KPLT - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Katapult Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Bill Wright, Vice President, Investor Relations. Please go ahead.

Bill Wright

morning. good and you Thank Welcome to earnings full XXXX quarter Katapult’s and investor fourth results and update year the conference call. are Officer; Chief With Cupito, today Orlando Executive Chief me Officer; Chief Financial Officer. and Operating Medlin, Derek Zayas, Karissa We this and issued during call. we presentation these morning referencing our and be investor release the earnings corresponding will can on Investor the Both Relations section be found of our website.

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

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

the GAAP be to information measures net considered This I additional financial replay in section on not that Reconciliations be should During is today’s such non-GAAP of website. release, for are will certain adjusted financial will EBITDA available discussion our These turn call of with information is adjusted website. being read and together and over on non-GAAP for section Relations income. measures constitutes provide performance, our under today’s our to measures be Relations call will the Orlando. available earnings of and recorded as SEC results. webcast financial now included our replacements certain measures GAAP a and the These we should Investor which rules. also include Investor

Orlando Zayas

for full Bill. everyone we and for Thanks, morning, us. XXXX. year quarter will thank On call, results our review joining fourth and today’s Good you

going Katapult. strategy. a provide deeper dive of current We In macro many are seeing new we as update as addition, in to realized are we on or what provide environment growth our regarding you investors well an to potential are the

a of we Katapult So, X. would with to on is Slide today begin what brief overview about starting like all

non-prime is inclusion company on a consumers foremost first the these we non-prime access for financial are that to bringing Katapult, living. focused provide and need they attractive for to everyday products We underserved consumers. an essential At solution

purchase of our market. at highly clear about large with lease attributes checkout to some believe Katapult’s directly scalable proprietary lease-to-own us non-prime significant online the to leading key and consumers transparent Our e-commerce We the that virtual us positions focus details on capture of lease-to-own consumers share platform. provide that transactions point-of-sale. a or the facilitates merchants technology both enables solution X Slide

is enable platform sophisticated our to deliver consumers. Our modeling merchants us proprietary technology and along to decision solutions with risk value-added to and our designed

due to experience merchant point-of-sale across We of business wins is application promote a a that financing believe simple sell options to solutions inventory. We of transparent and options, to have and Katapult’s variety repeat incremental innovative designed solutions. process, efficiently customer flexible our customer suite robust integrated lease merchants payment and enable seamless

see highlights, our can from you continues and navigate difficult as these X, our Slide the team merchants to both macro environment to Turning for consumers.

and headwinds, merchant of to spending chain changes the challenges, ongoing in impact past supply on government continues mentioned stimulus the As consumer macro calls including we consumer current and the end environments. have

and delivering for challenges We focused create our capture are volume objectives shareholders. confident to long-term value on remain in new and to these our navigate opportunities ability

fiscal number added revenue back merchants XX grew to bringing in to the total are: new takeaways merchants XXXX, merchants despite XX% XX in year we our Number strong. XXXX mention year-over-year. macro important XXX% fourth three, XXXX, at satisfaction the some ongoing quarter noted, from new Looking remain XXX challenges in our XXXX. one, Number new up two, metrics

December of XXXX February promoter XX score net has XXXX origination. end made of of and was grown XX% to and repeat Our of the our as QX XX, as XX customers XXXX up

that growth accelerating have initiatives key retention strong relationships during demonstrated as investment our four our merchant also with our are long-term strategy. by deepening We Number we support in merchants XXXX.

We to adding leaders well execution critical growth as in key as strategy of our of personnel areas new facilitate are our opportunity. to organization bring

are We market product capture are enable strategic technology designed to that in and initiatives us share. to planning to invest more

more build our we we creating will will we business, to detail I on the of it in stages initial performance. durable solid details a scalable turn will As in the our CFO operating in which I foundation, already more later financial believe over Karissa, now who our are presentation. provide and discuss sizable,

