Katapult Holdings, Inc. (“Katapult” or the “Company”) (NASDAQ:
KPLT), an e-commerce-focused financial technology company, today
reported its financial results for the fourth quarter ended
December 31, 2023.
“During the fourth quarter, we extended our track record of
growth by delivering double-digit, year-over-year increases in
gross originations and revenue. This success was driven by strong
execution in all key areas of our business and we’re very proud of
our team’s hard work,” said Orlando Zayas, CEO of Katapult. “From
new direct integrations with merchant partners such as Lenovo and
Grown Brilliance, to expanding Katapult Pay by onboarding retailers
like Walmart, consumers can now use a Katapult lease-to-own product
to shop for just about any durable good they want. We believe our
value proposition - which includes transparent pricing, fair terms
and no late fees, ever - stands out from the competition, and
consumers seem to agree. During 2023, we grew new customers by
about 15% and had a customer repeat rate of approximately 60%, two
metrics that illustrate how well our lease-to-own products are
resonating with consumers across the US.
“Our fourth quarter performance capped off a very strong 2023
for Katapult, and we believe we are well positioned for continued
growth in 2024,” continued Zayas. “We grew our business in 2023,
during a time in which many of our competitors saw their businesses
contract. This distinction gives us confidence that our product is
uniquely meeting the needs of consumers and our merchant partners.
During 2024 we believe that we can make the customer journey even
easier by further enhancing our search experience and merchant
selection. We believe that these enhancements coupled with our
relentless focus on offering unmatched value to consumers, will
allow us to continue to build long-term relationships with
customers that will benefit both Katapult and our merchant
partners.”
Operating Progress: Recent Highlights
- Launched direct integrations
- Lenovo - merchant partner that has enhanced its integration and
now offers the Katapult lease-to-own solution in its checkout and
waterfall processes
- Grown Brilliance - completed a new direct integration with this
pioneer in ethically engineered lab-grown diamonds in time for
engagement season
- Continued to build momentum for Katapult Pay(R) and our app by
creating new shopping options for customers
- Walmart is now available for shopping using Katapult Pay
- Gross originations in the app have grown steadily since launch
and Katapult Pay represented 19% of total gross originations during
2023
- On average, 29% of customers who generate a lease through
Katapult Pay will generate another lease within the next 60
days
- 14% of the leases that were initiated through Katapult Pay were
from new customers in 2024.
- Exited 2023 with ~500,000 app downloads and had more than
200,000 unique user interactions throughout the year
- Continued to execute strategy to grow customer base
- Significantly increased ROI-positive marketing activity by
testing and learning across several channels
- In 2023, grew new customers by ~15% and the number of lease
originations by ~23%, both year-over-year
- Customer satisfaction remained high and Katapult had a Net
Promoter Score of 52 as of December 31, 2023 and 59.9% of
gross originations for the fourth quarter of 2023 came from repeat
customers.1
Fourth Quarter
2023 Financial Highlights
(All comparisons are year-over-year unless stated otherwise.)
Fourth quarter net loss includes $4.2 million of out of period
adjustments that were identified during the year ended December 31,
2023 and reflects the correction of immaterial errors related to
cost of revenues, sales tax, rental revenue and operating expenses.
There is also a $1.2 million cash impact related to sales tax.
Fourth quarter Adjusted EBITDA includes an add back of these $4.2
million out of period adjustments.
- Gross originations were $67.5 million, an increase of
13.0%
- Total revenue was $56.7 million, an increase of 16.1%
- Our fourth quarter total operating expenses were impacted by a
$7 million, net expense we recorded in connection with our
negotiations to settle the two class action lawsuits that have been
pending in New York and Delaware since 2021 and 2022, respectively,
which may be satisfied in a combination of cash and shares. In
addition, we have recorded a $5 million receivable for our
insurance policy payment. In total, we recorded a $12 million
liability in connection with the potential settlement. We have not
yet and may not reach a settlement in the future with these parties
on these terms or at all. Further, any settlement agreement is
subject to court approval by the Delaware and New York courts,
respectively. Although the settlement negotiations are ongoing,
given the status of the settlement talks we are required under GAAP
to accrue for the liability in connection to the potential
settlement.
- Total operating expenses in the fourth quarter increased 14.5%.
