Q4 2024 Katapult Holdings Inc Earnings Call

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Operator: https://www.youtube.com or www.facebook.com Thank you for standing by and welcome to the Katapult Hldg's 4th Quarter and Full Year 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by and welcome to the Caterpillar Holdings fourth quarter and full year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you would like.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press the star 1. Thank you.

Jennifer: To withdraw your question again prestige star one. Thank you I'd now like to turn the call over to Jennifer <unk>, Vice President and head of Investor Relations you may begin.

Jennifer Kull: I'd now like to turn the call over to Jennifer Kull, Vice President and Head of Investor Relations. You may begin. Welcome to Katapult's fourth quarter 2024 conference call.

Jennifer: Welcome to Capital's fourth quarter 2024 conference call on the call with me today are Orlando Diet, Chief Executive Officer, Nancy Walsh, Chief Financial Officer, and Derek Madeleine President and Chief growth Officer for your reference we have posted in the.

Jennifer Kull: On the call with me today are Orlando Zayas, Chief Executive Officer, Nancy Walsh, Chief Financial Officer, and Derek Medlin, President and Chief Growth Officer.

Jennifer Kull: For your reference, we have posted materials related to 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 earnings release and slide deck posted to our website for your reference. Our actual results may differ materially. Forward-looking statements involve risks and uncertainty, some of which are described in today's earnings release and our most recent Form 10-K, and which will be updated in future periodic reports that we file with the SEC.

Jennifer: Cereal is related to today's call on the Investor Relations section of the catapult website, which can be found at IR Dot catapult holdings dotcom.

Jennifer: 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 earnings release and slide deck posted to our website for your reference.

Jennifer: Our actual results may differ materially.

Jennifer: Looking statements involve risks and uncertainties some of which are described in today's earnings release and our most recent Form 10-K, which will be updated in future periodic reports that we file with the SEC.

Jennifer Kull: 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.

Jennifer: 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.

Jennifer Kull: 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 replacements for or superior to our GAAP results. 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.

Jennifer: 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.

Jennifer: Reconciliation of non-GAAP financial measures. The most directly comparable GAAP financial measures is included with today's earnings release and is available on the Investor Relations section of the Companys Web site.

Jennifer Kull: Any comparisons to 2023 financial results are referencing 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.

Jennifer: Any comparisons to 2023 financial results are referencing are restated financials included in our Form 10-K for the year ended December 31, 2023 filed with the SEC on April 24th 2024.

Orlando Diet: Finally, all comparisons are year over year, unless stated otherwise with that I will turn the call over to Orlando.

Orlando Zayas: With that, I will turn the call over to Orlando. Thank you, Jennifer, and thanks to everyone joining us today. We're excited to give you an update on our Q4 results and our plans for 2025.

Orlando Diet: Thank you Jennifer and thanks to everyone. Joining us today, we're excited to give you an update on our Q4 results and our plans for 2025.

Orlando Zayas: If we had to land on one headline this quarter, it would be, we finished the year strong. Q4 growth originations grew more than 11% year over year, and fourth quarter revenue was up more than 9%. With this strong performance, we have now grown our gross originations consistently for more than two years, and we expect our revenue growth track record to hit this two-year milestone after we report Q1 in May. These results showcase the enhancements we've made across the board. From our go-to market strategy to operations, we believe we have executed well and transformed our business model, setting Katapult up for continued success.

Orlando Diet: We had to land on one headline this quarter it would be we finished the year strong.

Orlando Diet: Q4, gross originations grew more than 11% year over year and fourth quarter revenue was up more than 9%.

Orlando Diet: With the strong performance, we have now grown our gross originations consistently for more than two years and we expect our revenue growth track record. This two year milestone. After we report Q1 in May.

Orlando Diet: These results showcase the enhancements <unk> made across the board.

Orlando Diet: Our go to market strategy to operations, we believe we have executed well and transformed our business model setting catapult up for continued success.

Orlando Zayas: I could not be more proud of our team here. Their dedication and hard work are the main ingredients in our success. And I'd like to give a big thank you to everyone here at Katapult.

Orlando Diet: I could not be more proud of our team here their dedication and hard work are the main ingredient in our success and I would like to give a big thank you to everyone here accountable.

Orlando Zayas: Before we dive further into our results, I want to take a quick step back to summarize and review the progress we've made over the past few years. We have transformed our business from a single input driven business to a multidimensional growth engine in a very short period of time. We believe this is important context as you evaluate where we are today and where we believe we can go over the next year and beyond. If you recall, just two short years ago, we launched our Katapult app, which included a groundbreaking feature we call Katapult Pay, or K-Pay.

Orlando Diet: Before we dive further into our results I want to take a quick step back to summarize and review the progress we've made over the past few years, we have.

Orlando Diet: <unk> transformed our business from single input driven business to a multi dimensional growth engine in a very short period of time.

Orlando Diet: We believe this is important context as you evaluate where we are today and where we believe we can go over the next year and beyond.

Orlando Diet: Thank you recall just two short years ago, we launched our catapult App, which included a groundbreaking feature we call catapult okay.

Orlando Zayas: Up until this launch, nearly 100% of our focus had been on a merchant engagement opportunity. Before our app existed, our business model relied completely on merchants to refer consumer traffic to us, either through direct integration, which offered a Katapult lease as a checkout option, or through a waterfall finance platform, which would offer our LTO if we were the best option for its consumer. We developed a great reputation for converting this traffic into transactions, which were incremental sales for our merchants. This strategy allowed us to build relationships with merchants that partnered with us. Our partnerships were supported by data and insights that show the incremental sales that the Katapult LTO option brings when added to merchant payment ecosystems. And today we are confident that we have a superior LTO product that gives non-prime consumers the choice, transparency, and pricing terms they need.

Orlando Diet: Up until this launch nearly 100% of our focus had been on a merchant engagement opportunities.

Orlando Diet: Before I wrap existed or business model relies completely on merchants to refer consumer traffic to us.

Orlando Diet: Through direct integration, which offered a catapult liza checkout option or through a waterfall finance platform, which would offer our LTE. If we were the best option for its consumers.

Orlando Diet: We've developed a great reputation for converting this traffic into transactions, which were incremental sales for our merchants. This strategy allowed us to build relationships with merchants that partnered with us.

Orlando Diet: Our partnerships were supported by data and insights that show the incremental sales that the catapult <unk> auction brings when added to merchant payment ecosystems and today. We are confident that we have a superior LTE product that gives non prime consumers the choice transparency and pricing terms they need.

Orlando Zayas: This is a driver of our consistently high repeat rates and our strong NPS and Trust Pilot scores. We are proud of the product we built and the way we serve our community of consumers. When we launched our app, our goal was to create a destination where consumers could go for all their durable goods shopping needs. Simply put, we wanted to create an ecosystem that allowed Katapult to connect consumers to merchant partners, enabling commerce whenever and however the consumer wanted to shop. We believe we could turn our app into a marketplace where consumers would choose to start their shopping journey because they trusted Katapult.

Orlando Diet: This is a driver of our consistently high repeat rates and our strong NPS and trust how it scores. We are proud of the product, we built and the way we serve our community of consumers.

Orlando Diet: When we launched our App our goal was to create a destination where consumers could go for all their durable goods shopping needs simply put we wanted to create an ecosystem that allowed catapult to connect consumers to merchant partners, enabling commerce whenever and however, the consumer wants to shop.

Orlando Diet: We believe we can turn our app into a marketplace, where consumers would choose to start their shopping journey because they trusted catapult.

Orlando Zayas: To do this, we needed to create vibrancy in our marketplace. So in addition to the hundreds of direct and waterfall merchant websites that consumers could link to and shop from within our app, we began to methodically add merchants with whom we didn't have a direct or waterfall relationship in our app marketplace. We also added K-Pay functionality that allows consumers to seamlessly check out using our proprietary virtual credit card technology, allowing them to check out with these merchants and our marketplace. Our technology lets customers start and finish their shopping journey on our app. Practically speaking, we give consumers more choice.

Orlando Diet: To do this we needed to create vibrancy in our marketplace. So in addition to the one hundreds of direct and waterfall merchant websites the consumers could lead to and shop from within our App, We began to methodically add merchants with whom we didn't have a direct or waterfall relationship and our app marketplace.

We also added <unk> functionality that allows consumers to seamlessly checkout using our proprietary virtual credit card technology.

Orlando Diet: Allowing them to check out with these merchants in our marketplace.

Orlando Diet: Technology last customer start and finish their shopping journey on our App.

Orlando Diet: Practically speaking, we give consumers more choice.

Orlando Zayas: They could shop our app and check out on a merchant website or check out in our application. And as our customers enjoy a better experience, Katapult can gather behavioral insights that allow us to create a more personalized customer journey that encourages repeat shopping. With the launch of our app, we also took control of our destiny because it allows us, for the first time, to include merchants with whom we didn't have a direct or waterfall relationship in our marketplace. This meant that we could service consumer demand at our own discretion and we could be the source of traffic to our merchants.

