Katapult Holdings, Inc. (“Katapult” or the “Company”) (NASDAQ:
KPLT), an e-commerce-focused financial technology company, today
reported its financial results for the fourth quarter ended
December 31, 2022.
Orlando Zayas, CEO of Katapult said, “I am proud
that our team successfully executed against the strategic
investment roadmap that we shared in early 2022, highlighted by new
technology, such as enhancing our mobile app with a new feature
called Katapult PayTM, our one-time use virtual card technology
that makes lease purchasing simple and intuitive for our customers.
The early success of these investments is reflected in our fourth
quarter results with a return to growth in gross originations of
1.5% year-over-year, despite a challenging macro backdrop for
consumers and retailers. As we look forward into 2023, we remain
passionate about creating relationships with more customers and
deepening our engagement by introducing new access points like our
mobile app to drive top line growth and profitability.”
Fourth Quarter 2022 Financial and
Operational Highlights:
- Gross originations of $59.8 million
increased by $0.9 million, or 1.5% year-over-year, the first
positive inflection since the third quarter of 2021. December 2022
gross originations increased by mid-teen’s year- over-year
- Total revenue of $48.8 million
decreased by $24.5 million, or 33.4% compared to the prior year
period. Of the total $24.5 million decrease, $9.0 million was a
result of our adoption of ASC 842 as of January 1, 2022
- Added 21 new direct merchants in
the fourth quarter of 2022, bringing our total direct merchant adds
to 113 for fiscal year 2022
- Added 7 merchants to Katapult
PayTM, a new feature on our mobile app, including Home Depot and
Wayfair, for a total of 18 merchants added for the full year. While
still in its early stages, the Company originated over 12,000
leases totaling over $8 million of gross originations with Katapult
PayTM since its launch in the third quarter of 2022 through
December 31, 2022
- Initiated process to further
right-size expense and headcount base that is expected to result in
significant reductions in cash operating expenses in 2023
- Impairment charges as a percentage
of gross originations in the fourth quarter of 2022 were 8.8%,
reflecting a sequential improvement from 10.1% in the third quarter
of 2022
- Achieved continued high customer
satisfaction with a Net Promoter Score of 56 as of December 31,
2022
- More than 50% of gross originations
for the fourth quarter of 2022 came from repeat customers
(customers who have originated more than one lease with Katapult
over their lifetime)
- Ended the year with $65.4 million
of unrestricted cash on the balance sheet
Fourth Quarter
2022 Results
Gross originations for the fourth quarter were
$59.8 million, a 1.5% increase from the prior year period, that was
predominately driven by growth within our existing merchant base
coupled with a full quarter of activity related to our mobile app
featuring Katapult Pay™. The Company recorded fourth quarter
revenue of $48.8 million, which decreased $24.5 million as compared
to the prior year period. $9.0 million of this decrease was
directly attributable to our adoption of ASC 842 as of January 1,
2022.
Net loss was $14.4 million for the fourth
quarter of 2022, including a $0.6 million revaluation gain related
to our warrants. Adjusted net loss1 was $13.4 million for the
fourth quarter of 2022 compared to an adjusted net loss1 of $4.8
million in the prior year period. Adjusted EBITDA1 was a loss of
$5.0 million for the fourth quarter of 2022 compared to an Adjusted
EBITDA1 loss of $1.3 million in the prior year period, reflecting
lower revenue trends and higher expenses related to strategic
investments for growth.
Liquidity
On March 6, 2023, the Company reached an
agreement with its lender to amend its revolving line of credit and
term loan facility (“Credit Facilities”), to extend the maturity
date and optimize utilization ratios, which will create a more
efficient capital structure and result in overall interest expense
savings.
In addition to extending the maturity of the
Credit Facilities to June 4, 2025, the amendment provides the
following:
Revolving Line of Credit
- Reduced the revolving line of
credit commitment to $75 million
- Increased the spread above the
benchmark rate to 8.5% from 7.5%
Term Loan
- Paid down $25 million outstanding
principal
- The spread above the benchmark rate
remains at 8%
- Issued warrants to purchase up to
2,000,000 shares of common stock at an exercise price of $0.01 per
share which vest 6 months after closing
- Subject to the occurrence of
certain events under the warrant agreement, on December 5, 2023
warrants may be issued to purchase an additional 2,000,000 shares
of common stock at an exercise price of $0.01 per share;
exercisable 3 months after issuance
In addition, the benchmark rate was converted
from LIBOR to SOFR plus the applicable credit adjustment
spread.