Karissa Cupito

Thank Orlando. you,

$XX.X $X.X normalization as habits, major by pricing as with offers pre-pandemic part due spending levels. throughout margins to down stimulus face on year-over-year. originations QX lease in were Gross which challenges, promotions higher which down our as shifts down was the on lower is and quarter was our purchases. revenue out X released Total consumer dollars holiday supply slightly exhausted, offer that Slide Gross our credit million, played XX, customer to update, season to December detailed continue driven fourth largely after chain Cyber in for million year-over-year well quarter-to-date As slowed profit with flat year-over-year in we XXXX retailers of and X. line the was consumers

of for net fourth for million EBITDA as and company decreased million growth continue public incurred $X.X income by compared to to for Our $X.X XXXX was we quarter quarter adjusted million the fourth cost. ongoing and $XX.X invest

XX addition bad expenses year-over-year. to This employees three, year strategic expense compensation operating debt and financial I Full will on general modestly challenging year due of the revenue is year throughout XX% investments normalization, the forward XXXX Gross bad part full-time going $X.X market reflects XX. and XX, increased penetration largely the initiatives discuss up and expense aimed Total expense XXXX company of to originations employees year, debt XX; credit new due a up to continued increased to face in million for to full marketing factors: Slide at results was overall from addition higher increased were ‘XX. treatment and public of of lower Turning one, and and operating costs growth the related XXXX expenses decreased our million administrative full-time on public growth Slide million, $XXX.X in which plan; are for growth of income spend. two, million other at during the costs backdrop higher presented the as during Slide was $XXX macro adjusted EBITDA $XX.X costs. million, to three the Net increasing company year-over-year. $XX.X X%

of effective and a of Katapult expense Turning XXXX, within for the debt leases, revised X, adopted recognition leasing statement. to is XX, revenue ASC will that the dictates by leases. standard a has company as This treatment the for bad standard XXX the GAAP leasing timing January the Slide accounting required of income modify for accounting

arising the will corresponding will and As a lease revenue on company record cash no lease a basis record revenues result receivables debt expense. of going year rental or this longer bad forward, from adoption this any

as illustrative only, revenue, new XXXX we the debt December which and comparative are method We ending impacts for periods adopt in plan restate and XXXX XX, the accounting the of standard year ASC months permitted using we not the transition Slide income if or not the accounting XXX to XXXX in of in for lesser before prior expense respectively. will X periods modified for provision optional to adopt the and for are conform elimination years disclosing of apply to the non-GAAP purposes On income reporting Therefore, will were XXX to for non-GAAP the ended or XX, XX, adoption. March effect bad retrospective ASC XXXX recast the approach standard. here entities taxes,

held as As the starting corresponding ending eliminated evaluate for of on cash lease debt charges compared basis no bad to see XX, as we reported impairment the to we reflects as numbers. the the ASC which on of be our ASC point quarter related revenue impact detailed results, in rental applying you to the is due adoption the historical order property March was have in that to book of quarter, and bad which expense Since receipts timing reported lease compared longer you we can a will to expense our reduced portfolio slide. non-GAAP next XXX, XXXX to our XXX debt each performance,

QX property to held was related XX, percentage Slide gross in lease at impairment originations X.X% of Looking charges for as XXXX.

to tightening investments. so in and detailed, as previously environment led to our during seamless XXXX credit to and underwriting the XXXX non-prime that in trends and As we the now over have prime charges favorable to a payments XXXX. percentage do early trend to to levels response in occurred COVID-XX have both it initiated credit for higher gross Beginning we performance QX consumers. for our anticipate proactive historically in pre-pandemic of XXXX pressured XXXX. XXXX, these strategic do further data first into Orlando credit and of to significant stimulus performance. quality, up half origination discuss a quarter the of started of XXXX inflation to deterioration in of response we will to an coupled with new heading in increase QX normalize the continued third I a funds and absence impairment We turn In

Orlando Zayas

team details opportunity sales that capture XX us from marketing large the marketing, expanded on capturing onboarding and and Slide we and positioned sales in made employees, XX focused new total all growth to In to the the we strategic investments full-time merchants. ahead. XX XXXX

leading on marketing We work attract learnings new our improve and believe and value. best lifetime to also merchants partnered messaging we insightful customers tactics to co-promotion with on what

product expanded digital launch we faster are product, additional capabilities marketing allow a to enhancements we pace. addition, which to channels. in onboarded and In us customer roles, intended and at innovative strategic In efforts hired our acquisition

we We dynamic go differentiator real-time is for and for deployed powerful rates competitive how tool This be a we and and environment to individualized designed conversion it’s flow believe market. in also testing our to built instrumental conversion maximizing offers.