Excluding the one-time litigation expense, fourth quarter operating
expenses would have been down 27.8%. Fixed cash operating expenses2
were down approximately 35.6%
- Net loss was $18.6 million for the fourth quarter of 2023
compared with net loss of $14.4 million reported for the fourth
quarter of 2022. The increase in fourth quarter 2023 net loss was
driven primarily by:
- The one-time $7.0 million, net expense related to pending class
action litigation; and
- The $4.2 million out of period accounting adjustments;
- These increased expenses were partially offset by a $4.6
million decrease (excluding the one-time estimated litigation
expense) in operating expenses driven by our continued focus on
disciplined expense management; and
- A $4.1 million decrease in interest expense mainly driven by a
$25 million paydown of the outstanding principal of the term loan
in the first quarter of 2023
- Adjusted net loss2 improved to $6.1 million for the fourth
quarter of 2023 compared with an adjusted net loss of $13.4 million
reported for the fourth quarter of 2022
- Adjusted EBITDA2 loss improved to 0.1 million for the
fourth quarter of 2023 compared to an Adjusted EBITDA2 loss of $5.0
million in the prior year period
- Katapult ended the quarter with total cash and cash equivalents
of $28.8 million, which includes $7.4 million of restricted cash
and $60.7 million in outstanding debt on its credit facility. Cash
used during the quarter was impacted by a payment delay with the
Company’s third-party lease verification vendor in December 2023,
which was corrected in January 2024. Excluding the delay, and on an
adjusted basis, Katapult would have ended the quarter with total
cash and cash equivalents of $38.4 million, including the $7.4
million in restricted cash and $70.3 million in outstanding debt on
its credit facility.
- Write-offs as a percentage of revenue were 9.6% in the fourth
quarter of 2023 and remain within the Company’s 8% to 10% long-term
target range. This is a 10bps improvement compared with 9.7% in the
fourth quarter of 2022.
Full Year 2023
Financial Highlights
(All comparisons are year-over-year unless stated otherwise.)
Similar to our fourth quarter results, full year 2023 net loss
includes $1.8 million of out of period adjustments that reflect the
correction of immaterial errors related to cost of revenues, sales
tax, and rental revenue. These out of period adjustments were not
added back to full year Adjusted EBITDA.
- Gross originations were $226.6 million, an increase of
15.1%
- Total revenue was $222.2 million, an increase of 4.8%
- Net loss was $37.0 million, which compares favorably to net
loss of $37.9 million reported for 2022. While the net loss
improvement was driven primarily by a decrease in operating
expenses as well as a decrease in interest expense as a result of a
$25 million paydown of the outstanding principal of the term loan
in the first quarter of 2023, it also includes a one-time $7
million, net expense related to pending class action
litigation
- Total operating expenses were down 8.5%. Excluding the one-time
estimated litigation settlement expense, full year 2023 operating
expenses would have decreased by 19.0%. Fixed cash operating
expenses were down approximately 25.9%
- Adjusted net loss2 improved to $23.8 million compared with an
adjusted net loss of $37.9 million reported for 2022
- Adjusted EBITDA2 loss improved to $1.9 million compared to an
Adjusted EBITDA2 loss of $16.7 million in 2022. 2023 Adjusted
EBITDA was negatively impacted by the $1.8 million immaterial out
of period adjustments referenced above
[1] Repeat rate is defined as the percentage of in-quarter
originations from existing customers. [2] Please refer to the
“Reconciliation of Non-GAAP Measure and Certain Other Data” section
and the GAAP to non-GAAP reconciliation tables below for more
information.
First Quarter and Full Year 2024 Business
Outlook
The Company continues to navigate the evolving macro
environment. While inflation remains stable, it is still having an
impact on the spending habits and budgets of our core, target
consumers. US retail traffic is down, interest rates, while stable,
remain elevated, savings rates are low and credit card usage is
high. Currently, it is unclear what impact these dynamics will have
on prime lending standards and how much they will affect the US
consumer’s access to credit. We continue to believe that we have a
large addressable market of underserved, non-prime consumers, and
it’s important to note that, lease-to-own solutions have
historically benefited when prime credit options become less
available.
Based on these dynamics and the operating plan in place for the
full year 2024, Katapult expects to deliver the following results
for the first quarter of 2024:
- Year-over-year gross originations growth that is about flat
compared with the first quarter of 2023
- A 12 to 14% year-over-year increase in revenue
- Meaningful improvement in Adjusted EBITDA performance compared
with the first quarter of last year, reflecting our revenue growth
expectation and a sustained reduction of fixed cash operating
expenses. Fixed cash operating expenses are expected to be down
approximately 15% year-over-year in the first quarter
For full year 2024, Katapult expects the following dynamics and
results:
- We expect to continue to expand our customer base and acquire
new customers
- Year-over-year growth in gross originations is expected to
continue. For the full year we expect gross originations to grow at
a rate of at least 10% and our first quarter performance should be
the low point for the year.This outlook does not include any
material impact from prime creditors tightening or loosening above
us and assumes that there are no significant changes to the macro
environment. The Company also expects gross originations to improve
sequentially in the second half of 2024 compared to the first half
of 2024 driven by growth in direct merchant originations and
originations coming through Katapult Pay
- We also expect to maintain strong credit quality in our
portfolio. This will be driven by ongoing enhancements to our risk
modeling, onboarding high quality new merchants through direct
integrations, and repeat customers engaging with Katapult Pay
- Revenue growth is expected to be at least 10%
- Finally with the continued execution of our disciplined expense
strategy combined with our growing top-line we expect to deliver
another year of Adjusted EBITDA growth. We also expect Adjusted
EBITDA to follow the seasonal patterns that we have seen
historically.
