Katapult : Q1 2024 Press Release (Katapult Grows First Quarter Revenue 18 Year Over Year 2024)

NEWS RELEASE

Katapult Grows First Quarter Revenue 18% Year-

Over-Year

5/15/2024

Sixth Consecutive Quarter of Year-Over-Year Gross Originations Growth

Reiterates Full Year 2024 Outlook For At Least 10% Gross Originations and Revenue Growth

PLANO, Texas, May 15, 2024 (GLOBE NEWSWIRE) -- Katapult Holdings, Inc. ("Katapult" or the "Company") (NASDAQ:

KPLT), an e-commerce-focused

quarter ended March 31, 2024.

"We were able to deliver gross originations and revenue growth above our expectations, despite a challenging retail

environment," said Orlando Zayas, CEO of Katapult. "We continue to execute against the core tenets of our

merchant and customer strategies, and our progress is showing up in our

originations grew 9% during the

repeat purchase rate remained strong at 56%. We are consistently launching features and capabilities that increase

our value proposition for merchants, enhance the lease-to-own experience for customers and strengthen the

resiliency of our business model. We believe we are well positioned for continued growth and we are looking

forward to a great year."

Operating Progress: Recent Highlights

Upgraded Katapult platform with integration of newest version of Shopify

Expanded relationships focused on growing direct merchant-partner pipeline

Launched Katapult Cartridge for B2C Commerce on Salesforce AppExchange

Made progress integrating with the requirements of the Synchrony digital waterfall application process,

which will enable Synchrony's retail partners to o

Continued to build momentum for Katapult Pay and our app

Katapult Pay gross originations grew more than 150% year-over-year

Launched Lowe's in the Katapult marketplace; available for shopping using Katapult Pay as of May 7,

2024

Customer satisfaction remained high and Katapult had a Net Promoter Score of 65 as of March 31, 2024 and

	1
55.9% of gross originations for the	customers.

First Quarter 2024 Financial Highlights

(All comparisons are year-over-year unless stated otherwise.)

Gross originations were $55.6 million, an increase of 1.6%

Total revenue was $65.1 million, an increase of 18.1%

	2
Total operating expenses in the	decreased
approximately 20.6%
Net loss was $0.6 million for the
Adjusted net income was $1.0 million for the
to an adjusted net loss of $8.6 million reported for the
2
Adjusted EBITDA improved to positive $5.6 million for the	Adjusted
2
EBITDA loss of $1.0 million in the

Katapult ended the quarter with total cash and cash equivalents of $37.6 million, which includes $6.3 million

of restricted cash. The Company ended the quarter with $68.0 million of outstanding debt on its credit facility

Write-o

Company's 8% to 10% long-term target range. This is a 40 bps improvement compared with 8.8% in the

quarter of 2023.

1. Repeat customer rate is de
2. 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.

Second Quarter and Full Year 2024 Business Outlook

The Company is continuing to navigate an evolving macro environment and it is unclear if interest rates will move

lower this year given recent in

generally resilient. As a result, it's di

core consumer, and what, if any impact these dynamics will have on prime lending standards and the US

consumer's access to credit. We continue to believe that we have a large addressable market of underserved, non-

prime consumers, and it's important to note that lease-to-own solutions have historically bene

credit options become less available.

Based on these dynamics and the operating plan in place for the full year 2024, Katapult expects to deliver the

following results for the second quarter of 2024:

3 to 5% year-over-year increase in gross originations, which re	headwinds in the home
furnishings retail category
8 to 10% year-over-year increase in revenue

Continued improvement in Adjusted EBITDA performance compared with the second quarter of last year,

despite an expectation for	invest in
new growth initiatives
For full year 2024, Katapult is reiterating the following outlook:
We expect to continue to expand our customer base and acquire new customers

Year-over-year growth in gross originations is expected to continue. For the full year we expect gross

originations to grow at a rate of at least 10% and believe that ourwas the low point

for the year.

