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Katapult Holdings, Inc. (KPLT)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue rose to $74.044M (+22.8% YoY), gross originations were $64.2M (+25.3% YoY), and adjusted EBITDA reached $4.417M, exceeding the company’s $3.0–$3.5M guidance range; net loss improved to $(4.949)M .
  • Marketplace KPIs remained strong: 61% of originations started in the app, KPay originations grew 66% to $26.4M (41% of total), repeat customers were ~55%, and write-offs were 9.9% within the 8–10% target .
  • Liquidity and capital structure improved via a $65M convertible preferred investment (term loan repaid; RLOC reduced), with potential interest savings as advance rate moved from 99% to 90% .
  • Guidance tempered: Q4 gross originations +15–20% YoY, revenue +21–23% YoY, adjusted EBITDA ≈$2M; FY 2025 gross originations +20–23%, revenue +18–20%, adjusted EBITDA $8–$9M (down from ≥$10M previously) as management cites inflation, government shutdown risk, and non-prime delinquency trends .

What Went Well and What Went Wrong

What Went Well

  • “We are continuing to execute against our priorities… our 25% gross originations growth in the third quarter marks our third consecutive year of growth” — CEO Orlando Zayas; adjusted EBITDA of $4.417M beat outlook, and revenue grew for the 10th consecutive quarter .
  • App marketplace scaled: 61% of originations began in-app; KPay originations $26.4M (+66% YoY), unique KPay customers +76% YoY; added Apple to merchant roster .
  • Balance sheet actions: $65M preferred investment from Hawthorn repaid ~$35.1M term loan and reduced RLOC, aiming to lower interest expense and enable growth investments .

What Went Wrong

  • Guidance was tempered for Q4 and FY 2025 due to macro headwinds (inflation, government shutdown risk, rising non-prime delinquencies), lowering revenue and adjusted EBITDA outlook vs prior quarter .
  • Write-offs rose 60 bps YoY to 9.9% (still within target), and the home furnishings/mattress category remained a drag; underwriting was tightened late in Q3 to improve credit mix .
  • Net loss remained negative at $(4.949)M; while improved YoY, interest expense and other fees of $(5.900)M continued to weigh on results .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$71.946 $71.886 $74.044
Gross Originations ($USD Millions)$64.2 $72.1 $64.2
Gross Profit ($USD Millions)$14.349 $11.168 $14.552
Operating Income (Loss) ($USD Millions)$(0.536) $(1.410) $2.463
Net Loss ($USD Millions)$(5.688) $(7.835) $(4.949)
Diluted EPS ($USD)$(1.23) $(1.63) $(0.94)
Adjusted EBITDA ($USD Millions)$2.240 $0.322 $4.417
Adjusted Gross Profit ($USD Millions)$12.492 $9.211 $12.615
Write-offs as % of Revenue9.0% 9.8% 9.9%

KPIs

KPIQ1 2025Q2 2025Q3 2025
Repeat Customer Rate (%)57.4% 58.4% ~55%
App Marketplace Share of Originations (%)~59% ~60% 61%
KPay Share of Originations (%)35% 39% 41%
KPay Gross Originations ($USD Millions)n/an/a$26.4
Total App Originations ($USD Millions)n/an/a$39.3
Applications YoY Growth (%)~59% ~39% (app marketplace applications) ~80% (total applications)
Net Promoter Score66 63 64

Notes:

  • Q3 gross margin was ~19.7% per management commentary .
  • Non-GAAP definitions and reconciliations provided; adjusted EBITDA excludes interest, stock-based comp, fair value changes, transaction/litigation costs, depreciation, taxes, impairment, among others .

Guidance Changes

MetricPeriodPrevious Guidance (as of Q2 PR 8/13)Current Guidance (as of Q3 PR 11/12)Change
Gross Originations YoY GrowthFY 202520%–25% 20%–23% Lowered
Revenue YoY GrowthFY 2025≥20% 18%–20% Lowered
Adjusted EBITDA ($USD Millions)FY 2025≥$10 $8–$9 Lowered
Gross Originations YoY GrowthQ4 2025n/a15%–20% New
Revenue YoY GrowthQ4 2025n/a21%–23% New
Adjusted EBITDA ($USD Millions)Q4 2025n/a≈$2 New

Drivers:

  • Management cited inflation, government shutdown uncertainty, and broader non-prime delinquency trends impacting near-term demand and credit quality, prompting a conservative stance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
App Marketplace & KPay ExpansionQ1: KPay +57% YoY; 35% share; merchants added (Ashley, Bed Bath & Beyond) . Q2: KPay +81% YoY; 39% share; merchants added (Sam’s Club, Guitar Center, Pottery Barn) .App share 61%; KPay +66% YoY; 41% share; added Apple; MAUs +49% YoY; >11M app opens YTD; 1.2M downloads .Accelerating product adoption and engagement.
Macro Headwinds (Inflation/Tariffs/Delinquency)Q1: Home furnishings/mattress category challenging . Q2: Tariff uncertainty noted .Inflation and government shutdown risks; rising non-prime delinquencies (e.g., auto loans) observed; scenario planning in place .Elevated caution; risk-managed execution.
Credit Underwriting & Write-offsQ1: Write-offs 9.0% within 8–10% target . Q2: 9.8% within range .Underwriting tightened late Q3; write-offs 9.9% (within range); aim to drive down over time .Slight uptick with proactive tightening.
Capital Structure & LiquidityQ2: Blue Owl refinancing; RLOC liquidity increased; term loan PIK; warrants issued .$65M Hawthorn preferred; term loan repaid; RLOC reduced; advance rate cut to 90% to save interest expense .Strengthened balance sheet; potential interest savings.
Merchant EcosystemQ1/Q2: Continued merchant additions and pathways .Direct/waterfall 59% of originations; +6% YoY (excl. furnishings/mattress +42%); Wayfair slightly up YoY .Mixed by category; improving with key partners.

Management Commentary

  • CEO: “Our 25% gross originations growth in the third quarter marks our third consecutive year of growth… rapid application growth, expanding unique new customer base, strong repeat customer rates and an uptick in cross-shopping activity” .
  • CFO: “We expect robust gross originations growth… but given macroeconomic headwinds… we are tempering our full year outlook for gross originations, revenue and Adjusted EBITDA” .
  • CFO: “Adjusted EBITDA for Q3 was $4.4M, above our outlook range… fixed cash operating expenses were $7.5M, down 21.4% YoY” .
  • President/CGO: “We tightened our underwriting decision in a few targeted areas… credit quality of pre-approved consumers and converted customers [is] trending up… conversion rates [are] increasing” .

Q&A Highlights

  • The transcript did not include a live Q&A session; notable clarifications in prepared remarks: ~1ppt Q4 originations headwind from late-Q3 underwriting tightening ; Wayfair originations “grew slightly YoY” indicating an inflection with the largest merchant ; interest savings expected from reducing RLOC advance rate from 99% to 90% .
  • Capital transaction terms: Series A/B convertible preferred at initial conversion prices of $12.32 and $11.39; ~$35.1M term loan repaid; ~$6.9M RLOC reduction .

Estimates Context

  • S&P Global consensus estimates for Q3 2025 (EPS, revenue, EBITDA) were unavailable for KPLT at the time of retrieval; therefore, we cannot assess beat/miss versus Wall Street consensus for this quarter [Values retrieved from S&P Global].
  • Company-level guidance comparison shows a positive surprise in Q3 adjusted EBITDA versus management’s own outlook ($4.417M vs $3.0–$3.5M) .

Key Takeaways for Investors

  • Strong operational execution with double-digit revenue and originations growth, and an adjusted EBITDA beat versus company guidance — a positive signal into holiday season .
  • Marketplace flywheel strengthening: app-originated share reached 61%, KPay at 41% of originations, and engagement metrics (MAUs, downloads) support continued conversion gains .
  • Proactive credit posture: late-Q3 underwriting tightening aims to protect asset quality and reduce write-offs while potentially moderating near-term originations growth .
  • Balance sheet de-risking and interest expense relief via preferred investment and RLOC advance rate reduction create optionality for growth investments .
  • FY 2025 outlook tempered (revenue 18–20%, adjusted EBITDA $8–$9M) — monitor macro sensitivity (inflation, government shutdown, non-prime credit) and home furnishings/mattress exposure .
  • Merchant momentum and category mix matter: ex-home furnishings/mattress growth was robust; watch Wayfair trajectory and ongoing waterfall integrations/pathways .
  • Near-term trading setup: narrative likely centers on holiday execution, app/KPay conversion, and evidence that underwriting tightening reduces write-offs without stalling growth; any update to FY guide or proof of interest savings could be catalysts .