Orlando Diet: Could shop, our App and checkout on our merchant website or checkout on our App lets take that.

Orlando Diet: And as our customers enjoy a better experience catapult can gather behavioral insights that allow us to create a more personalized customer journey that encourages repeat shopping.

Orlando Diet: With the launch of our App. We also took control of our destiny because it allows us for the first time.

Orlando Diet: Merchants with whom we didn't have a direct or waterfall relationship at our marketplace.

Orlando Diet: We could service consumer demand at our own discretion and we could be the source of traffic to our merchants. This dynamic creates an even more compelling reason for merchants to want to partner with caterpillar.

Orlando Zayas: This dynamic creates an even more compelling reason for merchants to want to partner with Katapult. Since our app launched, we have added more than 30 KPAY-enabled merchants to our Marketplace, which again are in addition to the hundreds of other direct and waterfall merchant customers can reach through our Marketplace.

Orlando Diet: Since our App launched we have added more than 30, K pay enabled merchants to our marketplace, which again are in addition to the hundreds of other direct and waterfall merchant customers can reach through our marketplace.

Orlando Zayas: The impact of our Marketplace has been phenomenal. For 2024, approximately $127 million of gross originations actually began in our app. And our market-leading K-Pay feature enabled nearly $77 million of those gross originations last year alone. This is a significant change from our original go-to-market strategy. Before we launched our app, we were 100% reliant on merchants to send us this transfer. In just two years, 54% of our 2024 originations are now being driven by our own efforts.

Orlando Diet: The impact of our marketplace has been phenomenal.

Orlando Diet: For 2020 for approximately $127 million of gross originations actually began in our app.

Orlando Diet: And our market, leading K pay feature enabled nearly $77 million of those gross originations last year alone.

Orlando Diet: This is a significant change from our original go to market strategy before we launched our App, we're 100% reliant on merchants to set up this traffic.

Orlando Diet: In just two years, 54% of our 2024 originations are now being driven by our own efforts.

Orlando Zayas: starting in our ecosystem. We have created a two-sided marketplace that benefits consumers and merchants alike. It's self-generative and highly complementary to our merchant and waterfall-driven travel. Our two-sided marketplace is growing because we offer benefits to all market participants. We send merchants incremental sales with great economics, and our customers have a reliable shopping destination that offers straightforward and fair pricing for durable goods. We are a destination where they know they'll be treated with dignity and they will be able to acquire the items they need and want whenever and however they want to shop. This virtuous ecosystem means that customer success leads to merchant success and vice versa.

Orlando Diet: And our ecosystem.

Orlando Diet: We have created a two sided marketplace that benefits consumers and merchants alike.

Orlando Diet: Self generative and highly complementary to our merchant and waterfall driven traffic.

Orlando Diet: Our two sided marketplace growing because we offer benefits to all market participants, we send merchants incremental sales with great economics, and our customers have a reliable shopping destination that offer straightforward and fair pricing for durable goods.

Orlando Diet: We are a destination, where they know there'll be treated with dignity and they will be able to acquire the items, they need and want whenever and however, they want to shop.

Orlando Diet: This virtuous ecosystem means that customer success leads to merchant success and vice versa and when this happens catapult is also successful.

Orlando Zayas: And when this happens, Katapult is also successful.

Orlando Zayas: We've gone from simply being a payment method to being a growth partner to our merchants and a destination for consumers, and this 2.0 transformation has happened in less than two years. We believe merchants are beginning to understand the power of our marketplace and the strength of our LTO offering because they are now reaching out to Katapult with requests to be featured in our ecosystem. We know how to convert traffic into transactions and we believe this will encourage our merchant and waterfall partners to send us even more traffic in the future.

Orlando Diet: We've gone from simply being a payment method to being a growth partner to our merchants and a destination for consumers and this too pointed out transformation has happened in less than two years.

Orlando Diet: We believe merchants are beginning to understand the power of our marketplace and the strength of our <unk> offering because they are now reaching out to catapult with request to be featured in our ecosystem, we know how to convert traffic into transactions and we believe this will encourage our merchant and waterfall partner scientists even more traffic in the future.

Orlando Zayas: To unlock more of our marketplace potential, we need to drive additional top-of-the-funnel activity. In short, we need more applications that we can convert into customers and will come back to Katapult for their durable goods needs again and again.

Orlando Diet: To unlock more of our marketplace potential we need to drive additional top of the funnel activity in short we need more applications that we can convert into customers and we'll come back to catapult for their durable goods needs again and again.

Orlando Zayas: To do this, we have focused our top initiatives in four core areas. One, consumer engagement. Two, merchant engagement. Three, referral partnerships.

Orlando Diet: To do this we have focused our top initiatives in four core areas, one consumer engagement to merchant engagement three referral partnerships and four improving our unit economics and capital structure over time, so that we can improve profitability and sustainably generate cash.

Orlando Zayas: And four, improving our unit economics and capital structure over time so that we can improve profitability and sustainably generate cash.

Orlando Zayas: We're incredibly excited about the future of our marketplace.

Orlando Diet: We are incredibly excited about the future of our marketplace I'd now like to turn the call over to Derek who will provide you with an overview of our Q4 successes, which we intend to build upon to drive growth in 2025.

Derek Medlin: I'd now like to turn the call over to Derek, who will provide you with an overview of our Q4 successes, which we intend to build upon to drive growth in 2025.

Derek Medlin: After this, Nancy will give you a recap of our Q4 and 2024 financial results, as well as some expectations for our first quarter and full year 2025. We'll then open it up for your questions.

Speaker Change: After this nasty will give you a recap of our Q4 and 2024 financial results as well as some expectations for our first quarter and full year 2025, well then open it up for your questions Derek.

Derek Medlin: Derek? Thanks, Orlando.

Derek Madeleine: Thanks, Orlando and good morning to everyone. You just heard Orlando described how we've transformed our business over the past two years.

Derek Medlin: And good morning to everyone. You just heard Orlando describe how we've transformed our business over the past two years. When we launched our app in late 2022, we saw the opportunity to create a growth driver that would allow Katapult to gain more control over its business. Since that time, we've been executing against strategic initiatives we believe will support our continued progress. While we've already begun to see our strategy deliver, we believe we are still in the very early stages of a new phase of growth. We now have evidence that we can bring value to merchants and consumers alike.

Speaker Change: Monster App in late 2022, we saw the opportunity to create a growth driver that would allow catapult gain more control over its destiny.

Speaker Change: At that time, we've been executing against strategic initiatives, we believe will support our continued progress.

Speaker Change: While we've already begun to see our strategy to deliver we believe we are still in the very early stages of a new phase of growth.

Speaker Change: We now have evidence that we can bring value to merchants and consumers alike.

Derek Medlin: So our focus is on finding opportunities to move faster than we ever have before.

Speaker Change: <unk> focus is on finding opportunities to move faster than we ever had before.

Derek Medlin: So let's start with the progress we're making in our consumer engagement initiative. Within our consumer initiative, our overarching priority is engagement. In support of this, we're expanding our app functionality and footprint as we continue to test and learn with a variety of marketing campaigns. We believe our success in these efforts will allow us to leverage our app marketplace to drive consumer engagement, gross originations, and profitable revenue growth. During the fourth quarter, $46 million in gross originations started in our apps. For easy reference going forward, we will refer to this data point as total app origination.

Speaker Change: Let's start with the progress, we're making in our consumer engagement initiatives.

Speaker Change: Within our consumer initiative, our overarching priority is engagement.

Speaker Change: In support of this we're expanding our app functionality and footprint as we continue to test and learn with a variety of marketing campaigns.

Speaker Change: We believe our success in these efforts will allow us to leverage our app marketplace to drive consumer engagement gross originations and profitable revenue growth.

Speaker Change: During the fourth quarter $46 million in gross originations started in RF.

Speaker Change: For easy reference going forward, we will refer to this data point is total app originations.

Derek Medlin: Year over year, total app originations grew by 32% in Q4. This means that we were our own referral source for approximately 61% of the gross originations we generated in the fourth quarter. and roughly 31 million of our gross originations were transacted using KPAY, which was up approximately 52% year over year. Going forward, we will continue to refer to this data point as KPAY origination. This means that roughly 41% of our originations went through CAFE. Both these data points show that we are increasing the engagement and velocity in our marketplace and that activity is leading to growth.

Speaker Change: Year over year total.

Speaker Change: Total <unk> originations grew by 32% in Q4. This means that we were our own referral source for approximately 61% of the gross originations we generated in the fourth quarter.

Speaker Change: And roughly $31 million of our gross originations were transacted using case mix.

Speaker Change: Which was up approximately 52% year over year.

Speaker Change: Going forward, we will continue to refer to this data point as Keith K originations.

Speaker Change: This means that roughly 41% of originations went through Cathay.

