Q1 2024 Katapult Holdings Inc Earnings Call
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Operator: Hello everyone, thank you for waiting, and welcome to Katapult Hldg's incorporated first quarter 2024 earnings call.
Speaker Change: Hello, everyone. Thank you for waiting and welcome to catapult Holdings incorporated first quarter 'twenty 'twenty four earnings call.
Operator: Please note that this call is being recorded. Later on down the line, we will have a Q&A session. If you'd like to ask a question, please press star followed by the number one on your telephone keypad. I'd now like to hand over the call first to Jennifer Kull.
Speaker Change: This call is being recorded later along the lines you will have a Q&A session if you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: I'd like to hand over the call to Jennifer co.
Speaker Change: Hum.
Speaker Change: Yeah, Jennifer called Oh. Please go ahead.
Speaker Change: Welcome to catapult first quarter 2020 for a conference call on the call with me today are Orlando's I S Chief Executive Officer, Nancy Walsh, Chief Financial Officer, and Darren Meddling, Chief operating officer for your reference we have posted materials for today's call on the inverse.
Jennifer Kull: Welcome to Katapult's first quarter 2024 conference call. On the call with me today are Orlando Zayas, Chief Executive Officer; Nancy Walsh, Chief Financial Officer; and Derek Medlin, Chief Operating Officer.
Jennifer Kull: For your reference, we have posted materials from today's call on the Investor Relations section of the Katapult website, which can be found at ir.katapulthldings.com. Please keep in mind that our remarks today include forward-looking statements related to our financial guidance, our business, and our operating results, as noted in the slide deck posted to our website for your reference. Our actual results may differ materially.
Speaker Change: Your relations section of the catapult website, which can be found at IR dot catapult holding dot com.
Speaker Change: Please keep in mind that our remarks today include forward looking statements related to our financial guidance, our business and our operating results as noted in the slide deck posted to our website for your reference.
Speaker Change: Our actual results may differ materially forward looking statements involve risks and uncertainties. Some of which are described in today's earnings release and our most recent Form 10-Q, and which will be updated in future periodic reports that we file with the SEC.
Jennifer Kull: Forward-looking statements involve risks and uncertainties, some of which are described in today's earnings release and our most recent Form 10-Q, and which will be updated in future periodic reports that we file with the SEC. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them. Also, during the call, we will present both GAAP and non-GAAP financial measures. Non-GAAP financial measures should be considered supplemental to and not replacements for or superior to our GAAP results.
Speaker Change: Any forward looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them.
Speaker Change: Also during the call we'll present, both GAAP and non-GAAP financial measures non-GAAP financial measures should be considered supplemental to and not replacement for or superior to our GAAP results.
Speaker Change: A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included with today's earnings release and is available on the Investor Relations section of the company's website.
Speaker Change: Given our recent restatement any comparisons to 2023 financial results are referring to our restated financials included in our Form 10-K for the year ended December 31, 2023 filed with the SEC on April 24 2024.
Jennifer Kull: A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included with today's earnings release and is available on the investor relations section of the company's website. Given our recent restatement, any comparisons to 2023 financial results refer to our restated financials included in our Form 10-K for the year ended December 31, 2023, filed with the SEC on April 24, 2024. Finally, all comparisons are year-over-year unless stated otherwise. With that, I will turn the call over to Orlando.
Speaker Change: Finally, all comparisons are year over year, unless stated otherwise with that I will turn the call over to Orlando.
Orlando J. Zayas: Thank you, Jennifer, and thank you to everyone joining us this morning. We are excited to talk to you about our first quarter performance, which included gross originations and revenue that were both slightly above our expectations. We are very happy with our progress during Q1, which we achieved despite the macro headwinds facing the retail industry and a pullback in consumer demand. Today, I will focus my commentary on how we've continued to build momentum in our business by enhancing our merchant offering and extending our consumer reach.
Orlando: Thank you Jennifer and thank you to everyone. Joining us. This morning, we're excited to talk to you about our first quarter performance, which included gross originations and revenue that were both slightly above our expectations. We are very happy with our progress during Q1, which we achieved despite the macro headwinds facing the retail industry.
Orlando: Pullback in consumer demand.
Orlando: Today I'll focus my commentary on how we've continued to build momentum in our business by enhancing our merchant offering and extending our consumer reach.
Orlando J. Zayas: I'll then turn the call over to Nancy, who will give you an update on changes we've made to some historic financial statements, highlights from our Q1 financial performance, and an outlook on our second quarter. Heading into 2024, Katapult, like most of the retail sector, saw a bit of a slowdown in consumer traffic and purchase activity. We had expected to see trends improve throughout the first quarter, and that's exactly how the quarter played out.
Speaker Change: I'll, then turn the call over to Anthony who will give you an update on changes we've made to some historic financial statements highlights from our Q1 financial performance and outlook on our second quarter.
Anthony: Heading into 2024 catapult like most of the retail sector saw a bit of a slowdown in consumer traffic and purchase activity. We had expected to see trends improved throughout the first quarter and that's exactly how the quarter played out.
Orlando J. Zayas: When we look at intra-quarter performance, January was the trough for year-over-year gross originations comps, and we saw sequential improvement throughout the quarter to signal that trends were improving. This quarter represented our sixth consecutive quarter of gross originations growth, and this strong performance has ignited our revenue engine as well, leading to another quarter of double-digit revenue growth. For the first quarter, we delivered 1.6% gross originations growth, slightly ahead of our outlook for flat year-over-year performance.
Anthony: When we look at intra quarter performance January was the trough for our year over year gross originations comps and we saw sequential improvement throughout the quarter.
Anthony: I know that trends were improving.
Anthony: This quarter represented our sixth consecutive quarter of gross originations growth and this strong performance has ignited our revenue engine as well leading to another quarter of double digit revenue growth.
Anthony: For the first quarter, we delivered one 6% gross originations growth slightly ahead of our outlook for flat year over year performance.
Orlando J. Zayas: And if we look at the last two years together, we've delivered nearly 20% growth in gross origination. Gross origination was driven by both our direct integrations with merchants, as well as the continued strong performance of Katapult Pet. We believe this demonstrates that we can drive growth by partnering with merchants and stimulate consumer demand by leveraging our own marketplace. This is a good segue into our direct integration performance during the first quarter, so let me give you a few highlights.
Anthony: And if we look at the last two years together, we delivered nearly 20% growth and gross originations.
Anthony: Our gross originations were driven by both our direct integrations with merchants as well as continued strong performance of catapult.
Anthony: We believe this demonstrates that we can drive growth by partnering with merchants and stimulate consumer demand by leveraging our own marketplace.
Speaker Change: This is a good segue into our direct integration performance during the first quarter. So let me give you a few highlights.
Orlando J. Zayas: Our merchant strategy is built on three key areas. One, growing gross originations by integrating with new merchants. Two, growing our market share with our anchor merchants. And three, ensuring that we offer the variety of durable goods our customers are looking for to drive sustainable demand. During the first quarter, we continued to focus on enhancing the merchant experience on the Katapult platform and building new relationships that can deepen and accelerate our pipeline for future direct integration. First, we upgraded the Katapult platform to integrate the latest version of Shopify, which allows Katapult to align with the one-page checkout process Shopify now offers.
Speaker Change: <unk> merchant strategy is built on three key areas, one growing gross originations by integrating with new merchants to growing our market share with our anchor merchants and three ensuring that we offer a variety of durable goods are customers are looking for to drive sustainable demand.
Speaker Change: During the first quarter, we continued to focus on enhancing the merchant experience on the catapult platform and building new relationships that can deepen and accelerate our pipeline for future direct integrations.
Orlando J. Zayas: This upgrade was completed after working closely with Shopify to create a seamless integration path for our retailers that enables a friction-free lease transaction journey for our customers. In fact, the integration path has become so much easier with this upgrade that one retailer recently integrated our platform on their own, and we've already seen their first lease origination. The Shopify Checkout Glow is used by about 100 of our small and medium-sized merchants, and we expect this upgrade to be accretive to our top line over time.
Speaker Change: First we upgraded the catapult platform to integrate the latest version of Shopify, which allow us catapult to align the one page checkout process. Shopify now offers this upgrade was completed after working closely with shopify to create a seamless integration path for our retailers that enables a friction free Lee.
Speaker Change: This transaction journey for our customers.
Speaker Change: In fact, the integration path has becomes so much easier with this upgrade the one retailer recently integrated our platform on their own and we are already seeing their first lease origination.
Outside checkout flow is used by about 100 of our small and medium sized merchants and we expect this upgrade to be accretive to our top line over time.
Orlando J. Zayas: Through this enhancement, we expect to be able to accelerate the speed of integration, which we believe will be an attractive feature as we target new merchants for direct integration. Second, we have entered into an agreement with Salesforce to be an official solution partner for their Salesforce Commerce Cloud. We believe this new relationship will help accelerate our direct integration process with more than 100 enterprise merchants that work with Salesforce. In addition, through this partnership, we've been added to the Salesforce AppExchange, which gives us access to joint referrals as well as introductions to current Salesforce clients, which are typically larger merchants.
Speaker Change: Through this enhancement, we expect to be able to accelerate the speed of integration, which we believe will be an attractive feature as we target new merchants for direct integration.
Speaker Change: Second we have entered into an agreement with salesforce to be an official solution partner for their Salesforce Commerce cloud.
Speaker Change: We believe this new relationship will help accelerate our direct integration process with more than 100 enterprise merchants that work with Salesforce. In addition to this partnership we've been added to the Salesforce App exchange that gives us access to joint referrals as well as introductions to current salesforce clients, which are typically larger Merck.
Speaker Change: Yes.
Orlando J. Zayas: We are excited to work with Salesforce as we continue to enhance our go-to-market strategy with a broad range of platform partnerships. And finally, we have also continued to advance our relationship with Synchrony. As we announced a few quarters ago, we entered into an agreement with Synchrony to integrate our LTO solution into their waterfall. Since then, we have completed a number of integration tasks, and we intend to launch our dApply integration by the end of the second quarter.
