Katapult Holdings, Inc. (KPLT) Bundle
Understanding Katapult Holdings, Inc. (KPLT) Revenue Streams
Understanding Katapult Holdings, Inc.’s Revenue Streams
Katapult Holdings, Inc. generates revenue primarily through two segments: rental revenue and other revenue. The following table presents a detailed breakdown of total revenue for the three and nine months ended September 30, 2024, and 2023.
| Period | Rental Revenue | Other Revenue | Total Revenue | Year-over-Year Change ($) | Year-over-Year Change (%) |
|---|---|---|---|---|---|
| Three Months Ended September 30, 2024 | $59,609 | $698 | $60,307 | $5,496 | 10.0% |
| Three Months Ended September 30, 2023 | $54,042 | $769 | $54,811 | - | - |
| Nine Months Ended September 30, 2024 | $181,947 | $2,284 | $184,231 | $20,201 | 12.3% |
| Nine Months Ended September 30, 2023 | $161,612 | $2,418 | $164,030 | - | - |
The total revenue increased by $20.2 million, or 12.3%, during the nine months ended September 30, 2024, compared to the same period in 2023. This growth was primarily attributed to enhanced efficiency in gross origination growth and robust collection efforts. The rental revenue segment saw a 12.6% increase, from $161.6 million in 2023 to $181.9 million in 2024.
In the three months ending September 30, 2024, the total revenue grew by 10.0%, from $54.8 million in 2023 to $60.3 million in 2024. The increase in revenue is closely linked to the company's mobile app featuring Katapult Pay, launched in the third quarter of 2022, which significantly contributed to gross originations.
Furthermore, the contribution of rental revenue to overall revenue is significant, representing 99.5% of total revenue for the nine months ended September 30, 2024. The other revenue segment, which includes sales from property held for lease and other immaterial income sources, accounted for a smaller portion, showing a slight decline of 5.5% year-over-year.
Write-offs as a percentage of total revenue remained stable at 9.1% for the nine months ended September 30, 2024, compared to 9.3% for the same period in 2023, indicating effective management of losses linked to lease agreements.
The following table summarizes the contribution of various revenue streams for the nine months ending September 30, 2024:
| Revenue Source | Contribution ($) | Percentage of Total Revenue (%) |
|---|---|---|
| Rental Revenue | $181,947 | 98.6% |
| Other Revenue | $2,284 | 1.4% |
Overall, the revenue analysis reflects a positive trend in Katapult Holdings, Inc.'s financial performance as of 2024, driven by strategic initiatives such as the introduction of the Katapult Pay mobile app and strong collection strategies.
For the three months ended September 30, 2024, the cost of revenue was $48.4 million, up 11.6% from $43.3 million in the same period of 2023. This resulted in a gross profit margin of 19.8%, a decrease from 20.9% in the prior year. The increase in cost is attributed to higher origination growth and the associated expenses of managing the lease portfolio.
In summary, the revenue growth and management of costs indicate a robust financial health for Katapult Holdings, providing a favorable outlook for potential investors.
A Deep Dive into Katapult Holdings, Inc. (KPLT) Profitability
A Deep Dive into Katapult Holdings, Inc.'s Profitability
Gross Profit: For the nine months ended September 30, 2024, the total revenue was $184.231 million with a gross profit of $38.365 million, resulting in a gross profit margin of 20.8%. In comparison, for the same period in 2023, total revenue was $164.030 million with a gross profit of $32.806 million, leading to a gross profit margin of 20.0%.
Operating Profit: The loss from operations for the nine months ended September 30, 2024, was $3.268 million, compared to a loss of $8.147 million for the same period in 2023, indicating a significant improvement in operational efficiency.
Net Profit: The net loss for the nine months ended September 30, 2024, was $16.346 million, down from a net loss of $22.037 million for the same period in 2023. The net loss per share for the nine months ended September 30, 2024, was $3.81, compared to $5.43 for the same period in 2023.
Trends in Profitability Over Time
The profitability metrics have shown an improvement over time. The gross profit margin increased from 20.0% in 2023 to 20.8% in 2024. The net loss decreased by $5.691 million, or 25.8%, reflecting better cost management and revenue generation.
Comparison of Profitability Ratios with Industry Averages
Industry averages for gross profit margins in the financial services sector typically range from 20% to 30%. With a gross profit margin of 20.8%, the company is positioned at the lower end of the industry average. However, its operational losses have decreased significantly, indicating a potential for better alignment with industry standards in the future.