Speaker Change: Both of these data points show that we are increasingly engagement and velocity in our marketplace and that activity is leading to growth.

Derek Medlin: Since the start of 2024, we added eight merchants to our marketplace based on customer feedback. These merchants include Metro of IT Mobile, Zales, and Rooms to Go, which we launched in December 2024 and early 2025, respectively. During 2025, we will continue to strategically add features, functionality, and merchants to our marketplace that we believe will encourage consumers to engage and transact with Katapult for more of their shopping needs. We intend to leverage data and insights to personalize the shopping journey for our customers, which we believe will lead to higher conversion rates.

Speaker Change: Since the start of 2024, we added eight merchants to our marketplace based on customer feedback.

<unk> include Metro by T Mobile Zales and rooms to go which we launched in December 2024, and early 2025, respectively.

Speaker Change: During 2025, we will continue to strategically add features functionality and merchants to our marketplace that we believe will encourage consumers to engage and transact with catapult for more of their shopping needs.

Speaker Change: We intend to leverage data and insights to personalize the shopping journey for our customers, which we believe will lead to higher conversion rates.

Derek Medlin: Now let's turn to marketing, which is our other high-priority consumer engagement initiative. Throughout 2024, we increased our marketing activity with a focus on getting the Katapult product in front of more eyeballs. We expect to continue to improve the return on ad spend over time, and we feel comfortable with our customer acquisition costs and our continued investment in our multi-channel marketing strategy. For 2025, our top marketing priorities are to drive application growth, so we have more activity at the top of our funnel, and to both increase the number of customers who take out a second lease with us, and shorten the timeline between the origination of their first and second leases.

Speaker Change: Now, let's turn to marketing, which is our other high priority consumer engagement initiatives.

Speaker Change: Brown 'twenty 'twenty four we increased our marketing activity with a focus on getting the catapult product in front of more write offs.

Speaker Change: We expect to continue to improve the return on AD spend over time.

Speaker Change: Feel comfortable with our customer acquisition costs, and our continued investment in our multichannel marketing strategy.

Speaker Change: For 2025, our top marketing priorities are to drive application growth. So we have more activity at the top of our funnel and to both increase the number of customers, who take out a second lease with us and shorten the timeline between the origination of their first and second leases.

Derek Medlin: Multiple leases are an obvious driver of lifetime value growth and permitting customers to have more than one lease with us at a time distinguishes Katapult LTO from many of our competitors.

Speaker Change: Multiple leases are an obvious driver of lifetime value growth permitting customers to have more than one lease with us at a time distinguishes catapult <unk> from many of our competitors.

Derek Medlin: Let me give you a few examples of how we are leveraging marketing to deliver growth. We are thoughtfully engaging with consumers more regularly. In fact, our lifecycle team increased their volume of communications by nearly 200% in 2024. Touchpoints included emails, SMS, and push, whose timing was tied to inflection points in the customer journey and experience. We also launched strategies within new customer acquisition channels, including Google Paid Ad Search. We are seeing a strong ROI, and we expect to invest further in this channel as it continues to perform. Finally, we also launched marketing strategies related to organic social, paid social, video ads, and direct mail.

Speaker Change: Let me give you a few examples of how we are leveraging marketing to deliver growth.

Speaker Change: We are thoughtfully engaging with consumers more regularly in fact, our lifecycle team increased their volume of communications by nearly 200% in 2024.

Speaker Change: Touch points included E mails, SMS push whose timing was tied to inflection points in the customer journey and experience.

Speaker Change: We also launched strategies within new customer acquisition channels, including Google paid search.

Speaker Change: We are seeing a strong ROI and we expect to invest further in this channel as it continues to perform.

Speaker Change: Finally, we also launched marketing strategies related to organic social paid social video ads and direct mat.

Derek Medlin: And we believe we have a lot of potential growth to tap into related to these channels. We will continue to scale our marketing efforts by testing and learning in a variety of campaigns throughout 2025. We believe our hard work is paying off, and we are seeing strength and opportunities across the spectrum of KPIs we're using to measure the health of our market.

Speaker Change: We believe we have a lot of potential growth thats happened to related to these channels.

Speaker Change: We will continue to scale, our marketing efforts by testing and learning in a variety of campaigns throughout 2025.

Speaker Change: We believe our hard work is paying off and we're seeing strength and opportunities across the spectrum of Kpis, we are using to measure the health of our marketplace.

Derek Medlin: Let me highlight a few Q4 data points that illustrate our progress. Given top-of-funnel activity is our biggest near-term priority, I'll start with application volume, which grew approximately 50% during the fourth quarter, driven in equal parts by new and returning customers. Reading our application volume, both app downloads and MAUs, our monthly active users, grew during 2024. We now have nearly 1 million cumulative app downloads.

Speaker Change: Let me highlight a few Q4 data points that illustrate our progress.

Speaker Change: Given top of funnel activity is our biggest near term priority I'll start with application volume, which grew approximately 50% during the fourth quarter driven in equal parts by new and returning customers.

Speaker Change: In our application volume, both App downloads and May use for monthly active users grew during 2024.

Speaker Change: We now have nearly 1 million cumulative app downloads.

Derek Medlin: Traveling down the funnel, let's talk briefly about our conversion rate. The team has done a great job improving the customer journey, which led to a 72 basis point improvement in global conversion rate during the full year 2024. We continue to sustain what we believe is a market leading customer repeat rate, which was 61.5% in the fourth quarter. We came in above 55% for all of 2020. In fact, as of the end of the year, nearly 30% of our active customers have entered into four or more leases with Katapult during their time at We believe this data point demonstrates the value we bring to customers and given the demographic and psychographic similarities across our customer base, we believe we can drive that 30% much higher over time.

Speaker Change: Traveling down the funnel, let's talk briefly about our conversion rate. The team has done a great job of improving the customer journey, which led to a 72 basis point improvement in global conversion rate during the full year 2024.

Speaker Change: We continue to sustain what we believe is a market leading customer repeat rate, which was 61, 5% in the fourth quarter and came in above 55% for all of 2024.

Speaker Change: In fact as of the end of the year.

Speaker Change: 30% of our customers have been entered into four or more leases with catapult during their time with us.

Speaker Change: We believe this data point demonstrates the value, we bring to customers and get them.

Speaker Change: And the demographic and psychographic similarities across our customer base. We believe we can drive that 30% much higher over time.

Derek Medlin: We believe this repeat rate is fueled by the positive experiences our customers have with the Katapult Marketplace. We have a customer-centric philosophy, which means we never charge late fees and we give consumers the transparent and affordable LTO options they deserve. Our approach has consistently resonated with our customers. Our MTS was 58 as of the end of Q4, up from 52 in Q4 of 2023. This strong score is a testament to our customer service obsession. All of these data points drive LTV, which is one of the more important hallmarks of our healthy marketplace. During 2024, our customer LTV grew approximately 9% compared with 2023.

Speaker Change: We believe this repeat rates fueled by the positive experiences our customers have with the castle marketplace.

Speaker Change: Our customer centric philosophy, which means we never charge late fees and we give consumers the transparent and affordable LTE options they deserve.

Speaker Change: Our approach has consistently resonated with our customers. Our MTS was 58 as of the end of Q4 up from 52 in Q4 of 2023.

Speaker Change: This strong score is a testament to our customer service obsession.

Speaker Change: All of these data points drive LTV, which is one of the more important hallmarks of our healthy marketplace. During 2020 for our customer LTV grew approximately 9% compared with 2023.

Derek Medlin: We believe that these stats are giving merchants a better understanding of the incremental sales our LTO delivers and the consumer demand for our product. These merchants are seeing us as a growth partner and our relationships have become even more collaborative.

Speaker Change: We believe that these stats are giving merchants a better understanding of the incremental sales are L. T O delivers and the consumer demand for our products. These merchants are seeing us as a growth partner and our relationships have become even more collaborative.

Derek Medlin: That's a great segue to a conversation about our Merchant Engagement Initiative. Within Merchant Engagement, we are focusing on positioning Katapult as a partner of choice for all merchants in Waterfall Finance Platform. No matter how merchants are participating in our marketplace, we want them to recognize and value the incremental sales that Katapult has delivered. Our direct and waterfall merchants accounted for approximately 68% of total gross originations in 2024. We have remained focused on bringing new merchants to our marketplace and growing our market share with our anchor merchants. This focus led to success.

Speaker Change: That's a great segue to a conversation about our merchant engagement initiatives within merchant engagement, we are focusing on positioning <unk> as a partner of choice for all merchants and waterfall finance platforms.

Speaker Change: No matter, how merchants are participating in our marketplace, we want them to recognize and value the incremental sales accountable to delivering.

Speaker Change: Our direct and waterfall merchants accounted for approximately 68% total gross originations in 2024.

Speaker Change: We have remained focused on bringing new merchants to our marketplace and growing our market share with our anchor margins.