Speaker Change: We are excited to work with Salesforce as we continued to enhance our go to market strategy with a broad range of platform partnerships.
Speaker Change: And finally, we have also continued to advance our relationship with synchrony as we announced a few quarters ago, we entered into an agreement with synchrony to integrate our <unk> solution into their waterfall.
Speaker Change: Since then we have completed a number of integration tasks and we intend to launch our D apply integration by the end of the second quarter by way of background D. Apply provides financial services waterfall functionality to retailers and will allow a catapult offer to be presented to synchrony applicants who are not approved for a primary or secondary final.
Orlando J. Zayas: By way of background, dApply provides financial services waterfall functionality to retailers and will allow a Katapult offer to be presented to Synchrony applicants who are not approved for a primary or secondary financial product. Once complete, Synchrony will be able to leverage our innovative LTO solution in their digital waterfall application process, enabling their retailer partners to offer our lease-to-own option for their customers. We expect the integration to open the door for us to launch merchant partnerships more easily and at scale.
Speaker Change: Product.
Speaker Change: Once complete synchrony will be able to leverage our innovative <unk> solution and their digital waterfall application process, enabling their retailer partners to offer our lease to own option for their customers with.
Speaker Change: We expect the integration to open the door for us to launch merchant partnerships more easily and at scale.
Orlando J. Zayas: Direct integrations remain an important part of our growth strategy, and we have a robust pipeline of targets. We believe that our new agreements with Salesforce and Synchrony will unlock even more growth opportunities. We look forward to updating you on this progress.
Speaker Change: Direct integrations remain an important part of our growth strategy and we have a robust pipeline of targets, we believe that our new agreements with Salesforce and synchrony unlock even more growth opportunities. We look forward to updating you on this progress.
Orlando J. Zayas: Onboarding new merchants is just one part of our merchant growth strategy. We are also focused on deepening our relationships with and output from our existing merchant partnerships. While Wayfair remains our largest merchant partner, about 53% of our gross originations were driven by the performance of hundreds of other merchant partners in the first quarter. In the first quarter, our non-wayfarer gross originations grew by about 9%, led by 57% and 13% growth in the jewelry and electronics categories, respectively.
Speaker Change: On boarding new merchants is just one part of our merchant growth strategy. We are also focused on deepening our relationships with an output from our existing merchant partnerships.
Speaker Change: While <unk> remains our largest merchant partner about 53% of our gross originations were driven by performance of hundreds of other merchant partners in the first quarter.
Speaker Change: In the first quarter, our non ways there gross originations grew by about 9%.
Speaker Change: Led by 57% and 13% growth in the jewelry and electronics categories respectively.
Speaker Change: We are continuing to deliver platform enhancements such as the Shopify update I, just mentioned and the pre approval data that we began sharing with merchants late last year and we believe these enhancements will further strengthen our merchant partner relationships and support our continued strong performance.
Orlando J. Zayas: We are continuing to deliver platform enhancements, such as the Shopify update I just mentioned, and the pre-approval data that we began sharing with merchants late last year. And we believe these enhancements will further strengthen our merchant partner relationships and support our continued strong performance. Turning to our business with Wayfair, we have a strong partnership with Wayfair, and we continue to work closely with them to explore creative opportunities to drive consumer demand.
Speaker Change: Turning to our business with way fair, we have a strong partnership with waste there and we continue to work closely with them to explore creative opportunities to drive consumer demand to help support. Our continued partnership we are working with a number of initiatives to drive conversion rate, even higher at weight, there including opportunities to further improve the precision of our underwriting model.
Orlando J. Zayas: To help support our continued partnership, we are working with a number of initiatives to drive conversion rates even higher at Wayfair, including opportunities to further improve the precision of our underwriting model. Given the tough operating environment for home furnishings, we have focused on controlling the controllable by enhancing the parts of the consumer journey that we can influence. We have been running a variety of tests to drive both same-day and overall take rates higher, and we're seeing some very good results. For example, same-day take rates are up 330 basis points year-over-year, and approval rates are up 60 basis points year-over-year, even as our write-offs continue to decrease.
Speaker Change: <unk>.
Speaker Change: Given the tough operating environment for home furnishings, we have focused on controlling the controllable by enhancing the parts of the consumer journey that we can influence we had been running a variety of tests to drive both same day and overall take rates higher and we're seeing some very good results for example, Sanjay take rates.
Are up 330 basis points year over year and approval rates are up 60 basis points year over year, even as our write offs continue to decrease.
Orlando J. Zayas: We believe we have a superior LCO offering and that we can continue to build our market share. I think it's important to remember that we estimate our total addressable market opportunity to be in the $50 to $60 billion range here in the U.S. Given the footprint of existing LTOs, this TAM is underserved, creating a lot of greenfield opportunity for Katapult to amass share as we help new merchant partners tap into a loyal, non-prime, consumer base that wants the products they offer.
Speaker Change: We believe we have a superior <unk> offering and then we can continue to build our market share.
It's important to remember that we estimate our total addressable market opportunity to be in the $50 to $60 billion range here in the U S.
Speaker Change: Given the footprint of existing Lcs. This tam is underserved, creating a lot of greenfield opportunity for catapult to a mass share as we help new merchant partners tap into loyal non prime consumer base that wants products they offer.
Orlando J. Zayas: Bottom line, we believe we have both great product market fit and a large and unaddressed market opportunity. We are very proud of the relationships we have continued to build with consumers across the U.S. We offer fair and transparent terms, and we believe we have a best-in-class LTO product that continues to resonate with existing and new customers alike. As a result, we're seeing success in executing our strategy to drive customer demand, which is complementary to our merchant partner-driven demand that has historically fueled our business. During Q1, we made progress in many areas, but there are three that I'd like to discuss with you today.
Speaker Change: Bottom line, we believe we have both great product market fit and a large and unaddressed market opportunity.
Speaker Change: We are very proud of the relationships, we have continued to build with consumers across the U S.
Speaker Change: Fair and transparent terms and we believe we are.
Speaker Change: Have a best in class LTE product that continues to resonate with existing and new customers alike.
Speaker Change: As a result, we're seeing success in executing our strategy to drive customer demand, which is complementary to our merchant partner driven demand that has historically fueled our business during.
Speaker Change: During Q1, we made progress in many areas, but there are three that I'd like to discuss with you today.
Orlando J. Zayas: Katapult Pay, Marketing, and our new risk-based pricing model. Let's start with Katapult Pay, which continues to deliver value to our merchants, customers, and Katapults. During the quarter, we saw nearly $15 million of our gross originations come through Katapult Pay, which accounted for about a quarter of our total originations.
Speaker Change: Catapult pay marketing and our new risk based pricing model, let's start with catapult PE, which continues to deliver value to our merchant customers and catapult.
Speaker Change: During the quarter, we saw nearly $15 million of our gross originations come through catapult PE, which accounted for about a quarter of our total originations.
Orlando J. Zayas: Katapult Pay has become a go-to resource for many of our customers, and we believe we have created an amazing engagement tool that consumers love. In general, our app has become an important access point that customers are using more and more. In fact, during the first quarter, nearly 50% of our total gross origination dollars, including those that came through Katapult Pay, were initiated in our app. We're also excited to announce that we added Lowe's to Katapult Pay just last week. We survey our customers regularly, and Lowe's was a highly requested retailer.
Speaker Change: Catapult pay has become a go to resource for many of our customers and we believe we have created an amazing engagement tool that consumers love.
Speaker Change: In general our App has become an important access point that customers are using more and more in fact during the first quarter and nearly 15% of our total gross origination dollars, including those that came through catapult pay great initiated in our App.
Speaker Change: We're also excited to announce that we added lows to catapult paid just last week. We survey our customers regularly at Lowe's was a highly requested retailer where provide even more choice to our customers and look forward to seeing them engage with this well known retailer we.
Orlando J. Zayas: We are providing even more choice to our customers and look forward to seeing them engage with this well-known retailer. We believe that Katapult Pay is allowing us to deepen our relationship with consumers and that it is the cornerstone of our ability to sustain our track record of high NPS scores and repeat virtually. Case in point, during the first quarter, we earned an MPS score of 65, and our customer repeat purchase rate was 56%. Katapult Pay has quickly become a game changer for us.
Speaker Change: We believe the catapult pay is allowing us to deepen our relationship with consumers and that it is the cornerstone of our ability to sustain our track record of high NPS scores and repeat purchase rates case in point during the first quarter. We earned an NPS score of 65, and our customer repeat purchase rate was 56.
Speaker Change: Catapult pay has quickly become a game changer for US we are leveraging it to monetize our customer base control, our destiny and unlock new avenues for growth.
Orlando J. Zayas: We are leveraging it to monetize our customer base, control our destiny, and unlock new avenues for growth. One newer growth avenue is marketing. As we continue to grow our powerful direct-to-consumer app, we believe we're in a good position to continue scaling our marketing strategy. We remain prudent with our marketing spend, but we are seeing the ROI necessary to encourage our investment in this area. We believe we have built a market-leading LTO product that meets the needs of both merchants and consumers, and given the strength of our product offering, we are investing more in customer acquisition with a focus on digital marketing. This includes social, app store, and display advertising.
Speaker Change: One newer growth Avenue is marketing as we continue to grow our powerful direct to consumer App. We believe we're in good position to continue scaling our marketing strategy.
Speaker Change: We remain prudent on our marketing spend but we are seeing the ROI necessary to encourage our investment in this area. We believe we built a market leading LTE product that meets the needs of both merchants and consumers and given the strength of our product offering we are investing more in customer acquisition with a focus on digital marketing.
Speaker Change: This includes social App store and display marketing.
Orlando J. Zayas: Currently, we are running a number of tests that feature more trigger-based marketing. This style of marketing allows us to be responsive to customer behavior and creates a more connected dialogue with consumers. It's still early days, but we're seeing conversion rate improvements which are encouraging.
Speaker Change: Currently we are running a number of tests that feature more trigger based marketing. This solid marketing allows us to be responsive to customer behavior and creates a more connected dialogue with consumers.
