Katapult (KPLT) Q3 2024 earnings summary

Executive summary

• Achieved 10% year-over-year revenue growth in Q3 2024 to $60.3 million, surpassing outlook, with gross originations up 3.3% to $51.2 million and KPay originations rising 86% to $16 million, now 31% of total originations.

• Net loss widened to $8.9 million in Q3 2024 from $4.1 million in Q3 2023, mainly due to higher litigation and operating expenses.

• Adjusted EBITDA was $0.6 million for Q3 2024 and $5.8 million year-to-date, a $7.4 million improvement over last year.

• Non-Wayfair originations grew over 37% year-over-year, now 58% of the base, driven by new merchant partnerships and KPay expansion.

• The company operates a single segment focused on lease-to-own payment options for non-prime consumers through omnichannel and e-commerce partners.

Financial highlights

• Q3 2024 gross originations: $51.2 million, up 3.3% year-over-year; two-year stack growth of 16%.

• Q3 2024 total revenue: $60.3 million, up 10% year-over-year; sixth consecutive quarter of revenue growth.

• Gross profit: $11.9 million, gross margin 19.8%, within 18%-20% target range.

• Write-offs as a percent of revenue: 9.5% in Q3 2024, within 8%-10% target.

• Cash and cash equivalents at $30.3 million (including $4.4 million restricted cash) as of September 30, 2024; outstanding debt of $67.3 million.

Outlook and guidance

• Q4 2024: expects 6–8% year-over-year gross originations growth, 5–7% revenue growth, and breakeven adjusted EBITDA.

• Full year 2024: gross originations expected to grow 2–4%; revenue growth at least 10%; adjusted EBITDA expected at $5.5 million, first positive year since 2021.

• Gross margin for full year 2024 is expected to be in the 18–20% range.

• Assumes no material improvement in home furnishings and a stable macro environment.

• Management projects insufficient cash to pay off loans maturing in June 2025 and is seeking to refinance prior to maturity.