer adjusted this retail in investment Day and we annual presentation. XXXX in in Also XXXX. our deploying year. QX which We previously initiatives, Analyst introduced XXXX guidance EBITDA reduce originations XXXX, in April marketing, gross as communicated will April QX capital started technology sales QX

in concentrated back for million. very believe reiterate, pass we provide to $XXX to I'll weighting adjusted the much, comments. To heavy the we continue million QX revenue guidance guidance to second originations $XX Orlando the Given of Thank earnings to this on to million of a said $XX year data plan detailed majority growth and EBITDA have the $XXX $XXX to more appropriate, our million of anticipate and with to a million we to QX is as today, our And of we half XXXX. final to the previously, it and of and have be release. achieve is reasonable that $XXX we million, you update

Orlando Zayas

this our and at some this much wrap volatility begins I'll we on as said Though focused all future the reiterate are normal, to beginning world to of what bigger up, unavoidable year To is post-pandemic I the transition strategic a happy convinced improving to years questions. continued call. your new are Operator, go Thanks, Karissa. and profitability investments a please to I equate growth will our Karissa come. market-leading long-term strong Derek, take that ahead. and for position, focus be many our a and will to

Operator

Instructions] question the from Vincent will from Our [Operator first line come Caintic of Stephens.

may begin. You

Vincent Caintic

the Moving to first question.

on maybe up on commentary quarter. the for second -- the Just a follow

So seems players. help first great majority of I there government to it refunds lease-to-own and quarter, results, significant so have guess, stimulus, been strong the -- that forth. for saw with from was strength, we the And and tax

of so thinking about I'm of the rest have those you're you're on stimulus does thinking? expiration or an model refunds and how effect XXXX, so your And when tax on the wondering

Orlando Zayas

the government unemployment resilient, Yes. to been the they to right that pretty consumer strong have and affect to as and for Thanks changes work. really is We obviously, are going think thanks stimulus our question, as are is the don't going stimulus Vince. now, back The dropping obviously well year. people

happen, going things we're any And you we seen year any out. to of we think But think and So performed there's during recessionary And actually to we've see monitor but going to rest there's how things that as really going pretty we the we're be the don't remember, don't play for well. effect. times, -- impact. be obviously

Vincent Caintic

Great. Okay.

question. Second

if from in the wondering about originations think was how I we could And partnerships. your talk your partnerships. lift various your you highlighted should you about So

Shopify Magenta and Affirm. highlighted and You

of does So billion should -- think merchandise track example, partners we think you you? for do and about over flow like think, much the you Affirm, maybe billion I your year. could if we doing, for how volume how if When opportunity Like of to annually what much on of Shopify $X is size kind to are how take about $XXX this could Shopify? that

Derek Medlin

Derek. is this question. that I'll Vincent, take

level that platform detail we in generally, expect growth projections or don't base So to or of granular merchant terms of partner. give by

collaboration with seeing The and really partners would combined Katapult and it's on Affirm, direct to online available continuing we we're gets word our solution, and is with to as started, partnerships, also out others, getting really really partners, I easy whole. strategy Magento various just numbers. retailers develop and that and offerings strong However, and with the just exciting the are that the to the and like resonating volume interest waterfall add. add we're is our see

give so We'll us. means just future. continuing as us to in we're what really partners to flavor But more adding for also to the be And optimistic. new you're going that see

Orlando Zayas

Yes.

say if think I I just the scratching Vincent, surface. add, I can would we're

Operator

question will of the Barclays. El-Assal Ramsey line from come next Our from

begin. may You

Ramsey El-Assal

more XXX% at us to a coming the the is I ask think guide, wanted you to think, I give originations, little I color XQ the on in like grew which XX%. year drivers origination of full midpoint. around growth

merchants onboarding year merchants you line of sight quarter. I think new little also or not this comps there get half. But signed last trying result more color versus get a behind little bit easier, if to to the annualizing? acceleration I'm mistaken, a in Just back the the have