This outlook does not include any material impact from prime creditors tightening or loosening above us and

assumes that there are no signi	outlook also assumes the retail
environment for home furnishings begins to normalize. The Company also expects gross originations to
improve sequentially in the second half of 2024 compared to the	by growth in direct
merchant originations and originations coming through Katapult Pay.

We also expect to maintain strong credit quality in our portfolio. This will be driven by ongoing enhancements

to our risk modeling, onboarding high quality new merchants through direct integrations, and repeat

customers engaging with Katapult Pay

Revenue growth is expected to be at least 10%

Finally with the continued execution of our disciplined expense management strategy combined with our

growing top-line we expect to deliver another year of Adjusted EBITDA growth. We also expect Adjusted

EBITDA to follow the seasonal patterns that we have seen historically.

"During thequarter we faced retail headwinds, but as expected, we picked up momentum as the quarter

progressed," said Nancy Walsh, CFO of Katapult. "Each month we improved year-over-year gross originations

growth and this performance, coupled with our strong revenue growth, lease portfolio quality, and our disciplined

expense management, allowed us to improve Adjusted EBITDA substantially year-over-year. We are on track to

deliver a minimum of 10% gross originations and revenue growth for 2024 as we continue to scale our

model."

Conference Call and Webcast

The Company will host a conference call and webcast at 8:00 AM ET on Wednesday, May 15, 2024, to discuss the

Company'sresults. Related presentation materials will be available before the call on the Company's

Investor Relations page at https://ir.katapultholdings.com. The conference call will be broadcast live in listen-only

mode and an archive of the webcast will be available for one year.

About Katapult

Katapult is a technology driven lease-to-own platform that integrates with omnichannel 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 Pay(R), consumers who may be

unable to access traditional

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.

Contact

Jennifer Kull

VP of Investor Relations

[e-mail]

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. In

some cases, forward-looking statements may be identi by words such as "anticipate," "assume," "believe,"

"continue," "could," "design," "estimate," "expect," "intend," "may," "plan," "potentially," "predict," "should," "will,"

"would," or the negative of these terms or other similar expressions.. These forward-looking statements include, but

are not limited to, statements regarding our second quarter 2024 and full year 2024 business outlook and

underlying assumptions These statements are based on various assumptions, whether or not identi 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 de	statement	of fact or probability. Actual events and
circumstances are di	or impossible to predict and will di	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 the execution of Katapult's business strategy, launching new product o

and new brands and expanding information and technology capabilities; Katapult's market opportunity and its

ability to acquire new customers and retain existing customers; adoption and success of our mobile application

featuring Katapult Pay; the timing and impact of our growth initiatives on our futureperformance 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; general economic conditions in the markets where Katapult

operates, the cyclical nature of customer spending, and seasonal sales and spending patterns of customers; risks

relating to factors a	consumer spending that are not under Katapult's control, including, among others,
levels of employment,	disposable consumer income, in	prevailing interest rates, consumer debt and
availability of credit, pandemics (such as COVID-19), consumer con	in future economic conditions, political

conditions, and consumer perceptions of personal well-being and security and willingness and ability of customers

to pay for the goods they lease through Katapult when due; risks relating to uncertainty of Katapult's estimates of

market opportunity and forecasts of market growth; risks related to the concentration of a signi
transaction volume with a single merchant partner, or type of merchant or industry; the e	of competition on