Speaker Change: This focus led to success during the fourth quarter, if we exclude the home furnishings and mattress category are direct and waterfall gross originations grew approximately 44% year over year.

Derek Medlin: During the fourth quarter, if we exclude the home furnishings and mattress category, our direct and waterfall gross originations grew approximately 44% year over year. For whole year 2024, this metric was up 16%. This growth was driven by several factors. Let me highlight two.

Speaker Change: For full year 2024, this metric was up 16%.

Speaker Change: This growth was driven by several factors, let me highlight two.

Derek Medlin: First, we added more than 30 new direct or waterfall merchants or merchant pathways to our ecosystem. As a reminder, pathways include new or existing merchant partners that launch a new website or an in-store experience that includes Katapult as a direct or waterfall LTO offer. These merchants span a variety of categories, most notably automotive and durable medical devices, and collectively, we believe they will begin to contribute to the vibrancy of our marketplace and gross originations over time. Second, in the fourth quarter, we leaned into co-branded marketing campaigns with our merchant partners. Their support led to very strong growth during the Cyber 5 holiday period and the rest of the holiday season.

First we added more than 30, new direct a waterfall merchants or merchant pathways to our ecosystem.

Speaker Change: As a reminder, pathways include new or existing merchant partners launched a new website or an in store experience that includes catapult as a director of a waterfall LTE offerings.

Speaker Change: These merchants span a variety of categories, most notably automotive and durable medical devices and collectively we believe they will begin to contribute to the vibrancy of our marketplace and gross originations over time.

Speaker Change: Second in the fourth quarter, we leaned into co branded marketing campaigns with our merchant partners.

Speaker Change: Their support led to very strong growth during the cyber five holiday period, and the rest of the holiday season.

Derek Medlin: With their partnership, we grew gross originations by 24% in the month of December and approximately 100% during the Cyber 5 period compared with 2023.

Speaker Change: With their partnership we grew gross originations by 24% in the month of December.

Speaker Change: 100% during the cyber five period compared with 2023, let.

Derek Medlin: Let me give you a few examples of the types of co-marketing and other activities we're engaging in and the results they're creating. First, during a two-week promotion, we partnered with a gaining product merchant that led to a 200% increase in applications and more than 180% increase in gross originations compared with the same period last year. Second, with one of our leading tire and auto merchants, we co-sponsored a one-week promotion that led to applications increasing 65% year-over-year during that week, and gross originations growth of nearly 35%. We also worked with one of our leading electronics merchants to refresh their product detail pages to include a financing widget to help consumers find Katapult LTO option more easily.

Speaker Change: Let me give you a few examples of the types of co marketing and other activities, we are engaging in and the results they are creating.

Speaker Change: First Brian two week promotion, we partner with the gaming product merchant that led to a 200% increase in applications and more than 180% increase in gross originations compared with the same period last year.

Speaker Change: Second with one of our leading tire and auto merchants, we co sponsored a one week promotion that led to applications, increasing 65% year over year during that week and gross originations growth of nearly 35%.

Speaker Change: We also work with one of our leading electronics merchants to refresh their product detail pages to include a financing with it to help consumers find catapult <unk> option more easily.

Derek Medlin: This led to an approximate 38% increase in average daily growth originations through the end of the quarter compared with last year. Finally, for another leading tire and auto merchant, we added our innovative price calculator and were included in both our email newsletters and abandoned cart emails. Following these updates, we saw a 42% increase in average daily gross origination.

Speaker Change: This led to an approximate 38% increase in average daily gross originations through the end of the quarter compared with last year.

Speaker Change: Finally for another leading tire and auto merchant, we added our innovative price calculator and were included in both our E mail newsletters and abandoned cart E. Mails. Following these updates we saw 42% increase in average daily gross originations.

Derek Medlin: We will look for new opportunities to partner even more closely with our merchants as we test and learn in 2025 and continue to build affinity within our Katapult community. And while we're watching the performance of our entire merchant base, we closely monitor the success and health of our top 25 merchants. By monitoring the tip of the sphere performance, we believe we can quickly get a sense of our marketplace health and implement enhancements that unlock growth. During the fourth quarter, application volume grew approximately 30% for our top 25 merchants when compared to the top 25 last year.

Speaker Change: We will look for new opportunities to partner, even more closely with our merchants as we test and learn in 2025 and continuing to build a fannie within our catapult community.

Speaker Change: And while we're watching the performance of our entire merchant base, we closely monitor the success and health of our top 25 merchants.

Speaker Change: By monitoring the tip of the spear performance. We believe we can quickly get a sense of our marketplace and implement enhancements that unlock growth.

Speaker Change: During the fourth quarter.

Speaker Change: Location volume grew approximately 30% for our top 25 merchants when compared to the top 25 last year.

Derek Medlin: which led to nearly 10% gross origination growth to this cohort of... And perhaps most importantly, the Katapult Marketplace drove about $43 million in gross originations to our top 25. We are executing well on the consumer and merchant fronts, and we believe that our partnership initiatives can accelerate our progress even more.

Speaker Change: Which led to nearly 10% gross origination growth to this cohort of merchants.

Speaker Change: And perhaps most importantly, the catapult marketplace drove about $43 million in gross originations to our top 25 merchants.

Speaker Change: We are executing well on the consumer and merchant fronts, and we believe that our partnership initiatives can accelerate our progress even more.

Derek Medlin: We want to enter partnerships that can deliver new customers, increase brand awareness, create new products that customers want, and leverage our technology in new ways to drive gross originations and revenue growth. Given our focus on building top of funnel activity, our partnership efforts in 2025 will lean into building new relationships that broaden our application pool and give our customers more reason to engage with the Katapult marketplace.

Speaker Change: Want to enter partnerships that can deliver new customers increased brand awareness, great new products that customers want and leverage our technology in new ways to drive gross originations and revenue growth.

Speaker Change: Given our focus on building top of funnel activity. Our partnership efforts in 2025, we will lean into building new relationships that broadened our application pool and give our customers more reason to engage with the catapult marketplace.

Derek Medlin: We've recently kicked off new partnerships that align with these goals. In addition, we have multiple new executed contracts and are entering the launch phase with several others.

Speaker Change: We've recently kicked off new partnerships that align with these goals.

Speaker Change: In addition, we have multiple new executed contracts and are entering the last phase with several others.

Derek Medlin: Recent partnerships include Self, a financial technology company with a mission to help people build credit, particularly those who are new to credit or might not have access to traditional financial products. Through this partnership, we believe we can monetize our declined applications and as these consumers improve their credit profiles, they can reapply with Katapult, which will help us grow application volume and help our customers improve their financial health.

Speaker Change: <unk> partnerships include self financial Technology company with a mission to help people build credit, particularly those who are new to credit or might not have access to traditional financial products.

Speaker Change: Through this partnership we believe we can monetize our declined applications and as these consumers improve their credit profiles. They can reapply with catapult, which will help us grow application volume and help our customers improve their financial health.

Derek Medlin: We also have a new partnership with a global market leader that delivers discounts and benefits to employees of larger enterprises. This relationship is focused on exploring the benefits of their digital platform as an economical referral source for Katapult.

Speaker Change: We also have a new partnership with a global market leader that delivers discounts and benefits to employees of larger enterprises.

Speaker Change: This relationship is focused on exploring the benefits of their digital platform is an economical referral source for caterpillar.

Derek Medlin: Finally, we have also launched a partnership with Fintech that offers banking, investing, and borrowing products with a focus on consumers with limited credit. During the first two months following the launch, we expanded our reach to 50,000 consumers. We believe this partnership will also create an ROI-positive opportunity to expand our brand reach, giving the Katapult name in front of customers who can benefit from our offer.

Speaker Change: Finally, we have also launched a partnership with a fintech that offers banking investing and borrowing products with a focus on consumers with limited credit during the first two months following the launch we expanded our reach to 50000 consumers. We believe this partnership will also create an ROI positive opportunity to expand our brand reach getting mechanical name in front of customers who can.

Speaker Change: Benefit from our offerings.

Derek Medlin: Beyond these efforts, we have continued to build new relationships with waterfall finance platforms while deepening our partnerships with waterfalls we already work with. For example, of the more than 30 new direct or waterfall merchants we onboarded during Q4, 11 came to us through One Waterfall Partnership. Eight of these merchants are new to our platform, and three already had a direct integration with us. We have created multiple opportunities for merchants to participate in our marketplace. From Direct, to Waterfall, to Kpay, to our App Marketplace, we believe that allowing customers to connect to merchants whenever and however they want will drive growth for our merchants and Katapult.

Speaker Change: Beyond these efforts.

Speaker Change: To build new relationships with waterfall finance platforms, while deepening our partnerships with waterfalls, we already worked with for.

Speaker Change: For example of the more than 30, new direct or waterfall merchants. We on boarded during Q4 11 came to us through one waterfall partnership eight of these merchants are new to our platform and three already had a direct integration with us.

