KPLT - Earnings call transcript Q1 2024

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Operator

Hello, everyone. Thank you for waiting, and welcome to Katapult Holdings, Inc.

First Quarter 2024 Earnings Call. Please note that this call is being recorded. [Operator Instructions]I'd now like to hand over the call first to Jennifer Kull. ahead. go Please

Jennifer Kull

First Katapult's Conference Call. Welcome Quarter to XXXX

have are the the Financial Executive Chief Investor with Relations reference, Officer; on the today's today call me Orlando we your Officer; Officer.For website, Derek section Chief Zayas, materials the Medlin, from call On and Operating posted Katapult our Nancy of Walsh, Chief today statements related in to which can keep deck ir.katapultholdings.com.Please as forward-looking at slide our in mind results, financial our include your guidance, business to be found that and operating our website remarks reference. posted our noted for

Our may actual results differ materially.

any XX, SEC XXXX in on results financial XX, to directly is are non-GAAP XXXX, restatement, April and the our we involve ended for call, are that comparisons make and XX-K and beliefs of which them.Also our we measures our supplemental SEC. A to GAAP today, of Any our the and file on superior on Form statements included to the in financial present available is XXXX. disclaim included of that our which financial be are and restated for release to considered measures Non-GAAP comparable most measures we'll Form during non-GAAP both section GAAP or assumptions reconciliation and recent updated our earnings financial filed recent the and update with with XX-Q the today's today's on any financials Forward-looking and uncertainties, to company's the measures. website.Given statements most will obligation referring call release forward-looking risks we reports results. the to year described periodic should some be in not with replacements based December earnings this Relations Investor financial GAAP future

to call Finally, otherwise.With are I all over will turn unless year-over-year Orlando. that, comparisons the stated

Orlando Zayas

and us Thank this joining you, thank Jennifer, morning. you everyone to

included which quarter were revenue you gross to our that about talk performance, are our both to excited slightly originations We expectations. first above and

comps, like of an throughout in improve financial look and quarter, the we a trough most performance our bit offering we happy retail exactly a to throughout expected reach. turn achieved our improving. very saw will we are originations on over which quarter how and was the give the in of the the quarter, first sector, macro to the that's our during pullback the you we've QX, focus demand.Today, my business financial and and statements, our Nancy, I'll how update and despite We in at We quarter.Heading a momentum consumer year-over-year extending played build some and I retail outlook improvement headwinds we've QX then purchase with gross trends facing merchant When intra-quarter performance, who the to our the on for made commentary continued consumer that historic Katapult, sequential XXXX, saw our enhancing slowdown see signal progress an call on from into second changes January highlights by out. traffic to will had were activity. industry consumer trends

years revenue quarter has another our ignited XX% nearly represented if and This consecutive originations gross engine as quarter well, of our last our we leading X growth, this for strong revenue quarter sixth look together, X.X% delivered of we've double-digit growth outlook quarter, at performance the delivered of to first growth.For the flat performance. growth, originations gross originations. in year-over-year slightly ahead we gross And

performance segue drive demonstrates with leveraging during both by Katapult is that the integrations a own driven were by our by with as well merchants, originations into we partnering consumer first and good marketplace.This believe our demand gross quarter. direct growth our can stimulate We Pay. direct integration continued of strong merchants as this Our performance

So let few highlights. you give me a

for continued merchant growing the gross we the to we new future with growing merchants; market originations is integrating sustainable deepen customers relationships drive on demand.During by goods integrations. pipeline on durable our the building our areas: share to with built experience variety Katapult two, first of new looking one, merchant that that and accelerate key are three, and our quarter, enhancing direct platform offer can ensuring the focus Our for our strategy anchor X on merchants; and

seamless Shopify, First, a we our lease upgrade the Shopify that upgraded This the now with for platform journey our for checkout one-page path retailers process working create align enables which allows the to of integrate latest closely to Katapult offers. was Katapult friction-free transaction to integration version Shopify after customers. completed a

which easier top new new merchants about integration relationship retailer official In be accelerate our than more integration.Second, so Salesforce. accelerate and will expect entered direct that checkout much into accretive one with have The we first our help attractive own, to our Cloud. enterprise for the work integration of of and upgrade already and feature flow origination. XXX for is be recently an with with believe their partner seen small platform agreement expect an Shopify this line enhancement, path will Salesforce merchants has on solution their an that we we become be process we've Through this Salesforce as lease XXX their time. integrated We be direct over by integration, Commerce used to this speed able with to the medium-sized believe our this upgrade to to merchants, fact, we target we