launching anticipate developed we capabilities, in addition, next lease-to-own XXXX. proof-of-concepts our team which In generation for

level We management also at analytics. the hired roles in science technology, data key and

integrate more volume. to drive continue systems that e-commerce with point-of-sale platforms will future and We

scale approximately made solid step security can to which enable We infrastructure core be investor an as beginning to I overall have investment a billion. investments play in with $XX to we virtual overview accelerate to to so than We investments this market provide the $XX and ensure XX. billion sizable which will created foundation, believe less market would vast. and a market, also opportunity lease-to-own we captured believe we Slide X% in future. our back effectively. All us have update these We growth of on addressable a like is in characterize now we estimated

see peers. can that Slide have on a competitive you we differentiates our As believe advantage from XX, us we

only that the partners. e-commerce serving the solely consumers. not as prime but non-prime are company focused competition, We LTO view We focused is as on lenders

given serves lenders as different regulations prime product benefits. type different and Our requirements, has alone lease the and a of not from the consumer it

to particular market. these the segment us goods strategic differences, a for as look and this e-commerce durable lenders Given partner solution prime of

focus We largely lease-to-own other serve are our are also non-prime e-commerce based consumers differentiated businesses as that brick-and-mortar in on stores. by

significant we believe detail. on to share we turn business in a more are growth result, will our capture discuss As of plans. now we I the strategic as focus Derek addressable well-positioned over it to a our market to

Derek Medlin

value that segment sales have consumers Katapult financing been as underserved to to believe On merchants many to would non-prime opportunity to Orlando. options. differentiated lease this and the provides enabled proprietary to large our a incremental are by highly Slide declined can model, see give merchants you segment XX, the of predictive otherwise We you, is our of that merchants designed risk technology Thank consumers. and traditional access which through Katapult of by

to transactions. focus service is repeat straightforward more high Our to and and lead application simple designed process customer conversion and rates strong

waterfall. is for sales merchant tech capture. quick these for and solution and a position to their direct, merchant-focused, entirely increase of seamless proprietary them of intended our Each including platform, using provide Our experience a is to and partners efficient integration designed our options variety of options, platform,

provides Let detail examples and the few platform few and stories XX slides. over success me a our touch integration options. Slides upon next on direct

is for required. of provides the platform integration since development or merchant for the to experience allows payment create solution no Our Katapult a in a a form streamlined plug-in a merchant. extension This

We are with as platforms in complete to a it Shopify. can is integrated minutes we quick as cart. and shopping integration are be on e-commerce platform integrated, like a If XX be merchant this option and Magento a payment where

integrations APIs. to custom utilize proprietary direct offer they provides This shopping also via a Katapult with We platform. flexibility merchants if the integrate

waterfall We best will partnered select prime the option are A lenders to the prime flow from the giving is with the application integration. credit their automatically, where situation. also offer consumers waterfall declined for consumer lender to others

has that and important application, partner searching where electronically financing give a declines their retailer. was declines to waterfall as the situation credit creating can a consumer their first solution on when once. to consumers the opportunity retailers. We it’s submit approve prime and the the Our that the Slide for them data this clear may realized offer and offer a customer we compelling best customer. lose to another have the application They flexibility, integrate that for E-commerce XX. their where value to to consumer to believe you we us to important chose the retailers is having proposition only to payment waterfall understand for they see us If transmitted with lender is

and get transparent if is for they purchase to fully give for The process that’s the consumer options. Our application inclusion, we consumer to financial designed without hidden options durable that the most increase to need with to with are worrying fees consumers purchases the daily a the we credit goods importantly, order and without access remove since But perhaps We in their and make barriers flexible charges to is for or to lives. platform transparent communicating need affordability their offer payment about goal. way We to them the online. no directly offer late fees. score consumer the ownership underserved offer option

