Katapult Holdings (KPLT) Q1 2023 earnings summary

Executive summary

• Q1 revenue declined 7.0% YoY to $55,676 thousand, while gross profit rose 14.8% to $13,503 thousand; net loss widened to $9,114 thousand from $6,039 thousand.

• Gross originations increased 17.3% YoY to $54,736 thousand, supported by Katapult Pay and higher wallet capture during tax season, despite weaker consumer spending and lower revenue.

• Adjusted EBITDA was $573 thousand versus $(4,151) thousand a year earlier; adjusted net loss improved to $(7,156) thousand from $(8,039) thousand.

Financial highlights

• Total revenue was $55,676 thousand, down 7.0% YoY; rental revenue fell 7.1% to $54,724 thousand, while other revenue was $952 thousand.

• Cost of revenue declined 12.3% to $42,173 thousand; gross profit increased 14.8% to $13,503 thousand, reflecting lower early lease buyouts and lease depreciation.

• Operating expenses decreased 4.9% to $15,769 thousand; compensation costs rose 31.2% to $7,057 thousand, including higher stock compensation and one-time severance.

• Operating loss narrowed to $2,266 thousand from $4,811 thousand; net loss widened to $9,114 thousand, including a $2,391 thousand debt extinguishment loss and higher interest expense.

• Operating cash flow was $(2,906) thousand versus $3,741 thousand provided a year earlier; cash, cash equivalents and restricted cash ended at $44,949 thousand.

Outlook and guidance

• Management expected the challenging macroeconomic environment to continue further into 2023 and continued monitoring inflation, recession risks and customer payment ability.

• Unrestricted cash of $40,552 thousand at March 31, 2023 was considered sufficient for liquidity needs over the next 12 months; longer-term needs were expected to be met through cash, operating flows and RLOC availability.

• Cost-saving initiatives launched in late 2022 and Q1 2023 were expected to reduce near-term operating expenses, after Q1 severance costs.