that as to to are typically In clients, the which Salesforce to AppExchange addition, current introductions us larger referrals, merchants. joint gives access well as through we've this partnership, added been Salesforce

go-to-market partnerships.And Salesforce also strategy work relationship we continue to our broad of with with have our advance We enhance excited as to are continued with we to platform Synchrony. a range finally,

a we the waterfall launch end we dApply the of announced with LTO Synchrony to to Since background, allow digital into completed Katapult By approved number integration to be innovative solution agreement way financial offer lease-to-own our who Synchrony tasks, integrate for primary will secondary waterfall. a second ago, leverage by presented have be to and quarters not to of waterfall we As we their their partners retailers financial able LTO customers. our entered provides or few will an solution in are quarter. our Synchrony of integration into process, application a then, dApply their intend to and offer complete, to for a their our functionality Once product. applicants enabling retailer services option

is have at of targets. expect part and us to the integrations robust remain for launch one with easily that more partnerships to unlock We part of a important integration to pipeline open believe updating more the growth our strategy, agreements and merchant and this will we new Salesforce just forward We new scale.Direct strategy. We look Synchrony progress.Onboarding an on even our door growth merchants growth merchant our of opportunities. you

output on relationships with and partnerships. our deepening focused also merchant are our We from existing

our electronics began partners While believe led merchants partner XX% the non-Wayfair conversion performance support rate the quarter, help merchant mentioned year, that Wayfair, continued number by of in demand. in our explore such To as with and I continuing strong and other a our we to by enhancements further deliver working first sharing underwriting the consumer gross the and Shopify of with opportunities performance.Turning opportunities our with precision jewelry these were just higher X%, to of about to XX% late business quarter. even we are enhancements them we of continue growth Wayfair the Wayfair, and our Wayfair, our remains we last relationships drive largest strong In update at and platform categories, merchant a preapproval creative respectively.We XX% originations with the to with by merchant strengthen support grew partner, have hundreds our further we gross about driven to first are originations our partnership continued will closely initiatives including drive to and to work partnership, model. improve of data

on Given for parts we consumer the focused by the furnishings, that the enhancing influence. environment we controllable the can of operating journey controlling tough have home

drive and both take same-day We have a some rates overall of higher, tests very results. variety we're and been running seeing good to

For our year-over-year, up basis example, we to offering year-over-year market opportunity decrease. that We LTO believe XXX addressable build our think same-day and XX share.I in take approval as the to to continue superior the points points and our market important are we continued up can we a basis billion be total estimate it's to U.S. in rates $XX range to write-offs that even have here rates remember billion $XX are

we both fair tap existing and base proud and resonate relationships market build terms, for offer continued have opportunity.We they to Katapult the product best-in-class share we to great lot merchant across to with that a consumers that greenfield of line, LTOs, are as help new large customers offer. non-prime TAM products this with unaddressed LTO We and opportunity into we of and Bottom existing the believe continues alike. a creating fit very we believe U.S. of the new have loyal, have product footprint underserved, market we we is amass consumer a wants and partners transparent Given

to Katapult risk-based to drive marketing we're but you model. is we are customer result, Pay, made business.During strategy fueled historically like areas, our partner-driven complementary demand a seeing new progress in I'd which pricing there X our As our has our in executing demand, that with today: many to success QX, and merchant that discuss

Let's to value start and deliver which continues with our to customers Katapult Pay, Katapult. merchants,

come and saw customers, our become the many Katapult amazing about consumers our tool our more. X/X which million accounted more In total and important resource point become During using of of originations access an we go-to engagement through for of are our created a have $XX gross customers originations. for general, that has Pay, love. that we we Pay has nearly believe app quarter, Katapult an

we our gross Lowe's We during app.We're quarter, Katapult were those week. came excited to that Pay total including fact, customers initiated and retailer. Katapult our to origination regularly, in through of a was our Pay, just In dollars, nearly added first also Lowe's survey highly last announce the that XX% requested

to we to the and earned and well-known forward a ability record NPS look of Pay changer track NPS providing even retailer.We in to of allowing and believe with cornerstone scores our are our has customer choice us. an Katapult We with deepen us to our Katapult score first it Case and was is game engage rate more that XX, customers that this XX%. the them sustain quarter, repeat is repeat quickly consumers seeing our point, high for purchase Pay rates. relationship during purchase become of our

leveraging new newer are monetize unlock is our to control it avenues avenue our destiny and growth for growth.One marketing. customer We base,

to investing built of we but As we We ROI a given continue needs spend, a we focused a remain efforts can style aligned marketing serve LTO and good And our strength which running believe digital position our This marketing encourage customer and this and are that Currently, of app, improvements, we dialogue offering, the initiatives complementing investment marketing. are and on on necessary our and the customer in on with in continue includes a more on a referral conversion in both product to we're We number seeing responsive strategy. behavior to be are believe customer but our us direct-to-consumer the monetize our to our store still our believe social, digital building base opportunities we grow we're acquisition in is our our marketing. rate way product a We tests It's prudent meets to been non-prime brand creates of with with This powerful area. are trigger-based app consumers. early marketing. consumer. scaling allows marketing we to days, with encouraging.We more connected that more focus market-leading to that marketing merchants mission display partner consumers. the feature have we've seeing capitalize on of marketing networks.