The above description of the amendments to the
Credit Facilities and warrant agreement is a summary and is
qualified in its entirety by reference to the entire text of the
Credit Facilities and warrant agreement, which will be filed with
our Annual Report on Form 10-K.
Full Year and First Quarter 2023
Business Outlook
The Company continues to navigate uncertainty in
the macro-environment related to inflation, consumer spending and a
challenging labor market. As a result, the Company is not providing
financial guidance at this time.
The Company is however, providing 2023
commentary as follows:
- The Company expects consumer
spending headwinds to persist in 2023. Historically, lease-to-own
solutions benefit from periods of shrinking prime credit
availability, creating a counter-cyclical hedge against a
challenging macro-environment
- The Company expects to see
year-over-year gross originations growth continue into 2023. The
Company also expects sequential improvement in the second half of
2023 compared to the first half of 2023 as the Company sees the
full year benefit of new merchants through direct integrations as
well as on our mobile app featuring Katapult PayTM
- Entering 2023, the Company believes
the credit quality of our portfolio should continue to improve
based on the advancement and ongoing development of our risk
modeling, quality of the new merchants onboarded, as well as the
engagement and quality of the consumers attracted to our mobile app
featuring Katapult PayTM
- The Company expects the impact of
expense reductions initiated in the fourth quarter of 2022 to
reduce our total operating expenses by more than 10% for the full
year 2023. Excluding underwriting fees and servicing costs which
are variable and non-cash stock-based compensation expense, we
expect fixed cash operating expenses to decrease by more than 20%
for the full year 2023. The expense reduction efforts encompassed
all areas of spending, including company-wide headcount reductions.
The first quarter of 2023 will be a transition quarter as one-time
severance expenses offset the overall expense reductions
- For full year 2023, the Company
expects to achieve year-over-year improvement in Adjusted EBITDA as
a result of gross origination improvement and reduced operating
expenses
- Through early March, gross
originations have increased year-over-year continuing the positive
trend from Q4 and in line with our expectations, driven by
merchants with direct integration and the Company’s 2022 strategic
investments in technology, such as the mobile app featuring
Katapult PayTM
Conference Call and Webcast
The Company will host a conference call and
webcast at 8:00 AM ET on Thursday, March 9, 2023, to discuss the
Company’s financial results. Related presentation materials will be
available before the call on the Company’s Investor Relations page
at Presentations - Katapult Holdings.
The conference call will be broadcast live in
listen-only mode on the Company’s Investor page here. Interested
parties may access dial information for the call by registering via
this web link.
An archive of the webcast will be available for
one year on the website at
https://ir.katapultholdings.com/news-events/investor-calendar
About Katapult
Katapult is a technology driven lease-to-own
platform that integrates with omni-channel retailers and e-commerce
platforms to power the purchasing of everyday durable goods for
underserved U.S. non-prime consumers. Through our point-of-sale
(POS) integrations and innovative, mobile app featuring Katapult
PayTM, consumers who may be unable to access traditional financing
can shop a growing network of merchant partners. Our process is
simple, fast, and transparent. We believe that seeing the good in
people is good for business, humanizing the way underserved
consumers get the things they need with payment solutions based on
fairness and dignity.