"Our team worked really hard to deliver financial performance
throughout 2023 that distinguishes us from our competitors,” said
Nancy Walsh, CFO of Katapult. “We believe our results also
demonstrate the power of our financial and operating models that
allow us to grow the top-line without significantly adding to our
expense structure. During 2023 we delivered more than $14.8 million
more of Adjusted EBITDA compared to the year ended 2022 and we
believe we are positioning the company for sustainable and
profitable growth in the future. Regarding gross originations, we
are successfully growing by taking market share with our largest
merchant partner, Wayfair while continuing to diversify our growth
drivers. Gross originations for Wayfair grew by more than 5% in
2023 and non-Wayfair gross originations grew by nearly 28%
year-over-year. As a result, non-Wayfair gross originations
increased to 48% of our 2023 gross originations compared with 43%
for 2022. We have great merchant partners and are very pleased with
their performance this year.
“Based on what we’re seeing in the broader market landscape, our
gross originations performance through February appears to be in
line with the macro environment. That said, we feel confident about
our competitive position, our strategy and plan for 2024 and
believe that gross originations growth will improve from the first
quarter throughout the rest of the year,” added Walsh.
Conference Call and Webcast
The Company will host a conference call and webcast at 8:00 AM
ET on Wednesday, March 14, 2024, to discuss the Company’s
financial results. Related presentation materials will be available
before the call on the Company’s Investor Relations page at
https://ir.katapultholdings.com. The conference call will be
broadcast live in listen-only mode and an archive of the webcast
will be available for one year.
About Katapult
Katapult is a technology driven lease-to-own platform that
integrates with omnichannel retailers and e-commerce platforms to
power the purchasing of everyday durable goods for underserved U.S.
non-prime consumers. Through our point-of-sale (POS) integrations
and innovative mobile app featuring Katapult Pay™, consumers who
may be unable to access traditional financing can shop a growing
network of merchant partners. Our process is simple, fast, and
transparent. We believe that seeing the good in people is good for
business, humanizing the way underserved consumers get the things
they need with payment solutions based on fairness and dignity.
Contact
Jennifer Kull VP of Investor Relations ir@katapult.com
Forward-Looking Statements
Certain statements included in this Press
Release that are not historical facts are forward-looking
statements for purposes of the safe harbor provisions under the
United States Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally are accompanied by words such
as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,”
“intend,” “expect,” “should,” “would,” “plan,” “predict,”
“potential,” “seem,” “seek,” “future,” “outlook,” and similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. These
forward-looking statements include, but are not limited to,
statements regarding our first quarter 2024 and full year 2024
business outlook and underlying assumptions, including expectations
regarding consumer demand, improvements in the credit quality of
our portfolio and expectations regarding our expense strategy, our
ability to drive sustainable and profitable growth and our ability
to settle our class action lawsuits in Delaware and New York on the
terms contemplated herein or at all. These statements are based on
various assumptions, whether or not identified in this Press
Release, and on the current expectations of Katapult’s management
and are not predictions of actual performance.
These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as, a
guarantee, an assurance, a prediction or a definitive statement of
fact or probability. Actual events and circumstances are difficult
or impossible to predict and will differ from assumptions. Many
actual events and circumstances are beyond the control of Katapult.