Speaker Change: Still early days, but we're seeing conversion rate improvements, which have been encouraging.
Speaker Change: We are complementing our digital marketing efforts with initiatives focused on building, our referral and partner marketing networks. We believe we can capitalize on opportunities to monetize our customer base in a way that is on brand and aligned with our mission to serve the non prime consumer.
Orlando J. Zayas: We are complementing our digital marketing efforts with initiatives focused on building our referral and partner marketing networks. We believe we can capitalize on opportunities to monetize our customer base in a way that is on brand and aligned with our mission to serve the non-prime consumer. For example, we are pursuing other partnerships that will allow us to offer our customers products like layoff protection plans, credit building, and others that can improve their financial health and create a high-margin revenue stream for Katapult.
Speaker Change: For example, we are pursuing other partnerships that will allow us to offer our customers products like layoff protection plans credit building and others. They can improve their financial health and create high margin revenue stream for catapult.
Orlando J. Zayas: All these efforts are rooted in our focus on increasing the lifetime value of our customers while delivering a market-leading experience. Our data show that Katapult Pay customers are more likely to initiate a second lease, and in fact, about 30% have typically gone on to enter another lease agreement within 60 days, which contributes to their higher LTV.
Speaker Change: All of these efforts are rooted on our focus on increasing the lifetime value of our customers, while delivering a market leading experience our data show that catapult pay customers are more likely to initiate a second lease and in fact about 30% have typically gone onto another lease agreement within 60 days, which contributes to their higher.
Speaker Change: The LTV.
Orlando J. Zayas: We believe that our prudent yet dynamic approach to marketing, coupled with our strong product market fit, will support our goal to grow new customers in the mid-teens for full year 2024, which will be similar to our strong 2023 performance. To round out our customer focus, I want to briefly discuss the risk-based pricing model we are currently launching. Our innovative new underwriting model can consider key dynamics such as cart size, our internal proprietary credit scores, merchant type, product category, and our history with the consumer to determine the best price.
Speaker Change: We believe that our prudent yet dynamic approach to marketing coupled with our strong product market fit will support our goal to grow new customers in the mid teens for full year, 2024, which will be similar to our strong 2023 performance.
Speaker Change: To round out our customer focus I want to briefly discuss risk based pricing model. We are currently launching.
Speaker Change: Our innovative new underwriting model can consider key dynamics, such as cart size, our internal proprietary credit scores merchant type product category and our history with the consumer to determine the best pricing.
Orlando J. Zayas: We expect the new model to allow us to scale our ability to offer customers with a better or more established credit profile and lower initial payment or lower pricing through the lease term without increasing our risk. As a result, we believe we'll be able to offer more qualified customers better options that could encourage them to accept our lease offer more frequently. And what's even more special is that we can quickly do this at the individual customer level, allowing us to continue to provide an offer in five seconds or less on average.
Speaker Change: We expect the new model to allow us to scale, our ability to offer customers with a better or more established credit profile and lower initial payment or lower pricing through the lease term without increasing our risk as a result, we believe we'll be able to offer more qualified customers better options that could encourage that so et cetera.
Speaker Change: Our lease offer more frequently.
Speaker Change: And what's even more special is that we can quickly do this at the individual customer level, allowing us to continue to provide an offer in five seconds or less on average.
Orlando J. Zayas: By offering the right pricing to the right customer at the right time, we believe we can enhance our already terrific customer experience and simultaneously drive conversion rates higher. We are excited about the potential for this new model, and we look forward to rolling it out across our platform. Before I turn it over to Nancy, let me quickly touch on the progress we've made in the first quarter on a few tech initiatives.
Speaker Change: By offering the right pricing to the right customer at the right time, we believe we can enhance our already terrific customer experience and simultaneously drive conversion rates higher we.
Speaker Change: We are excited about the potential for this new model and we look forward to rolling it out across our platform.
Speaker Change: Before I turn it over to Nancy Let me quickly touch on the progress we've made in the first quarter on a few tech initiatives.
Orlando J. Zayas: First, as we discussed during our Q4 call, our teams are hard at work on product-based search. We believe we can enhance the shopping journey by creating an experience that allows customers to search directly for a durable good they'd like to lease instead of having to begin their journey at the retail level. In addition, this capability should provide us with more precise insights into what consumers are searching for and, ultimately, purchasing, unlocking opportunities across business, intelligence, marketing, and other areas of the company.
Nancy: First as we discussed during our Q4 call. Our teams are hard at work on product based search we believe we can enhance the shopping journey by creating an experience that allows customers to source directly for durable goods that you'd like to lease instead of having to begin their journey at the retail level.
Nancy: In addition, this capability should provide us with more precise insight into what the consumers are searching for and ultimately purchasing unlocking opportunities across the business intelligence marketing and other areas of the company.
Orlando J. Zayas: We have a goal to launch this new product this year, and we will keep you posted on our progress. Second, we are in the final launch stages of our new tech product called Techs2Checkout. This new feature will further bolster our omni-channel capabilities by providing a new checkout solution for in-person or call center-driven transactions. With this new solution, in-store customers will be able to complete their lease transactions on their own mobile devices, protecting their privacy and lowering fraud risk to Katapult and our merchant partners.
Nancy: We have a goal to launch this new product this year and we'll keep you posted on our progress.
Nancy: Second we are in the final launch stages of our new Tech product call text to check out. This new feature will further bolster our omnichannel capabilities by providing a new checkout solution for in person our call center driven transactions.
Nancy: With this new solution in store customers will be able to complete their lease transactions on their own mobile devices protecting their privacy and lowering fraud risk to catapult at our merchant partners. We believe this feature can up and the way <unk> transactions are handled in brick and mortar and.
Orlando J. Zayas: We believe this feature can upend the way LTO transactions are handled in brick and mortar stores. In short, through a text-to-checkout capability, we can control the customer journey through our app and make it easy for the in-store salesperson by eliminating the burden they have of explaining how an LTO product works.
Nancy: In short through a text to checkout capability, we can control the customer journey through our App and make it easy for the in store salesperson by eliminating the burden they have of explaining how an LTE product works.
Orlando J. Zayas: In summary, we turned in solid first quarter results that we believe set us up for a strong 2024. We are making steady progress across our core initiatives, and we believe we are well positioned to create value for our stakeholders throughout the year. With that, I'll turn it over to Nancy to discuss our first quarter results.
Nancy: In summary, we turned in solid first quarter results that we believe set us up for a strong 2024, we are making steady progress across our core initiatives and we believe we are well positioned to create value for our stakeholders throughout the year.
Speaker Change: With that I'll turn it over to Nancy to discuss our first quarter results Nancy.
Nancy A. Walsh: Thanks, Orlando, and hello to everyone joining us this morning. Our financial results came in slightly ahead of our expectations, and I'm excited to provide you with some key highlights. Before I jump into Q1, I want to spend a few moments talking about our recently filed 10-K. As we disclosed in early April, we delayed the filing of our 10-K to address some historical misstatements identified during the preparation of our 2023 filing. We performed a broad assessment of our sales tax liabilities across all tax jurisdictions and determined that we had miscalculated sales tax payable related to certain customer lease payments going back multiple years. We concluded that we had overstated rental revenue and understated sales tax payable, which were included in accrued liabilities.
Nancy: Thanks, Orlando and Hello to everyone. Joining us this morning, our financial results came in slightly ahead of our expectations and I'm excited to provide you with some key highlights.
Nancy A. Walsh: We also corrected other immaterial errors as part of this process. Based on this, we restated our financial results for 2022, which we did in our recent 10-K. Our filing restates the first three quarters of 2022 and 2023, as well as full year 2022 results. For errors made that impacted 2021 and prior, we made an adjustment to the beginning balance of retained earnings as of January 1st, 2022. Please refer to our 10-K for more details.
Nancy: Before I jump into Q1, I want to spend a few moments talking about our recently filed 10-K.
Nancy A. Walsh: But for your easy reference, we have included a slide in our investor presentation that outlines the high-level impact of these restatements on our 2023 results, including the specific impact our restatement had on our Q4 2023 revenue, gross profit, and adjusted EBITDA. Let me quickly walk through the updates to our revenue and adjusted EBITDA for 2023, which are as follows. Full year revenue was $221.6 million compared with our March 14, 2023 disclosure of $222.2 million.
Nancy: As we disclosed in early April we delayed the filing of our 10-K to address some historical misstatements identified during the preparation of our 2023 filing.
Nancy A. Walsh: And the adjusted EBITDA loss for 2023 was $1.9 million, about equal to what we previously disclosed. This reflects the net impact of revenue and cost of revenue adjustments, including a reversal of the out-of-period adjustment we disclosed on March 14. There is also a full breakdown of the updated, unaudited quarterly results for the first three quarters of 2023 and 2022 in Note 16 of our 2023-10-K.
Nancy A. Walsh: While we are disappointed that we made these errors, I want to state emphatically that from a business perspective, we had a terrific 2023. We have a lot of operational momentum, and we believe we are well positioned to continue to grow our market share in the LTO space. We have put new rigorous procedures and safeguards in place that are designed to prevent mistakes like this from reoccurring, and we appreciate your understanding and support through this process.
Nancy: We performed a broad assessment of our sales tax liabilities across all tax jurisdictions and determined that we had miscalculated sales tax payable related to certain customer lease payments going back multiple years.
Nancy: We concluded that we had overstated rental revenue and understated sales tax payable included in accrued liabilities.
Nancy: We also corrected other immaterial errors as part of this process.
Nancy: Based on this we restated our financial results for 2022, which we did in our recent 10-K.
Nancy: Filing restates, the first three quarters of 2022, and 2023 as well as full year 2022 results.
Nancy: For errors made that impacted 2021 and prior we made an adjustment to the beginning balance of retained earnings as of January one 2022.
Nancy: Please refer to our 10-K for more details, but for your easy reference we have included a slide in our investor presentation that outlines the high level impact of these restatements on our 2023 results, including the specific impact our restatement had on our Q4 2023 revenue gross profit and adjusted EBITDA, Let me quickly.