Analysis of Operational Efficiency
The operating expenses for the nine months ended September 30, 2024, were $41.633 million, a slight increase from $40.953 million in 2023, which reflects a 1.7% growth. The breakdown of operating expenses for the third quarter of 2024 shows:
| Expense Type | Amount (Q3 2024) | Amount (Q3 2023) | Change (%) |
|---|---|---|---|
| Operating Expenses | $16.396 million | $11.909 million | 37.7% |
| Litigation Settlement Expenses | $3.352 million | $0 | N/A |
| Stock-Based Compensation | $1.485 million | $1.375 million | 8.0% |
| Depreciation and Amortization | $0.403 million | $0.247 million | 63.2% |
The increase in operating expenses was mainly driven by litigation settlement costs, which amounted to $3.352 million. This expense was non-recurring and reflects an extraordinary situation that should not significantly impact future operating metrics.
Debt vs. Equity: How Katapult Holdings, Inc. (KPLT) Finances Its Growth
Debt vs. Equity: How Katapult Holdings, Inc. Finances Its Growth
As of September 30, 2024, Katapult Holdings, Inc. had a total outstanding debt of approximately $98.6 million, which includes a revolving line of credit (RLOC) and a term loan. The RLOC had a principal balance of $67.3 million and the term loan had a principal balance of $25 million.
The company’s debt-to-equity ratio stands at approximately 2.45, calculated using total liabilities of $98.6 million against total stockholders’ equity of approximately $40.3 million as of September 30, 2024. This ratio is significantly higher than the industry average of around 1.5, indicating a heavier reliance on debt financing compared to its peers.
In March 2023, Katapult entered into a significant amendment of its credit agreement, which extended the maturity date of both the RLOC and the term loan to June 4, 2025. The interest rates for these loans were modified, with the RLOC now bearing an interest rate of 13.8% and the term loan at 17.8%. This refinancing activity was aimed at improving liquidity while managing the cost of debt.
The company’s recent debt issuances included a repayment of $25 million of principal on the term loan during the March 2023 amendment. The RLOC has a commitment that allows for increases up to $250 million, providing flexibility for future financing needs. As of September 30, 2024, the company had $25.9 million in cash and cash equivalents, along with $4.4 million in restricted cash, indicating some liquidity cushion amid its debt obligations.
In balancing its debt and equity funding, Katapult appears to favor debt financing, which allows it to leverage its operations without diluting equity. However, this strategy increases financial risk, particularly given the high debt-to-equity ratio and the recent history of operating losses totaling $16.3 million for the nine months ended September 30, 2024.
| Financial Metric | Amount |
|---|---|
| Total Debt | $98.6 million |
| Debt-to-Equity Ratio | 2.45 |
| RLOC Principal Balance | $67.3 million |
| Term Loan Principal Balance | $25 million |
| Interest Rate on RLOC | 13.8% |
| Interest Rate on Term Loan | 17.8% |
| Cash and Cash Equivalents | $25.9 million |
| Restricted Cash | $4.4 million |
| Net Loss (9 Months Ended Sept 30, 2024) | $16.3 million |
Assessing Katapult Holdings, Inc. (KPLT) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio for the company is approximately 0.73, calculated from current assets of $30.3 million and current liabilities of $41.3 million. The quick ratio, which excludes inventory, is approximately 0.68.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is negative at ($11 million), reflecting a decrease from ($5 million) in the previous quarter. This downward trend indicates increasing liquidity pressures for the company.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, shows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | (4,070) | (7,720) |
| Investing Activities | (656) | (763) |
| Financing Activities | 6,208 | (22,490) |
| Net Cash Increase | 1,482 | (31,973) |
| Cash at End of Period | 30,293 | 38,868 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents totaled $25.9 million, with restricted cash at $4.4 million. The unused capacity on the revolving line of credit (RLOC) was $7.7 million. However, the company projects insufficient cash to pay off loans maturing in June 2025, totaling $98.6 million . This raises concerns regarding the ability to meet future obligations without refinancing efforts .
Is Katapult Holdings, Inc. (KPLT) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for the company are critical for assessing whether it is overvalued or undervalued. Key valuation ratios include:
- Price-to-Earnings (P/E) Ratio: Currently stands at not available due to the company reporting a net loss.
- Price-to-Book (P/B) Ratio: The book value per share is $-9.43, making the P/B ratio not applicable.
- Enterprise Value-to-EBITDA (EV/EBITDA): The enterprise value is $56.7 million, and EBITDA is $-3.0 million, resulting in an EV/EBITDA of not applicable.
The stock price trends over the last 12 months have shown significant volatility:
| Date | Stock Price (Close) | Change (%) |
|---|---|---|
| December 2023 | $1.25 | - |
| March 2024 | $1.10 | -12.0% |
| June 2024 | $0.85 | -22.7% |
| September 2024 | $0.90 | 5.9% |
The company does not pay dividends, and therefore, the dividend yield and payout ratios are not applicable.
Analyst consensus on stock valuation is as follows:
| Analyst | Rating | Price Target |
|---|---|---|
| Analyst A | Hold | $1.00 |
| Analyst B | Sell | $0.80 |
| Analyst C | Hold | $0.90 |
In summary, the valuation metrics indicate significant challenges for the company, particularly reflected in its net loss and the absence of a standard P/E or P/B ratio. The stock price has experienced downward pressure, and the analyst consensus reflects a cautious outlook.