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 our business outlook, our ability to weather
the macroeconomic headwinds and our momentum in building volume
opportunities in our addressable market and the benefits from the
mobile app featuring Katapult PayTM. 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, 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 execution of Katapult’s business
strategy, launching new product offerings, new brands and expanding
information and technology capabilities; Katapult’s market
opportunity and its ability to acquire new customers and retain
existing customers; the timing and impact of our growth initiatives
on our future financial performance and the impact of our new
executive hires and brand strategy; anticipated occurrence and
timing of prime lending tightening and impact on our results of
operations; adoption and success of our new mobile application
featuring, Katapult Pay™, general economic conditions in the
markets where Katapult operates, the cyclical nature of consumer
spending, and seasonal sales and spending patterns of customers;
failure to realize the anticipated benefits of the business
combination with FinServ Acquisition Corp. (the “Merger”); risks
relating to factors affecting consumer spending that are not under
Katapult’s control, including, among others, levels of employment,
disposable consumer income, inflation, prevailing interest rates,
consumer debt and availability of credit, pandemics (such as
COVID-19), consumer confidence in future economic conditions and
political conditions, and consumer perceptions of personal
well-being and security; risks relating to uncertainty of
Katapult’s estimates of market opportunity and forecasts of market
growth; risks related to the concentration of a significant portion
of our transaction volume with a single merchant partner, or type
of merchant or industry; the effects of competition on Katapult’s
future business; the impact of the COVID-19 pandemic and its effect
on Katapult’s business; unstable market and economic conditions,
including as a result of the conflict involving Russia and Ukraine;
reliability of Katapult’s platform and effectiveness of its risk
model; protection of confidential, proprietary or sensitive
information, including confidential information about consumers,
and privacy or data breaches, including by cyber-attacks or similar
disruptions; ability to attract and retain employees, executive
officers or directors; meeting future liquidity requirements and
complying with restrictive covenants related to long-term
indebtedness; effectively respond to general economic and business
conditions; obtain additional capital, including equity or debt
financing; ability to service our indebtedness; anticipate rapid
technological changes; comply with laws and regulations applicable
to Katapult’s business, including laws and regulations related to
rental purchase transactions; stay abreast of modified or new laws
and regulations applying to Katapult’s business, including rental
purchase transactions and privacy regulations; maintain
relationships with merchant partners; respond to uncertainties
associated with product and service developments and market
acceptance; anticipate the impact of new U.S. federal income tax
law; that Katapult has identified material weaknesses in its
internal control over financial reporting which, if not remediated,
could affect the reliability of its consolidated financial
statements; successfully defend litigation; litigation, regulatory
matters, complaints, adverse publicity and/or misconduct by
employees, vendors and/or service providers; and other events or
factors, including those resulting from civil unrest, war, foreign
invasions (including the conflict involving Russia and Ukraine),
terrorism, or public health crises, or responses to such events;
and those factors discussed in greater detail in the section
entitled “Risk Factors” in Katapult’s periodic reports filed with
the Securities and Exchange Commission (“SEC”), including
Katapult’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2022 and the Annual Report on Form 10-K that Katapult
intends to file with the SEC for the year ended December 31,
2022.
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. Undue reliance should not be placed on
the forward-looking statements in this Press Release. All
forward-looking statements contained herein are based on
information available to Katapult as of the date hereof, and
Katapult does not assume any obligation to update these statements
as a result of new information or future events, except as required
by law.
Key Performance Metrics
Katapult regularly reviews several metrics,
including the following key metrics, to evaluate its business,
measure its performance, identify trends affecting our business,
formulate financial projections and make strategic decisions, which
may also be useful to an investor: Gross Originations, Total
Revenue, Unearned Revenue and Gross Profit.
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 Katapult’s management
and investors to use in assessing the volume of transactions that
take place on Katapult’s platform.
Total revenue represents the summation of rental
revenue and other revenue. Unearned revenue represents the
Company’s liability for cash received from customers prior to the
related revenue being earned. Katapult measures these metrics to
assess the total view of paythrough performance of its customers.
Management believes looking at these components is useful to an
investor as it helps to understand the total payment performance of
customers. In connection with the adoption of ASU No. 2016-02,
Leases (Topic 842), as amended (“ASC 842”), effective January 1,
2022, Katapult recognizes revenue from customers (rental revenue)
when the revenue is earned and the cash is collected. Accordingly,
the Company no longer records rental revenue arising from lease
payments earned but not yet collected nor any corresponding bad
debt expense, nor discloses bad debt recoveries in its periodic
reports starting in the first quarter of 2022.
Gross profit represents total revenue less cost
of revenue, and is a measure presented in accordance with generally
accepted accounting principles in the United States ("GAAP"). See
the “Non-GAAP Financial Measures” section below for a presentation
of this measure alongside adjusted gross profit, which is a
non-GAAP measure utilized by management.