Nancy: Walks through the updates to our revenue and adjusted EBITDA for 2023, which are as follows.
Nancy: Full year revenue was $221 $6 million compared with our March 14th 2023 disclosure of $222 2 million and adjusted EBITDA loss for 2023 was $1 $9 million about equal to what we previously disclosed this reflects the net impact of revenue and cost of revenue.
Nancy: Estimates, including the reversal of the out of period adjustment, we disclosed on March 14th.
Nancy: There was also a full breakdown of the updated unaudited quarterly results for the first three quarters of 2023 and 2022 in note 16 of our 2023 10-K.
Nancy: While we are disappointed that we made these areas I want to state emphatically that from a business perspective, we had a terrific 2023, we have a lot of operational momentum and we believe we are well positioned to continue to grow our market share in the LTE space.
Nancy: We have put new rigorous procedures in safeguards in place that are designed to prevent mistakes like this from reoccurring and we appreciate your understanding and support through this process.
Nancy A. Walsh: With that, I'll move on to our first quarter 2024 financial highlights. Starting with the top line, we have now grown gross originations for six consecutive quarters, and as Orlando has already touched upon, our first quarter results came in slightly better than our expectations for flat performance. Gross originations increased 1.6% to $55.6 million in the first quarter. And on a two-year stack basis, our gross originations grew at a faster pace than the rest of our direct competitors. One driver of our strong performance has been our high repeat purchase rates. We continue to see a large number of repeat customers come back to us through the Katapult Pay feature.
Nancy: With that I'll move on to our first quarter 2024 financial highlights.
Speaker Change: Starting with the top line, we have now grown gross originations for six consecutive quarters and is Orlando has already touched upon our first quarter results came in slightly better than our expectations for flat performance.
Speaker Change: Gross originations increased one 6% to $55 6 million in the first quarter and on a two year stack basis, our gross originations grew nearly 20% at faster pace than the rest of our direct competitors.
Speaker Change: One driver of our strong performance has been our high repeat purchase rates, we continue to see a large number of repeat customers come back to us through the catapult pay feature consumers are engaging with the app and it is delivering for our merchant partners as well between the App and our direct integrations, we were able to increase active customers by about 15% as it.
Nancy A. Walsh: Consumers are engaging with the app, and it is delivering for our merchant partners as well. Between the app and our direct integrations, we were able to increase active customers by about 15% as of the end of Q1 2024 compared with Q1 2023. We remain excited about the potential to continue to leverage our app as a growth driver.
Speaker Change: The end of Q1 2024, compared with Q1 2023.
Speaker Change: We remain excited about the potential to continue to leverage our app as a growth driver.
Nancy A. Walsh: Our sustained gross originations growth has become an engine for revenue growth. During Q1, revenue increased 18.1% to $65.1 million, reflecting both our gross originations trends and strong collection efforts. Gross profit for Q1 was approximately $16.5 million, an increase of nearly 39%.
Speaker Change: Our sustained gross originations growth has become an engine for revenue growth. During Q1 revenue increased 18, 1% to $65 $1 million, reflecting both our gross origination trends and strong collection efforts.
Speaker Change: Gross profit for Q1 was approximately $16 $5 million, an increase of nearly 39%. We achieved gross margin of 25% an increase of nearly 380 basis points compared with last year.
Nancy A. Walsh: We achieved gross margin of 25%, an increase of nearly 380 basis points compared with last year. This performance was higher than what we typically see in Q1 and driven by strong collection efforts, the continued strength of our underwriting models, lower lease inventory costs as a percent of revenue, and a bit of a tax season tailwind. For the full year 2024, we expect gross margin to be in the 18 to 20 percent range, which reflects the impact of seasonality.
Speaker Change: This performance was higher than what we typically see in Q1 and driven by strong collection efforts. The continued strength of our underwriting models lower leased inventory costs as a percent of revenue in a bit of a tax season tailwind.
Speaker Change: For the full year 2024, we expect gross margin to be in the 18% to 20% range, which reflects the impact of seasonality.
Nancy A. Walsh: Write-offs as a percent of revenue continued to improve and remain within our target range of 8 to 10 percent. During the first quarter, this metric was 8.4 percent, an improvement of 40 basis points versus the 8.8 percent we achieved in Q1 2023.
Write offs as a percentage of revenue continued to improve and remain within our target range of 8% to 10%.
Speaker Change: During the first quarter. This metric was eight 4% an improvement of 40 basis points versus the eight 8% we achieved in Q1 2023.
Nancy A. Walsh: As Orlando mentioned, we are in the process of rolling out our new risk-based pricing model, which we believe will have a positive impact on our write-offs over time. Moving on to profitability. Our disciplined approach to expense management, coupled with our top-line growth, allowed us to deliver another quarter of substantial adjusted EBITDA growth. During the first quarter, our total operating expenses decreased by 18.5%, primarily driven by lower fixed cash operating expenses. Excluding underwriting fees and servicing costs, which are variable, and depreciation and stock-based compensation expense, which are non-cash expenses, our fixed cash operating expenses were $9.4 million, a decrease of 20.6% compared to last year. This decrease was primarily driven by the benefits of the cost-saving measures we implemented in early 2023.
Speaker Change: As Orlando mentioned, we are in the process of rolling out our new risk based pricing model, which we believe will have a positive impact on our write offs overtime.
Speaker Change: Yeah.
Speaker Change: Moving on to profitability, our disciplined approach to expense management, coupled with our topline growth allowed us to deliver another quarter of substantial adjusted EBITDA growth.
Speaker Change: During the first quarter, our total operating expenses decreased by 18, 5%, primarily driven by lower fixed cash operating expenses.
Speaker Change: Excluding underwriting fees and servicing costs, which are variable and depreciation and stock based compensation expense, which are noncash expenses, our fixed cash operating expenses were $9 4 million a decrease of 26% compared to last year.
Speaker Change: This decrease was primarily driven by the benefits of the cost saving measures we implemented in early 2023.
Nancy A. Walsh: As a reminder, we have now fully anniversaried a full year of benefits from these cost-saving measures, and we intend to make modest strategic investments in growth initiatives as we go forward. Based on our top-line performance and the structural benefits we are realizing from our operating efficiencies, we were able to improve our year-over-year adjusted EBITDA performance for the fifth consecutive quarter. For the first quarter, we recorded $5.6 million in adjusted EBITDA, an increase of $6.6 million compared with the $986,000 adjusted EBITDA loss we reported in the first quarter of last year.
Speaker Change: As a reminder, we have now fully anniversaried a full year of benefits from these cost saving measures and we intend to make modest strategic investments in growth initiatives as we go forward.
Speaker Change: Based on our topline performance in the structural benefits we are realizing from our operating efficiencies, we were able to improve our year over year adjusted EBITDA performance for the fifth consecutive quarter for.
Speaker Change: For the first quarter, we recorded $5 6 million in adjusted EBITDA, an increase of $6 $6 million compared with the $986000 of adjusted EBITDA loss, we reported in the first quarter of last year.
Speaker Change: As of March 31, 2024, we had total cash and cash equivalents of $37 6 million, which includes $6 3 million of restricted cash and reflects the correction of the third party leased verification issue we discussed during Q4.
Nancy A. Walsh: As of March 31, 2024, we had total cash and cash equivalents of $37.6 million, which included $6.3 million of restricted cash and reflects the correction of the third-party lease verification issue we discussed during Q4. The issue led to Katapult overfunding $9.6 million in leases during the fourth quarter, which increased our cash usage and lowered our debt levels as of the end of 2023. We corrected this issue early in the first quarter.
Speaker Change: The issue led to catapult overfunding $9 $6 million in leases during the fourth quarter, which increased our cash usage and lowered our debt levels as of the end of 2023, we corrected this issue early in the first quarter.
Nancy A. Walsh: As of the end of the first quarter, we also had $68 million in outstanding debt on our credit facility. We received a few questions about restricted cash and how it impacts our balance sheet, so I'd like to provide a few points of clarification. Restricted cash is generally cash related to customer lease payments that have not yet been settled.
Speaker Change: As of the end of the first quarter, we also had $68 million in outstanding debt on our credit facility.
Speaker Change: We received a few questions about restricted cash and how it impacts our balance sheet. So I'd like to provide a few points of clarity restricted.
Speaker Change: Restricted cash is generally the cash related to customer lease payments that have not yet been settled once these payments have been processed which generally occurs on a weekly basis. The cash is released this should not be confused with the minimum cash balance we are required to maintain under our credit agreement.
Nancy A. Walsh: Once these payments have been processed, which generally occurs on a weekly basis, the cash is released. This should not be confused with the minimum cash balance we are required to maintain under our credit agreement. In addition, we have also received a few questions on how gross originations flow onto our P&L and balance sheet. For your reference, we've included a slide in our investor deck that illustrates how gross originations impact our balance sheet, revenue, and write-offs as a percent of revenue.
Speaker Change: In addition, we have also received a few questions on how gross originations flow onto our P&L and balance sheet for your reference we've included a slide in our investor deck illustrates how gross originations impact our balance sheet revenue and write offs as a percentage of revenue.
Speaker Change: Before I provide you with our outlook for the second quarter I want to address some of the questions. We've been getting from investors about the potential of our business and financial models.
Nancy A. Walsh: Before I provide you with our outlook for the second quarter, I want to address some of the questions we've been getting from investors about the potential of our business and financial model. While we are not in a position today to establish an externally facing long-term model, we are excited about the progress we've made in the business and how that progress is translating to our financial results. Given the momentum we are continuing to build on the top line, we believe we can continue to scale the business and maintain gross margin in the 18 to 20 percent range on an annualized basis, including the impact of seasonality.
Speaker Change: While we are not in a position today to establish an external facing long term model. We are excited about the progress we've made in the business and how that progress is translating to our financial results.
Speaker Change: Given the momentum we are continuing to build on the top line. We believe we can continue to scale the business and maintain gross margin in the 18% to 20% range on an annualized basis, including the impact of seasonality.
