Katapult Holdings, Inc. Q2 FY2025 earnings call

• Q2 gross originations grew 30.4% YOY, exceeding the 25%-30% outlook; revenue grew 22.1% YOY, exceeding 17%-20% outlook; adjusted EBITDA was slightly over $300,000.
• Year-to-date, gross originations grew nearly 23% and revenue by ~16%.
• Total app originations grew 56% to $43.1M, with ~60% starting in app; KPay originations grew 81% to $28.3M, 39% of total gross originations.
• NPS score was 63, up YOY; 58.4% of gross originations from repeat customers; unique new customers grew ~40% in Q2.
• App was opened 3.8M times in Q2, 50% more than same period last year; KPay unique customer count grew 87% YOY.
• Added 48 new direct or waterfall merchants/paths in Q2; Spring Living and Mother's Day campaigns led to 30% gross origination growth and 40% application growth.
• Completed debt refinancing in June: revolving credit facility liquidity increased by $20M to $110M, maturity extended to Dec 4, 2026, interest rate reduced.

In the second quarter, total app originations grew 56% year-over-year to $43.1 million, with approximately 60% of gross originations starting in the app. KPay originations, a subset of total app originations, were $28.3 million, growing 81% year-over-year and accounting for 39% of total gross originations. Direct and waterfall merchants accounted for approximately 61% of total gross originations, with gross originations for this group growing about 11%. Excluding the home furnishings and mattress category, direct and waterfall gross originations grew approximately 56% year-over-year. Additionally, total app was opened 3.8 million times in Q2, an acceleration from Q1, and KPay unique customer count grew nearly 87% year-over-year.

• Q3 2025 outlook: gross originations growth 25%-30%, revenue growth 20%-25%, adjusted EBITDA $3M-$3.5M.
• 2025 outlook: raised gross originations growth to 20%-25%, reiterates revenue at least 20% and adjusted EBITDA at least $10M.
• Q3 and 2025 outlooks not assuming extraordinary impact from tariffs or credit changes.

• Macro economic headwinds such as increasing tariffs and rising inflation.
• June is typically a tough month for delinquencies.

Q: What drove the year-over-year increase in the lease merchandise charge-off rate and how is it expected to trend?

A: Nancy said write-offs fluctuate within the 8%-10% target range, with macro factors and tariffs, and Orlando noted June is usually the toughest month for delinquencies, expecting it to return to normal next quarter.

Q: Commentary on the pipeline for new waterfall and direct partners?

A: Derek said the pipeline is strong, with merchants seeing new customers coming to their sites/stores, strong interest across segments like auto, home furnishings, electronics, etc.

Q: Color on sales and marketing to drive higher application activity?

A: Derek mentioned intentional work on digital marketing, customer referral strategy, bringing in fitting-profile customers, and improving the funnel to convert applications to origination dollars.

Q: Competitor environment around credit ladder and pricing?

A: Derek said above us in financing spectrum has been consistent, Katapult optimizes for risk, conversion, and repeat rate with clear customer communication and strong affinity, leaning into that for more conversion for merchant partners.