Katapult Holdings Q3 2025 Earnings Call Summary

1Key Financial Results and Metrics

Gross Originations: Grew 25.3% year-over-year to $64.2 million, marking 12 consecutive quarters of growth.

Revenue: Increased 22.8% to $74 million, achieving the tenth consecutive quarter of year-over-year growth.

Adjusted EBITDA: Reported at $4.4 million, exceeding the guidance range of $3 million to $3.5 million.

Gross Profit: Approximately $14.6 million, with a gross margin of 19.7%.

Write-offs: Increased to 9.9% of revenue, up 60 basis points from Q3 2024 but within the target range of 8% to 10%.

Cash Position: Total cash and cash equivalents of $9 million, including $5.6 million of restricted cash.

2Strategic Updates and Business Highlights

Capital Investment: Secured a $65 million investment from Hawthorn Horizon Credit Fund, allowing for debt repayment and funding growth initiatives.

Application Growth: Applications increased by 76% year-to-date, with a 35% growth in unique new customers and a 49% increase in monthly active users (MAUs).

Customer Engagement: Strong Net Promoter Score (NPS) of 64, with 55.3% of gross originations coming from repeat customers.

KPay Performance: KPay originations grew 66% year-over-year, representing 41% of total gross originations.

Merchant Partnerships: Added 46 new direct or waterfall merchants, with gross originations from top 25 merchants growing 25%.

3Forward Guidance and Outlook

Q4 2025 Expectations:

Gross originations projected to grow by 15% to 20%, factoring in a headwind from recent underwriting tightening.

Revenue growth anticipated in the range of 21% to 23%.

Expected adjusted EBITDA of approximately $2 million.

Full Year 2025 Outlook:

Gross originations growth revised to 20% to 23%.

Revenue growth expected between 18% and 20%.

Adjusted EBITDA projected between $8 million and $9 million, reflecting 60% to 80% year-over-year growth.

2026 Projections: Anticipated gross origination growth of at least 20%.

4Bad News, Challenges, or Points of Concern

Application Quality: Noted a slight downward trend in application quality, prompting tighter underwriting measures.

Macroeconomic Factors: Concerns about inflation and delinquency trends affecting non-prime consumers, which could impact future performance.

Home Furnishings Impact: The home furnishings and mattress category negatively affected growth, with Q3 gross originations in this sector declining.

5Notable Q&A Insights

Management acknowledged the challenges posed by macroeconomic conditions but emphasized reliance on real-time data for decision-making.

Discussion on the tightening of underwriting practices and its early positive effects on credit quality and conversion rates.

Emphasis on the importance of maintaining fiscal discipline while investing in growth initiatives to sustain profitability. Overall, Katapult Holdings demonstrated solid growth in Q3 2025, with strong performance metrics and strategic initiatives in place, but faces challenges related to application quality and macroeconomic pressures that could impact future growth.