that these the credit value are us revenue improve example, increasing pursuing building partnerships lifetime and layoff on stream our plans, offer market-leading can allow of others delivering Katapult.All and financial a efforts our For that focus on like experience. are high-margin health while to our rooted other protection we will create their customers, products for customers

a LTV. risk-based another focus, product in agreement XX initiate have Our briefly that our pricing strong XXXX show in to yet model fact, to our higher to I our with about which the customers customer enter goal coupled gone launching. lease, which XX% to discuss want approach that will will round for currently support marketing, customers market likely to new days, mid-teens and contributes year believe data to full performance.To be our Katapult fit, Pay XXXX, we our within grow more out similar to strong their dynamic are lease prudent We are typically on second

key internal and model best underwriting with type, new consumer merchant product innovative dynamics Our the credit can category determine our cart size, scores, such proprietary consider to pricing. history as the our

We with profile credit a us offer model through without to better to and lower allow expect initial scale term the customers increasing more lower to new payment or ability established lease risk. our the our or pricing

we terrific options that we even offer conversion we offer level, we do that qualified the experience to a And continue able drive in average.By the we'll right higher. accept provide right enhance this customer at better pricing to offer our more right believe to believe be already customer result, time, them to seconds frequently. our lease rates is offering As special us individual simultaneously could an the allowing more on quickly can at more encourage X less can customer customers and or what's the to

are the quarter it forward We the made Nancy, me first few we progress over the initiatives. a new to to this on about let tech model, for excited and it potential we've touch I platform.Before on turn across look our quickly in out rolling

are as by enhance an instead journey can that hard our a begin we retail discussed shopping teams like to level. they'd we the QX having the First, customers during durable for journey We search. their work lease product-based of creating our to on at call, believe directly search to good allows at experience

us insights marketing other into and the precise searching with for purchasing, and the the across provide this opportunities more of what unlocking capability are should addition, consumers business In ultimately intelligence, company. areas

keep merchant to feature and called new a we on capabilities our to posted we'll in upend will In LTO control and Katapult transactions and year, This works.In final app a salesperson We be in-store the through an results lowering brick-and-mortar. how have new way solution, protecting of product feature goal in-store tech believe a handled risk partners. Text it fraud have quarter to devices, new We our complete Checkout the stages progress.Second, new new by in launch and we omnichannel easy in-person our set will make mobile summary, we through center-driven this this can solid call the this checkout their product eliminating launch the are Text strong for short, Checkout. you can explaining providing our turned on further for bolster customers journey privacy capability, or solution our own we burden to their us to transactions in the believe lease With this that first they for by of a transactions. their able LTO product are up XXXX. customer

Nancy? I'll for our our believe across positioned and we year.With progress results. the steady over making are throughout well core quarter We to that, create we to value initiatives, are discuss Nancy first turn stakeholders our to it

Nancy Walsh

hello morning. everyone and joining Orlando, to Thanks, this us

to jump a came you key ahead about talking XX-K. recently expectations, want highlights.Before of I into few some results slightly excited with financial and I'm to our I moments provide filed spend in QX, Our our

tax disclosed certain in we We sales lease years. and assessment overstated delayed sales early some that jurisdictions going included accrued we customer As to April, had back across our filing understated multiple we payments payable determined in historical tax XXXX miscalculated tax payable of that revenue a identified filing. our performed had tax during and related sales rental to our broad liabilities. we concluded all XX-K the We the liabilities preparation of misstatements of address

of which did errors we recent our our financial on We results this we as XX-K. XXXX, process.Based this, corrected in immaterial for restated also part other

the as XXXX XXXX filing quarters first X restates Our and well as XXXX, full year of results.