Katapult's future business; meet future liquidity requirements and complying with restrictive covenants related to

our long-term indebtedness; the impact of unstable market and economic conditions such as rising in	and
interest rates; reliability of Katapult's platform and e	of its risk model; data security breaches or other
information technology incidents or disruptions, including	cyber-attacks, and the protection of con

proprietary, personal and other information, including personal data of customers; ability to attract and retain

employees, executive o	or directors; e	respond to general economic and business conditions; obtain
additional capital, including equity or debt	and servicing our indebtedness; enhance future operating and
results; anticipate rapid technological changes, including generative arti	intelligence and other new

technologies; comply with laws and regulations applicable to Katapult's business, including laws and regulations

related to rental purchase transactions; stay abreast of modi or new laws and regulations applying to Katapult's

business, including with respect to rental purchase transactions and privacy regulations; maintain and grow

relationships with merchants and partners; respond to uncertainties associated with product and service

developments and market acceptance; the impacts of new U.S. federal income tax laws; that Katapult has identi

material weaknesses in its internal control over	reporting which, if not remediated, could a	the
reliability of its condensed consolidated	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 con

involving Russia and Ukraine and the Israel-Hamas con terrorism, public health crises and pandemics (such as

COVID-19), or responses to such events; Katapult's ability to meet the minimum requirements for continued listing

on the Nasdaq Global Market; the eof the reverse stock split on our common stock; and those factors

discussed in greater detail in the section entitled "Risk Factors" in Katapult's periodic reports

and Exchange Commission ("SEC"), and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024

that Katapult

If any of these risks materialize or our assumptions prove incorrect, actual results could di 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 di 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 aour business, formulateprojections and make strategic decisions,

which may also be useful to an investor: gross originations, total revenue, gross pro adjusted gross pro and

adjusted EBITDA.

Gross originations are deas 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. Katapult measures this metric to

assess the total view of pay through 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.

Gross pro 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 description and presentation of adjusted gross pro and adjusted EBITDA, which are non-GAAP measures

utilized by management.

Non-GAAP Financial Measures
To supplement the	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
performance: adjusted gross pro	adjusted EBITDA, adjusted net income/(loss) and	cash operating
expenses. The Company	believes	that for management and investors to more e	compare core

performance from period to period, the non-GAAP measures should exclude items that are not indicative of our

results from ongoing business operations. The Company urges investors to consider non-GAAP measures only in

conjunction with its GAAP

to its comparable GAAP

Adjusted gross pro represents gross pro less variable operating expenses, which are servicing costs, and

underwriting fees. Management believes that adjusted gross pro provides a meaningful understanding of one

aspect of its performance speci	attributable to total revenue and the variable costs associated with total
revenue.
Adjusted EBITDA is a non-GAAP measure that is de	as net loss before interest expense and other fees, interest

income, change in fair value of warrant liability, provision (bene for income taxes, depreciation and amortization

on property and equipment and capitalized software, provision of impairment of leased assets, loss on partial

extinguishment of debt and stock-based compensation expense.

Adjusted net income/(loss) is a non-GAAP measure that is de	as net loss before change in fair value of warrant
liability and stock-based compensation expense.
Fixed cash operating expenses is a non-GAAP measure that is de	as operating expenses less depreciation and

amortization on property and equipment and capitalized software, stock-based compensation expense and

variable lease costs such as servicing costs and underwriting fees. Management believes that	cash operating
expenses provides a meaningful understanding of non-variable ongoing expenses.

Adjusted gross pro adjusted EBITDA and adjusted net income/(loss) 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	ial 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-GAAPmeasures, 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-GAAPmeasures

when evaluating operating performance and for internal planning and forecasting purposes. Management believes

that these non-GAAP	measures help indicate underlying trends in the business, are important in
comparing current results with prior period results and are useful to investors and	analysts in assessing
operating performance. However, these non-GAAP measures exclude items that are signi	in understanding
and assessing Katapult's	results. Therefore, these measures should not be considered in isolation or as

alternatives to revenue, net loss, gross pro

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.