These forward-looking statements are subject to a number of risks
and uncertainties, including execution of Katapult’s business
strategy, launching new product offerings, new brands and expanding
information and technology capabilities; Katapult’s market
opportunity and its ability to acquire new customers and retain
existing customers; the timing and impact of our growth initiatives
on our future financial performance and the impact of our new
executive hires and brand strategy; anticipated occurrence and
timing of prime lending tightening and impact on our results of
operations; adoption and success of our new mobile application
featuring, Katapult Pay™, general economic conditions in the
markets where Katapult operates, the cyclical nature of consumer
spending, and seasonal sales and spending patterns of customers;
risks relating to factors affecting consumer spending that are not
under Katapult’s control, including, among others, levels of
employment, disposable consumer income, inflation, prevailing
interest rates, consumer debt and availability of credit, pandemics
(such as COVID-19), consumer confidence in future economic
conditions and political conditions, and consumer perceptions of
personal well-being and security; risks relating to uncertainty of
Katapult’s estimates of market opportunity and forecasts of market
growth; risks related to the concentration of a significant portion
of our transaction volume with a single merchant partner, or type
of merchant or industry; the effects of competition on Katapult’s
future business; unstable market and economic conditions, including
as a result of the conflict involving Russia and Ukraine and the
Israel-Hamas conflict; reliability of Katapult’s platform and
effectiveness of its risk model; protection of confidential,
proprietary or sensitive information, including confidential
information about consumers, and privacy or data breaches,
including by cyber-attacks or similar disruptions; ability to
attract and retain employees, executive officers or directors;
meeting future liquidity requirements and complying with
restrictive covenants related to long-term indebtedness;
effectively respond to general economic and business conditions;
obtain additional capital, including equity or debt financing;
ability to service our indebtedness; anticipate rapid technological
changes; comply with laws and regulations applicable to Katapult’s
business, including laws and regulations related to rental purchase
transactions; stay abreast of modified or new laws and regulations
applying to Katapult’s business, including rental purchase
transactions and privacy regulations; maintain relationships with
merchant partners; respond to uncertainties associated with product
and service developments and market acceptance; anticipate the
impact of new U.S. federal income tax law; that Katapult has
identified material weaknesses in its internal control over
financial reporting which, if not remediated, could affect the
reliability of its consolidated financial statements; successfully
defend litigation; litigation, regulatory matters, complaints,
adverse publicity and/or misconduct by employees, vendors and/or
service providers; and other events or factors, including those
resulting from civil unrest, war, foreign invasions (including the
conflict involving Russia and Ukraine), terrorism, or public health
crises, or responses to such events; and those factors discussed in
greater detail in the section entitled “Risk Factors” in Katapult’s
periodic reports filed with the Securities and Exchange Commission
(“SEC”), and the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2023 that Katapult filed with the SEC.
If any of these risks materialize or our
assumptions prove incorrect, actual results could differ materially
from the results implied by these forward-looking statements. There
may be additional risks that Katapult does not presently know or
that Katapult currently believes are immaterial that could also
cause actual results to differ from those contained in the
forward-looking statements. Undue reliance should not be placed on
the forward-looking statements in this Press Release. All
forward-looking statements contained herein are based on
information available to Katapult as of the date hereof, and
Katapult does not assume any obligation to update these statements
as a result of new information or future events, except as required
by law.
Key Performance Metrics
Katapult regularly reviews several metrics,
including the following key metrics, to evaluate its business,
measure its performance, identify trends affecting our business,
formulate financial projections and make strategic decisions, which
may also be useful to an investor: gross originations, total
revenue, gross profit, adjusted gross profit and adjusted
EBITDA.
Gross originations are defined as the retail
price of the merchandise associated with lease-purchase agreements
entered into during the period through the Katapult platform. Gross
originations do not represent revenue earned. However, we believe
this is a useful operating metric for both Katapult’s management
and investors to use in assessing the volume of transactions that
take place on Katapult’s platform.
Total revenue represents the summation of rental
revenue and other revenue. Katapult measures this metric to assess
the total view of pay through performance of its customers.
Management believes looking at these components is useful to an
investor as it helps to understand the total payment performance of
customers.
Gross profit represents total revenue less cost
of revenue, and is a measure presented in accordance with generally
accepted accounting principles in the United States ("GAAP"). See
the “Non-GAAP Financial Measures” section below for a description
and presentation of adjusted gross profit and adjusted EBITDA,
which are non-GAAP measures utilized by management.
Non-GAAP Financial Measures
To supplement the financial measures presented in this press
release and related conference call or webcast in accordance with
GAAP, the Company also presents the following non-GAAP and other
measures of financial performance: adjusted gross profit, adjusted
EBITDA, adjusted net loss and fixed cash operating expenses. The
Company believes that for management and investors to more
effectively compare core performance from period to period, the
non-GAAP measures should exclude items that are not indicative of
our results from ongoing business operations. The Company urges
investors to consider non-GAAP measures only in conjunction with
its GAAP financials and to review the reconciliation of the
Company’s non-GAAP financial measures to its comparable GAAP
financial measures, which are included in this press release.
Adjusted gross profit represents gross profit less variable
operating expenses, which are servicing costs, and underwriting
fees. Management believes that adjusted gross profit provides a
meaningful understanding of one aspect of its performance
specifically attributable to total revenue and the variable costs
associated with total revenue.