Nancy A. Walsh: In order to put our gross margin opportunity into perspective, I think it's important to remember that we don't charge our customers any late fees or penalties, ever. And these types of fees are typically a margin driver.
Speaker Change: In order to put our gross margin opportunity into perspective, I think it's important to remember that we don't charge our customers any late fees or penalties ever and these types of fees are typically a margin driver. Instead, we are growing our gross margin by continuing to enhance our underwriting capabilities and our excellent cash collection efforts, which allows us to treat our customers.
Nancy A. Walsh: Instead, we are growing our gross margin by continuing to enhance our underwriting capabilities and our excellent cash collection efforts, which allows us to treat our customers well and provide them with what we believe is best-in-class pricing and service. In addition, we continue to grow the top line and execute our disciplined expense management strategy. We believe we are on a path to achieving consistent positive adjusted EBITDA on an annualized basis. The next step in our march toward profitability is to achieve gross profit that exceeds our total cash operating expense and cash interest expense.
Speaker Change: Well and provide them with what we believe is best in class pricing and service.
Speaker Change: In addition, we continue to grow the topline and execute our disciplined expense management strategy. We believe we are on a path to achieving consistent positive adjusted EBITDA on an annualized basis.
Speaker Change: The next step in our March toward profitability is to achieve gross profit that exceeds our total cash operating expense and cash interest expense.
Speaker Change: Turning to our Q2 outlook, we are continuing to navigate an evolving macro environment and it's unclear if the fed intends to lower interest rates anytime soon given recent inflation trends at the same time our results lead us to believe that our core consumer is generally resilient.
Nancy A. Walsh: Turning to our Q2 outlook, we are continuing to navigate an evolving macro environment, and it's unclear if the Fed intends to lower interest rates anytime soon, given recent inflation trends. At the same time, our results led us to believe that our core consumer is generally resilient. As a result, it's difficult to assess what, if any, impact these dynamics will ultimately have on our core consumer and what, if any, impact these dynamics will have on prime lending standards and the U.S. consumer's access to credit.
Speaker Change: As a result, it's difficult to assess what if any impact. These dynamics will ultimately have on our core consumer and what if any impact. These dynamics will have on prime lending standards in the U S consumers access to credit.
Nancy A. Walsh: 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, we expect the following for the second quarter: gross originations growth of 3-5%, which reflects ongoing headwinds facing the home furnishings retail category; revenue growth in the range of 8-10%, and continued year-over-year improvement to adjusted EBITDA, which includes a slight increase in operating expenses in Q2 as we invest in key growth initiatives.
Speaker Change: 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.
Speaker Change: Based on these dynamics and the operating plan in place for the full year 2024, we expect the following for the second quarter.
Speaker Change: Gross originations growth of 3% to 5%, which reflects ongoing headwinds facing the home furnishings retail category.
Speaker Change: Revenue growth in the range of 8% to 10% and continued year over year improvement to adjusted EBITDA, which includes a slight increase in operating expenses in Q2, as we invest in key growth initiatives.
Nancy A. Walsh: We are also reiterating our outlook for a minimum of 10% growth in gross originations and revenue for the full year 2024. As a reminder, our full-year outlook does not include any material impact from prime creditors tightening or loosening above us and assumes that the overall macro environment does not change significantly. Our outlook also assumes that the retail environment for home furnishings begins to normalize. With that, I'll turn it back to the operator for Q&A.
Speaker Change: We are also reiterating our outlook for a minimum of 10% growth for gross originations and revenue for the full year 2024.
Speaker Change: As a reminder, our full year outlook does not include any material impact from prime creditors tightening or loosening above us and assumes that the overall macro environment does not change significantly.
Speaker Change: Our outlook also assumes that the retail environment for home furnishings begins to normalize.
Speaker Change: With that I'll turn it back to the operator for Q&A.
Speaker Change: Operator.
Operator: We are now opening the floor to questions and answers. If you'd like to ask a question, please press star followed by the number 1 on your telephone keypad. Our first question comes from Anthony Chukumba from New Capital. Your line is now open.
Speaker Change: And now opening the floor for a question and answer session to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: First question comes from Anthony <unk> from Loop capital. Your line is now open.
Anthony Chinonye Chukumba: Good morning. Thanks for taking my questions. And congratulations on a strong start to the year. I guess my first question is sort of a two-parter. So I had to do some algebra. I haven't done it in quite some time. But based on my algebra, it appears that your Wayfair business was down about 7%. So I want to first confirm that my algebraic equation was correct. And then secondly, just, you know, would love to get any thoughts in terms of what exactly will happen with Wayfair in the first quarter. Thanks.
Anthony Chinonye Chukumba: Good morning, Thanks for taking my questions and congrats on a strong start to the year I guess my first.
Anthony Chinonye Chukumba: My first question, it's sort of a two parter. So I have to do some algebra I haven't done that in quite some time, but based on my algebra. It appears that your wafer business was down about 7%. So I wanted to first confirm that my.
Anthony Chinonye Chukumba: Algebraic equation was correct and then secondly, just.
Speaker Change: We'd love to get just any thoughts in terms of.
Speaker Change: What exactly happened with wafer in the first quarter. Thanks.
Orlando J. Zayas: Thanks, Anthony. This is Orlando. Thanks for the questions and good morning.
Speaker Change: Thanks, Anthony Orlando, Thanks for the questions and good morning.
Anthony Chinonye Chukumba: On wafer.
Anthony Chinonye Chukumba: As has been reported by a number of others in the home furnishing industry.
Anthony Chinonye Chukumba: Yes.
Orlando J. Zayas: So, on Wayfair, you know, as I think has been reported by a number of others in the home furnishing industry, while their business overall is good, there's not a lot of the financing side of it where we're seeing the impact. So, app flow has been down a little bit. And so, and this isn't something that we can't control. What we can control is Katapult Pay and being able to get customers to come back, which wouldn't show up in that number necessarily. So, you know, they're still a great partner.
Anthony Chinonye Chukumba: Their business overall is good.
Anthony Chinonye Chukumba: Not a lot on the financing side of it is.
Anthony Chinonye Chukumba: Is where we're seeing the impact so outflow has been down a little bit.
Anthony Chinonye Chukumba: And Thats not something we can't control what we can control is our catapult PE and being able to get customers to come back, which which wouldnt show up in that number necessarily so there is still a great partner.
Orlando J. Zayas: We're launching risk-based pricing with them, and we've done a number of marketing initiatives with them to try to drive volume. And we're starting to see towards the end of the first quarter that volume has started to turn around and get back to what we think is normal. And we're looking forward to the second quarter. May is a big furniture month, so we're hoping that, you know, May turns into a strong, strong quarter for us with Wayfair.
Anthony Chinonye Chukumba: We're launching the risk based pricing with them.
Anthony Chinonye Chukumba: We've done a number of marketing initiatives with them to try to drive volume and we're starting to see towards the end of the first quarter, where the volume.
Anthony Chinonye Chukumba: The turnaround and get back to what we think is normal.
Anthony Chinonye Chukumba: Going forward to the second quarter means a big furniture month, so we're hoping that.
Anthony Chinonye Chukumba: May turns into a strong.
Anthony Chinonye Chukumba: Strong.
Anthony Chinonye Chukumba: For us with waiver.
Orlando J. Zayas: And so, Anthony, our Wayfair business overall, both direct and paid, has gone about 5%. So, pretty close to your math. The other kind of financial metrics I wanted to point out is that our same-day take rate is up about 330 basis points, and our approval rates are up 60 basis points, but this is in the context of our write-offs improving.
Speaker Change: And so Anthony.
Speaker Change: Our wastewater business overall, both direct and cadence down about 5% so close on your map.
Speaker Change: Any other kind of financial metrics I wanted to point out is that our same day take rate is up about 330 basis points and our approval rates are up 60 basis points, but this is in the context of our write offs improving.
Speaker Change: As a percent of revenue.
Speaker Change: Okay Yeah.
Anthony Chinonye Chukumba: Okay, yeah, I guess my algebra is off. My, the nun who taught me algebra, that's right.
Speaker Change: I guess my algebra resource.
Speaker Change: Non who taught me.
Speaker Change: [laughter] right now.
Anthony Chinonye Chukumba: But we're not going to go there. I'll talk about that with my therapist. Next question. So, I'm intrigued by this new risk-based pricing model. I guess my question is, you know, what do you see as the potential benefits? In other words, like you look, you've always been guided to like an eight to 10% write-off rate. You're at the lower end of that.
Speaker Change: We're not going to go there I'll talk about that with my therapist.
Speaker Change: So.
Speaker Change: Yeah.
Speaker Change: Next question, so I'm intrigued by this new risk based pricing model.
Speaker Change: I guess my question is.
Speaker Change: What do you see as the potential benefits.
Other ones like you look you've always guided to like an 8% to 10%.
Speaker Change: Write off rate you were at the lower end of that you were down 40 basis points year over year do you see it as maybe 8% to 10% becomes 7% to 9% or do you see it as well maybe you drive higher gross originations because you can become more surgical and maybe somebody <unk> got $1000 of of leasing power.
Anthony Chinonye Chukumba: You're down 40 basis points year over year. Do you see it as, you know, maybe eight to 10% becomes seven to 9%? Or do you see it as, well, maybe you, you know, you drive higher gross originations because you can, you know, become more surgical. And, you know, maybe somebody who got $1,000 of, you know, leasing power gets $1,200, you know, because, you know, they feel better about the credit? Like, how do you sort of think about the benefits of that? You kind of answered the question, but you're right on point, Anthony.
Speaker Change: It's $1200 because you know because you because you feel better about the credit like how do you how do you sort of think about what the benefits are.
Speaker Change: That would.
Orlando J. Zayas: So the way we look at risk-based pricing is, you know, we've historically been in a waterfall, obviously with Wayfair and even with other retailers. We're in a waterfall situation. And what happens there is, you know, a person applies for credit, and they may be thinking they're going to get approved, maybe a special financing offer or something, and they get turned down. And so we see a number of higher-credit people that come through the funnel on the waterfall that don't take the lease offer, and we've been working for years to try to convert those people because they didn't really have another option.