Speaker Change: We have created multiple opportunities for merchants to participate in our marketplace from direct to waterfall to pay to our app marketplace, we believe that allowing customers to connect to merchants whenever and however, they want will drive growth for our merchants and catapult.

Derek Medlin: We are very excited about our progress, and our team is executing well across our key initiatives, and the hard work is translating into continued growth origination and revenue growth, as well as unlocking our path to profitability.

Speaker Change: We are very excited about our progress and our team is executing well across our key initiatives and our hard work is translating into continued gross origination and revenue growth as well as unlocking our path to profitability.

Nancy Walsh: With that, I'll turn it over to Nancy, who will give you an update on our financial results and outlook. Thanks, Derek, and hello to everyone joining us this morning. As you have heard, we had a great quarter and we believe we are well positioned to accelerate our momentum. Let's start with a few insights on our top-line performance. We have now grown gross originations for nine consecutive quarters. Gross Originations grew 11.3% to $75.2 million in the fourth quarter. And on a two-year stack basis, our Gross Originations grew 25.7%. In addition, if we exclude home furnishings and mattress gross originations from the direct and waterfall channel, Q4 gross originations grew more than 50% year over year.

Speaker Change: With that I'll turn it over to Nancy who will give you an update on our financial results and outlook Nancy.

Nancy Walsh: Thanks, Derrick and Hello to everyone. Joining us. This morning as you have heard we had a great quarter and we believe we are well positioned to accelerate our momentum.

Nancy Walsh: Let's start with a few insights on our topline performance.

Nancy Walsh: We have now grown gross originations for nine consecutive quarters.

Nancy Walsh: Gross originations grew 11, 3% to $75 2 million in the fourth quarter and on a two year stack basis, our gross originations grew 25, 7%.

Nancy Walsh: In addition, if we exclude home furnishings and mattress gross originations from the direct and waterfall channel Q4, gross originations grew more than 50% year over year.

Nancy Walsh: For the full year 2024, total gross originations grew approximately 5%. Q4 gross originations grew faster than our 6-8% outlook and this was driven in large part by an exceptional holiday sales season. We saw growth accelerate throughout the quarter, culminating in December growing 24% year-over-year. We are leveraging our technology, underwriting, and go-to market know-how to scale our two-sided marketplace, and I'm proud of the results we're delivering. We are also successfully diversifying our gross originations footprint. As Derek mentioned, gross originations for our top 25 merchants grew 10% during the quarter and we reduced our merchant concentration. To add further context to our top 25 merchants, our largest merchant, Wayfair, represented 27% of our total gross originations in Q4, down from 43% of our total in Q4 2021.

Nancy Walsh: For the full year 2020 for total gross originations grew approximately 5%.

Nancy Walsh: Q4, gross originations grew faster than our 6% to 8% outlook and this was driven in large part by an exceptional holiday sales season, we saw growth accelerate throughout the quarter, culminating in December growing 24% year over year.

Nancy Walsh: We are leveraging our technology underwriting and go to market know how to scale, our two sided marketplace and im proud of the results we're delivering we.

Nancy Walsh: We are also successfully diversifying our gross origination footprint.

Nancy Walsh: As Derek mentioned gross originations for our top 25 merchants grew 10% during the quarter and we reduced our merchant concentration.

Nancy Walsh: To add further context to our top 25 merchants, our largest merchant wayfarer represented 27% of our total gross originations in Q4 down from 43% of our total in Q4 2023.

Nancy Walsh: From a financial model perspective, I am very excited about how accelerated top-line growth can positively impact profitability and cash flow. Since we are a two-sided marketplace, we can rapidly grow the top line without having to rapidly grow our expenses. Given where we are in our growth cycle, we are prioritizing those initiatives that can accelerate gross originations, but that do not add meaningfully to our fixed cost expenses. And we are executing on these priorities as fast as we can. and our execution is creating value for all marketplace participants. We are referring valuable traffic to our merchant partners and creating a safe and productive shopping experience for our customers.

Nancy Walsh: From a financial model perspective, I am very excited about how accelerated topline growth can positively impact profitability and cash flow. Since we are a two sided marketplace. We can rapidly grow the top line without having to rapidly grow our expense base.

Nancy Walsh: Given where we are in a growth cycle. We are prioritizing those initiatives that can accelerate gross origination, but that do not add meaningfully to our fixed cost expenses and we are executing on these priorities as fast as we can.

Nancy Walsh: And our execution is creating value for all marketplace participants, we are referring valuable traffic to our merchant partners and creating a safe and productive shopping experience for our customers.

Nancy Walsh: This is delivering a virtuous cycle of benefits for our marketplace participants, which we believe can continue to grow. As we lean into growing applications, we are also closely watching cross-shopping activity. Not only does cross-shopping create new avenues for growth for merchants, it also provides tangible proof of the vibrancy of our marketplace. Cross shoppers during the fourth quarter grew approximately 60% and for the full year they grew approximately 46%. On the revenue front, we also had a great quarter and a terrific year. We delivered $63 million, or 9.4% growth in Q4, which was above our outlook and marked the seventh consecutive quarter of year-over-year growth.

Nancy Walsh: This is delivering a virtuous cycle of benefits for our marketplace participants, which we believe can continue to grow.

Nancy Walsh: As we lean into growing applications. We are also closely watching cross shopping activity.

Nancy Walsh: Not only does cross shopping create new avenues for growth for merchants. It also provides tangible proof of the vibrancy of our marketplace.

Nancy Walsh: Cross shoppers during the fourth quarter grew approximately 60% and for the full year. They grew approximately 46%.

Nancy Walsh: On the revenue front, we also had a great quarter and a terrific year, we delivered $63 million or nine 4% growth in Q4, which was above our outlook and marked the seventh consecutive quarter of year over year growth.

Nancy Walsh: This growth reflects continued improvements in productivity and efficiencies, as well as strong collection trends. For the full year 2024, we delivered approximately 12%, also above our outlook. Gross profit for Q4 was approximately $7.4 million. This compares with gross profit of $8.9 million last year. As a reminder, we front load lease depreciation, which impacts gross profit. And this depreciation is not an add back to adjusted EBITDA. This means that in times of rapid gross originations growth, such as what we achieved in December, depreciation costs will have a disproportionate impact on gross profit in the quarter. For the full year, gross profit was $45.8 million, up about 10% versus 2023.

Nancy Walsh: This growth reflects continued improvements in productivity inefficiencies as well as strong collection trends.

Nancy Walsh: For the full year 2024, we delivered approximately 12% also above our outlook.

Nancy Walsh: Gross profit for Q4 was approximately $7 $4 million. This.

Nancy Walsh: <unk> with gross profit of $8 $9 million last year as a reminder, we frontload lease depreciation which impacts gross profit and this depreciation is not an add back to adjusted EBITDA.

Nancy Walsh: This means that in times of rapid gross originations growth such as what we achieved in December depreciation costs will have a disproportionate impact on gross profit in the quarter for.

Nancy Walsh: For the full year gross profit was $45 $8 million up about 10% versus 2023.

Nancy Walsh: Gross margin for full year 2024 was 18.5% within our target range of 18 to 20%. We have continued to effectively manage write-offs as a percent of revenue. During the fourth quarter, this metric was 9.6%, fairly in line with our Q3 rate of 9.5%, and up from 8.7% in the fourth quarter of 2023. Moving on to expenses and profitability, our disciplined approach to expense management coupled with our top line growth is at the center of our financial model. This philosophy fuels our decision-making and it is a core component of our long-term growth strategy.

Nancy Walsh: Gross margin for full year 2024 was 18, 5% within our target range of 18% to 20%. We have continued to effectively manage write offs as a percent of revenue during the fourth quarter. This metric was nine 6% fairly in line with our Q3 rate of nine 5% and up from eight 7% in the fourth.

Nancy Walsh: Quarter 2023.

Nancy Walsh: Moving on to expenses and profitability.

Nancy Walsh: Upland approach to expense management, coupled with our topline growth is at the center of our financial model.

Nancy Walsh: This philosophy fuels, our decision, making and it is a core component of our long term growth strategy.

Nancy Walsh: This approach allowed us to increase adjusted EBITDA by nearly $7 million in 2024 and report the first full year of positive adjusted EBITDA since 2021. We believe we are well positioned to further improve upon this performance in 2025. Let me walk you through some of the puts and takes that impacted Q4 Adjusted EBITDA. We've already talked about our front-loaded lease depreciation and the impact rapid growth has on in-quarter gross profit. Similarly, because lease depreciation is not an add-back, this non-cash expense drives cost of sales higher, without a commensurate add-back to adjusted EBITDA. This was a headwind to our Q4 adjusted EBITDA.

Nancy Walsh: This approach allowed us to increase adjusted EBITDA by nearly $7 million in 2024 and report the first full year of positive adjusted EBITDA since 2021.