Karissa Long

nailed decline for in going high -- us. Karissa. as really head. QX, terms because our where is Sure, in in anticipate call, But mentioned originations Ramsey. the half, year-over-year QX was just to you is unseasonably easier, year, the Yes, QX. concentrated. This the we last strong on and comps second we're growth We pretty saw it growth, of get that's in on the growth I the

of year. and was out And and as then new year half next a the second year, in the the definitely we last we we the also driving onboard of year, merchants ordinary season, anticipate the first very merchants volume season us. which half So holiday the in saw for of now holiday flat

season new that seasonal growth. holiday returning. really uptick we do, where the that's about we're excited So merchants we're and see as onboard seeing the then that normally And we

Ramsey El-Assal

logistics sales at some your are experiencing And delayed is impacting shipping, buy from the and [Indiscernible], a couch about Okay. all? business times of then of some we've that any you reading to been separately, impact on that seeing delayed try or us we when

Derek Medlin

that is Derek. one. Ramsey, I'll this take

some communication expand said, partnering do our get to seen or that to the and available. retailers, widely that have are customer approach we the our We well higher has relationship abandonment. with that rates possibly consumer cancellation retain So and to definitely were able more these That with answer customers later delays and believe transaction when experience leading we things that is been impacting yes.

So things we doing but to fluctuations, we it continue like have and monitor seen looks that. some are

Ramsey El-Assal

Okay. Last ask to me wanted the is concentration. update for on just for Wayfair one I an

was the in as I recall, kind Is know that's I trending. curious that world still of expectation atypical for recall expectation just XXXX. I'm for the think track? a how to bit about that now. is I right quite on -- I obviously it decline

Orlando Zayas

a that's saw what quarter far We first in Yes. as we as and expected. the decline concentration,

we the And along year. them, retailers grow new the we pipeline and it's so to have about new the coming that second of with into really while while continue half the

Derek Medlin

an point I'll that. on additional put

at of of excited down expectations end that through of the from of then the the we've first dropped side, seeing the to in in is the business, more And about. the year, decrease Wayfair quarter. had our because the really just We've So mid-XXs that which areas the the we're concentration. other the on of we're that's mid-XXs end growth

Operator

from line the Markets. question Chukumba come Capital Our Anthony of Loop from will next

may You begin.

Anthony Chukumba

questions. guess two I

of the change think that the you, about your get little don't change know Would the sort calculate of want love color the like way give number, you just direction more I or was like change in I a just actual directionally way said, that? the the year-over-year? or not what on to First maybe if but number, what just that or question, to with guess, if I mean sort you I write-offs year-over-year exact the

Karissa Long

you're When speaking of slightly? to down margin write-offs, comment Yes. why went that gross of profit my is

Anthony Chukumba

write-offs, something I'm then And Like right? like about right? just you, off. they have No, it talking but write leases somebody disappear, from to you

Karissa Long

Yes, yes. absolutely. Yes,

Just wanted to confirm that.

consistent So very Prior past the perspective seeing a for rates XX write-off and credit months and pandemic write-offs. the seen write-offs state COVID perspective, had prior. really loss to we from hitting, mid we're a and steady

We're seeing materially way changes So levels. we're or not those at other. any same the one

Anthony Chukumba

and tax stimulus question the this in how I question, second the this about context the of point. fact I love your that But in, of a spent that in that full And just earlier child you have guidance. federal probably then sort guess you're had year we kicks checks Okay. so are do expanded at credit about July. thinking much pretty --

Karissa Long

stimulus Yes. of some think something in see we'll I increase do monitoring. in did terms When hit, we I that's see paper. also and we definitely be that mean does -- within hit, volume this

or the refund We that's the checks, buy -- or be something trends they early because stimulus consumers checks closely their once we see receive checking proactively that do out trends and on monitoring our go when tax buybacks also lease. will

think I a play. be So there'll of at dynamics lot

during closely out, So go the on throughout we'll summer. see we'll it how that and turns

