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| Statement |
|---|
| The results are encouraging and help drive our growth with Wayfair this quarter |
| For four consecutive quarters we have grown our gross originations year-over-year and in the third quarter, we more than tripled our revenue growth compared with Q2 resulting in more than $4 million in year-over-year improvement to adjusted EBITDA and we’ve achieved this growth against the backdrop of macroeconomic headwinds and growing consumer concerns about the economy |
| Despite the ebb and flow of macroeconomic headwinds that caused the consumer to pull back on retail spending during the late summer, we delivered our fourth consecutive quarter of year-over-year gross origination growth, which was up 12.5% |
| And summarizing our third quarter, we’re really proud of our steady progress |
| In addition, by coupling our topline growth with continued focus on disciplined expense management, we were able to deliver a positive adjusted EBITDA, which improved substantially compared to last year |
| Our progress this quarter was driven by strong performance across our strategic pillars, focused on; one, expanding our merchant base and deepening our existing merchant relationships; two, growing our consumer reach by focusing mainly on doing more with our current customers, but taking measured steps to bring more consumers to our platform; and three, continuing to leverage our technology to support our merchant and consumer goals while expanding our competitive moat |
| We are proud of our ability to grow while providing our customers with a fair, transparent and accessible lease-to-own product and our merchants with a growth channel that has so much potential |
| During the third quarter, we achieved very strong repeat rates, which are defined as the percentage of in-quarter originations from existing customers |
| We feel very good about what we’ve achieved year-to-date and we are continuing on our growth trajectory, five quarters of consecutive growth that with what we projected for our Q4 outlook |
| So the business is still really strong |
| There is not a lot of patents in this area and we’re proud of the work our team is doing to protect our competitive positioning |
| I’m real proud that we were able to get through this -- get this partnership done and we’re going to continue to look for others |
| As we continue to look for opportunities to grow, we remain pleased with the performance of our existing customers |
| We feel confident that we are well positioned for continued growth as we march toward profitability |
| We have a clear growth strategy, a well-defined operating plan that we are executing against and a healthy balance sheet that provides us with the financial room we need to fund our pipeline of origination |
| We delivered our fourth consecutive quarter of gross originations growth, which translates to $159 million in gross origination year-to-date and double-digit revenue growth for the quarter and we drove this topline growth performance against the backdrop of continued disciplined expense management, which has allowed us to deliver substantial improvements to adjusted EBITDA profitability |
| For the full year, this translates to an outlook of 12% to 13% gross origination growth, 3% to 4.5% revenue growth and meaningful improvement in adjusted EBITDA, which as of the third quarter has already increased by $14 million year-to-date versus the same period of 2022 |
| Just to give you an example of this impact we can have, when we made a few changes to how the customer-facing offer was displayed, we saw a nice improvement in take rates just from that update |
| Revenue was up nearly 10% year-over-year, more than tripling the year-over-year revenue growth we achieved last quarter |
| Our third quarter results represented another strong period of growth for Katapult |
| Our strong growth with Wayfair indicates that we are gaining market share in their U.S |
| Take rates also grew and were up mid-teens year-over-year and this growth was also accompanied by higher application volume from Wayfair shoppers, as well as higher same-day take rates |
| Lastly, we expect our adjusted EBITDA performance to continue to improve significantly compared with the fourth quarter of last year, reflecting our revenue growth expectations and sustained reduction of our fixed cash operating expenses |
| This outlook is driven by our expectation that macroeconomic conditions and our collections trajectory remain consistent with the first three quarters of the year and that we see a positive impact from marketing initiatives we discussed today |
| Finally, I’m excited about our exploration of generative AI, which we believe will allow our teams to remain on the leading edge of technology |
| We are extremely proud of our progress |
| For the third quarter, we recorded positive adjusted EBITDA of $2 million, which was a $4.3 million improvement, compared with the $2.3 million loss we reported in the third quarter of last year |
| Based on our topline performance and the structural and sustainable benefits we are realizing from our operating efficiencies, we were able to improve our adjusted EBITDA performance substantially |
| We continue to benefit from our focus on disciplined expense management during the quarter |
| This strong performance reflects the trends driving gross originations that I just mentioned, as well as the volume performance we saw in the first half of the year |
| Statement |
|---|
| Retail traffic is down, interest rates remain elevated, lending standards are tight, and there is uncertainty about how the resumption of student loan repayments will impact our core customer |
| And while lease-to-own solutions have historically benefited when prime credit options become less available, we believe this mixed bag of economic indicators led to a slowdown in retail activity mid-third quarter and we also believe it could be temporarily dampening some consumer demand for many of the durable goods that are leaseable through Katapult |
| While we have continued to see healthy results from our direct merchants and Katapult Pay merchants, we did face macro headwinds and a few timing challenges during the quarter |
| Specifically, we saw retail slow in August and early September before picking back up again and we had one key integration that took a bit longer to launch than we anticipated |
| Exactly what you said, it was that slowdown that we saw in August going into early September and then we talked about there was one integration that just took a little bit longer compared to what we had projected |
| During Q3, we saw this metric peak in July and then come down steadily during the rest of the quarter |
| Excluding underwriting fees and servicing costs, which are variable and depreciation and non-cash stock-based compensation expense, our fixed cash operating expenses were $9 million, down 31.8% compared to last year |
| You came up a little bit light of that |
| As you’ve heard, like other companies, we’re navigating a dynamic and sometimes volatile macro environment, while there are tailwinds, such as stable inflation rate and a reduced likelihood of a recession in the U.S., there are also a number of headwinds |
| We lowered our overall operating expenses by 11.5% compared with Q2 2023 and 27% year-over-year |
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