of have of revenue, impact and For and had that our XXXX, net profit in reference, made more we what with was compared our our $XXX.X follows. revenue for emphatically January slide year walk we EBITDA of impact for included the X of outlines high-level EBITDA.Let we on adjustment XXXX out-of-period breakdown and presentation we to March full easy balance QX we updates including restatement This adjusted XX-K are is results errors XXXX EBITDA reflects retained a million our March XX prior, on loss XX, state quarterly first X, through disclosure business And errors, the want of XXXX gross updated as that XX. of to of me adjustment Full XXXX XXXX an of a revenue a equal about specific I Please the made your XXXX. XXXX earnings impacted disclosed. adjusted to But the million. to a perspective, also details. made revenue including XXXX we refer adjusted There disappointed for terrific from the we XXXX million, that adjustments, the which of that our quarters as beginning investor in these and our our unaudited Note the reversal the and our $X.X was XX-K.While disclosed restatements cost of to had results, on these revenue $XXX.X are impact for for XXXX. previously quickly

We and well we the a positioned grow lot believe continue market to of to our have LTO we share are momentum, in space. operational

touched already With a our now and performance. the in faster quarter our grew procedures originations and We understanding our have originations financial originations are your that, first as the nearly through this our quarters. X first purchase our move for competitors. XXXX in Gross to $XX.X first quarter I'll the on gross from reoccurring, has been rest to for designed X.X% a appreciate we of increased strong stack have consecutive we put to process. like with basis, gross pace prevent place than XX%, high better top million flat Orlando repeat results our quarter. line, One safeguards slightly grown new rigorous on support that our and And mistakes has this highlights.Starting upon, driver direct of X-year came than performance expectations rates. in And

of to for are partners as feature. QX continue and increase to leverage us is continue app to Between potential the merchant through engaging Pay integrations, We well. of the of we number with XX% app the end see We Consumers come customers delivering compared as direct it as repeat able our about app, a large Katapult our and to about by remain XXXX. with driver. active the excited a the to were customers our QX growth back XXXX

sustained Our for engine revenue growth become gross growth. originations has an

than higher $XX.X with we of million, and QX, year. reflecting and During of and a models, performance points strong percent tailwind. was an of an a XX%, lower $XX.X of XX%. XX.X% gross nearly million, gross both margin achieved nearly profit trends last of collection was tax originations what QX efforts.Gross inventory We efforts, revenue approximately continued a revenue, to our XXX increase the increased for see strong compared lease as collection basis of costs typically QX This bit season driven strength in underwriting by our increase

the to we be a full improve within the remained seasonality.Write-offs as X% in target to to XXXX, our which range, reflects revenue the XX% to of expect impact continued percent year of XX%. range XX% and For margin of gross

points XX X.X%, was achieved versus we improvement QX in metric basis of X.X% this quarter, first the During the an XXXX.

to out adjusted on to disciplined deliver risk-based top new of quarter coupled another mentioned, pricing which have on over our impact we rolling our us profitability, a allowed we line to with of in positive model, write-offs time.Moving approach growth. the management, process expense substantial growth, EBITDA are our believe our Orlando will As

lower decreased cash our expenses driven by quarter, by first XX.X%, the total operating operating expenses. During fixed primarily

implemented which expenses, was stock-based we and of This servicing Excluding variable, decrease year. primarily benefits underwriting driven the expenses cash are our and and measures in a noncash compared fixed XX.X% expense, which decrease operating $X.X cost-saving the compensation by to fees early million, depreciation costs, last XXXX. of are were

cost-saving investments we performance our full now and go were realizing forward.Based in operating quarter. the for structural efficiencies, of top fully we growth adjusted intend initiatives from and year-over-year are make performance measures, consecutive we the benefits anniversaried to these a from our modest EBITDA fifth as able improve our on strategic to reminder, benefits we As line have year we a

in the XXXX, cash reported the the and of EBITDA, with adjusted For million of quarter in recorded cash had in and of end restricted last XX, lease compared third-party Katapult verification loss correction we cash the issue quarter. an the which lowered $X.X $X.X the QX. million, first the $XX.X total in our leases of first overfunding corrected quarter, this as of during issue million we debt of of we million includes increase adjusted reflects issue which quarter, increased we of year.As $X.X EBITDA $XXX,XXX and equivalents fourth The led during $X.X XXXX. of our We the discussed early cash to levels million first March usage

been weekly been to credit of be outstanding cash Once released. to these minimum with the generally how required of processed, end Restricted on payments have which As we restricted customer debt few should under maintain cash agreement. so our received the are facility.We related on like settled. payments to the This a million of points have basis, occurs not we first $XX that I'd clarity. balance balance impacts it cash our a our cash and is about confused had few cash is sheet, generally lease the yet provide credit questions quarter, not the also a in

we few our originations have also received addition, sheet. questions onto balance flow and P&L how a on In gross