we effective item remaining fee. After versus the X% the option to lease cost payments XX XX help buyout will is most ownership. Our days to or the days, cost a charging facilitate in less contractual full discount

their along financial as us time works is how we underserved be to Being for to consumers. their about and arise. and these is needs the the goal core increase work again non-prime way lease Our consumer important as inclusion time upfront communicating to

customers and Slide Our experience. a process. of seamless We the XX our of Katapult customer-centered provide approach. use appreciate demonstrates our the application with intuitive also ease platform checkout and consumers and

the Our our XX or they completed FICO have payment application fields fast, references, simple only can check. payment hard out Customers by shipped credit pay transparent given no application provided fill with three-step item and after and any is is the lease lease requirements their to made. terms before collected. discreet, process, Once card initial is personal immediately is information consumers are no and importantly, bureau money

Finally, management on their we lease customers offer access to convenience. our demand a portal for

to inclusion financial our make through our their changes with chat, As account, text about their for empower more of options, all, understand financing mission communicate to e-mail. us and customers part of we and

our it wish using will support to consumers’ enjoying now to questions for the call, growth. back to teams tools items. strategy rapidly them discuss to their are those our digital back get I to solve For and who Orlando turn

Orlando Zayas

Thanks, Derek.

to future XX, of I’d Slide with vision Katapult. to Turning our like the for you share

that us our the of ahead We we available cash of and investments for are growth well-positioned as XXXX. in strategic a result opportunities made

up environment the success set the macro in same in the will initiatives the many we are our deliberately we is for over believe to years XXXX, While and that growth today, pursue remain of for challenging have continuing who backdrop success consumers to elements us in category increase to sales. looking of will conditions and experience need capture merchants product the number industry, our the expand we number to on macro Based the our current potential incremental anticipate this come.

outlined make a will the and market anticipate to to investments share result, position slide on of investments us take belief the be position are trends. our As our that is grow long-term who to capture best this We companies that going advantage these company. today in best secular

LTO $XX that billion billion ahead that of We is have the of us $XX the this virtual surface we have to market recognized significant. scratched only opportunity

to can slide. core initiatives in medium place, year, on laid are have and hiring have build past talent solid we the term that on leadership strategic for In invested now the the near can For this growth. foundation execution. we ahead look a that out we at expansion we category, With focused drive that

the upgrading on output, building across In processes and are and capabilities while addition, sales time laser our data tech at we product, focused and same functions. marketing

pave following: way we larger maximizing our and two, these win them; for investment accelerating number three, ourselves the category, gets the is merchant dollars goal that lease are enterprise category. Our our one, customer this and is focusing volume; our In right and for ensuring up offer originated optimized the to flywheel investments the conversion number rates accounts. for on setting to

we to on initiatives These million access convert intended plan Turning and growth. on Slide to this merchants to $XX in million to driving for focus XXXX. are opportunities investing in XX, initiatives purpose more more consumers $XX growth

focus successful that we this and for At adjust that plan for And is high given our to necessary. While hiring and and spend our inputs the am level, environment monitor we note us. been roles spend the a that we continue area. this I to like macro has investment current see is will to strategic have today, I pleased deem a in I this team the leadership discretionary would been huge announce

benefit help as Klarna, to slide. it detailed sales on Chief Marketing We moving Morgan merchants. Strategy, new Resources Partnerships, XXXX, are Officer, laser companies of Adyen, will Stanley. experience believe with Sales the accelerate plan process plan our on flywheel. eligible new and that to which optimized such partnering sales Marino merchants target BXB of Klarna. UBS, Marketing execute access focused sales VP He our goods opportunities, in he we us thousands on Chief experience instrumental initiatives, an Verizon, processes, VP far offering new from Colleen Gorsky So Officer, and structured to the to and VP company our When have expand the to her in all data-driven marketing utilize a of leaders could are where comes of Marino to with we initiatives Chief we with our is decisions from implemented a forward at VP by to around there leveraging merchant ShopKeep, Human of durable onboarded at developed be These adding Ruiz. Officer, comes extensive this platform Sales,

