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Katapult Announces First Quarter 2021 Financial Results

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NEW YORK, June 15, 2021 (GLOBE NEWSWIRE) -- Katapult Holdings, Inc. (“Katapult” or the “Company”) (NASDAQ: KPLT), an e-commerce focused financial technology company, today announced financial results for the first quarter ended March 31, 2021.

“We are pleased to report strong first quarter 2021 results and excited to begin a new chapter as a publicly traded company. Our results reflect solid execution and a strong positive trajectory in our business as we continue to onboard more merchants and drive growth with our existing customers,” said Orlando Zayas, CEO of Katapult. “Looking to the remainder of 2021 and beyond, we are excited about the breadth of opportunities available to us to continue to expand our business and build long-term shareholder value.”

First Quarter 2021 Financial and Operating Highlights:

  • Total Revenue for the first quarter was $80.6 million, an increase of 88% year-over-year, driven by strong growth in originations as we continue to add new merchant relationships and expand with our existing merchants.

  • Gross Originations were $63.7 million, an increase of 71% from $37.2 million in Q1 2021.

  • Onboarded 26 new retailers in the first quarter of 2021, including Motorola, Simply Mac, and Cybertron.

  • Our Adjusted EBITDA in the first quarter was $14.7 million, up 122% from $6.6 million in the first quarter of 2020, primarily reflecting the scalability of our business as revenue growth is outpacing our operating expense growth.

  • Net Income was $8.1 million in the first quarter, up 120% year-over-year. Adjusted Net Income for the first quarter was $9.3 million, up 146% from $3.8 million in the first quarter of 2020.

Recent Business Highlights

  • Listed as a new public company following completion of a business combination with FinServ Acquisition Corp. (“FinServ”) that closed on June 9, 2021.

  • Katapult Holdings, Inc., and its common stock and warrants began trading on the Nasdaq Stock Market under the ticker symbols “KPLT” and “KPLTW”, respectively on June 10, 2021.

  • Announced new Board of Directors comprising of proven leaders. Brian Hirsch, Managing Partner at Tribeca Venture Partners, will serve as Chairman of Katapult’s newly formed Board of Directors.

Key Operating Metrics, GAAP and Non-GAAP Financial Measures

 ($ million) Unaudited

Three Months Ended March 31,

 

 

2021

 

 

 

2020

 

Growth

Gross Originations1

$63.7

 

 

$37.2

 

71

%

Revenue

$80.6

 

 

$42.9

 

88

%

Net Income

$8.1

 

 

$3.7

 

120

%

Adjusted Net Income

$9.3

 

 

$3.8

 

146

%

Adjusted EBITDA

$14.7

 

 

$6.6

 

122

%

 

 

 

 

 

Adjusted EBITDA Margin

18%

 

 

15%

 

 

1 Gross Originations are defined as the retail price of the merchandise associated with lease-purchase agreements entered into during the period through the Katapult platform.  Net Originations were $51.9 million and $31.4 million for the three months ended March 31, 2021  and 2020, respectively representing an increase of 65% year-over-year. Effective 2021 and going forward, the Company will be reporting Gross Originations, as we believe this metric is more representative of the underlying growth of our business as Net Originations are continuously revised over subsequent periods and Gross Originations is more consistent with how our public peers report volume. 

2021 Financial Guidance

As of June 15, 2021, Katapult anticipates FY 2021 Gross Originations, Revenue and Adjusted EBITDA to be in the following ranges:

  • Gross Originations: $375-$425 million

  • Revenue: $425-$475 million

  • Adjusted EBITDA: $50-$60 million

Basis of Presentation

The financial information as of and for the three months ended March 31, 2021 and as of December 31, 2020 and the three months ended March 31, 2020 included in this press release reflects, and is based upon, information of Katapult Holdings, Inc. prior to giving effect to the business combination with FinServ Acquisition Corp. completed on June 9, 2021 (as further discussed below).

