Katapult Holdings, Inc. ((KPLT)) has held its Q4 earnings call. Read on for the main highlights of the call.
Katapult Holdings, Inc. recently held its earnings call, revealing a mixed sentiment. The company celebrated significant growth in originations and revenue, fueled by its app marketplace and enhanced customer engagement. For the first time since 2021, Katapult achieved positive adjusted EBITDA. However, the call also highlighted challenges, including increased lease write-offs, a heavy reliance on Wayfair, and concerns regarding cash flow and debt refinancing.
Strong Q4 Growth in Originations and Revenue
Katapult reported impressive growth in its fourth quarter, with originations increasing by over 11% year-over-year and revenue rising by more than 9%. This achievement marks the ninth consecutive quarter of growth in gross originations, showcasing the company’s consistent upward trajectory.
Successful App and Marketplace Strategy
The launch of the Katapult app has been a game-changer, with 54% of 2024 originations stemming from the company’s ecosystem. The app marketplace generated approximately $127 million in gross originations, with the KPay feature contributing nearly $77 million, underscoring the success of Katapult’s strategic initiatives.
Positive Adjusted EBITDA for Full-Year 2024
For the first time since 2021, Katapult reported a full year of positive adjusted EBITDA, marking a $6.7 million improvement compared to the previous year. This milestone reflects the company’s effective cost management and revenue growth strategies.
Improved Customer Engagement and Metrics
Customer engagement metrics showed significant improvement, with applications growing by approximately 50% during Q4 and a repeat rate of 61.5%. Additionally, the Net Promoter Score increased to 58 from 52, indicating enhanced customer satisfaction and loyalty.
Increased Lease Merchandise Write-offs
Despite the positive growth, Katapult faced challenges with lease merchandise write-offs, which rose to 9.6% of revenue in Q4, up from 8.7% in the previous year. This increase highlights a potential area of concern for the company’s financial health.
Dependence on Wayfair
Katapult’s dependence on Wayfair remains a significant risk, with Wayfair accounting for 27% of total gross originations in Q4. Although this is a decrease from 43% the previous year, the high concentration risk persists.
Cash Flow and Debt Concerns
The company reported cash used in operations amounting to $32.6 million for the full year 2024, driven by increased property held for lease and litigation settlement costs. With $82.8 million in outstanding debt, Katapult is actively working on refinancing, though a new facility has yet to be secured.
Forward-Looking Guidance
Katapult shared optimistic guidance for 2025, anticipating at least 20% growth in both gross originations and revenue. The company projects a $10 million positive adjusted EBITDA, leveraging its strong marketplace and strategic initiatives. This forward-looking outlook suggests confidence in continued growth and profitability.
In conclusion, Katapult Holdings, Inc.’s earnings call painted a picture of robust growth and strategic success, tempered by financial challenges and dependency risks. The company’s positive sentiment is driven by its marketplace achievements and customer engagement improvements, while its forward-looking guidance indicates a promising future. However, investors should remain cautious of the highlighted risks and financial concerns.