Operator

the from And from Joseph next Jefferies. question comes Kyle line of the

begin. may You

Kyle Joseph

after normalize to we've transaction me the done, XX-day quick in on of How on. for given buyout of and We Congratulations long this rounds for stimulus kind of getting having there. last thanks kind take March. the at round follow up does X said point? around Yes, seen activity a the stimulus it

Derek Medlin

Kyle, I'll take that.

option more to responses, of communicate days year, that for our answer example, that other quick is tax the can era, with the the early XXX part things a these did can see So see we've right? always seen of looked season. it in that later happened, consumers different so last they much stimulus a to we and in really as just stimulus variety increase we best activity some It typical how like in our early looking didn't see some roughly we season out. events that said, activity. purchase moments, we're the And of is that deal. they understand XX after So That approach get is

you then mentioned within see And call. or on but of consumers it three typically, months a So been -- so. as we behavior little dynamic, bit has the the

Kyle Joseph

And one follow up it. me. then Got for one just

imagine potential pipeline brick-and-mortar? your guys a enough is diversification? space As verticals? your balance just But the retail be Longer on Or vertical your perspective, would existing then talk but you the about color helpful. very stays of there some from for of pipeline would on And also a we think up big business. of in focused leg vertical obviously, partners, a e-comm, white you business with about e-commerce term, have side the

Orlando Zayas

Sure. that. I'll take

is for of little a did I over to originally the maybe marketing shopping consumer We store, doing of think knowledge is the e-commerce, which pipeline, the because last we a in brick-and-mortar to online several not and be see more have it the we years. moved number perspective can in might only We capturing the are visiting this but experience add retailers, than and -- fulfill business not player and floated the a store. that this We from who kind omnichannel it we a towards think want wants bit and we e-commerce value both,

few now relatively a I have is capability, easy. talking think, we're building that. So And to that that retailers

of leaders, a He for our example, sales have does field team. One ran that sales background.

on part scale relatively So I just depends the retailer. think that the is It easy. of

the think the technology So we're we've a consumer. not around ideas experience got it, driving of for some store afraid I at but better

So the side? the consumer is in control. And vertical on then

Derek Medlin

that, Yes, Orlando. I'll take

We Kyle, So items. believe opportunities appliances, we're for furniture, essential lease items takes question. access certainly that's new it's seeing like and spot those tend to That on but to also where the demand essential really space, We opportunities, on close evaluating side, constantly are in purchase electronics. and a core that this growth consumer helps happening that us sweet we're focusing good stay the product. those We're to the our vertical us. auto

are them talk of some to we'll and be And excited interesting, really more.

out really increasing the of interest see at new brought we're look about. electronic areas that you we great in performance like retailers gaming If we're excited and and you'll seeing on, capabilities other

Operator

up have from a We follow Instructions] Vincent from [Operator Stephens. Caintic

begin. may You

Vincent Caintic

you think you're just, when if how cycle a question. typically -- works maybe talking you So talk pipeline, about when the guess, could your I a about sales broader But merchant. to

whatever We with there have the going your -- process or especially the you had for? how are But when tremendous to are online that guess typically try what origination like as points? And add and does done capabilities to retailer, your the looks they with continue, on has looking -- we've e-comm competitors, Katapult focus. retailer well the the so e-comm it's side, other you've engage with engage the what they of parity. are I and and seems to of one reach things growth, work? guys heard the online some the so trying -- -- really and of And some well the friction to are online What from trying like

-- they Just if that competitors? maybe are So wondering about sales for other competitive is of could you're when you the a and pressure, works. sort talk searching engaging how retailer, the process the around when cycle