our I balance revenue provide second the and the we've write-offs I some our from a getting quarter, investor illustrates For address outlook potential gross revenue.Before your of as about questions percent originations in sheet, and of you financial been want with business models. a investors have that to reference, we of our included slide our how the deck impact for

to long-term model, the we business about a financial the in how external-facing we've an results. While our made today progress is progress are to establish that position we translating and excited in are not

expense.Turning and anytime we profitability to Fed intends pricing gross results expense top same believe we to time, it's Given important cash QX seasonality.In of continue don't lower charge generally disciplined our to the outlook, strategy. our We toward any evolving adjusted we next I it's on basis. environment, think our navigate that our a in customers macro are XX% to to the trends. addition, path gross At continue margin execute believe range rates core interest excellent the the consumer order that remember positive impact build an to an the enhance fees if service.In led the we operating in expense is margin gross given our top these achieve can to customers ever, maintain our we march recent unclear momentum the believe The that our perspective, margin resilient. to profit we provide is well cash our or gross management on to us basis, capabilities to business including step to by are fees total and underwriting opportunity late and line put soon, to on best-in-class we a and achieving inflation scale continuing annualized Instead, us line, into continuing our margin which XX% driver. and interest an believe typically are allows them is the we consistent, to our our are we what grow continuing and and our growing on and of penalties to exceeds types are cash EBITDA collection with efforts, treat annualized

our these it's will access any, assess to if lending and result, on these credit. have the consumers' if and consumer impact dynamics a have prime any, what, on As will to what, impact difficult ultimately U.S. dynamics standards core

and X% the second quarter: home invest to in in a in market these reflects benefited XX%; on available.Based continue in gross to prime we XXXX, lease-to-own less a includes adjusted solutions plan of of key EBITDA, slight originations believe retail in we growth consumers, which non-prime continued that become X% credit operating growth headwinds have dynamics revenue historically the place to and expect large to increase category; range have furnishings note year improvement growth following facing underserved expenses for to QX the We the which operating year-over-year when and it's of ongoing the for as addressable X%, options we initiatives. the that full important

reiterating are for originations year XXXX. revenue gross for the of full also We a our outlook for minimum and XX% growth

As assumes that macro include outlook loosening change a or reminder, creditors and our the does us does full not prime impact any environment from tightening above overall material not significantly. year

outlook retail that, begins normalize.With Operator? for I'll Our for operator to also back assumes the environment that Q&A. home the it furnishings turn to

Operator

from comes question first Chukumba Loop Our Instructions] from Anthony [Operator Capital.

Anthony Chukumba

of strong a I a on Congrats sort X-parter. it's start to the year. guess, my question, first

in time. your Wayfair that my do But appears on had to some some algebra. down about was X%. haven't based business I quite algebra, So done it that I

that So terms Wayfair the quarter. to was I with get would first love will just secondly, algebraic want what in exactly to happen my just in correct. first equation And confirm thoughts then any of

Orlando Zayas

for Thanks Orlando. is the This Anthony. Thanks, questions.

on others has a industry. it reported by I the been in think, number of Wayfair, furnishing So, home

there's is not business lot impact. -- of we're a it good, side their of is While the overall seeing financing where the

has flow app been little a So bit. down

Katapult something -- we back, number to and so and being able come which necessarily. to we And up can customers that Pay can in wouldn't show control control. that's is What not get

the And Wayfair. with number normal. done to end the we're to May drive initiatives we into marketing volume. big is think turns started risk-based get second month, quarter launching May the where pricing what that volume still is towards them. them to of starting a We're a quarter, turn the to first a around hoping we're they're us with a And We've the great with and so try back for to So of partner. to looking we're strong forward furniture quarter. see,

Nancy Walsh

And so, down close both on [ X%, math. Anthony, direct Pay your ], business is our so K and overall, about Wayfair

same-day take context of our wanted as financial XXX rate basis up and The are basis is rates other write-offs but point points percent this our to in XX a that the revenue. I our is is points, of improving kind up about metrics approval out of

Anthony Chukumba

the I is Yes, new guess, off. going question, I'm to there. intrigued my question my guess, pricing that next who so go you not always rate. to with algebra as In this about do is, I words, look, guided an The to benefits? what by like nun risk-based algebra talk my therapist.So, Okay. [indiscernible] I'll write-off taught model. you've but X% XX% me other see we're potential

end lower of that. the at You're

somebody down power become benefits it more $X,XXX How year-over-year. see $X,XXX surgical sort higher do leasing it do to of Do credit? You're X% who you maybe what and can XX well, of as, Or points become you as the drive because you because originations X%? about you X% maybe feel think you gets to basis about be? the see of you better gross that maybe got would XX%