Speaker Change: It would be you kind of you kind of answered the question.
Anthony Chinonye Chukumba: But youre right on point, Anthony with so the way we look at risk based pricing is.
Speaker Change: We've historically been in a waterfall, obviously with ways, there and even with other retailers. We're in a waterfall situation and what happens there is a person applies for credit and they may be thinking theyre going to get approved maybe a special financing offer something and they get turned down and so we see a number of higher credit people.
Speaker Change: That come through the funnel on the waterfall that don't take the lease offer and we've been working for years to try to convert those people because they didn't really have another option and so what we started testing was can we can we change the offer a little bit to maybe lower the turn or lower the origination fee to entice.
Orlando J. Zayas: And so what we started testing was, can we change the offer a little bit to maybe lower the turn or lower the origination fee to entice the higher credit people that are getting turned down for the prime, you know, and the lease? And we're seeing some really positive signs on that. So I think you're right.
Speaker Change: The higher credit people that are getting turned down for the prime.
Speaker Change: Hey.
Speaker Change: And the leaf and we're seeing some really positive signs on that so I think youre right. It will improve is really about improving gross originations, but I think.
Orlando J. Zayas: It will improve. It's really about improving gross originations. But I think obviously keeping an eye on the losses to make sure that, you know, we don't exceed what our goals are to hit our margins. And then on the other side of it, on some of the higher-risk people, we're actually increasing the price a little bit and increasing the origination fee, you know, to cover that risk. So we don't think it'll impact write-offs as much as it'll help us grow the business from a gross originations perspective.
Speaker Change: Obviously keeping.
Speaker Change: On.
Speaker Change: The losses to make sure that we don't exceed our goals are to hit our margins and then the other side of it.
Speaker Change: Some of the higher risk people, we're actually increasing the price a little bit and increasing the origination fee to cover that risk. So we don't think it will impact.
Speaker Change: The write off as much as that that'll help us grow the business from a gross origination perspective.
Derek Medlin: Yeah. Hi Anthony. This is Derek.
Derek: Yes, Hi, Anthony this is Derek I'm, just going to add a little bit.
Speaker Change: This is a little bit unique in catapult.
Speaker Change: Respect simply because we have so much data.
Derek Medlin: I'm just going to add a little bit that this is a little bit unique in Katapult's respect, simply because we have so much data flowing through the transaction. So as an example, what I think is different than a traditional risk-based offer is that we get to see what's in the cart, and we get to see more details about the device. And so this customization and precision that we can have is down to the cart and what's in it.
Speaker Change: Blowing through the transaction. So as an example, what do you think is different than a traditional risk based offer is that we get to see what's in the cart, we get to see more details about the device and so this customization on precision that we can have is down to the cart and what's in the cart. So theyre different transactions that have different risk profiles.
Speaker Change: And so we believe that there are high quality consumers out there that have very attractive performance opportunities that if we get the right price for.
Derek Medlin: So there are different transactions that have different risk profiles. And so we believe that there are high-quality consumers out there that have very attractive performance opportunities that if we get the right price, for the right offer on those transactions, we can not only say yes, but, like you said, perhaps enhance the offer so that the conversion rates go up. So overall, I'm excited about the upside here. The testing that we've done over the last several years has really allowed us to narrow in on those factors that matter, and we're going to continue to be expanding it more widely across more merchants and more use cases.
Anthony Chinonye Chukumba: Got it. That's helpful.
Speaker Change: So the right offer on those transactions.
Speaker Change: We can not only say, yes, but like you said, perhaps enhance the offer so that the conversion rates go up so overall I'm excited about the upside here.
Speaker Change: Tests that we've done over the last several years has really allowed us to narrow in on those factors that matter.
Speaker Change: And we're going to continue to be expanding more widely across more merchants and more use cases.
Speaker Change: Got it that's helpful.
Anthony Chinonye Chukumba: So next question, I mean, you know, look, waiting for the sort of credit trade down, you know, from, you know, prime and kind of subprime, it's been like waiting for Godot, right? Wanted to see if you're seeing any additional signs of that, you know, given the fact that, you know, inflation is stubbornly high and, you know, and credit card fees. Well, I mean, I guess that hasn't been released yet, but credit.
Speaker Change: Next question I mean look waiting for the sort of credit trade down from <unk>.
Speaker Change: Prime and subprime and it's been like waiting for Godot rate wanted to study.
If youre seeing any additional signs of that.
Speaker Change: Given the fact that inflation stubbornly high and.
Speaker Change: Credit card fees.
Speaker Change: I haven't seen it yet, but the credit card <unk> is probably going to go down like what are you seeing from that perspective.
Orlando J. Zayas: We're not seeing anything yet. You know, I think it was October 22 that we started to see some trade down as, you know, we were kind of coming out of the COVID area, and the prime lenders were starting to tighten up because, you know, the consumer wasn't flush with cash. So, we haven't seen much movement since then, but we are anticipating or thinking that if the late fee goes through and they can only charge $8 versus, you know, $20 or $30, what that's going to force them to do is it's going to impact their margins, and what they'll end up doing is, you know, start tightening up to hit those margins. So, we're kind of cheering for the Texas court to pass it, quite frankly.
Speaker Change: We're not seeing anything yet.
Speaker Change: I think it was October of 22.
Speaker Change: We started to see some trade down.
Speaker Change: We were kind of coming out of the Covid area and the prime lenders, we're starting to tighten up because the consumer was a flush with cash. So we haven't seen much of a much movements. Since then, but we are anticipating or thinking that with the if the late fee.
Speaker Change: Yes, it goes through and they can only charge $8 versus 20 or $30.
Speaker Change: That's going to force them to do is going to impact their margins.
Speaker Change: And what they'll end up doing is.
Start tightening up to hit those margins so.
Were kind of sharing for Texas Court to pass.
Speaker Change: And frankly.
Speaker Change: Because I think that'll be good for our business and it'll help us see more trade down on our side.
Speaker Change: Got it and then.
Anthony Chinonye Chukumba: Got it. And then, you know, I know we've got this expiration coming up with the term loan, and obviously, you know, the fact that you're starting to generate significant EBITDA certainly will help from that perspective, but any updates there in terms of your discussions with your lenders, anything to report there?
Speaker Change: I know, we've got this exploration coming up with the with the term loans and obviously with the fact that you are.
Speaker Change: Starting to generate significant EBITDA, certainly will help in that perspective, but any any updates there in terms of your discussions with your lenders or anything to report there.
Nancy A. Walsh: Hi Anthony, at this point, you know, this is an important priority for us, but I'm not yet ready to report anything out. So more to come.
Anthony Chinonye Chukumba: Hi, Anthony at this point you know this is a important priority for us, but not yet ready to report anything out so more to come.
Speaker Change: Got it.
Anthony Chinonye Chukumba: Got it. Got it.
Anthony Chinonye Chukumba: Got it and then I guess sort of last but not least I mean, you talked about adding lowes.
Anthony Chinonye Chukumba: And then, I guess, sort of last but not least, I mean, you talked about adding Lowe's. Obviously, Catpult Pay, you know, it looks like it's growing nicely, and now it's, you know, a pretty significant percentage of release originations. Anything to report there, just in terms of, you know, improvements in functionality or, you know, any other, you know, big accounts or, you know, partners that you're thinking about adding to Catapult Pay specifically going forward? I mean, it seems like, you know, it seems like that's been a real nice business for it.
Anthony Chinonye Chukumba: Obviously capital pay.
Anthony Chinonye Chukumba: It looks like it's growing nicely and now it's a pretty significant.
Speaker Change: What percentage of your release originations anything anything to report there just in terms of.
Anthony Chinonye Chukumba: No.
Anthony Chinonye Chukumba: Improvements in functionality or.
Anthony Chinonye Chukumba: Any other.
Anthony Chinonye Chukumba: Big account or.
Speaker Change: <unk> partners.
Speaker Change: Adding to catapult piece, specifically going forward.
Speaker Change: It seems like it seems like that's been a really nice business for you.
Derek Medlin: Thanks, Anthony. And yes, Katapult mobile app and Katapult Pay are one of the areas of our business that I'm just so excited about the momentum that we've seen in adoption. And I think what this all really boils down to is growing our engagement with a customer base that shows a really high affinity for what we're offering. And in fact, you know, we see that through our NPS scores, our repeat rates, etc.
Speaker Change: Thanks Anthony.
Speaker Change: Yes capsule.
Speaker Change: Mobile App and capital pay are one of the areas of our business that I'm. Just so excited about the momentum that we've seen in the adoption.
And I think what what this all really boils down to we had this objective about growing our engagement with our customer base.
Speaker Change: That shows a really high affinity for what we're offering in fact.
Speaker Change: You see that through our NPS scores are repeat rates et cetera, and now that we've made it easier to transact and easier to shop.
Derek Medlin: Now that we've made it easier to transact and easier to shop, those consumers are rewarding us with more activity, and we're going to continue to listen to them in terms of what types of products and what types of retailers they want to shop at. Where are there steps in the process that are creating friction that we can eliminate? And what are those other things that they're looking for in terms of a partner that'll help them with their purchasing power?
Speaker Change: Those consumers are rewarding us with more activity in and we're going to continue to listen to them in terms of what types of products and what types of retailers. They want to shop at where are there steps in the process that are creating friction that we can eliminate.
Speaker Change: And what are those other things that they're looking for in terms of a partner that will help them with their purchasing power and so both in the App and with catapult pay we're going to continue to drive enhancements and really to make sure that we take advantage of this.
Derek Medlin: And so both in the app and with Katapult Pay, we're going to continue to drive enhancements and really make sure that we take advantage of this ongoing and deepening relationship we have with consumers. So, likely, you know, you're going to see many of these things that Orlando mentioned about the different products and partnerships that we're going to offer. Those are going to land in the app. We continue to get feedback directly from our consumers about the types of retailers that they're looking for.
Speaker Change: Ongoing and deepening relationship we have with consumers.