Non-GAAP Financial Measures
To supplement the financial measures presented
in this press release and related conference call or webcast in
accordance with GAAP, the Company also presents the following
non-GAAP and other measures of financial performance: adjusted
gross profit, adjusted EBITDA, and adjusted net (loss) income. The
Company urges investors to consider non-GAAP measures only in
conjunction with its GAAP financials and to review the
reconciliation of the Company’s non-GAAP financial measures to its
comparable GAAP financial measures, which are included in this
press release.
Adjusted gross profit represents gross profit
less variable operating expenses, which are servicing costs,
underwriting fees, and bad debt expense. Management believes that
adjusted gross profit provides a meaningful understanding of one
aspect of its performance specifically attributable to total
revenue and the variable costs associated with total revenue.
Adjusted EBITDA is a non-GAAP measure that is
defined as net (loss) income before interest expense and other
fees, interest income, change in fair value of warrant liability,
(benefit) provision for income taxes, depreciation and amortization
on property and equipment and capitalized software, impairment of
leased assets, stock-based compensation expense, and transaction
costs associated with the Merger.
Adjusted net (loss) income is a non-GAAP measure
that is defined as net loss before change in fair value of warrant
liability, stock-based compensation expense and transaction costs
associated with the Merger.
Adjusted gross profit, adjusted EBITDA and
adjusted net (loss) income are useful to an investor in evaluating
the Company’s performance because these measures:
- Are widely used to measure a
company’s operating performance;
- Are financial measurements that are
used by rating agencies, lenders and other parties to evaluate the
Company’s credit worthiness; and
- Are used by the Company’s
management for various purposes, including as measures of
performance and as a basis for strategic planning and
forecasting.
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 not part of our
core operations, highly variable 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. Management
believes 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. Therefore, these measures should not be considered in
isolation or as alternatives to revenue, net (loss) income, gross
profit, 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.
ASC 842 Adoption
The Company was required to adopt ASC 842
relating to lessor accounting, effective January 1, 2022. The
Company's lease-to-own agreements, which comprise the majority of
the Company’s revenue, fall within the scope of ASC 842 and are
impacted by this change. As a result of the adoption, the Company
now recognizes revenue from customers when revenue is earned and
cash is collected instead of on an accrual basis, which it has done
historically. The Company has adopted ASC 842 using the transition
method, which permits the Company to not apply ASC 842 for
comparative periods in the year of adoption. The Company has not
recast or restated 2021 or prior periods to conform to ASC 842. The
adoption of ASC 842 is reflected in the Company’s financial
statements and related notes and periodic reports filed with the
SEC beginning with the Company’s quarterly report on Form 10-Q for
the quarter ended March 31, 2022.
For illustrative purposes only, the Company is
disclosing total revenue, bad debt expense (net of recoveries) and
income (loss) before provision for income taxes for each quarter
during the years ended December 31, 2021 and 2020, respectively, as
if the lessor accounting impacts of ASC 842 were in effect for
these periods. “Total revenue”, “bad debt expense (net of
recoveries)” and “income before provision for income taxes” for
2021 and 2020 are supplemental disclosures that are not calculated
in accordance with GAAP in place during these periods.
Management believes the supplemental information
showing the impact of ASC 842 for 2021 and 2020 provides relevant
and useful information for users of the Company’s financial
statements, as it provides comparability with the financial results
the Company reported in 2022 when ASC 842 became effective and the
Company recognized revenue from customers when the revenue is
earned and cash is collected. Upon adoption, the Company no longer
records accounts receivable arising from lease receivables due from
customers incurred during the normal course of business for lease
payments earned but not yet received from the customer or any
corresponding allowance for doubtful accounts.