Adjusted EBITDA is a non-GAAP measure that is defined as net
loss before interest expense and other fees, interest income,
change in fair value of warrant liability, provision (benefit) for
income taxes, depreciation and amortization on property and
equipment and capitalized software, impairment of leased assets,
loss on partial extinguishment of debt, stock-based compensation
expense, estimated litigation settlement, net and out of period
adjustments. We have made an adjustment to fourth quarter 2023
Adjusted EBITDA and Adjusted net loss for out of period adjustments
described above.
Adjusted net loss is a non-GAAP measure that is defined as net
loss before change in fair value of warrant liability, stock-based
compensation expense, estimated litigation expense, net, and out of
period adjustments.
Fixed cash operating expenses is a non-GAAP measure that is
defined as operating expenses less depreciation and amortization on
property and equipment and capitalized software, stock-based
compensation expense, estimated litigation settlement, net, and
variable lease costs such as servicing costs and underwriting fees.
Management believes that fixed cash operating expenses provides a
meaningful understanding of non-variable ongoing expenses.
Adjusted gross profit, Adjusted EBITDA and Adjusted net loss are
useful to an investor in evaluating the Company’s performance
because these measures:
- Are widely used to measure a company’s operating
performance;
- Are financial measurements that are used by rating agencies,
lenders and other parties to evaluate the Company’s credit
worthiness; and
- Are used by the Company’s management for various purposes,
including as measures of performance and as a basis for strategic
planning and forecasting.
Management believes the use of non-GAAP financial measures, as a
supplement to GAAP measures, is useful to investors in that they
eliminate items that are not part of our core operations, highly
variable or do not require a cash outlay, such as stock-based
compensation expense. Management uses these non-GAAP financial
measures when evaluating operating performance and for internal
planning and forecasting purposes. Management believes that these
non-GAAP financial measures help indicate underlying trends in the
business, are important in comparing current results with prior
period results and are useful to investors and financial analysts
in assessing operating performance. However, these non-GAAP
measures exclude items that are significant in understanding and
assessing Katapult’s financial results. Therefore, these measures
should not be considered in isolation or as alternatives to
revenue, net loss, gross profit, cash flows from operations or
other measures of profitability, liquidity or performance under
GAAP. You should be aware that Katapult’s presentation of these
measures may not be comparable to similarly titled measures used by
other companies.
Reverse Stock Split
All share and per share amounts in the consolidated statements
of operations and comprehensive loss and consolidated balance
sheets have been retroactively adjusted for all periods presented
to give effect to the reverse stock split that was effective as of
July 27, 2023.
Out of Period Adjustments
The Company recorded out of period adjustments to correct
immaterial errors related to cost of revenues and rental revenue on
our consolidated statement of operations and comprehensive loss for
the three months and year ended December 31, 2023 and property
held for lease and accrued liabilities on our consolidated balance
sheet as of December 31, 2023. The out of period adjustments
include an additional net loss of $4.2 million and $1.8 million for
the three months and year ended December 31, 2023,
respectively. The Company has evaluated the effects of these
