Katapult Holdings, Inc. Q3 FY2024 earnings call

• Orlando highlighted that Q3 was another period of across - the - board progress with the eighth consecutive quarter of gross originations growth. The merchant strategy involves integrating with new merchants, growing market share with anchor merchants, and ensuring a variety of durable goods. Notable merchant integrations include BB Wheels, Extreme Customs, and Tire Agent. During the Labor Day period, applications and approvals grew approximately 29% and 30% respectively, leading to nearly 50% gross originations growth. - Derek discussed his focus on increasing application flow, deepening partnerships with merchants, and leveraging the power of the app for cross - selling. Katapult Pay has seen significant growth, and there was early progress on a product - based search feature in tech.

In the third quarter, gross originations grew 3.3% to $51.2 million. More than 58% of total Q3 gross originations (excluding Wayfair) grew over 37% year - over - year, up from 20% in Q2. Applications for this portion grew by over 50% year - over - year. Katapult Pay (KPay) has delivered $46 million of gross originations year - to - date, growing 110% year - over - year. In Q3, KPay grew 86.1% to $16 million in gross originations, representing 31% of the total base.

• For the fourth quarter, expects gross originations growth of 6% to 8%. Gross originations excluding Wayfair are expected to grow at a much faster pace. Revenue growth is in the range of 5% to 7% and roughly breakeven adjusted EBITDA. - For the full year 2024, expects gross originations to grow 2% to 4%. Reiterates 2024 revenue outlook for growth of at least 10% and expects to deliver $5.5 million in positive adjusted EBITDA.

• Mentioned a patent infringement lawsuit brought against the company. Orlando stated that the company is evaluating the recently filed lawsuit and intends to vigorously defend, with no current impact on financial statements.

Q: What would it take to see a material change in home furnishings demand?

A: Orlando Zayas stated that it's as simple as more home purchases as interest rates are starting to come down.

Q: What is average origination size today versus 12 months ago?

A: Nancy Walsh said it's still in the $600 to $700 range.

Q: How long does it generally take for referral partners to mature?

A: Derek Medlin said when initially launching the mobile app and Katapult Pay, they targeted existing customers. Now, they are expanding to be an acquisition channel, and Katapult takes a diligent approach to analyzing and ramping up to mature referral partners.

Q: How do the terms of the new line of credit compare to the current one?

A: Nancy Walsh said they can't say much at this point but are working hard to close the new credit facility as soon as possible.

Q: Why were shares outstanding up?

A: Nancy Walsh said it's due to the Delaware Litigation Settlement, where 168,000 shares were released as of November 1.

Q: What percentage of Q4 originations come from the Thanksgiving, Black Friday to Cyber Monday period?

A: Nancy Walsh said it's a fair component as Q4 is important for retailers.

Q: Comments on the patent infringement lawsuit?

A: Orlando Zayas said the company is evaluating the filed lawsuit, with no current impact on financial statements, and intends to vigorously defend