Nancy Walsh: We believe we are well positioned to further improve upon this performance in 2025.

Nancy Walsh: Let me walk you through some of the puts and takes that impacted Q4 adjusted EBITDA.

Nancy Walsh: Already talked about are front loaded lease depreciation and the impact rapid growth has on in quarter gross profit similar.

Nancy Walsh: Similarly, because lease depreciation is not an add back this noncash expense drives cost of sales higher without a commensurate add back to adjusted EBITDA.

Nancy Walsh: This was a headwind to our Q4 adjusted EBITDA.

Nancy Walsh: Total operating expenses decreased by 37% during the quarter. The year-over-year decrease was primarily driven by lower litigation expense this quarter compared to Q4 2023. Full year OPEX decreased 11 percent. Excluding underwriting fees and servicing costs, which are variable, depreciation and stock-based compensation expense, which are non-cash expenses, and excluding litigation settlement, our Q4 fixed cash operating expenses were $8.4 million, a decrease of 6.9% compared to last year, reflecting our ongoing commitment to expense control. The full year fixed cash operating expenses decreased 7.1%. During the fourth quarter, our loss from operations was $4.8 million, a significant improvement compared with the $10.6 million loss from operations we reported for Q4 2023.

Nancy Walsh: Total operating expenses decreased by 37% during the quarter.

Nancy Walsh: The year over year decrease was primarily driven by lower litigation expense this quarter compared to Q4 2023.

Nancy Walsh: Full year Opex decreased 11%.

Nancy Walsh: Excluding underwriting fees and servicing costs, which are variable depreciation and stock based compensation expense, which are noncash expenses and excluding litigation settlement.

Nancy Walsh: Q4 fixed cash operating expenses were $8 4 million a decrease of six 9% compared to last year, reflecting our ongoing commitment to expense control.

Nancy Walsh: For the full year fixed cash operating expenses decreased seven 1%.

Nancy Walsh: During the fourth quarter, our loss from operations was $4 8 million, a significant improvement compared with the $10 $6 million loss from operations, we reported for Q4 2023.

Nancy Walsh: For the full year, excluding litigation expense we recognized in Q3, our loss from operations was approximately $4.4 million, down from $11.8 million in full year 2023. Taken together, these puts and takes resulted in a Q4 adjusted EBITDA loss of $1.1 million, which was below our outlook. Again, this performance was primarily driven by stronger-than-expected top-line growth and the least depreciation costs associated with this growth. For full year 2024, we delivered approximately $4.8 million of adjusted EBITDA, a $6.7 million improvement compared to the same period of last year. We are proud of the progress we have made on this front and believe we have the right strategy, initiatives, and discipline in place to deliver continued growth.

Nancy Walsh: For the full year, excluding litigation expense, we recognized in Q3, our loss from operations was approximately $4 4 million.

Nancy Walsh: Down from $11 8 million and full year 2023.

Nancy Walsh: Taken together these puts and takes resulted in a Q4 adjusted EBITDA loss of $1 $1 million, which was below our outlook.

Nancy Walsh: Again this performance was primarily driven by stronger than expected topline growth in the lease depreciation costs associated with this growth.

Nancy Walsh: For full year 2024, we delivered approximately $4 $8 million of adjusted EBITDA of $6 $7 million improvement compared to the same period of last year.

Nancy Walsh: We are proud of the progress we have made on this front and believe we have the right strategy initiatives and discipline in place to deliver continued growth.

Nancy Walsh: Turning to the balance sheet and cash flow, as of December 31, 2024, we had total cash and cash equivalents of $16.6 million, which included $13.1 million of restricted cash. Our restricted cash balance was unusually high due to the timing of the New Year's holiday, which impacted our cash collection flow. In early January, we returned to our normal collection flow, and as of January 31, total cash and cash equivalents were $20 million, including approximately $5 million of restricted cash. As of the end of the fourth quarter, we also had $82.8 million in outstanding debt on our revolving credit facility.

Nancy Walsh: Turning to the balance sheet and cash flow.

Nancy Walsh: As of December 31, 2024, we had total cash and cash equivalents of $16 6 million, which included $13 1 million of restricted cash.

Nancy Walsh: Our restricted cash balance was unusually high due to the timing of the new year's holiday, which impacted our cash collection flow.

Nancy Walsh: In early January we returned to our normal collection flow and as of January 31, total cash and cash equivalents were $20 million, including approximately $5 million of restricted cash.

Nancy Walsh: As of the end of the fourth quarter. We also had $82 8 million and outstanding debt on our revolving credit facility.

Nancy Walsh: Last quarter, we disclosed that we signed a non-binding letter of intent in October with a direct lender with respect to a new credit facility. As we advised previously, there can be no assurance we will consummate this or any other credit facility with this or any other lender. While we are continuing to work on a refinancing, we do not have anything additional to share today.

Nancy Walsh: Last quarter, we disclosed that we signed a nonbinding letter of intent in October with a direct lender with respect to any of our credit facility as.

Nancy Walsh: As we advised previously there can be no assurance, we will consummate this or any other credit facility with this or any other lender.

Nancy Walsh: We are continuing to work on our refinancing we do not have anything additional to share today.

Nancy Walsh: In the 10K we filed this morning, we provided more information regarding the risks and uncertainty surrounding our ability to secure this refinancing and to continue as a going concern. We will provide an update when we have something to report. Cash used in operations for the full year 2024 was $32.6 million compared to $17.4 million in cash used in operations in 2023. The increase was largely driven by costs related to our growth in Q4, specifically an increase in property held for lease, as well as a decrease in accrued liabilities and the costs related to the litigation settlements we finalized in Q3 2024.

Nancy Walsh: The 10-K, we filed this morning, we provided more information regarding risks and uncertainty surrounding our ability to secure this refinancing and to continue as a going concern we will provide an update when we have something to report.

Nancy Walsh: Cash used in operations for the full year 2024 was $32 6 million compared to $17 $4 million in cash used in operations in 2023.

Nancy Walsh: The increase was largely driven by costs related to our growth in Q4, specifically an increase in property held for lease as well as a decrease in accrued liabilities and the costs related to litigation settlements, we finalized in Q3 2024.

Nancy Walsh: Excluding the costs related to accrued liabilities and litigation, cash used in operations in 2024 would have been approximately $20 million.

Nancy Walsh: Excluding the costs related to accrued liabilities and litigation cash used in operations in 2024 would have been approximately $20 million.

Nancy Walsh: Turning to our Q1 2025 and full year 2025 outlook. We are continuing to navigate a challenging macroenvironment, particularly surrounding the home furnishings and mattress category. That said, given the current breadth of our merchant selection, as well as our plans to introduce new merchants to the Katapult app marketplace throughout 2025, our strategic marketing and our strong consumer offering, we believe we are well positioned to deliver continued growth in 2025.

Nancy Walsh: Turning to our Q1 2025 and full year 2025 outlook.

Nancy Walsh: We are continuing to navigate a challenging macro environment, particularly surrounding the home furnishings and mattress category.

Nancy Walsh: That said given the current breath of our merchant selection as well as our plans to introduce new merchants to the catapult app marketplace throughout 2025, our strategic marketing and our strong consumer offering. We believe we are well positioned to deliver continued growth in 2025.

Nancy Walsh: From a big picture perspective, we believe we have a large addressable market of underserved non-prime consumers and that we will benefit if prime credit options become less available. From a Katapult-specific perspective, we plan to leverage the many direct and waterfowl merchant relationships we have that provide our customers with access to just about any durable good they want and unleash the power of the Katapult App Marketplace and our targeted marketing campaigns to give consumers the shopping experience they need to keep coming back to Katapult again and again.

Nancy Walsh: From a big picture perspective, we believe we have a large addressable market of underserved non prime consumers and that we will benefit if prime credit options become less available.

Nancy Walsh: From a catapult specific perspective, we plan to leverage the many direct and waterfall merchant relationships, we have that provide our customers with access to just about any durable good they want and unleash the power of the catapult app marketplace and our targeted marketing campaigns to give consumers the shopping experience they need to keep coming back to catapult.

Nancy Walsh: Again and again.

Nancy Walsh: Based on quarter-to-date results, we expect the following for the first quarter. Gross originations growth of approximately 11%. Gross originations excluding the home furnishings and mattress category are expected to continue to grow at a much faster pace than our overall gross origination. Revenue growth of approximately 10%. and approximately $3 million in positive adjusted EBITDA. For your models, our Q1 adjusted EBITDA will be impacted by the strong gross originations growth we achieved in Q4 2024. This high growth means that we expect to have higher lease depreciation costs in Q1 2025, which will impact gross margin. As a reminder, during the first quarter of 2024, we had an exceptionally strong gross profit margin.

Nancy Walsh: Based on quarter to date results, we expect the following for the first quarter.

Nancy Walsh: Gross originations growth of approximately 11% gross originations, excluding the home furnishings and mattress category are expected to continue to grow at a much faster pace than our overall gross originations.