Speaker Change: So likely you're going to see many of these things that Orlando mentioned about.
Speaker Change: The different products and partnerships that we're going to offer you know those are going to land in the app.
Derek Medlin: Those will show up in the app throughout the year. And then, you know, we continue to drive activities that will increase adoption so that customers all have access to them. And so even things like our text-to-checkout and our in-store experiences are going to have an option to leverage the app to make that a really smooth experience. So we really believe that what we've built is something that is a really firm foundation for us to grow from, both with our core products and with these additional benefits that we're going to offer consumers.
Speaker Change: We continue to get feedback directly from our consumers about the types of retailers that they're looking for those will show up in the app over the throughout the year and then we continued to drive activities that will increase adoption. So.
Speaker Change: So that customer.
Speaker Change: All have access to this and so even even things like our techs to checkout and our in store experiences are going to leverage.
Speaker Change: Have an option to leverage.
Speaker Change: To make that a really smooth experience. So we really believe that.
Speaker Change: What we've built is something that is a really firm foundation for us to grow from both with our core products and and with these additional benefits that we're going to offer consumers. So excited about loews really really great to see that customers not only told us but now we can see that they are operating with their.
Derek Medlin: Excited about Lowe's, really, really great to see that customers not only told us, but now we can see that they're operating with their, voting with their transactions, and we'll be excited to give updates on that in future quarters.
Speaker Change: Voting with their transactions and we'll be excited to give updates on that in future quarters.
Speaker Change: Got it.
Anthony Chinonye Chukumba: Got it. And I know I've completely spoiled this Q&A session, but I do have one sort of final question. So, you know, obviously, you would file the 10-K that had the restated full-year numbers. And obviously, you're, I'm assuming that the one, the first quarter numbers that are in this press release are restated. And I haven't had a chance to take a super close look at the 10-K or the 10-Q.
Speaker Change: I know I have completely bow guarded this Q&A session, but I do have one final question.
Speaker Change: So obviously you had filed a 10-K that had the restated full year numbers and obviously you're.
Speaker Change: Assuming that the work that the one the first quarter numbers that are in this press release are restated.
Speaker Change: And I haven't had a chance to take a super close look at the 10-K 10-Q and for some reason I can't give any of our Investor Relations website think about tech problem on my end, but.
Anthony Chinonye Chukumba: And for some reason, I can't get into the rest of the relations website. I think it's a tech problem on my end. But have you published restated quarterly results for the 2nd, 3rd, and 4th quarter of last year?
Speaker Change: Are there.
Speaker Change: You publish restated results quarterly results for the for the for the second third and fourth quarter of last year.
Nancy A. Walsh: So, yes, Anthony, if you look at the 10-K, it is actually called a super 10-K because we added two footnotes. Footnote 2 restates the balance of 22 in full and compares that to 23, and then footnote 16 does each of the quarters. So, you'll see all of 22, the first three quarters of 22, and the first three quarters of 23 have all been restated. 24, obviously, of 23, because it wasn't published yet, is revised. But if you're looking for the restatement, and we've done a nice summary in there that shows each of the line items for all the financial statements, so you can easily see what impacted what. And, Anthony, you'll find the revised fourth quarter financials in our investor deck. We did a slide to help people kind of connect the dots there. Got it, okay?
Speaker Change: So yes, Anthony if you look at the 10-K, it actually it's called a Super 10-K, because we added two footnotes footnote to restate 22 in full and compares that to 'twenty three and then footnote 16 does each of the quarters. So you'll see all of 'twenty two in the first three quarters of 'twenty two.
Speaker Change: To first three quarters of 'twenty three have all been restated Q4, obviously at 'twenty three because it wasn't published.
Speaker Change: Published yet it is revised but if youre looking for the restatement and we've done a nice summary in there that shows each of the line items throughout the financial statements. So you can easily see what impacted what Anthony Youll find the rebound fourth quarter.
Speaker Change: Financial and our investors with a five how people kind of connect the dots there.
Speaker Change: Got it okay.
Nancy A. Walsh: Got it. Okay. Yeah, I have my work set out for me there, but okay. Congrats once again on the strong start to the year and good luck with the remainder of the year.
Speaker Change: Oh My I have my works that out for me there, but okay.
Speaker Change: Congrats once again on the strong start to the year and good luck with the remainder of the year.
Anthony: Thank you Anthony.
Speaker Change: Our next question comes from Scott Buck.
Scott Buck: Our next question comes from Scott Buck from HSC Wainwright. Your line is now open.
Speaker Change: Tom H C.
Speaker Change: C. Wainwright your line is now open.
Scott Buck: Good morning, everyone. Thanks for taking my questions. First, I was just curious about seasonal origination trends in the second quarter to date versus what you've seen historically going from 1Q to 2Q?
Scott Buck: Hi, Good morning, everyone. Thanks for taking my questions first I was just curious.
Scott Buck: Seasonal origination trends holding in the second quarter to date versus what you've seen historically going from <unk> to <unk>.
Nancy A. Walsh: Scott, unfortunately, we don't typically comment on the current quarter. But I think from a macro perspective, you know, what we talked about in light of our 3 to 5% in terms of gross originations reflects that we're still seeing a challenge with some of the sectors related to furniture and mattresses. And, you know, as Anthony mentioned previously, there's still a little bit of confusion about what's going on in the macro environment. So, we've laid out kind of the 3 to 5% growth we're expecting to see in the second quarter, kind of tied in very closely to what's going on in the macro and what's going on with the consumer and seeing some of those trends begin to normalize.
Speaker Change: Scott. Unfortunately, we don't typically comment on the current quarter.
Speaker Change: I think from a macro perspective, what we talked about in light of our 3% to 5% in terms of gross originations reflects that we're still seeing a challenge with some of the sectors related to furniture and mattresses.
Speaker Change: And as Anthony mentioned previously that there is still a little bit of confusion with what's going on in the macro environment. So.
Speaker Change: We've laid out kind of the 3% to 5% growth, we're expecting to see in second quarter.
Speaker Change: So kind of tied in very closely to what's going on in the macro on what's going on with the consumer and seeing some of those trends begin to normalize.
Speaker Change: Alright Thats fair.
Speaker Change: Yeah.
Speaker Change: You added.
Derek Medlin: All right, that's fair. You added the Katapult Pay capabilities to Lowe's, I guess, last week. I'm curious, what does a typical ramp look like in kind of getting... pay up to, you know, I guess, what does the maturity schedule look like in ramping that up? Hi, Scott. This is Derek.
Speaker Change: Catapult pay capabilities to Lowe's.
Speaker Change: Last week I am curious what is the typical ramp look like and kind of getting.
Speaker Change: Pay up to I guess, what is the maturity schedule look like in ramping that up.
Speaker Change: Hi, Scott This is Derek thanks for the question, it's actually really interesting.
Derek Medlin: Thanks for the question. It's actually really interesting, now that you bring that up, because the RAMP app actually happens pretty quickly, generally, because our addressable community that we focus on today is across the Katapult community that we already know. So we have more than 2 million approved customers that we engage with regularly, and so our ability to communicate with them through various channels happens very, very fast. You know, we kind of introduce it in a test, measure, and learn approach so that we can optimize over time. So we ramp up pretty quickly.
Speaker Change: That you bring that up because.
Derek: The ramp up actually happens pretty quickly generally because our our addressable community.
Speaker Change: We focus on today are across the catapult community that we already know so we have more than $2 million approved customers that we engage with regularly and so our ability to communicate with them through various channels happens very very fast.
Speaker Change: We kind of introduce it and test measure and learn approach. So that we can optimize over time, so we ramp pretty quickly I would say, though that the.
Derek Medlin: I would say, though, that we continue to look at, and we've had, you know, disciplined marketing approaches to, you know, introduce new customers who aren't, who are, looking for transaction or transaction assistance and may want to shop at a place like Lowe's. And so we have been doing all sorts of marketing tests out in the market to acquire new customers as well. And so, that has a longer burn rate as we really target who the right customers are to give an offer to and introduce Katapult to. But with our existing base, the ramp is really, really fast.
Speaker Change: The opportunity that we continue to look at and we've had disciplined marketing approach is to introduce new customers, who haven't who are looking for a transaction.
Speaker Change: Our transaction assistance and they want to shop at a place like Lowe's and so we have been doing all sorts of <unk>.
Speaker Change: Marketing tests out in the market to acquire new customers as well and so that has a longer burn as we really target and on who the right customers are to give an opportunity to introduce capital too, but with our existing base.
Speaker Change: Ramp is really really quickly and we're just looking for the right timing for when that transaction makes sense for them in loans makes a lot of sense right now given this spring time going into summer a lot of activity happening in the home improvement space and so now they have both home depot and Lowe's.
Scott Buck: And, you know, we're just looking for the right timing for when a transaction makes sense for them. And Lowe's makes a lot of sense right now, given that this is springtime going into summer, and there is a lot of activity happening in the home improvement space. And now that they have both Home Depot and Lowe's, and Menards and others, we really have excellent coverage for wherever our customers want to shop, where they can get the best deal for the best price.
Speaker Change: And minority and others, we really have excellent coverage for wherever a customer wants to shop, where they can get the best deal for the best price.
Speaker Change: Great. That's helpful and then I wanted to ask about the.
Scott Buck: Great, that's helpful. And then I want to ask about the full-year origination guide of 10% growth. What's driven by new customers versus existing customers, and then, on the flip side, you know, what's driven by new logos, and then maybe an expansion of service within, you know, some of the current relationships, retailer relationships.
Speaker Change: The full year origination guidance of 10% growth whats driven by.
Speaker Change: New customers versus.
Speaker Change: Existing customers and then on the flip side, what's driven by new logos and then maybe expansion of service within some of the current relationships retailer relationships.
Derek Medlin: You know, it's really all of those things, and that's why our strategies of driving a customer base, as well as expanding relationships with existing merchants, adding new merchants, as we talked about in prepared comments, we have a healthy pipeline of activities that we're expecting will start to be reflected in our financial results as we go through the second half. But it's a combination of all those, and unfortunately, you know, we have not broken it down yet.
