Katapult Reports Significant Q1 Growth and Outlook for 2025

Katapult Achieves Impressive Growth in the First Quarter

Katapult Holdings, Inc. (NASDAQ: KPLT), a financial technology firm catering to e-commerce, has recently announced impressive financial results for the first quarter of 2025, showcasing significant growth in gross originations and revenue. With a 15.4% increase in gross originations, totaling $64.2 million, and a 10.6% rise in total revenue to $71.9 million, the company is well-positioned for further success this year.

Chief Executive Officer Orlando Zayas expressed optimism about the company's performance, highlighting that the growth is largely driven by enhanced engagement across its Katapult app marketplace. Notably, KPay originations surged by 57%, signifying a robust attraction to this innovative payment method. Katapult’s thriving marketplace is characterized by rising application rates, high customer satisfaction as evidenced by a Net Promoter Score of 66, and promising repeat purchase rates.

Strategic Milestones and Consumer Engagement Expansion

The first quarter brought a range of strategic milestones for Katapult. Notably, approximately 59% of the company’s gross originations originated from its app marketplace, demonstrating its effectiveness as a customer referral channel. Total app originations saw a remarkable growth of 42% year-over-year, while customer satisfaction remained critical with a repeat customer rate of over 57% for the quarter.

In a bid to enhance consumer interaction, Katapult has rolled out new functionalities within its app alongside targeted marketing campaigns. As a result, the conversion rate for KPay improved significantly, with a unique customer count increase of more than 65% compared to the previous year. The addition of popular merchants like Ashley and Bed Bath & Beyond to the Katapult app signifies significant progress in broadening the company’s offerings.

Financial Performance and Business Outlook

The financial metrics show a mixed picture. While gross originations and total revenue increased, total operating expenses climbed by 17.3%. Katapult reported a net loss of $5.7 million, considerably higher than the previous year’s loss of $0.6 million. This upward trend in losses mainly stems from heightened operational costs and expenditures related to sales.

Despite these challenges, Katapult maintains a strong outlook for the upcoming quarters. The company's guidance suggests a projected growth in gross originations between 25% and 30% year-over-year for the second quarter, alongside expected revenue growth of 17% to 20%. This positivity reflects Katapult's continuing commitment to expand its presence in a challenging macroeconomic landscape, particularly in the home furnishings sector.

Commitment to Credit Quality and Strategic Initiatives

Katapult emphasizes maintaining a robust credit quality in its portfolio, strategically enhancing risk modeling, and integrating high-quality merchants into its ecosystem. The company is also focused on nurturing repeat customer engagement through its KPay platform. With expectations set for a gross originations growth of at least 20% for the entirety of 2025, Katapult contemplates leveraging its market position among underserved and non-prime consumers.

Notably, Katapult’s management is keen on executing a disciplined expense management strategy, which they believe, combined with income growth, will yield a positive Adjusted EBITDA of at least $10 million in the coming year. CFO Nancy Walsh remarked on achieving stronger-than-expected outcomes in the first quarter, asserting confidence in the company's ability to scale operations and meet the needs of their customer base effectively.

Conclusion

As Katapult navigates through operational challenges, its recent quarterly performance points to strong potential for growth and increased market penetration in the lease-to-own sector. With a clear strategy in place and a commitment to operational excellence, Katapult is poised for a successful 2025, focusing on transforming the shopping experience for consumers.

Frequently Asked Questions

What are the key growth figures reported by Katapult for Q1 2025?

In Q1 2025, Katapult reported a 15.4% increase in gross originations totaling $64.2 million and a 10.6% rise in total revenue amounting to $71.9 million.

How is Katapult enhancing consumer engagement?

Katapult is enhancing consumer engagement by adding new functionalities to its app and executing targeted marketing campaigns, resulting in a 65% increase in unique customer count.

What is the company’s outlook for the second quarter of 2025?

Katapult anticipates a 25% to 30% year-over-year increase in gross originations and a 17% to 20% increase in revenue for the second quarter of 2025.

How does Katapult plan to maintain credit quality?

Katapult aims to maintain credit quality by improving risk modeling, onboarding new, high-quality merchants, and focusing on engaging repeat customers.

What strategic insights did the CEO of Katapult share?

CEO Orlando Zayas expressed confidence that Katapult could achieve its full year targets and create value for all stakeholders through their effective ecosystem and operational strategies.

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