Orlando Zayas

You kind you're of right Anthony. answered the question, but point, on

and to even risk-based a maybe person get waterfall they financing we've obviously, something, So may they and the look is down. we And or what other in a for applies been with there retailers who credit pricing Wayfair are situation. and is, thinking get with historically approved, they're a going turned a special waterfall, way offer at be in happens

to higher the for because funnel working And take lease of And to another the have people so, on offer. credit through try we've option. they really that don't come that the we years didn't convert waterfall see number those been a people

and lease. entice little we people lower can And to positive the for testing turned we that credit what offer some getting the the And a maybe prime down was, change turn really that. so, lower on fee started the we're origination the seeing to signs are bit or higher the

margins. people, price gross It's eye I improve. exceed make an will what you're risk. the really other to increasing risk right, So think to think, that it about but it, cover hit obviously, I are goals that we improving the to we're fee then, don't actually originations, and the our side keeping -- the of for losses sure on on our higher a origination little the some of increasing And bit

don't as from think will it perspective. us the gross a will impact as the we much business So grow help originations write-offs it

Derek Medlin

we add is this in respect, much so transaction. unique that is the just because through this going little a bit Anthony, bit Derek. Yes. data to I'm simply flowing Katapult's a have little

risk-based We think than that I get more what see in offer we a is example, what's an the cart. see traditional their different device. about as to is details to So, get

precision in so, we have can that and this and to down the customization the And what's cart. cart is

profiles. that different there risk are have So transactions different

get the can high-quality out And that the attractive so, there offer we that the on if opportunities said, rates not conversion performance price perhaps go you that that for have yes, right only so believe transactions, those we right there are up. consumers but the enhance we offer very say like

more and done So more across test matter. upside The factors here. it years narrow overall, that last merchants be that several on the I'm And allowed we've going over us to more to cases. excited about widely we're continue the really use has expanding those in to

Anthony Chukumba

Got it. That's helpful.

waiting inflation credit the see if and I [indiscernible] right? you're [ perspective? I you late like going for question, look, is down it's are kind waiting prime to any for What Godot Wanted subprime, that fees that, seeing from that sort trade signs credit ], additional to card seeing and from been of fee go mean, but is credit guess of next the well, card of haven't given stubbornly down. yet, fact I been probably -- high So,

Orlando Zayas

anything We're not seeing yet.

as some to up see it started area wasn't kind of was because of prime cash. the to of were starting think were consumer lenders October tighten the COVID with flush the I out that we we and coming 'XX trade-down

tightening but haven't if thinking the then, only with can goes that fee or their the anticipating $XX, they margins, is and what since are that's to sort through and or hit charge -- going we to we late $XX going force those do movement up them impact doing they'll to much So what versus is, up end seen $X to it's of margins.

will for to cheering quite that our on side. and pass see it, of good be kind Texas more our we're trade-down business will think help frankly, I Court So it us because for

Anthony Chukumba

any significant Anything But know loan, report terms -- that starting Got lenders? fact generate expiration obviously, And to from term discussions to there? perspective. certainly you're help and with with it. with then, in your EBITDA got which your up this we've updates the that will coming the is there I of

Nancy Walsh

ready come. this important but Anthony, out, not is to so for at yet more an anything point, priority this report us, to

Anthony Chukumba

in Anything pretty Got it. report looks for that's And percentage Pay, to specifically then, about now It or business and I seems nicely, forward? talked you significant been originations. of about least, a nice there guess, sort improvements other it's growing release it and of Katapult like last but you're not or that of your big partners thinking real Lowe's. to adding it's just Katapult going functionality adding like a account any terms you. Obviously, Pay

Derek Medlin

Katapult yes, Thanks, shows think that are really boils of And we're just business this excited app about objective that for offering. Katapult that the all base what of the we a our this our customer mobile And we've high what areas really with engagement seen so affinity in had I Pay one adoption. momentum the down Anthony. to, growing a I'm about

with friction are see we steps with they in NPS where that for power. activity. terms to are other will et eliminate, products looking want we're cetera. and in their we their through fact, creating made shop rewarding it to to can that repeat us those purchasing terms those the what scores, our to at, of process and now shop, and consumers help transact And what what to that types they're retailers easier things in them a to of are more In partner our types are rates, that going that them we've of that listen continue easier And of

drive with we're make in to we to app and relationship consumers. Katapult both with to so, this And really continue deepening of we have the and enhancements going and ongoing advantage Pay, sure take that

of Orlando to going you're in feedback of to the land likely, many about mentioned different partnerships are things going going offer. get that the to our Those consumers from we're these retailers all that have to year. activities to about throughout show that -- and So products that see to directly access continue app.We the continue drive the we over then, And Those will so for. in increase customers this. the that will up types looking they're adoption the app

experiences an things our going like a our really are to option make smooth to in-store Checkout to leverage even -- leverage have And Text and experience. that so, the to app

we core to benefits we've products from, that the these additional and both So us with built what we're for that really a consumers. offer to is foundation going something that believe our with grow really firm is