Nancy Walsh: Revenue growth of approximately 10%.

Nancy Walsh: And approximately $3 million in positive adjusted EBITDA.

Nancy Walsh: For your models, our Q1, adjusted EBITDA will be impacted by the strong gross originations growth we achieved in Q4 2024.

Nancy Walsh: This high growth means that we expect to have higher lease depreciation costs in Q1, 2025, which will impact gross margin as a reminder, during the first quarter of 2024, we had an exceptionally strong gross profit margin.

Nancy Walsh: Based on these dynamics and our operating plan, we expect to deliver the following for 2025. gross originations growth of at least 20 percent. Gross originations excluding the home furnishings and mattress category are also expected to continue to grow at a much faster pace than our overall gross originations during full year 2025. Revenue growth of at least 20%. and at least $10 million in positive adjusted EBITDA. We are very excited about the year ahead and really proud of the hard work and results we delivered in 2024. We look forward to reporting on our success as the year progresses.

Nancy Walsh: Based on these dynamics and our operating plan, we expect to deliver the following for 2025.

Nancy Walsh: Gross originations growth of at least 20%.

Nancy Walsh: Gross originations, excluding the home furnishing the mattress category are also expected to continue to grow at a much faster pace than our overall gross originations during full year 2025.

Nancy Walsh: Revenue growth of at least 20%.

Nancy Walsh: And at least $10 million in positive adjusted EBITDA.

Nancy Walsh: We are very excited about the year ahead, and really proud of the hard work and results we delivered in 2024.

Nancy Walsh: We look forward to reporting on our success as the year progresses.

Operator: With that, I'll turn it back to the operator for Q and A. Operator? Thank you.

Nancy Walsh: With that I'll turn it back to the operator for Q&A operator.

Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Kyle Joseph: Your first question comes from a line of Kyle Joseph from Stevens. Your line is open. Hey, good morning. Thanks very much for taking my questions. Just wanted to dive into the model a little bit. I know you talked about the margin being impacted by growth in the fourth quarter and potentially kind of back-weighted growth, but obviously your guidance for 2025 calls for strong growth again. So just want to get a sense for the outlook for the margins.

Speaker Change: Your first question comes from the line of Kyle Joseph from Stephens. Your line is open.

Kyle Joseph: Hey, good morning.

Speaker Change: Thanks, very much for taking my questions.

Kyle Joseph: Wanted to dive into the model a little bit.

Kyle Joseph: I know you've talked about the margin being impacted by growth.

Kyle Joseph: In the fourth quarter, and potentially kind of back weighted growth but.

Kyle Joseph: Obviously your guidance for 2025 calls for for strong growth again.

Kyle Joseph: Just wanted to get a sense for the outlook for the margins I know you talked about it in the first quarter year over year, but the margin for.

Nancy Walsh: I know you talked about it in the first quarter year over year, but the margin for 2025, given the outlook for originations growth, would you anticipate that kind of drifting back towards historical levels or given growth, should we anticipate that being a little bit lower than historically? What we've talked about consistently is that for the full year, gross profit is expected to stay in that 18 to 20% range, and that would be consistent in 2025. You know, we do see seasonality obviously in Q1 and then in Q4. Q1 being high and Q4 being low, but that 18 to 20% range still holds.

Kyle Joseph: 25, given the outlook for originations go ahead would you anticipate that kind of drifting back towards historical levels or given growth should we anticipate that being a little bit lower than historically.

Kyle Joseph: What we've talked about.

Kyle Joseph: For the full year gross profit is expected to stay in that 18% to 20% range and that would be consistent in 2025.

Kyle Joseph: We do see seasonality, obviously in Q1, and then in Q4 Q1 being high in Q4 being low but that 18% to 20% range still holds for 2025.

Kyle Joseph: Got it.

Speaker Change: Got it and then just one follow up for me.

Kyle Joseph: And then just one follow-up from me.

Orlando Zayas: Given all the headlines on tariffs and everything, obviously you're expecting strong growth and I think you mentioned the potential for a trade-down effect as you see traditional providers of credit, but have you seen any changes in consumer behavior as a result of all the headlines recently, either a greater demand for credit or a change in purchase activity? Hey Kyle, this is Orlando. Yeah, I think we haven't seen a direct impact yet to tariffs and the consumer, you know, when we look at our consumer and how they're behaving, we haven't seen much of a change and actually the delinquencies are kind of in line with what we expect.

Speaker Change: Given all of that all of the headlines on tariffs and everything obviously, I mean, you're saying.

Speaker Change: Strong growth and I think you mentioned.

Speaker Change: Potential for trade down.

Speaker Change: A fact that as you see traditional providers of credit, but have you seen any any changes in consumer behavior. As a result of of all of the all of the headlines recently, you know either a greater demand for credit or a change in kind of purchase activity.

Carlos: Hey, Carlos Orlando.

Carlos: Yes, I think we haven't seen a direct impact to tariffs and the consumer you know when we look at our consumer and how they're behaving we haven't seen much of a change and actually the delinquencies are kind of in line with what we expect.

Orlando Zayas: You know, when we've looked at this in the past, the thing that really drives our consumer is gas prices. And as you know, gas prices are down. So I think that's.

Carlos: Well, we've looked at this in the past the thing that really drives our consumers gas prices and as you can.

Carlos: Gas prices are down so I think that's.

Orlando Zayas: Some of them feel good about it, but, you know, we're working closely with our merchants and I'll let Derek talk more about it. We're working closely with our merchants around, you know, how does the tariff affect their pricing? And how do we how do we look at that? And how do we build that?

Carlos: All of them feel good about it.

Derek Madeleine: But we're working closely with our merchants and I'll, let Derrick talk more about it working closely with our merchants.

Derek Madeleine: How does the tariff effect there are pricing and how do we how do we look at that and how do we build that in.

Derek Medlin: Thanks, Orlando. And Kyle, thanks for the question. Like Orlando mentioned, we really haven't seen any incremental increase in trade down conversations since mid 2023 when we first saw it. Again, it hasn't been accelerating. It's been fairly stable for us. And like you mentioned, looking across things like tax season and tariffs, you know, just there's been a lot of stability and resiliency in our base. You know, I think when we think about the impact of tariffs, obviously that could impact prices, which might decrease conversion, but it could also increase gross origination amounts and average order values.

Derek Madeleine: Yes, Thanks, Orlando and Karl Thanks for the question.

Karl: Like Orlando mentioned, we really haven't seen any incremental increase in trade down conversation since mid 2023, when we first saw it.

Karl: Again, it hasn't been accelerating it's been fairly stable for us.

Karl: And like you mentioned looking across things like tax season, and tariffs just there's just been a lot of stability and resiliency in our base.

Karl: I think when when we think about the impact of tariffs, obviously, there could that could impact impact prices, which might decrease conversion, but it could also increase gross origination.

Kyle Joseph: So we're just going to be watching it very, very closely and understanding where there's opportunity for us to partner with our retailers to deliver meaningful offers that help to stabilize options. Got it. Very helpful.

Karl: And average order values. So we're just going to be watching very very closely in understanding where there's opportunity for us to partner with our retailers.

Karl: To deliver.

Karl: Meaningful offers that that helps us stabilize.

Karl: Options for the customer.

Speaker Change: Got it very helpful. Thanks for taking my questions.

Kyle Joseph: Thanks for taking my questions. Thank you.

Speaker Change: Thanks, Karl Thanks, Thank you.

Anthony Chukumba: Your next question comes from the line of Anthony Chukumba from Loop Capital Markets. Your line is open. Good morning. Thanks for taking my questions as well. I guess my first question was on leased merchandise write-offs. I know it was within your target range, but it was up year over year. And I guess just wondering what what was the driving You know, they fluctuate, Anthony. That's why we provide the range. So there really was no significant reason for the change. You know, it is a function of the revenue growth as well, but we're very comfortable with where the range stands consistently.

Anthony: Your next question comes from the line of Anthony <unk> from Loop capital markets. Your line is open.

Anthony: Good morning, Thanks for taking my questions as well.

Speaker Change: I guess my first question.

Anthony: Was on lease merchandise write offs.

Anthony: Within your targeted range, but it was up year over year and I guess just.

Anthony: Just wondering what was the driver for that.

Anthony: They fluctuate Anthony that's why we provide the range. So there really was no significant reason for the change it is a function of the revenue growth as well.

Anthony: We're very comfortable with where the range stands.

Anthony: Consistent <unk> and also compared to some of our competitors, so very happy with that range.

Nancy Walsh: And also, you know, compared to some of our customers. Very happy with that one.

Anthony: Got it fair enough.