Speaker Change: It's really all of those things and.
Speaker Change: That's why our strategy of driving our customer base as well as expanding relationships with existing merchants, adding new merchants.
Speaker Change: As we talked about in the prepared comments, we have a healthy pipeline of activities that we're expecting will.
Speaker Change: Start to be reflected in our financial results as we go through the second half.
Speaker Change: But it's a combination of all those and unfortunately, we have not broken it out in terms of that detail for competitive reasons, but feel very good about all three arms of the strategy that.
Derek Medlin: In terms of that detail, for competitive reasons, but feel very good about all 3 kinds of arms of the strategy that. Controlling what we can control through our app and through catapult pay, with the high repeat rate and the fact that the lifetime value of those customers is just amazing. I think the metric we gave out is 30% of our customers within 60 days or initiating another grocery another lease.
Speaker Change: Controlling what we can control through our app and through catapult pay with the high repeat rate and the fact that the lifetime value of those customers is just amazing I think the metric. We gave out is 30% of our customers within 60 days or initiating another gross another lease. So that's a very powerful for us, we're bringing a lot of customers to our merchants.
Derek Medlin: So that's very powerful for us. We're bringing a lot of customers to our merchants. And at the same time, what we talked about with Wayfair, we're really taking a look at how we can creatively solve for what the merchant and us are looking for to drive our business. And so each of these is equally important. And it all factors into what we're seeing for growth in the second half of the year.
Speaker Change: And at the same time, what we talked about with waste there. We're really taking a look at how can we creatively solve for what the merchants and us are looking to drive our business and so each of these are equally important.
Speaker Change: And it all factors into what we're seeing the growth for the second half of the year.
Orlando: Yeah, Scott This Orlando one thing I'll add to is with catapult <unk> I think we've changed kind of the trending of the business and we saw this last year with.
Orlando J. Zayas: Scott, this is Orlando. One thing I'll add is with Katapult Pay, I think we've changed the kind of trending of the business. And we saw this last year with Best Buy and, obviously, Lenovo and Home Depot and Lowe's, that created more of a holiday-driven volume than if we were just home furnishings. Because home furnishings, people don't buy a new living room set for Christmas, but they sure do buy electronics and home improvement goods and stuff like that to improve their homes for the holidays.
Speaker Change: Best buy and obviously, Lenovo and home depot, and Lowe's that created more of a holiday driven volume than if we were just home furnishings, because home furnishing people don't buy a new living room set for Christmas, but they sort of Dubai electronics and home.
Speaker Change: Home improvement goods, it sounds like that to improve their home for the holidays.
Orlando J. Zayas: So we're pretty optimistic about the fourth quarter being as good as last year, probably better. And then you add in some new merchants that we've got coming up, and then continuing to improve our repeat rate with our customers, and then our direct-to-consumer marketing that we do, that's gonna help us round out the year.
Speaker Change: We're pretty optimistic about.
Speaker Change: Fourth quarter being as good as last year, probably better and then you add on some new merchants that we've got coming up.
Speaker Change: And then continuing to improve our repeat rate with our customers.
Speaker Change: And then our direct direct to consumer marketing that we do that that's going to help us round out the year.
Derek Medlin: And Scott, I'll add one more metric for this year: we're looking to grow our customer base by about 15% this year. New customers. Okay.
Speaker Change: Scott one more metrics for this year that we're looking to grow our customer base by about 15%.
Speaker Change: New customers.
Scott Buck: Okay, that's great. That's very helpful.
Scott Buck: Okay. That's great. That's very helpful. I appreciate that on the competitive environment anything youre seeing from your peers that raises an eyebrow whether it's <unk>.
Scott Buck: I appreciate that. In terms of the competitive environment, anything you're seeing from your peers that, you know, raises an eyebrow, whether it's... Justin Underwriting or anything along those lines to keep an eye on. Scott, I'll take that. This is Derek.
Speaker Change: <unk> underwriting or anything along those lines to keep an eye on.
Scott Buck: Okay.
Derek: Scott I'll take that this is Derek thanks for the question.
Derek Medlin: Thanks for the question. You know, I think we just see such a huge opportunity and the TAM is so large that right now, we have a lot of conversations going on with merchants, partners, and others in the ecosystem that are really, really exciting that, you know, obviously, we keep a close eye on activities to make sure that we are having an excellent offer for both consumers and for merchant partners. But for us, there's a huge greenfield opportunity out there that we're still accessing and tapping into.
Speaker Change: I think we just see such a huge opportunity and the Tam is so large that right now we have a lot of conversations going on with merchants partners.
Speaker Change: And other than the ecosystem that are really really exciting that obviously, we keep a close eye on activities to make sure that we are having an excellent offer for both consumers and for our merchant partners.
Speaker Change: But.
Speaker Change: For us there is a huge greenfield opportunity out there that we're still accessing and tapping into and I think overall, what I would say.
Derek Medlin: And I think overall, what I would say, Anthony didn't ask this traditional pipeline question, but there are great interactions that we're having with merchants who, when there are challenges in customer activity and in the macro, they're looking for solutions that can help them convert customers that are already on their sites or in their stores. And Katapult's a great solution for that.
Speaker Change: Anthony did mask as traditional pipeline question, but there are.
Speaker Change: Great interactions that we're having with merchant to win.
Speaker Change: When there is a chat.
Speaker Change: <unk> and customer activity and then the macro theyre looking for solutions that can help them convert customers that are already on their sites or in their stores. When capital is a great solution to that not only do we have a great offer but the way that we do it transparently and how we treat customers is really really powerful and those are the things that we're going to continue to lean in.
Derek Medlin: Not only do we have a great offer, but the way that we do it transparently and how we treat customers is really, really powerful. And those are the things that we're gonna continue to lean in on. Also, having no fees, late fees, et cetera.
Speaker Change: On also having no fee.
Speaker Change: Yes.
Speaker Change: We think those are winning propositions that are going to attract partners consumers and continue this great affinity that we have with our consumer base. So so we obviously watch it but we're really pleased with what we're seeing in terms of how the market is reacting to our offer and we're going to keep leaning into that.
Scott Buck: We think those are winning propositions that are gonna attract partners, consumers, and continue this great affinity that we have with our consumer base. So, we obviously watch it, but we're really pleased with what we're seeing in terms of how the market's reacting to our offer. And we're gonna keep leaning into that. Great, that's helpful.
<unk>.
Great. That's helpful. And then sorry, guys last one for me.
Scott Buck: And then, sorry, guys, last one for me. Nancy, it sounds like you guys are going to be strategically ramping up marketing in some areas. How should we think about the cadence of that as we move through the year? Is it, you know, kind of each quarter sequentially moves a bit higher or is there some seasonality involved that makes that a little bit more lumpy quarter to quarter?
Speaker Change: Nancy It sounds like you guys are going to be strategically ramping marketing in some areas. How should we think about the cadence of that as we move through the year is it kind of each quarter sequentially moves a bit higher or.
Nancy: Is there some seasonality involved that makes that a little bit more lumpy quarter to quarter.
Nancy A. Walsh: There will be a little lumpiness due to seasonality. Obviously, you know, the holiday season is the largest quarter for us. Tax season is a very high peak for us as well, and we tend to see the summertime being a little less.
Speaker Change: There will be a little lumpiness due to seasonality obviously the holiday season, it's the largest quarter for us tax season is a very high peak for us as well and we tend to see the summertime being a little less so you will see some of that.
Nancy A. Walsh: So you will see some of that. This is the 1st full year of really leaning into the marketing efforts, and you know, it's a lot of how we're utilizing the tools that we have and kind of expanding on that rather than investing a lot of dollars. Having said that, you know, we're keeping a close eye on that we are generating the appropriate returns for these investments. And it's not only driving new customers for us but driving a top line as well as improving our profitability. Great, thank you for that, and appre
This is the first full year of really leaning into the marketing efforts and.
Speaker Change: It's a lot of how were utilizing.
Speaker Change: The instruments that we had and kind of expanding on that rather than investing a lot of dollars, having said that we're keeping a close eye that we are generating the appropriate returns for these investments and it's not only driving new customers for us, but driving top line as well as improving our profitability.
Scott Buck: Great, thank you for that, and I appreciate you guys taking the time to answer my questions. Thank you.
Speaker Change: Great. Thank you for that and I. Appreciate you guys, taking my questions. Thank you.
Scott Buck: Thank you Scott.
Speaker Change: So you don't have any pending questions now I'd now like to hand.
Operator: If we don't have any pending questions as of right now, I'd now like to hand over to Orlando Zayas, CEO, for final remarks.
Speaker Change: Key online data science CEO for final remarks.
Orlando J. Zayas: Thanks, Operator. In closing, I want to thank everyone for tuning in today. We're proud of our continued progress. Before I sign off, I want to give a big thank you to the Katapult team. You're hardworking and resilient, and it's because of you that we've been able to report six consecutive quarters of gross origination growth and are on track for double-digit revenue and gross origination growth in 2024. Thank you so much for your dedication. We look forward to chatting with you and our investors as Q2 progresses, so please reach out to Jennifer if you have any questions or feedback. Thank you very much for the call today.
Speaker Change: Thanks, operator in closing I want to thank everyone for tuning in today. We are proud of our continued progress before I sign off I want to give a big thank you to the catapult team through our hard working and resilient and it is because of you that we've been able to report six consecutive quarters of gross origination growth and are on track for double digit revenue.
Speaker Change: And gross origination growth in 2024. Thank you so much for your dedication.
Speaker Change: Forward to chatting with you and our investors and as Q2 progresses. So please reach out to Jennifer if you have any questions or feedback. Thank you very much for the call today.
Speaker Change: Okay.
Operator: Thank you for attending today's call. You may now disconnect. Have a wonderful day.
Speaker Change #100: Thank you for attending today's call you may now disconnect have a wonderful day.
Speaker Change #100: Goodbye.
Speaker Change #100: Okay.
Speaker Change #100: Yeah.
Speaker Change #100: Okay.