-- their see So excited about us, future operating to but in give their we'll and Lowe's. Really to excited customers see quarters. transactions, not now can -- that great updates the they're be with that voting with we only told on that

Anthony Chukumba

Got it. I And Q&A I this one completely do final but bogarted know question. have sort session, I've of

or that in you XX-Q. XX-K that Investor I restated. And for numbers. had obviously, the a a And chance obviously, XX-K in numbers are close had And the reason, filed -- release that restated you're I'm to Relations this year super a at can't some the your take the website. haven't I get So quarter -- look assuming the one had first full press are

end. it's -- But last think a the published second, my third results and on -- for you of problem there results restated have are year? quarterly fourth tech quarter I

Nancy Walsh

we footnotes. and the Footnote if 'XX 'XX, it X full restates the called Anthony, XX is you actually a and Super compares at of then, Footnote X yes, So, XX-K, to look does added quarters. that XX-K because each in

of items all is quarters QX, the yet, financial all if 'XX what. shows 'XX, published you're that 'XX you of the have see easily you'll a revised. first 'XX, the But each see for and there first restatement wasn't quarters summary of can impacted of statements, so obviously, done -- -- looking in what all X line been because we've it X So nice restated. through of the

Jennifer Kull

And did you'll there. financials revised a find people [ the kind ] investor Anthony, our in quarter connect the We fourth slide of dots help deck. to

Anthony Chukumba

it. Got

the my again the But, me good there. work Okay. I remainder the have okay, with and of to strong for the start year. year on luck set congrats up once

Operator

from Our next H.C. Scott comes question Wainwright. from Buck

Scott Buck

to quarter holding you've First, to trends what historically I second was XQ? in the just versus seasonal from curious, date going origination seen XQ

Nancy Walsh

don't comment the we current on Scott, typically quarter. unfortunately,

I still a bit about the perspective, of Anthony gross seeing a and still environment. some what X% what's little reflects of the X% terms our with previously furniture to going on of in a light think macro in of And mattresses. we're challenge that related there's to originations we from mentioned confusion in macro as that talked sectors with

we're second of and expecting macro laid on tied we've kind begin going on to see of with out X% to X% in normalize. closely to very growth in that So kind the the seeing those of consumer the some in going quarter to and trends what's what's

Scott Buck

That's fair. right. All

last the kind added Katapult the in ramp does -- guess, capabilities to look the in Pay maturity You up up? of I I'm does schedule ramping typical getting Lowe's, to Pay what what guess, that what, like I curious, like week. look

Derek Medlin

interesting, generally the really Derek. addressable the on for know. because community Scott, happens across that actually pretty It's focus this you we are community up, already question. now the that is quickly, Katapult actually because our ramp-up Thanks that that today bring we

regularly. we have with we customers than more approved X that engage So million

various optimize we introduced them And so, measure of through happens very kind test, over in our fast. a it channels can time. communicate learn to ability and approach that We with very, so

acquire and to we of to that tests I are look well. and we new sorts customers is continue So transaction say for may approach who as we've looking out -- to disciplined at marketing place pretty all like market ramp have shop introduce Lowe's, that and in new would opportunity the marketing had the so quickly. been doing assistance haven't at want to a though customers we who

the introduce happening space. makes right with right a give of an just of for them. lot into is going existing for a And summer, springtime Lowe's makes improvement home given timing the And so, to when sense longer a really this we But lot transaction really, are to. ramp in activity sense looking has to to the right now, for who Katapult quickly. customers the on is that we're the a burn target And in and as really our offer base,

price. for And shop, they others. get where a best have both have to Depot Home wants best wherever they deal so, Lowe's really Menards and coverage We now the and and customer the for excellent can

Scott Buck

existing the current helpful. want full by driven And to on ask -- relationships new retailer about growth. of then, the I customers expansion the some then Great. What's driven flip what's versus service of And logos of and That's then, side, maybe guide customers? within new origination XX% year by relationships?

