Katapult Holdings, Inc. Q1 FY2024 earnings call

• Merchant strategy: Focused on three key areas - growing gross originations via new merchant integrations, increasing market share with anchor merchants, and offering durable goods. Upgraded the Katapult platform to integrate Shopify, entered into an agreement with Salesforce, and advanced the relationship with Synchrony. - Katapult Pay: Contributed nearly $15 million to gross originations, accounting for about 1/4 of total originations. Nearly 50% of total gross origination dollars were initiated in the app, and Lowe's was added to Katapult Pay. - Marketing: Leveraging the direct - to - consumer app, investing in digital marketing like social, app store, and display marketing, and running trigger - based marketing tests. - Risk - based pricing model: Innovative model considering key dynamics to determine best pricing, expected to enhance customer experience and conversion rates. - Tech initiatives: Working on product - based search to launch this year and in final launch stages of Text to Checkout feature.

For the first quarter, Katapult achieved a 1.6% growth in gross originations, reaching $55.6 million, slightly above expectations. Approximately one - fourth of total gross originations came from Katapult Pay, which generated nearly $15 million. Non - Wayfair gross originations grew by about 9% in the first quarter, with the jewelry category seeing a 57% growth and the electronics category a 13% growth.

• Second quarter outlook: Gross originations growth of 3% to 5%, revenue growth in the range of 8% to 10%, and continued year - over - year improvement in adjusted EBITDA with a slight increase in operating expenses in Q2 as investing in key growth initiatives. - Full year 2024: Reiterating a minimum of 10% growth for gross originations and revenue, assuming the macro environment doesn't change significantly and the retail environment for home furnishings normalizes.

• The retail industry faces macro headwinds and pullback in consumer demand. - Uncertainty regarding Prime creditors' credit standards and their impact on the core consumer and access to credit.

Q: Anthony Chukumba asked about the Wayfair business performance and the new risk - based pricing model.

A: Orlando Zayas said Wayfair's financing side was impacted, but volume started to turn around towards the end of the first quarter, and the risk - based pricing model is aimed at improving gross originations while keeping an eye on losses. Derek Medlin added that the model's uniqueness lies in having a lot of transaction data, allowing for customization.

Q: Scott Buck inquired about the full year origination guide and marketing cadence.

A: Nancy Walsh responded that the growth is a combination of new customers, existing customer expansion, new logos, and service expansion within existing retailer relationships. Regarding marketing cadence, there will be some lumpiness due to seasonality, with the holiday season and tax season being high peaks and summertime being relatively lower, and marketing efforts are focused on generating appropriate returns while driving new customers and top line.