dedicated represent also are we relationships a believe of by we merchants. customer to increase total merchants’ collaborating a that originations and deepening new where can items our merchants, for living. penetration volume sales everyday see total existing the our Currently, overall merchants of for engaged with grow increased of target solutions to percentage acquire opportunity lease to sales sales volume need through base to We is the our with our modest penetration. We looking rate they

positioning investments and around brand expanding Our focus initiatives. marketing awareness

addition, and new to and customer plan building conversion are reach we targeted propensity shopping. is enhanced product, rates repeat In increase business and designed promotions capabilities to through that data expand functionality we customer models. our In product customer through cross new

and We both focusing new merchants. partnership solutions expanding are on consumers to our to also provide network

and to well lenders new technology experiences expand omni-channel Our continue additional e-commerce digital further platforms out footprint. as and our building on integrate to is as with focus

our taxes QX January XXXX difficult March consumers one Moving in this XX, and carried by most to year headwinds as into drove One quarter. QX spending and in many our XXXX comp QX were first year, that stimulus during have last origination macro XXXX volume. turn the two as Slide represents from bolstered recent gross consequently to we XXXX. the of

ago. partners year Our sales are key experiencing volumes merchant lower than a

in these lease In down The to is addition, management, February. portfolio tighten factors resulting our leading to we trending continued underwriting through we originations as have XX% year-over-year approximately fewer combination prudent remain in approvals. of risk

able is challenging macro to But QX. the second that have the largest the return expect to during We will we our in merchant to and expectation partners of that growth environment half comps will year. our be persist tough

pre-pandemic We also vintages work anticipate impairment levels charges through to the returning lower as performing lifecycle. lease

will expanded working delinquencies over underwriting solutions. prime as as becomes anticipate non-prime and been lenders This focused the has underwriting. our that have withstand headwinds. applications well a team we observed to to of drive the management and We of credit quality for their near-term weaker, increase believe, the low have looking their tighten consumer the macro to we with tools customers available record payment environment volume to cash it that the as due Our will for what credit leads decade previously us

is Our calibrated credit a for proprietary dynamic environment. model risk

later year underwrite out to focus conservatively is have to this quality bear to the to higher historical start trends extent to order more capacity and Our now that customers in come to the add leases us.

to non-prime ahead, look business now Slide e-commerce the we leader are opportunity seize growth the next we As our over our lays plan years. in remain the the to out in X XX finance planning to invest segment.

out transaction ecosystem Product built and to knowledge and control non-prime access and ability have and to are customers’ to deepen their the improve The that and choice. quicker relationships high in a designed plans merchants the with this unable the by financing. more empower We level rates informed to purchasing previously improvements aid to goods a technology high hands that intended base, are grow had enhancements been qualify expand quality keeping for conversion and consumers enabled existing of to solid retailers works. consumers the believe continue decisions. in the build merchants would purchase consumers our product pipeline. our robust our e-commerce to partners are are platform merchant We that with Near-term, quality for

Looking their connect solutions to lower merchant desire value. non-prime consumers credit be as scores expand our and We and platform costs that financing to additional drive financial options. are lifetime able customers products are and improve developing with to ways we position other eventually to to out believe merchants our integrations intended further, us our

product and We plan data diversify by to platform models. our look our monetizing risk to proprietary revenue also

a and transaction revenue addressable we efforts goal our our Our create are to of the we margin In as high provide year, based proud of share both look to conclusion, of market. the levels ahead customer ability to of these to satisfaction. the of expand is high out well merchant of rest strong, grow take laid and solutions positioned our we commerce today. strategically the believe advantage long-term strategy will and in now We investment is trends that, and With payment company digital customer I our that have for alternative take questions. and

Operator

[Operator Instructions] Our with first Siegler Josh Fitzgerald. Cantor question comes from

is line Your open.