Nancy Walsh

is with driving strategy merchants. existing all well those of really customer as our that's the adding merchants, relationships things, why new as of and expanding It's base,

we're high and have competitive it's feel the of the what of activities reasons can amazing. good reflected of Katapult X we arms As as through and in customers have of Pay results repeat we we financial talked not but is lifetime fact app that for through through with detail our rate controlling just start the we all terms kind that broken the that value half. combination those about the our be very of pipeline control a strategy second healthy a about that of unfortunately, And to those. in comments, will expecting it go we prepared in But out all

the days are out another is XX% our lease. within XX think we I customers of initiating metric gave

looking at what we powerful merchants. time, for the what creatively talked same So us. and we're that's merchant can And very bringing solve a customers Wayfair, how We're about taking us business. lot our a for the of look are really to we to with our at drive

it And seeing second factors for the important, so, we're into of the equally year. and each half of these are growth all the for what

Orlando Zayas

but set sure we like do just living-room home to for if people saw add Lenovo year goods than the home Christmas, That with because Lowe's. home electronics obviously, of buy I'll I furnishing business, volume last think home they Katapult the changed and stuff the new holiday-driven that were created and their we've is thing Best improvement too this Buy and kind don't a more and -- holidays. this and, Orlando. for Scott, of with is, a Depot and of improve we buy One trending furnishings Home Pay,

us year, then year. to rate as our good to the add that our we're fourth coming new quarter our being we on merchants then, optimistic -- with up and So direct-to-consumer continuing improve marketing which going out that's pretty round and as customers, about some you help we've last probably then repeat that got our better. do, And

Nancy Walsh

Scott, I'll more we're our grow And one customers. to looking for metric year by that add customer base about this XX%, new

Scott Buck

That's great. That's helpful. that. very Appreciate Okay.

anything on? an lines environment, your you're to that along raises competitive it's the seeing eye peers or those from On keep eyebrow, underwriting an anything in whether shifts

Derek Medlin

take that. I'll Scott, This Derek. is for Thanks the question.

customers the with on, going fees, or in and to solutions affinity activity them late is are really, and are for that the on sites this a great and great tapping there's for going -- that pipeline opportunity that merchants, I also huge really, continue there us, offer winning transparently merchant having offer, But out And and challenges Not we're still propositions attract really then et solution do that large question, would base. consumers didn't with we right ecosystem the Anthony have those that partners are Katapult are things with great the already make treat but that. have we're activities and that interactions it of are that in a excellent I there who And such going they're partners. what and consumers eye lean help merchants think on think we is are we looking but no customer macro, think to his we is close ask having exciting I opportunity overall, greenfield only when there to now, traditional is in a -- just way can on stores, to partners, great so TAM -- in the huge really and we We we're lot we conversations see continue and how consumer have say do that a those to that having are customers a an into. our others for that accessing sure powerful. we we're a cetera. that keep their convert obviously, we their our for that both

watch of obviously seeing with to we're how that. the in pleased and is into our going terms we to it, leaning So reacting really but keep what market we're offer, we're

Scott Buck

higher? for think lumpy helpful. a should the are like quarter guys, we strategically Great. sequentially of sorry, That's little marketing through Or sounds me. some last more each of that cadence Nancy, there And ramping as makes it bit that quarter-to-quarter? be Is about to How one you the seasonality is in involved bit year? going a some guys it that then, areas. kind moves we move

Nancy Walsh

to us. lumpiness little for seasonality. There see holiday Obviously, and will season due quarter the largest be us tend we to high is summertime is being a a season well, for peak little the very as a Tax less. the

and will you lot kind we're of a that. This of expanding had generating a keeping are new these as leaning than it's but that into improving close is we top customers we're year of well lot a utilizing driving see us, the as dollars. investments, full eye that, for of So the really of the some said rather on that marketing that first And returns it's our how not investing we and efforts. profitability. for instruments the driving line, only Having appropriate

Operator

like of right CEO, Orlando to I'd pending over hand final any for have to don't as remarks. questions now. We now Zayas,

Orlando Zayas

of everyone for progress. in our to closing, In operator. thank tuning continued We're want I Thanks, proud today.

Katapult a I want sign to Before thank the off, team. big you I give to

and able gross hardworking growth chatting and forward investors we've double-digit is growth so and as of are for are because XXXX. look on origination quarters resilient, gross and you report origination QX revenue of your you progresses. to you consecutive been for Thank dedication.We to You with X our that it track in and much

questions to you feedback. the Jennifer So very for you Thank any if today. reach or much please have out call

Operator

you call. for today's attending Thank

may Have wonderful You a disconnect. now day.

Katapult (KPLT) 15 May 242024 Q1 Earnings call transcript