errors, both qualitatively and quantitatively, and does not believe
the corrections were material to any current or prior interim or
annual periods that were affected. The Company will revise prior
quarter amounts in subsequent periodic filings as revisions to
prior year amounts and disclose the impact in the notes to the
financial statements.
KATAPULT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (amounts in thousands,
except per share data)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
Rental revenue |
$ |
55,886 |
|
|
$ |
47,904 |
|
|
$ |
218,965 |
|
|
$ |
207,979 |
|
Other revenue |
|
823 |
|
|
|
944 |
|
|
|
3,241 |
|
|
|
4,126 |
|
Total revenue |
|
56,709 |
|
|
|
48,848 |
|
|
|
222,206 |
|
|
|
212,105 |
|
Cost of revenue |
|
52,368 |
|
|
|
39,740 |
|
|
|
180,854 |
|
|
|
171,119 |
|
Gross profit |
|
4,341 |
|
|
|
9,108 |
|
|
|
41,352 |
|
|
|
40,986 |
|
Operating expenses: |
|
|
|
|
|
|
|
Servicing costs |
|
1,118 |
|
|
|
975 |
|
|
|
4,311 |
|
|
|
4,337 |
|
Underwriting fees |
|
549 |
|
|
|
498 |
|
|
|
1,919 |
|
|
|
1,828 |
|
Professional and consulting fees |
|
1,247 |
|
|
|
3,037 |
|
|
|
6,694 |
|
|
|
11,281 |
|
Technology and data analytics |
|
1,642 |
|
|
|
2,103 |
|
|
|
6,905 |
|
|
|
9,389 |
|
Compensation costs |
|
4,790 |
|
|
|
6,491 |
|
|
|
22,732 |
|
|
|
25,090 |
|
General and administrative |
|
2,598 |
|
|
|
3,435 |
|
|
|
10,942 |
|
|
|
14,167 |
|
Estimated litigation settlement, net |
|
7,000 |
|
|
|
— |
|
|
|
7,000 |
|
|
|
— |
|
Total operating expenses |
|
18,944 |
|
|
|
16,539 |
|
|
|
60,503 |
|
|
|
66,092 |
|
Income (loss) from
operations |
|
(14,603 |
) |
|
|
(7,431 |
) |
|
|
(19,151 |
) |
|
|
(25,106 |
) |
Loss on partial extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
(2,391 |
) |
|
|
— |
|
Interest expense and other fees |
|
(4,271 |
) |
|
|
(8,385 |
) |
|
|
(17,822 |
) |
|
|
(19,998 |
) |
Interest income |
|
363 |
|
|
|
521 |
|
|
|
1,697 |
|
|
|
744 |
|
Change in fair value of warrant liability |
|
36 |
|
|
|
646 |
|
|
|
807 |
|
|
|
6,439 |
|
Loss before income taxes |
|
(18,475 |
) |
|
|
(14,649 |
) |
|
|
(36,860 |
) |
|
|
(37,921 |
) |
(Provision) benefit for income taxes |
|
(112 |
) |
|
|
222 |
|
|
|
(165 |
) |
|
|
50 |
|
Net loss |
$ |
(18,587 |
) |
|
$ |
(14,427 |
) |
|
$ |
(37,025 |
) |
|
$ |
(37,871 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding - basic and diluted |
|
4,172 |
|
|
|
3,940 |
|
|
|
4,088 |
|
|
|
3,930 |
|
|
|
|
|
|
|
|
|
Net loss per common share -
basic and diluted |
$ |
(4.46 |
) |
|
$ |
(3.66 |
) |
|
$ |
(9.06 |
) |
|
$ |
(9.64 |
) |
KATAPULT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
|
December 31, |
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
21,408 |
|
|
$ |
65,430 |
|
Restricted cash |
|
7,403 |
|
|
|
4,411 |
|
Property held for lease, net of accumulated depreciation and
impairment |
|
59,335 |
|
|
|
50,278 |
|
Prepaid expenses and other current assets |
|
4,491 |
|
|
|
8,515 |
|
Litigation insurance reimbursement receivable |
|
5,000 |
|
|
|
— |
|
Total current assets |
|
97,637 |
|
|
|
128,634 |
|
Property and equipment,
net |
|
327 |
|
|
|
557 |
|
Security deposits |
|
91 |
|
|
|
91 |
|
Capitalized software and
intangible assets, net |
|
1,919 |
|
|
|
1,847 |
|
Right-of-use assets |
|
888 |
|
|
|
772 |
|
Total assets |
$ |
100,862 |
|
|
$ |
131,901 |
|
LIABILITIES AND
STOCKHOLDERS' (DEFICIT) EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
903 |
|
|
$ |
1,264 |
|
Accrued liabilities |
|
17,942 |
|
|
|
14,532 |
|
Accrued estimated litigation settlement |
|
12,000 |
|
|
|
— |
|
Term loan |
|
— |
|
|
|
25,000 |
|
Unearned revenue |
|
2,318 |
|
|
|
1,552 |
|
Lease liabilities |
|
297 |
|
|
|
382 |
|
Total current liabilities |
|
33,460 |
|
|
|
42,730 |
|
Revolving line of credit |
|
60,347 |
|
|
|
57,639 |
|
Term loan, non-current |
|
25,503 |
|
|
|
23,057 |
|
Other liabilities |