Conference Call and Webcast

Katapult will host a conference call and webcast at 8:00 AM ET to discuss the company’s financial results.

A live audio webcast of the event will be available on the Katapult Investor Relations website at http://ir.katapultholdings.com/.

A live dial-in will be available at (888) 302-0680 (domestic) or (281) 962-4859 (international). The conference ID number is 1591375. Shortly after the conclusion of the call, a replay of this conference call will be available through 11:00 AM ET on June 29, 2021 at (855) 859-2056 (domestic) or (404) 537-3406 (international). The replay passcode is 1591375.

About Katapult

Katapult is a next generation platform for digital and mobile-first commerce for the nonprime consumer. Katapult provides POS lease purchase options for consumers challenged with accessing traditional financial products who are seeking to obtain everyday durable goods. The Company has developed a sophisticated end-to-end technology platform that enables seamless integration with merchants, underwriting capabilities that exceed the industry standard, and exceptional customer experiences.

Business Combination

On June 9, 2021, FinServ Acquisition Corp., a special purpose acquisition company, announced that they completed their previously announced business combination under which FinServ acquired Katapult Holdings, Inc. for approximately $842 million in total consideration. Upon completion of the business combination, the combined company changed its name to Katapult Holdings, Inc., and its common stock and warrants began trading on the Nasdaq Stock Market under the ticker symbols “KPLT” and “KPLTW”, respectively on June 10, 2021.

Forward-Looking Statements

Certain statements included in this Press Release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of  financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether or not identified in this Press Release, and on the current expectations of Katapult’s  management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Katapult. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political and legal conditions; failure to realize the anticipated benefits of the  transaction with FinServ; risks relating to the uncertainty of the projected financial information with respect to Katapult; risks related to the concentration of Katapult’s business among a relatively small number of merchants; the effects of competition on Katapult’s future business; the impact of the COVID-19 pandemic on Katapult’s business; the ability of Katapult to issue equity or equity-linked securities or obtain debt financing in the future, and those factors discussed in FinServ’s final prospectus dated October 31, 2019 and Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and FinServ’s registration statement on Form S-4 which was declared effective on May 14, 2021, in each case, under the heading “Risk Factors,” and other documents of FinServ filed, or to be filed by Katapult, with the Securities and Exchange Commission (“SEC”). If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Katapult does not presently know or that Katapult currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Katapult’s expectations, plans or forecasts of future events and views as of the date of this Press Release. Katapult anticipates that subsequent events and developments will cause Katapult’s assessments to change. However, while Katapult may elect to update these forward-looking statements at some point in the future,  Katapult specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Katapult’s assessments as of any date subsequent to the date of this Press Release. Accordingly, undue reliance should not be placed upon the forward-looking statements. Certain market data information in this Press Release is based on the estimates of Katapult management. Katapult obtained the industry, market and competitive position data used throughout this Press Release from internal estimates and research as well as from industry publications and research, surveys and studies conducted by third parties. Katapult believes its estimates to be accurate as of the date of this Press Release. However, this information may prove to be inaccurate because of the method by which Katapult  obtained some of the data for its estimates or because this information cannot always be verified due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process.

Non-GAAP Financial Measures

To supplement the financial measures presented in this press release and related conference call or webcast in accordance with generally accepted accounting principles in the United States (“GAAP”), we also present the following non-GAAP measures of financial performance: Adjusted EBITDA, Adjusted Net Income, Gross Originations, and Net Originations.

Adjusted EBITDA is defined as net income before interest expense and other fees, loss on extinquishment of debt, provision for income taxes, depreciation and amortization on property and equipment, impairment of leased assets, stock compensation expense, change in fair value of warrant liability, transaction costs associated with the merger, legal fees associated with investor transactions, and employee recruiting costs. Adjusted Net Income is defined as net income before loss on extinquishment of debt, stock compensation expense, change in fair value of warrant liability, transaction costs associated with the merger, legal fees associated with investor transactions, and employee recruiting costs.