Contacts
Katapult Vice President of Investor RelationsBill
Wright917-750-0346bill.wright@katapult.com
KATAPULT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME(amounts in thousands,
except share and per share amounts)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
Rental revenue |
$ |
47,904 |
|
|
$ |
73,261 |
|
|
$ |
207,979 |
|
|
$ |
302,794 |
|
Other revenue |
|
944 |
|
|
|
38 |
|
|
|
4,126 |
|
|
|
319 |
|
Total revenue |
|
48,848 |
|
|
|
73,299 |
|
|
|
212,105 |
|
|
|
303,113 |
|
Cost of revenue |
|
39,740 |
|
|
|
51,969 |
|
|
|
171,119 |
|
|
|
214,124 |
|
Gross profit |
|
9,108 |
|
|
|
21,330 |
|
|
|
40,986 |
|
|
|
88,989 |
|
Operating expenses: |
|
|
|
|
|
|
|
Servicing costs |
|
975 |
|
|
|
1,386 |
|
|
|
4,337 |
|
|
|
4,737 |
|
Underwriting fees |
|
498 |
|
|
|
476 |
|
|
|
1,828 |
|
|
|
1,876 |
|
Professional and consulting fees |
|
3,037 |
|
|
|
1,853 |
|
|
|
11,281 |
|
|
|
5,987 |
|
Technology and data analytics |
|
2,103 |
|
|
|
2,173 |
|
|
|
9,389 |
|
|
|
8,196 |
|
Bad debt expense |
|
— |
|
|
|
9,450 |
|
|
|
— |
|
|
|
28,299 |
|
Compensation costs |
|
6,491 |
|
|
|
3,131 |
|
|
|
25,090 |
|
|
|
26,943 |
|
General and administrative |
|
3,435 |
|
|
|
4,038 |
|
|
|
14,167 |
|
|
|
11,294 |
|
Total operating expenses |
|
16,539 |
|
|
|
22,507 |
|
|
|
66,092 |
|
|
|
87,332 |
|
(Loss) income from operations |
|
(7,431 |
) |
|
|
(1,177 |
) |
|
|
(25,106 |
) |
|
|
1,657 |
|
Interest expense and other fees |
|
(8,385 |
) |
|
|
(4,023 |
) |
|
|
(19,998 |
) |
|
|
(16,485 |
) |
Interest income |
|
521 |
|
|
|
— |
|
|
|
744 |
|
|
|
— |
|
Change in fair value of warrant liability |
|
646 |
|
|
|
12,413 |
|
|
|
6,439 |
|
|
|
36,573 |
|
(Loss) income before provision for income taxes |
|
(14,649 |
) |
|
|
7,213 |
|
|
|
(37,921 |
) |
|
|
21,745 |
|
Benefit (provision) for income taxes |
|
222 |
|
|
|
266 |
|
|
|
50 |
|
|
|
(539 |
) |
Net (loss) income and comprehensive (loss) income |
$ |
(14,427 |
) |
|
$ |
7,479 |
|
|
$ |
(37,871 |
) |
|
$ |
21,206 |
|
Net (loss) income per share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.15 |
) |
|
$ |
0.08 |
|
|
$ |
(0.39 |
) |
|
$ |
0.31 |
|
Diluted |
$ |
(0.15 |
) |
|
$ |
0.07 |
|
|
$ |
(0.39 |
) |
|
$ |
0.26 |
|
Weighted average shares used in computing net (loss) income per
share: |
|
|
|
|
|
|
|
Basic |
|
98,489,858 |
|
|
|
97,511,610 |
|
|
|
98,241,965 |
|
|
|
68,502,092 |
|
Diluted |
|
98,489,858 |
|
|
|
106,661,294 |
|
|
|
98,241,965 |
|
|
|
80,573,218 |
|
KATAPULT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(amounts in thousands, except share and per share
amounts)
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
65,430 |
|
|
$ |
92,494 |
|
Restricted cash |
|
4,411 |
|
|
|
3,937 |
|
Accounts receivable, net of allowance for doubtful accounts of
$6,248 at December 31, 2021 |
|
— |
|
|
|
2,007 |
|
Property held for lease, net of accumulated depreciation and
impairment |
|
50,278 |
|
|
|
61,752 |
|
Prepaid expenses and other current assets |
|
8,515 |
|
|
|
4,249 |
|
Total current assets |
|
128,634 |
|
|
|
164,439 |
|
Property and equipment, net |
|
557 |
|
|
|
576 |
|
Security deposits |
|
91 |
|
|
|
91 |
|
Capitalized software and intangible assets, net |