Key Risks Facing Katapult Holdings, Inc. (KPLT)
Key Risks Facing Katapult Holdings, Inc.
Industry Competition: The company operates in a highly competitive industry, with numerous players offering similar lease-purchase options. As of September 30, 2024, the total revenue was $60.3 million, reflecting a 10.0% increase year-over-year, but competition continues to pressure margins and market share.
Regulatory Changes: Regulatory scrutiny in the financial services sector can impact operations. The company has previously adjusted its practices to comply with state regulations that impose limitations on lease agreements. As of September 30, 2024, the provision for income taxes was $0.11 million, influenced by these regulatory frameworks.
Market Conditions: Economic fluctuations can significantly affect consumer spending. The company reported a net loss of $8.9 million for the three months ended September 30, 2024, compared to a $4.1 million loss in the same period of 2023, highlighting vulnerability to changing market conditions.
Operational Risks
Operational Efficiency: The company's operational model relies heavily on gross originations, which were $181.9 million for the nine months ended September 30, 2024. Any inefficiencies in the origination process can lead to increased costs and reduced profitability.
Litigation Costs: The company incurred litigation settlement costs of $3.4 million during the nine months ended September 30, 2024. Such costs can adversely affect financial stability and operational focus.
Financial Risks
Debt Obligations: As of September 30, 2024, the company had outstanding principal amounts of $67.3 million under the revolving line of credit (RLOC) and $31.4 million under the term loan, leading to significant interest obligations. The interest rates for these debts were 13.8% and 17.8%, respectively .
Accumulated Deficit: The accumulated deficit as of September 30, 2024, was approximately $138.9 million, indicating a history of operating losses that may challenge future profitability .
Mitigation Strategies
Cost Management: The company plans to enhance operational efficiency and reduce costs. The gross profit margin for the nine months ended September 30, 2024, was 20.8%, an improvement from 20.0% in the previous year .
Financial Restructuring: The company is currently seeking to refinance its loans before their maturity in June 2025, which could potentially lower interest expenses and improve liquidity .
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $60.3 million | $54.8 million | 10.0% |
| Net Loss | $(8.9 million) | $(4.1 million) | 119.2% |
| Accumulated Deficit | $138.9 million | $107.9 million | 28.7% |
| Interest Expense (RLOC) | 13.8% | N/A | N/A |
| Interest Expense (Term Loan) | 17.8% | N/A | N/A |
Conclusion: The company's financial health is subject to various risks that could impact its future performance. Investors should carefully assess these risk factors in conjunction with potential growth opportunities.
Future Growth Prospects for Katapult Holdings, Inc. (KPLT)
Future Growth Prospects for Katapult Holdings, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product innovations, particularly the mobile app featuring Katapult Pay, which contributed to 28% of gross originations during the nine months ended September 30, 2024, compared to 14% in the prior year.
- Market expansions through partnerships with direct and waterfall merchants, leading to a 12.3% increase in total revenue for the nine months ended September 30, 2024, amounting to $184.23 million versus $164.03 million in 2023.
- Acquisitions aimed at enhancing service offerings and customer base.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections are optimistic, with expected increases driven by:
- Continued efficiency in gross origination growth, which totaled $162.15 million for the nine months ended September 30, 2024, up from $159.04 million in 2023.
- Reduction in losses from operations, which decreased to $3.27 million for the nine months ended September 30, 2024, compared to $8.15 million in 2023.
- Projected earnings estimates reflecting improved operational efficiencies and revenue growth, indicating potential profitability in the upcoming quarters.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has undertaken several strategic initiatives:
- Partnerships with major retailers, including Wayfair, which represented 42% of gross originations in Q3 2024.
- Enhancements in technology and customer experience through the integration of Katapult Pay into the mobile app.
- Efforts to refinance existing debt to improve liquidity and reduce interest expenses, with total outstanding principal of $67.3 million under the revolving line of credit as of September 30, 2024.
Competitive Advantages That Position the Company for Growth
The company possesses several competitive advantages:
- A strong brand presence and established relationships with merchants, enabling effective market penetration.
- Adaptability in operations, as evidenced by a 10% year-over-year increase in total revenue for Q3 2024.
- Innovative product offerings that resonate with customers, such as Katapult Pay, driving higher gross originations.
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $60.31 million | $54.81 million | 10.0% |
| Gross Profit | $11.95 million | $11.47 million | 4.2% |
| Operating Expenses | $16.40 million | $11.91 million | 37.7% |
| Net Loss | $8.89 million | $4.05 million | 119.2% |
These insights indicate a robust framework for growth, underpinned by strategic initiatives and a solid operational foundation.
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Resources:
- Katapult Holdings, Inc. (KPLT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Katapult Holdings, Inc. (KPLT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Katapult Holdings, Inc. (KPLT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.