Gross Originations are defined as the retail price of the merchandise associated with lease-purchase agreements entered into during the period through the Katapult platform. Gross Originations do not represent revenue earned. However, we believe this is a useful operating metric for both the Company and investors to use in assessing the volume of transactions that take place on our platforms.

Net Originations are defined as Gross Originations less modifications and cancellations that occur in the period.

Management believes the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of our core operations or do not require a cash outlay, such as stock-based compensation expense. Management uses these non-GAAP financial measures when evaluating operating performance and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures help indicate underlying trends in the business, are important in comparing current results with prior period results, and are useful to investors and financial analysts in assessing operating performance. However, these non-GAAP measures exclude items that are significant in understanding and assessing Katapult’s financial results or position. Therefore, these measures should not be considered in isolation or as alternatives to revenue, net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. You should be aware that Katapult’s presentation of these measures may not be comparable to similarly titled measures used by other companies.

A reconciliation of our forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such reconciliations that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

Contacts

Katapult Vice President of Investor Relations
Bill Wright
917-750-0346
ir@katapultholdings.com

Katapult Investor Contact
William Maina
ICR for Katapult
646-277-1236
Katapult-IR@icrinc.com

Press Inquiries:
Tribe Builder Media
Kristen Shea
929-367-8993
press@tribebuildermedia.com


KATAPULT HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands)


 

 

 

 

 

 

 

March 31, 2021

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

 

 

$

67,788

 

 

$

65,622

 

 

 

Restricted cash

 

 

 

2,877

 

 

 

3,975

 

 

 

Accounts receivable, net of allowance for doubtful accounts of $3,611 and
$4,372 at March 31, 2021 and December 31, 2020, respectively

 

 

1,343

 

 

 

1,636

 

 

 

Property held for lease, net of accumulated depreciation and impairment

 

 

67,590

 

 

 

66,737

 

 

 

Prepaid expenses and other current assets

 

 

3,273

 

 

 

1,248

 

 

 

    Total current assets

 

 

 

142,871

 

 

 

139,218

 

 

Property and equipment, net

 

 

403

 

 

 

330

 

 

Security deposits

 

 

 

 

91

 

 

 

91

 

 

Capitalized software and intangible assets, net

 

 

336

 

 

 

188

 

 

 

     Total assets

 

 

$

143,701

 

 

$

139,827

 

 

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

 

$

2,202

 

 

$

1,688

 

 

 

Accrued liabilities

 

 

 

12,173

 

 

 

12,967

 

 

 

Unearned revenue

 

 

 

3,032

 

 

 

2,652

 

 

 

     Total current liabilities

 

 

17,407

 

 

 

17,307

 

 

Revolving line of credit

 

 

 

68,400

 

 

 

74,316

 

 

Long term debt

 

 

 

 

37,487

 

 

 

36,413

 

 

Other liabilities

 

 

 

 

13,102

 

 

 

12,740

 

 

 

      Total liabilities

 

 

 

136,396

 

 

 

140,776

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

REDEEMABLE CONVERTIBLE PREFERRED STOCK

 

 

 

 

 

 

Redeemable convertible preferred stock (Series C), $.001 par value-- 95,415,981 shares

 

 

 

 

      authorized; 68,589,913 shares issued and outstanding at March 31, 2021 and

 

49,894

 

 

 

49,894

 

 

 

      December 31, 2020

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Common stock, $.001 par value-- 120,000,000 shares authorized;

 

 

 

 

 

 

       9,781,884 and 9,524,440 shares issued and outstanding at March 31, 2021 and

 

 

 

 

 

 

 

 

 

 

 

       December 31, 2020, respectively

 

 

10

 

 

 

10

 

 

 

Additional paid-in capital

 

 

7,360

 

 

 

7,196

 

 

 

Accumulated deficit

 

 

 

(49,959

)

 

 

(58,049

)

 

 

      Total stockholders' deficit

 

 

(42,589

)

 

 

(50,843

)