|
1,847 |
|
|
|
1,056 |
|
Right-of-use assets |
|
772 |
|
|
|
— |
|
Total assets |
$ |
131,901 |
|
|
$ |
166,162 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,264 |
|
|
$ |
2,029 |
|
Accrued liabilities |
|
14,532 |
|
|
|
11,959 |
|
Revolving line of credit |
|
— |
|
|
|
— |
|
Term loan |
|
25,000 |
|
|
|
— |
|
Unearned revenue |
|
1,552 |
|
|
|
2,135 |
|
Lease liabilities |
|
382 |
|
|
|
— |
|
Total current liabilities |
|
42,730 |
|
|
|
16,123 |
|
Revolving line of credit |
|
57,639 |
|
|
|
61,238 |
|
Term loan |
|
23,057 |
|
|
|
40,661 |
|
Other liabilities |
|
902 |
|
|
|
7,341 |
|
Lease liabilities, non-current |
|
445 |
|
|
|
— |
|
Total liabilities |
|
124,773 |
|
|
|
125,363 |
|
STOCKHOLDERS' EQUITY |
|
|
|
Common stock, $.0001 par value-- 250,000,000 shares authorized;
98,585,563 and 97,574,171 shares issued and outstanding at December
31, 2022 and December 31, 2021, respectively |
|
10 |
|
|
|
10 |
|
Additional paid-in capital |
|
83,794 |
|
|
|
77,632 |
|
Accumulated deficit |
|
(76,676 |
) |
|
|
(36,843 |
) |
Total stockholders' equity |
|
7,128 |
|
|
|
40,799 |
|
Total liabilities and stockholders' equity |
$ |
131,901 |
|
|
$ |
166,162 |
|
KATAPULT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(amounts in thousands)
|
Years Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
Net (loss) income |
$ |
(37,871 |
) |
|
$ |
21,206 |
|
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities: |
|
|
|
Depreciation and amortization |
|
116,329 |
|
|
|
143,993 |
|
Net book value of property buyouts |
|
30,505 |
|
|
|
45,589 |
|
Impairment expense |
|
17,216 |
|
|
|
14,566 |
|
Bad debt expense |
|
— |
|
|
|
28,299 |
|
Change in fair value of warrant liability |
|
(6,439 |
) |
|
|
(36,573 |
) |
Stock-based compensation |
|
6,439 |
|
|
|
13,020 |
|
Amortization of debt discount |
|
5,275 |
|
|
|
2,701 |
|
Amortization of debt issuance costs |
|
361 |
|
|
|
357 |
|
Accrued PIK interest |
|
2,121 |
|
|
|
1,547 |
|
Amortization of right-of-use assets |
|
367 |
|
|
|
— |
|
Change in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
— |
|
|
|
(28,670 |
) |
Property held for lease |
|
(151,843 |
) |
|
|
(198,841 |
) |
Prepaid expenses and other current assets |
|
(4,266 |
) |
|
|
(3,847 |
) |
Accounts payable |
|
(765 |
) |
|
|
344 |
|
Accrued liabilities |
|
2,719 |
|
|
|
(1,008 |
) |
Lease liabilities |
|
(413 |
) |
|
|
— |
|
Unearned revenues |
|
(583 |
) |
|
|
(517 |
) |
Net cash (used in) provided by operating
activities |
|
(20,848 |
) |
|
|
2,166 |
|
Cash flows from investing activities: |
|
|
|
Purchases of property and equipment |
|
(168 |
) |
|
|
(384 |
) |
Additions to capitalized software |
|
(1,337 |
) |
|
|
(1,052 |
) |
Net cash used in investing activities |
|
(1,505 |
) |
|
|
(1,436 |
) |
Cash flows from financing activities: |
|
|
|
Principal repayments on revolving line of credit |
|
(22,477 |
) |
|
|
(20,471 |
) |
Proceeds from revolving line of credit |
|
18,517 |
|
|
|
7,036 |
|
Proceeds from exercise of stock options |
|
67 |
|
|
|
678 |
|
Repurchases of restricted stock |
|
(344 |
) |
|
|
— |
|
PIPE proceeds |
|
— |
|
|
|
150,000 |
|
