Katapult Holdings (KPLT) Q4 2021 earnings summary

Executive summary

• Digital point-of-sale lease-purchase platform serving non-prime U.S. consumers; approved over 1.8 million customers and recorded NPS of 54 at year-end 2021.

• FY21 revenue rose 22.6% to $303.1 million, while net income declined 5.9% to $21.2 million; macro pressures and tighter underwriting weighed on originations entering 2022.

Financial highlights

• FY21 total revenue $303.1 million, up 22.6%; gross profit $89.0 million, up 11.5%, with gross margin at 29% versus 32% in FY20.

• Operating income was $1.7 million versus $36.9 million; net income was $21.2 million versus $22.5 million, and diluted EPS was $0.26 versus $0.48.

• Adjusted gross profit declined 5.6% to $54.1 million; adjusted EBITDA fell to $17.3 million from $40.2 million, including $13.5 million stock-based compensation and $3.4 million merger costs in FY21.

• Gross originations increased 4.9% to $248.0 million; originations excluding Wayfair grew 29.9% YoY.

• Bad debt expense rose 76.2% to $28.3 million as the lease base expanded and stimulus-era delinquencies normalized; cost of revenue increased 27.9% to $214.1 million.

Outlook and guidance

• Challenging macro conditions are expected to continue in 2022; originations trended significantly lower YoY through February after underwriting tightened in Q4 2021 and continued into 2022.

• Largest merchant partners are expected to return to growth in H2 2022; impairment charges are expected to rise toward pre-pandemic levels.

• If prime lenders tighten underwriting after their earlier expansion, additional volume and higher-credit customers could become available.