 

 

      Total liabilities, redeemable convertible preferred stock
      and stockholders' deficit

 

$

143,701

 

 

$

139,827

 

 

 

 

 

 

 

 

 

 

 


KATAPULT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands)

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

 

 

2021

 

 

 

2020

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Rental revenue

 

$

80,625

 

 

$

42,578

 

 

 

 

Other revenue

 

 

10

 

 

 

264

 

 

 

 

Service fees

 

 

-

 

 

 

46

 

 

 

 

 

 

Total revenue

 

 

80,635

 

 

 

42,888

 

 

 

Cost of revenue

 

 

52,882

 

 

 

27,333

 

 

 

Gross profit  

 

 

27,753

 

 

 

15,555

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Servicing costs

 

 

1,138

 

 

 

980

 

 

 

 

 

Underwriting fees

 

 

467

 

 

 

479

 

 

 

 

 

Professional and consulting fees

 

 

1,534

 

 

 

222

 

 

 

 

 

Technology and data analytics

 

 

1,715

 

 

 

1,828

 

 

 

 

 

Bad debt expense

 

 

4,887

 

 

 

3,388

 

 

 

 

 

General and administrative

 

 

3,599

 

 

 

1,924

 

 

 

 

 

 

 

 

Total operating expenses

 

 

13,340

 

 

 

8,821

 

 

 

Income from operations

 

 

14,413

 

 

 

6,734

 

 

 

 

 

Interest expense and other fees

 

 

(4,140

)

 

 

(2,985

)

 

 

 

 

Change in fair value of warrant liability

 

 

(358

)

 

 

-

 

 

 

Income before provision for income taxes

 

 

9,915

 

 

 

3,749

 

 

 

 

 

Provision for income taxes

 

 

(1,825

)

 

 

(79

)

 

 

Net income and comprehensive income

 

$

8,090

 

 

$

3,670

 

 

 

Net income and comprehensive income available to common shareholders

 

$

695

 

 

$

293

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

 

 

 

$

0.07

 

 

$

0.03

 

 

 

 

Diluted

 

 

 

$

0.02

 

 

$

0.01

 

 

 

Weighted average shares used in computing net income per share:

 

 

 

 

 

 

 

Basic

 

 

 

 

9,650,717

 

 

 

8,686,478

 

 

 

 

Diluted

 

 

 

 

30,414,536

 

 

 

23,867,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 


KATAPULT HOLDINGS, INC.
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
(Amounts in thousands)

 

 

 

 

Three Months Ended March 31,

Adjusted EBITDA

 

 

 

2021

 

 

 

2020

 

Net income

 

 

$

8,090

 

 

$

3,670

 

Add back:

 

 

 

 

 

 

 

Interest expense and other fees

 

 

4,140

 

 

 

2,985

 

 

Change in fair value of warrant liability

 

 

358

 

 

 

-

 

 

Provision for income taxes

 

 

1,825

 

 

 

79

 

 

Depreciation and amortization on property and equipment

 

 

 

48

 

 

 

20

 

 

Impairment of leased assets

 

 

(625

)

 

 

(246

)

 

Stock compensation expense

 

 

80

 

 

 

77

 

 

Employee recruiting costs

 

 

 

106

 

 

 

34

 

 

Transaction costs associated with merger

 

 

676

 

 

 

-

 

Adjusted EBITDA

 

 

$

14,698

 

 

$

6,619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

Adjusted Net Income

 

 

 

2021

 

 

 

2020

 

Net income

 

 

$

8,090

 

 

$

3,670

 

Add back:

 

 

 

 

 

 

 

Change in fair value of warrant liability

 

 

358

 

 

 

-

 

 

Stock compensation expense

 

 

80

 

 

 

77

 

 

Employee recruiting costs

 

 

 

106

 

 

 

34

 

 

Transaction costs associated with merger

 

 

676

 

 

 

-

 

Adjusted net income

 

 

$

9,310

 

 

$

3,781