Derek Medlin

Vincent, into few me question a let break down areas. different that

huge So on the this just market competitive untapped. there, that is is and side, start really I'll which

we're for -- want not consumer, a we the doing be have that work developing we in So solution, to compelling and it for make deliver that. surprised the to solution. and stop see to to is enhance value at been and to the both our one, space. We on to consistently, sides moat we're more content strategic want our going not the interest competitive easiest all We've with really to retailer continue and number

that things really we to have we're So underway continue really are to excited be differentiated. going about that

our is where is a encouraging and that's a value sales existing to the retailer direct part retailer retailer a see I works, very, business able and approach. a we've also think how this waterfall that with And that is for on cycle a delivers be SMB it really that solution, of solution of yes. powerful match a most or think really the which onboard can to it huge we the is One of easy see made and it both, simply our say base to marketing a very we depends, signs. with our lot terms In side, extremely

the in midsize is only greater because size, of our IT side. friction prioritization to large On the

the getting that retailers and have the retailers to them. more that pandemic proprietary What's And up is we're really some or we've signs omnichannel base scale, see prioritization. you getting go and a a viable exciting, due environments nonprime But it solutions. this testimonials to the an POS really is solutions that market lot it. web overall quickly. really, are share, you information of for untapped And custom attractive care consumer about As the are the of is that really very able that increasing is segment interest good and been market is though,

Operator

question Markets. will line from come Loop Our Chukumba of from next Capital Anthony the

begin. may You

Anthony Chukumba

merchant your is I And retailers. service e-commerce way omnichannel sales special guess of that's there's sauce retailers. servicing So of involved you my question sort with brick-and-mortar you support your guess have pipeline, mentioned only really there, you lot retailers. I understood a a number always that the and obviously, of I've

to retailers So necessary retail omnichannel that to your going you're should going if be will those profitability? we going or that expect after be bring to going that's to investments down be service

Derek Medlin

e-commerce their deck, on some that's bit just the mobile strategic and I question. about we on. we're talk And you're we of first. that to point Day that a our number you that advantages of is that and and/or And that about Anthony, deliver already e-commerce penetration retailers would a more focus right, to looking Orlando business. sure can are digital, we value talked we're me trying area and making. in sales to really let good But grow our one markets mentioned is strategic our approach, omnichannel they nice e-commerce have there. And e-commerce first, actively Because Analyst little interest those you the make a where said, new tap investments their like increasingly, that those

are right, places. shop customers However, They different multichannel. in

as But seen wouldn't do definitely same And an with so right? areas, And communicate retailers have oriented store seamless. We're experience, consumers in to checkout hey, can the to as that other digital the yes. is answer us have we to the in-store well? you've means way in using it make asked do you

a that in have investments we will should of doing investments impact we touch smooth it. make the terms experiences, that but digital in-store to experience be and so have will yes, lighter making there tied of be if And that financial

Anthony Chukumba

just then one follow-up Got question. it. And

was I your you're costs. So looking backing see release employee adjusted your through EBITDA. of calculation recruiting and press I out

that. never concerned small, seen numbers are them, Now I'm terribly but about these not just I I've mean so pretty

company. you adjusting would be business, for a just for that why that, of particularly a I think would be cost guess I would that? So growing doing

Karissa Long

take company. were a uplift the of that for costs It's onetime really we I'll these that. Yes, just were public -- isolating to become some

something recruiting positions We're cetera, we use that recruiting but forward, some onetime firms, firms going just interim those roles good isolate firms that's of yes, call really wanted But et we that recruiting because we needed big regular the for. cadence, Officer, just in actually some we a great be out. own. don't hiring recruiting these to a our at back best using Chief won't normally. there. on we're But were because we on Accounting for to get we utilize like out did We the So talent talent adding wanted

Operator

showing call not turn I'm over in like closing to questions And any back queue. any to speakers remarks. further the the the for I'd

Orlando Zayas

coming. appreciate next your Hopefully, appreciate and with time of being able everyone, of your many look investors and this forward days. your today. journey you've the the and support public a for couple things We thanks, time conversations into that answer questions company, our really great Well, given through to to over we're us are the continuing

So again. thanks

Operator

for conference you today's Thank call. concludes participating. This

disconnect. now may You

Katapult (KPLT) 18 Jun 212021 Q1 Earnings call transcript