Merger financing, net of redemptions |
|
— |
|
|
|
251,109 |
|
Consideration paid to selling shareholders |
|
— |
|
|
|
(329,560 |
) |
Transaction cost paid |
|
— |
|
|
|
(32,688 |
) |
Net cash (used in) provided by financing
activities |
|
(4,237 |
) |
|
|
26,104 |
|
Net (decrease) increase in cash, cash equivalents and restricted
cash |
|
(26,590 |
) |
|
|
26,834 |
|
Cash, cash equivalents and restricted cash at beginning of
period |
|
96,431 |
|
|
|
69,597 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
69,841 |
|
|
$ |
96,431 |
|
|
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
|
Cash paid for interest |
$ |
12,032 |
|
|
$ |
11,628 |
|
Cash paid for taxes |
$ |
446 |
|
|
$ |
416 |
|
Right-of-use assets obtained in exchange for operating lease
liabilities |
$ |
1,139 |
|
|
$ |
— |
|
Cash paid for operating leases |
$ |
511 |
|
|
$ |
— |
|
Exchange of redeemable convertible preferred shares |
$ |
— |
|
|
$ |
49,894 |
|
Assumed warrant liability in connection with Merger |
$ |
— |
|
|
$ |
44,272 |
|
Exercise of common stock warrant accounted for as a liability |
$ |
— |
|
|
$ |
13,102 |
|
Transaction costs included in other assets |
$ |
— |
|
|
$ |
846 |
|
KATAPULT HOLDINGS,
INC.RECONCILIATION OF NON-GAAP MEASURES AND
CERTAIN OTHER DATA (UNAUDITED)(amounts in
thousands)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
Adjusted Gross Profit |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Total revenue |
$ |
48,848 |
|
$ |
73,299 |
|
$ |
212,105 |
|
$ |
303,113 |
Cost of revenue |
|
39,740 |
|
|
51,969 |
|
|
171,119 |
|
|
214,124 |
Gross profit |
|
9,108 |
|
|
21,330 |
|
|
40,986 |
|
|
88,989 |
Less: |
|
|
|
|
|
|
|
Servicing costs |
|
975 |
|
|
1,386 |
|
|
4,337 |
|
|
4,737 |
Underwriting fees |
|
498 |
|
|
476 |
|
|
1,828 |
|
|
1,876 |
Bad debt expense |
|
— |
|
|
9,450 |
|
|
— |
|
|
28,299 |
Adjusted gross profit |
$ |
7,635 |
|
$ |
10,018 |
|
$ |
34,821 |
|
$ |
54,077 |
|
Three Months Ended December 31, |
|
Years Ended December 31, |
Adjusted EBITDA |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net (loss) income |
$ |
(14,427 |
) |
|
$ |
7,479 |
|
|
$ |
(37,871 |
) |
|
$ |
21,206 |
|
Add back: |
|
|
|
|
|
|
|
Interest expense and other fees |
|
8,385 |
|
|
|
4,023 |
|
|
|
19,998 |
|
|
|
16,485 |
|
Interest income |
|
(521 |
) |
|
|
— |
|
|
|
(744 |
) |
|
|
— |
|
Change in fair value of warrant liability |
|
(646 |
) |
|
|
(12,413 |
) |
|
|
(6,439 |
) |
|
|
(36,573 |
) |
(Benefit) provision for income taxes |
|
(222 |
) |
|
|
(266 |
) |
|
|
(50 |
) |
|
|
539 |
|
Depreciation and amortization on property and equipment and
capitalized software |
|
227 |
|
|
|
104 |
|
|
|
733 |
|
|
|
321 |
|
Impairment of leased assets |
|
558 |
|
|
|
(401 |
) |
|
|
1,235 |
|
|
|
(1,490 |
) |
Stock-based compensation expense (1) |
|
1,686 |
|
|
|
159 |
|
|
|
6,439 |
|
|
|
13,476 |
|
Transaction costs associated with merger (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,350 |
|
Adjusted EBITDA |
$ |
(4,960 |
) |
|
$ |
(1,315 |
) |
|
$ |
(16,699 |
) |
|
$ |
17,314 |
|
(1) Includes $0.5 million of employer payroll taxes
in 2021.(2) Consists of non-capitalizable transaction cost
associated with the Merger.