|
95 |
|
|
|
902 |
|
Lease liabilities,
non-current |
|
614 |
|
|
|
445 |
|
Total liabilities |
|
120,019 |
|
|
|
124,773 |
|
STOCKHOLDERS' (DEFICIT)
EQUITY |
|
|
|
Common stock, $.0001 par value-- 250,000,000 shares authorized;
4,072,713 and 3,943,423 shares issued and outstanding at
December 31, 2023 and 2022, respectively |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
94,544 |
|
|
|
83,804 |
|
Accumulated deficit |
|
(113,701 |
) |
|
|
(76,676 |
) |
Total stockholders' (deficit) equity |
|
(19,157 |
) |
|
|
7,128 |
|
Total liabilities and stockholders' (deficit) equity |
$ |
100,862 |
|
|
$ |
131,901 |
|
KATAPULT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS (dollars in thousands)
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities: |
|
|
|
Net loss |
$ |
(37,025 |
) |
|
$ |
(37,871 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
127,039 |
|
|
|
116,329 |
|
Net book value of property held for lease buyouts |
|
25,855 |
|
|
|
30,505 |
|
Impairment on property held for lease expense |
|
22,378 |
|
|
|
17,216 |
|
Change in fair value of warrants liability |
|
(807 |
) |
|
|
(6,439 |
) |
Stock-based compensation |
|
7,034 |
|
|
|
6,439 |
|
Loss on partial extinguishment of debt |
|
2,391 |
|
|
|
— |
|
Amortization of debt discount |
|
2,760 |
|
|
|
5,275 |
|
Amortization of debt issuance costs, net |
|
277 |
|
|
|
361 |
|
Accrued PIK Interest |
|
1,555 |
|
|
|
2,121 |
|
Amortization of right-of-use assets |
|
355 |
|
|
|
367 |
|
Change in operating assets and liabilities: |
|
|
|
Property held for lease |
|
(183,197 |
) |
|
|
(151,843 |
) |
Prepaid expenses and other current assets |
|
4,024 |
|
|
|
(4,266 |
) |
Litigation insurance reimbursement receivable |
|
(5,000 |
) |
|
|
— |
|
Accounts payable |
|
(361 |
) |
|
|
(765 |
) |
Accrued liabilities |
|
2,929 |
|
|
|
2,719 |
|
Accrued estimated litigation settlement |
|
12,000 |
|
|
|
— |
|
Lease liabilities |
|
(387 |
) |
|
|
(413 |
) |
Unearned revenues |
|
766 |
|
|
|
(583 |
) |
Net cash used in operating activities |
|
(17,414 |
) |
|
|
(20,848 |
) |
Cash flows from investing
activities: |
|
|
|
Purchases of property and equipment |
|
(20 |
) |
|
|
(168 |
) |
Additions to capitalized software |
|
(954 |
) |
|
|
(1,337 |
) |
Net cash used in investing activities |
|
(974 |
) |
|
|
(1,505 |
) |
Cash flows from financing
activities: |
|
|
|
Proceeds from revolving line of credit |
|
14,297 |
|
|
|
18,517 |
|
Principal repayments on revolving line of credit |
|
(11,551 |
) |
|
|
(22,477 |
) |
Principal repayment on term loan |
|
(25,000 |
) |
|
|
— |
|
Payments of deferred financing costs |
|
(34 |
) |
|
|
— |
|
Repurchases of restricted stock |
|
(355 |
) |
|
|
(344 |
) |
Proceeds from exercise of stock options |
|
1 |
|
|
|
67 |
|
Net cash used in financing activities |
|
(22,642 |
) |
|
|
(4,237 |
) |
Net decrease in cash, cash
equivalents and restricted cash |
|
(41,030 |
) |
|
|
(26,590 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
69,841 |
|
|
|
96,431 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
28,811 |
|
|
$ |
69,841 |
|
Supplemental
disclosure of cash flow information: |
|
|
|
Cash paid for interest |
$ |
13,014 |
|
|
$ |
12,032 |
|
Cash paid for income taxes |
$ |
206 |
|
|
$ |
446 |
|
Deferred financing costs included in accrued liabilities |
$ |
481 |
|
|
$ |
— |
|
Issuance of warrants to purchase common stock in connection with
debt refinancing |
$ |
4,060 |
|
|
$ |
— |
|
Right-of-use assets obtained in exchange for operating lease
liabilities |
$ |
471 |
|
|
$ |
1,139 |
|
Cash paid for operating leases |
$ |
513 |
|
|
$ |
511 |
|
KATAPULT HOLDINGS, INC.RECONCILIATION
OF NON-GAAP MEASURES AND CERTAIN OTHER DATA
(UNAUDITED)(amounts in
thousands)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total revenue |
$ |
56,709 |
|
|
$ |
48,848 |
|
|
$ |
222,206 |
|
|