Nancy Walsh: So, second thing, you know, in terms of your guidance, you're assuming 20% revenue growth, but EBITDA essentially doubling. So that would imply that your EBITDA margin, obviously, improved significantly. What's the driver of that? I mean, is that just, you know, essentially, like, you know... corporate overhead leverage or what sort of drives it. That is predominantly what we're seeing. We continue to manage our expenses very diligently, but we are focused on growth, so we're making sure that we're investing in the right places to drive that growth, technology, marketing, things that we've talked about in the past.

Anthony: So second thing.

Anthony: In terms of your guidance you're assuming.

Anthony: Revenue growth, but EBITDA essentially doubling.

Anthony: So that would imply that the margin obviously.

Anthony: Improved significantly.

Anthony: The driver of that I mean is that just simply like you know.

Anthony: Our corporate overhead leverage or whats sort of.

Anthony: Driving that.

Anthony: That is predominantly what we're seeing we continue to manage our expenses very diligently, but we are focused on growth, but we're making sure that we're investing in the right places to drive that growth technology marketing and things that we've talked about in the past.

Nancy Walsh: That's the main driver, but we're always looking for opportunities.

Anthony: That's the main driver, but we're always looking for opportunities to continue to improve the profitability.

Nancy Walsh: I'm very thrilled with our first year of profitability or positive adjusted EBITDA this year and looking to continue to grow that as we get into the fall. got it.

Anthony: Very thrilled with our first year of profitability or positive adjusted EBITDA. This year and looking to continue to grow that as we get into 2025 and beyond.

Anthony: Got it.

Anthony Chukumba: And, and then maybe the 10K, but what was the growth in specifically Wayfair originations?

Anthony: And then.

Anthony: At this time.

Anthony: 10-K.

Anthony: What was the growth.

Anthony: And specifically where are you for originations in the fourth quarter specifically.

Nancy Walsh: Wayfair Gross Origination wrote we don't Give that out, but it was a continued theme of what we had. throughout the year. You know, the application flow continues to be down. We've signaled that as we've given our guidance. But the business outside of Wayfair continues to be very strong, growing at 50%. So as we talked about next year, you know, we're hoping to see that trend improve as we go through the year.

Anthony: Oh waste their gross origination growth.

Anthony: Typically give that out but it was a continued theme of what we had seen throughout the year. The application flow continues to be down we signaled that as we've given our guidance.

Anthony: The business outside of <unk>.

Anthony: There continues to be very strong growing at 50%. So as we talked about next year. You know, we're hoping to see that trend improve as we go through the year, but we're remaining very conservative on wafer and home furnishing sector in.

Anthony Chukumba: But we're remaining very conservative on Wayfair and home furnishing sector in general. got it. That's all very helpful. Thank you.

Anthony: In general.

Got it that's all very helpful. Thank you.

Anthony: Thanks Anthony.

Scott Buck: Your next question comes from a line of Scott Buck from HC Wainwright. Your line is open. Hi, good morning guys. Thanks for taking my questions.

Speaker Change: Your next question comes from the line of Scott Buck from H C. Wainwright. Your line is open.

Scott Buck: Hi, Good morning, guys. Thanks for taking my questions.

Derek Medlin: I'm curious, does an environment, a macro environment where there's more uncertainty, can that actually help accelerate merchant acquisition as they look for every edge possible? Hi Scott, this is Derek. Listen, I think across the board what we're finding is that merchants are looking for avenues of growth, whether that be helping them in their checkout experience or also bringing new customers to their door. And when things are stressed, certainly I think that makes the conversation more relevant and more timely. And what we've done with the app and being able to not only bring our community of users together, but then to distribute them out to merchants has really been resonating.

Scott Buck: Curious doesn't environment macro environment, where there's more uncertainty can that actually help accelerate merchant acquisition as they look for every edge possible.

Derek Madeleine: Hi, Scott this is derrick.

Speaker Change: Listen I think across the board what we're finding is that that merchants are.

Derek Madeleine: Looking for avenues of growth.

Derek Madeleine: Whether that'd be helping them in their checkout experience, we're also bringing new customers to their door and when things are stressed certainly.

Derek Madeleine: I think that that makes the conversation more relevant and more timely.

Derek Madeleine: And what we've done with the App and being able to not only bring our community of users together, but then to distribute them out to merchants has really been resonating. So I think it's kind of a combination of.

Derek Medlin: So I think it's kind of the combination of the desire for growth, especially in segments that have been under pressure like home furnishings, but also the fact that we can deliver value that's measurable and specific and targeted for them with very little lift, if any, to help support their business. So yes, I think in general there is some concern of growth opportunities in different retail segments, but even when there's not, if someone can help bring you foot traffic and or click traffic, that's a really attractive proposition that's really resonating in the market.

Derek Madeleine: The desire for growth, especially in segments that have been under pressure like home furnishings, but also the fact that we can deliver value, that's measurable and specific and targeted for them.

Derek Madeleine: With very little lift if any to.

Derek Madeleine: To help support their business. So yes, I think I think in general that there is some concern of growth opportunities.

Derek Madeleine: And different retail segments.

Derek Madeleine: Even when there's not if someone can help bring you put traffic and or click traffic.

Derek Madeleine: That's a really attractive proposition, that's really resonating in the marketplace.

Scott Buck: Great, that's helpful.

Derek Madeleine: Great. That's helpful and then I apologize if I missed this but.

Scott Buck: And then I apologize if I missed this, but First quarter seasonality around tax season, has that been consistent with previous years or are you seeing any changes there? No, it was consistent with prior years. We were very pleased with how that came out. Okay, perfect.

Derek Madeleine: First quarter seasonality around tax season has that been consistent with previous years, where are you seeing any changes there.

Derek Madeleine: No. It was consistent with prior years, we were very pleased with how that contributed to first quarter.

Speaker Change: Okay, Perfect and then last one Nancy twenty-five anywhere.

Nancy Walsh: And then last one, Nancy, for 2025, anywhere in the OPEX that you need to play catch up or, you know, expect to see increased investment in 2025? The only place, as we've talked about, that we really expect to see any increases in SG&A relate to our investments in technology, investments in marketing, which we've talked about quite a bit. Those are the two predominant.

Speaker Change: And the Opex that you need to play catch up or expect to see increased investment in 2025.

Speaker Change: The only place as we've talked about that we really expect to see any increases in SG&A relate to our investments in technology investments in marketing, which we've talked about quite a bit those are the two predominant one.

Nancy Walsh: And that's to drive the growth, but we're looking always for places to offset that and to continue to optimize. category and making sure all of those expenses have an appropriate ROI.

Speaker Change: And that's to drive the growth, but we're looking always for places to offset that and can you continue to optimize and make our business more efficiently from an expense category and making sure all of those expenses have an appropriate ROI.

Scott Buck: OK, and then you brought it up in the comments, but timing around the refinancing of the line, what do we think in there? Other than the prepared remarks, we have nothing new to add right now, but as soon as we do, we will update you. Okay, well I appreciate it guys.

Speaker Change: Okay, and then you brought it up in the comments, but timing around the.

Speaker Change: Refinancing of the line what do we think in there.

Speaker Change: Other than the prepared remarks, it really we have nothing new to add right now, but as soon as we do we will obviously share it with everyone.

Speaker Change: Okay, well I appreciate it guys. Thanks for the time.

Scott Buck: Thanks for the time. Thank you so much.

Speaker Change: Thank you so much.

Operator: And that does conclude our question and answer session.

Orlando Diet: And that does conclude our question and answer session I will now turn the call back over to Orlando for closing remarks.

Orlando Zayas: I will now turn the call back over to Orlando for closing remarks. Thanks, operator. And thanks to everyone tuning in today. We believe we have a differentiated offering that provides benefits for both consumers and merchants. For consumers, we provide a fair and transparent LTO that allows them to acquire the durable goods they need from merchants they trust. For merchants, we provide a growth partnership that gives them access to non-prime customers who may not have been able to purchase their goods without our LTO. These benefits are the foundation for the Katapult app marketplace, and we believe we are well-positioned for continued growth.

Orlando Diet: Thanks, operator, and thanks to everyone for tuning in today, we believe we have a differentiated offering that provides benefits for both consumers and merchants for our consumers, we provide a fair and transparent <unk> that allows them to acquire the durable goods they need what from merchants. They trust for merchants, we provide a growth partnership.

Orlando Diet: That gives them access to non prime customer, who may not have been able to purchase their goods without our L. T O <unk>.

Orlando Diet: These benefits are the foundation for the catapult App marketplace, and we believe we are well positioned for continued growth.

Orlando Zayas: We look forward to chatting with you and the other investors as the year progresses.

Orlando Diet: We look forward to chatting with you.

Orlando Diet: Other investors as the year progresses, please reach out to Jennifer if you have any questions or feedback. Thank you.

Jennifer Kull: Please reach out to Jennifer if you have any questions or feedback. Thank you.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Orlando Diet: This concludes today's conference call. Thank you for your participation you may now disconnect.

Orlando Diet: Okay.

Orlando Diet: Okay.

Orlando Diet: Okay.

Orlando Diet: Okay.