Josh Siegler

Yes. materially was question. Hi. if build out. morning. providing Good taking little expect could to XXXX? growth on Typically, you Thanks initiatives the color my revenue in do for I by wondering your more contribute a your start

Orlando Zayas

Orlando. Yes, Hi for Josh. is the this Thanks asking question.

very hiring We in aggressive team. have the been

to I got from XX. in of on-boarded. – the getting is There we think have wrong. process a XX They gone sorry, fourth the number are

kind the Marino VP Ruiz he came also that from generation. analytics doing new a of are of job ShopKeep. And the on a is Sales, we labor. And starting lead of data who see to great We fruits hired sales, around

as that and also and to also financing. get in a through are leads possible. the Chief as them she really appropriate has how for We Officer, and a see interesting our around – business, things merchant from is experience we then quick drive doing some who hired And sales Marketing funnel the sales BNPL

things come we have, the we had. the that that to starting together new new plus adds I these headcount think with all are

up. So, starting generation a we second on But see count I of so year. track, are is to merchant the successful definitely have tick half believe lead the the

Josh Siegler

new you helpful. a merchants you contribution XXX on-boarding than mentioned, typically you. And XXXX? year, can significant into new or a Thank Excellent. material generate ramp a do heading that this immediately, is your as then, tailwind there That’s more very are customers period provide

Derek Medlin

Hi, different take times that variety on a I with question. see ramp We retailers. and depending experience is the size financing by Josh, Derek, different the this will of

is it answer the depends. that So,

months through and more option the typically, that and anywhere to is tool closely cycle to more becomes six full merchants get new resources will their working see new see those has we the kits our we with been gets merchandising consumer And between onboard – this team aware much the However, established, ramp three brought come again new the months retailers available. to as that base quickly.

do as year then as pull more we So, those just from retailers and through grow. see to we continues add to some XXX expect continue to this

Orlando Zayas

And can integration. Josh, add direct when channel, third. through be waterfall I the a usually then depends usually If that a where Orlando. onboard of first this us. two that’s or they possibly the stores, we come either And merchant, would the is on or one it’s to a they it And if have

the shopping the maybe carts if to storefronts, any have then were is quick we finance first, done So, waterfall get an into cart way option, we integration as want shopping the finally, it storefront. their on page. at they capacity to Usually, as look we integration their And possible. the the the direct integration have do comes then the

integrate those increasing see So, volume the three we that’s over different you channels. where time as

Josh Siegler

very Thank you Great. much.

Orlando Zayas

Thanks.

Operator

you. Thank

Anthony comes Capital next Chukumba Our Loop with Markets. question from

open. is line Your

Anthony Chukumba

much how you do quarter-to-date so I of my Thank tough we identified tightening to for of my to question is you you originations, guess that? decisions lease your How as be Good credit? much in due on macro this the trends parse bit terms have question. made think that those a about you is think to opposed some morning. of taking out. might that But should

Karissa Cupito

Hi, great question. Karissa, Anthony, this is

terms impact the their it’s in coming at look largest it, affecting retailers that that’s are funnel application our the of at seeing we teen. sales, when are we So, top macro in so, our

our the of of that a and the So, conservative that terms impact really being that parse now. would approval then right you tightening condition remainder macro with in credit. of in could macro it proactively us because that’s be out rates are merchants our challenged XX% And

Orlando Zayas

year-over-year. just important Another and to we of year comps so of you that right are after stimulus Anthony, a reminded be year-over-year first thing, for is different little the that the the coming bit occurred off are

kind a the seeing thing turnaround of are we of However, equalizing that tax.

Anthony Chukumba

terms And looks originations And give it. in mean doing I any like, lease of the – I in wonder That’s Wayfair. update your or down partner, to helpful. Got close there, your anything just are going that largest you first revenue would if of that you the retail be outperformed XX% sort fourth don’t then how to in are quarter think but relative U.S. to to quarter. their growth, sales they their it

going So, us of you if are terms can give am in update I there. things wondering how just Thank an you.