$ |
212,105 |
|
Cost of revenue |
|
52,368 |
|
|
|
39,740 |
|
|
|
180,854 |
|
|
|
171,119 |
|
Gross profit |
|
4,341 |
|
|
|
9,108 |
|
|
|
41,352 |
|
|
|
40,986 |
|
Less: |
|
|
|
|
|
|
|
Servicing costs |
|
1,118 |
|
|
|
975 |
|
|
|
4,311 |
|
|
|
4,337 |
|
Underwriting fees |
|
549 |
|
|
|
498 |
|
|
|
1,919 |
|
|
|
1,828 |
|
Adjusted gross
profit |
$ |
2,674 |
|
|
$ |
7,635 |
|
|
$ |
35,122 |
|
|
$ |
34,821 |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
2023(1) |
|
|
2022 |
|
Net loss |
$ |
(18,587 |
) |
|
$ |
(14,427 |
) |
|
$ |
(37,025 |
) |
|
$ |
(37,871 |
) |
Add back: |
|
|
|
|
|
|
|
Interest expense and other fees |
|
4,271 |
|
|
|
8,385 |
|
|
|
17,822 |
|
|
|
19,998 |
|
Interest income |
|
(363 |
) |
|
|
(521 |
) |
|
|
(1,697 |
) |
|
|
(744 |
) |
Change in fair value of warrant liability |
|
(36 |
) |
|
|
(646 |
) |
|
|
(807 |
) |
|
|
(6,439 |
) |
Provision (benefit) for income taxes |
|
112 |
|
|
|
(222 |
) |
|
|
165 |
|
|
|
(50 |
) |
Depreciation and amortization on property and equipment and
capitalized software |
|
454 |
|
|
|
227 |
|
|
|
1,133 |
|
|
|
733 |
|
Provision for impairment of leased assets |
|
1,588 |
|
|
|
558 |
|
|
|
2,084 |
|
|
|
1,235 |
|
Loss on partial extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
2,391 |
|
|
|
— |
|
Stock-based compensation expense |
|
1,356 |
|
|
|
1,686 |
|
|
|
7,034 |
|
|
|
6,439 |
|
Estimated litigation settlement, net |
|
7,000 |
|
|
|
— |
|
|
|
7,000 |
|
|
|
— |
|
Out of period adjustment |
|
4,152 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted
EBITDA |
$ |
(53 |
) |
|
$ |
(4,960 |
) |
|
$ |
(1,900 |
) |
|
$ |
(16,699 |
) |
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
2023(1) |
|
|
2022 |
|
Net loss |
$ |
(18,587 |
) |
|
$ |
(14,427 |
) |
|
$ |
(37,025 |
) |
|
$ |
(37,871 |
) |
Add back: |
|
|
|
|
|
|
|
Change in fair value of warrant liability |
|
(36 |
) |
|
|
(646 |
) |
|
|
(807 |
) |
|
|
(6,439 |
) |
Stock-based compensation expense |
|
1,356 |
|
|
|
1,686 |
|
|
|
7,034 |
|
|
|
6,439 |
|
Estimated litigation settlement, net |
|
7,000 |
|
|
|
— |
|
|
|
7,000 |
|
|
|
— |
|
Out of period adjustment |
|
4,152 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted net
loss |
$ |
(6,115 |
) |
|
$ |
(13,387 |
) |
|
$ |
(23,798 |
) |
|
$ |
(37,871 |
) |
(1) 2023 Net loss, Adjusted EBITDA and Adjusted net loss
for the year ended December 31, 2023 were negatively impacted
by an immaterial out of period adjustment for $1,798.
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total operating expenses |
$ |
18,944 |
|
|
$ |
16,539 |
|
|
$ |
60,503 |
|
|
$ |
66,092 |
|
Less: |
|
|
|
|
|
|
|
Depreciation and amortization
on property and equipment and capitalized software |
|
454 |
|
|
|
227 |
|
|
|
1,133 |
|
|
|
733 |
|
Stock based compensation
expense |
|
1,356 |
|
|
|
1,686 |
|
|
|
7,034 |
|
|
|
6,439 |
|
Servicing costs |
|
1,118 |
|
|
|
975 |
|
|
|
4,311 |
|
|
|
4,337 |
|
Underwriting costs |
|
549 |
|
|
|
498 |
|
|
|
1,919 |
|
|
|
1,828 |
|
Estimated litigation
settlement, net |
|
7,000 |
|
|
|
— |
|
|
|
7,000 |
|
|
|
— |
|
Fixed cash operating
expenses |
$ |
8,467 |
|
|
$ |
13,153 |
|
|
$ |
39,106 |
|
|
$ |
52,755 |
|
CERTAIN KEY PERFORMANCE METRICS
(in thousands) |
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total revenue |
$ |
56,709 |
|
|
$ |
48,848 |
|
|
$ |
222,206 |
|
|
$ |
212,105 |
|
KATAPULT HOLDINGS, INC.GROSS
ORIGINATIONS BY QUARTER
|
|
Gross Originations by Quarter |
($
millions) |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
FY 2023 |
|
$ |
54.7 |
|
|
$ |
54.7 |
|
|
$ |
49.6 |
|
|
$ |
67.5 |
|
FY 2022 |
|
$ |
46.7 |
|
|
$ |
46.4 |
|
|
$ |
44.1 |
|
|
$ |
59.8 |
|
FY 2021 |
|
$ |
63.8 |
|
|
$ |
64.4 |
|
|
$ |
61.0 |
|
|
$ |
58.9 |
|
FY 2020 |
|
$ |
37.2 |
|
|
$ |
77.6 |
|
|
$ |
60.5 |
|
|
$ |
61.1 |
|
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