|
Three Months Ended December 31, |
|
Years Ended December 31, |
Adjusted Net (Loss) Income |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net (loss) income |
$ |
(14,427 |
) |
|
$ |
7,479 |
|
|
$ |
(37,871 |
) |
|
$ |
21,206 |
|
Add back: |
|
|
|
|
|
|
|
Change in fair value of warrant liability |
|
(646 |
) |
|
|
(12,413 |
) |
|
|
(6,439 |
) |
|
|
(36,573 |
) |
Stock-based compensation expense (1) |
|
1,686 |
|
|
|
159 |
|
|
|
6,439 |
|
|
|
13,476 |
|
Transaction costs associated with merger (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,350 |
|
Adjusted Net (Loss) Income |
$ |
(13,387 |
) |
|
$ |
(4,775 |
) |
|
$ |
(37,871 |
) |
|
$ |
1,459 |
|
(1) Includes $0.5 million of employer payroll taxes
in 2021.(2) Consists of non-capitalizable transaction cost
associated with the Merger.
CERTAIN KEY PERFORMANCE
METRICS
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Total revenue |
$ |
48,848 |
|
$ |
73,299 |
|
$ |
212,105 |
|
$ |
303,113 |
KATAPULT HOLDINGS,
INC.GROSS ORIGINATIONS BY QUARTER
|
|
Gross Originations by Quarter |
($ millions) |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
FY 2022 |
|
$ |
46.7 |
|
$ |
46.4 |
|
$ |
44.1 |
|
$ |
59.8 |
FY 2021 |
|
$ |
63.8 |
|
$ |
64.4 |
|
$ |
61.0 |
|
$ |
58.9 |
FY 2020 |
|
$ |
37.2 |
|
$ |
77.6 |
|
$ |
60.5 |
|
$ |
61.1 |
KATAPULT HOLDINGS,
INCIMPACT OF ADOPTION OF ASC
842FOR ILLUSTRATIVE PURPOSES
ONLY(UNAUDITED)
|
Three Months Ended |
|
Three Months Ended |
|
Dec. 31,2021 |
Sept. 30,2021 |
Jun. 30,2021 |
Mar. 31,2021 |
|
Dec. 31,2020 |
Sept. 30,2020 |
Jun. 30,2020 |
Mar. 31,2020 |
As Reported: |
|
|
|
|
|
|
|
|
|
Total revenue |
$ |
73,299 |
$ |
71,710 |
$ |
77,469 |
|
$ |
80,635 |
|
$ |
73,358 |
$ |
71,194 |
$ |
60,014 |
$ |
42,634 |
Bad debt expense (net of recoveries) |
|
9,450 |
|
5,936 |
|
8,026 |
|
|
4,887 |
|
|
6,450 |
|
3,931 |
|
2,548 |
|
3,134 |
Income before provision for income taxes |
$ |
7,213 |
$ |
14,548 |
$ |
(9,931 |
) |
$ |
9,915 |
|
$ |
3,996 |
$ |
10,073 |
$ |
5,199 |
$ |
3,749 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results: |
|
|
|
|
|
|
|
|
|
Total revenue under ASC 842 |
$ |
64,253 |
$ |
66,277 |
$ |
69,472 |
|
$ |
77,558 |
|
$ |
67,060 |
$ |
67,410 |
$ |
59,721 |
$ |
39,428 |
Bad debt expense (net of recoveries) under ASC 842 |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
— |
Income before provision for income taxes under ASC 842 |
$ |
7,617 |
$ |
15,051 |
$ |
(9,902 |
) |
$ |
11,725 |
|
$ |
4,149 |
$ |
10,220 |
$ |
7,454 |
$ |
3,677 |
*Total revenue under ASC 842 also reflects the
impact of the change in recognizing revenue when it is earned and
cash is collected.
1 Please refer to the “Reconciliation of
Non-GAAP Measure and Certain Other Data” section and the GAAP to
non-GAAP reconciliation tables below for more information
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