Orlando Zayas

us that the Thanks Anthony. know business with We appreciate we other and partnership there. We we to And out day, called on specifically. really great they got have they their have that over don’t a comment them. the call

our help so teams to to a to for continue deliver great and our ways lean find grow ours customers. and mutual their together experience continue business And and optimal in

be that to shift positioned so to share good. we have an optimistic are And grow them. continues And secular they continue the continue think we e-commerce to gain alongside with and are we on and to

Anthony Chukumba

Thanks. enough. Fair

Orlando Zayas

Anthony. Thanks,

Operator

have El-Assal Thank Barclays. with a you. from And we Ramsey question

Your is open. line

Unidentified Analyst

of what way, a like? you like can look give is that any sort the so difficult very I ask to didn’t helpful? ‘XX – be full And forecast like think the I’ll on normal there so comps. you of that of of the the there Ben percentage, terms why in well color for anyway. is Because challenging wanted seasonality sense ask kind I’ll to perhaps distribution guide a macro is impacts taking look question. originations, ‘XX quarter-to-date this of results. the you And But for much of – as XQ Thanks for a Ramsey. XQ as Hi, like the I lot any might way maybe follow-up understanding understand on would are this us year

Karissa Cupito

again. Yes, Karissa is thanks, Ramsey. This

last toughest year QX For our because was January the payments, obviously with there one abnormal was comp, seasonality stimulus one in in March. and two

So obviously, very remain hoping, macro but are conditions we the dynamic.

holiday the the the near-term is has normal challenging. historically the of hard are our back to which It’s more ultimately So, really to world end a season hoping origination normalized highest strong. But QX go we is by we been – volume quarter would it’s and year, provide guidance. when calendar

point would So, that returning, we remains anticipate at obviously, in the very environment. dynamic but this macro everything

not are near-term we why that’s any providing So guidance.

Unidentified Analyst

got just then there in the the hires, of color around some SMBs, new or and either around the new share the characteristics QX merchants? that? you the And any of can follow-up on the it understandable. some pipeline like anything Very is you’ve sort Sure. perhaps enterprise, one initiatives with Is new merchants

Orlando Zayas

Thanks is Ramsey. Yes, the question. for Orlando. This

BNPL. past just So year what mid-last the the have last that we we had to seeing are compared excitement year say retailers BNPL shine let’s gone this that around year or the is

lot are we the and think acquisitions mergers of happening side. BNPL on seeing I a

retailers I think by have penetrated many the they now. of

And are next so we have has building shift nicely. the And I pipeline retailer okay, a step. BNPL, our starting what’s now, in to done the pretty see saying, been

them leads executing deals as of a into matter possible. it’s Now, those integrated and just quick getting as

last I – me with year, sales are then, we like, later. a I talk team, it to would out retailers. answering the where of coverage the phone these are there guess is to So now, getting more was lot last compared and the describe there to But they way added year one out reaching addition the

as produce. it will getting execute So, me year that integrated the these gives retailers we to plans and and great starting possible to able in the quick hope as be

Unidentified Analyst

great. taking for Okay, my Thanks questions.

Operator

Thank you.

question Goetsch a have Hal Loop We Capital. with from

Your line is open.

Hal Goetsch

onboard better market – job then so more and retailers it than materially and Hi, to many more being in early come XXXX there. in XXXX. was With

than so stores you. more And outlook there more improving growing because with job is or not more people borrowers still being improving think of said as your are application funnel you coming like, qualifiable that what or your many and before? is your into would with people market? of probably for kind growth are applications Thank You more qualifiable and

Karissa Cupito

onboard a we we which of and to terms that would to that Yes, there on especially as that increase application pipeline little. I think prime to face that or One, answers with delinquencies, ultimately, sales like the secular flow. the trends if and yes, tighten obviously applications near-term is business then our with markets a to we are us. February But in for the would funnel short-term, merchants And merchants, credit there. funnel few of and incremental some that our application more we facing challenges of continue, going widen more the will countercyclicality the and you macro long-term especially has anticipate shrunk numbers respond viability give through this year-to-date mentioned, creates merchants just obviously, have

So, as come the also a merchant be decline then of /tightens I could more there of us a function increase form us but a and from on applications. will think us, then in will applications coming from which prime to it’s the tailwind above side continue to execute onboarding, prime to our

Hal Goetsch

Thank you.

Operator

today’s are questions Thank concludes you. in conference for This no And queue. Thank participating. call. you the other there

day. may a Everyone, You great now have disconnect.

Katapult (KPLT) 15 Mar 222021 Q4 Earnings call transcript