Reverse Stock Split

All share and per share amounts in the condensed consolidated statements of operations and comprehensive loss

and condensed consolidated balance sheets have been retroactively adjusted for all periods presented to give

e

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(amounts in thousands, except per share data)

(unaudited)

		Three Months Ended March 31,
		2024		2023
				(As Restated)
Revenue
Rental revenue	$	64,142	$	54,131
Other revenue		919		952
Total revenue		65,061		55,083
Cost of revenue		48,573		43,213
Gross pro		16,488		11,870
Operating expenses		12,688		15,567
Income (loss) from operations		3,800		(3,697)
Loss on partial extinguishment of debt		-		(2,391)
Interest expense and other fees		(4,527)		(5,189)
Interest income		324		620
Change in fair value of warrant liability		(162)		132
Loss before income taxes		(565)		(10,525)
Provision for income taxes		(5)		(20)

Net loss	$	(570)		$	(10,545)
	4,242			3,973
Weighted average common shares outstanding - basic and diluted
Net loss per common share - basic and diluted	$	(0.13)		$	(2.65)

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

		March 31,			December 31,
		2024			2023
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	31,232		$	21,408
Restricted cash		6,339			7,403
Property held for lease, net of accumulated depreciation and impairment		57,575			59,335
Prepaid expenses and other current assets		3,461			4,491
Litigation insurance reimbursement receivable		5,000			5,000
Total current assets		103,607			97,637
Property and equipment, net		295			327
Security deposits		91			91
Capitalized software and intangible assets, net		1,811			1,919
Right-of-use assets		812			888
Total assets	$	106,616		$	100,862
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	1,657		$	903
Accrued liabilities		20,023			24,146
Accrued litigation settlement		12,000			12,000
Term loan		-		-
Unearned revenue		5,156			4,949
Lease liabilities		334			297
Total current liabilities		39,170			42,295
Revolving line of credit		67,631			60,347
Term loan, non-current		26,519			25,503
Other liabilities		257			95
Lease liabilities, non-current		522			614
Total liabilities		134,099			128,854
STOCKHOLDERS' DEFICIT
Common stock, 0.0001 par value-- 250,000,000 shares authorized; 4,105,645 and 4,072,713 shares
issued and outstanding at March 31, 2024 and December 31, 2023, respectively		-		-
Additional paid-in capital		95,623			94,544
Accumulated de		(123,106)			(122,536)
Total stockholders' de		(27,483)			(27,992)
Total liabilities and stockholders' de	$	106,616		$	100,862

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(dollars in thousands)

Three Months Ended March 31,

		2024			2023
					(As Restated)
Cash
Net loss	$	(570)		$	(10,545)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		34,026			29,677
Net book value of property held for lease buyouts		7,613			6,747
Impairment on property held for lease expense		5,636			5,258
Change in fair value of warrants liability		162			(132)
Stock-based compensation		1,391			2,090
Loss on partial extinguishment of debt		-		2,391
Amortization of debt discount		669			1,093
Amortization of debt issuance costs, net		66			81
Accrued PIK Interest		347			530
Amortization of right-of-use assets		76			98
Change in operating assets and liabilities:
Property held for lease		(45,249)			(43,299)
Prepaid expenses and other current assets		1,029			3,109
Accounts payable		754			252
Accrued liabilities		(4,123)			(594)
Lease liabilities		(55)			(112)
Unearned revenues		208			450
Net cash provided by (used in) operating activities		1,980			(2,906)
Cash
Purchases of property and equipment		-		(4)
Additions to capitalized software		(126)			(297)
Net cash used in investing activities		(126)			(301)
Cash
Proceeds from revolving line of credit		10,058			4,350
Principal repayments on revolving line of credit		(2,840)			(872)
Principal repayment on term loan		-		(25,000)
Repurchases of restricted stock		(312)			(163)
Net cash provided by (used in)		6,906			(21,685)
Net increase (decrease) in cash, cash equivalents and restricted cash		8,760			(24,892)
Cash, cash equivalents and restricted cash at beginning of period		28,811			69,841
Cash, cash equivalents and restricted cash at end of period	$	37,571		$	44,949
Supplemental disclosure of cash
Cash paid for interest	$	3,382		$	3,459
$	112		$	2
Cash paid for income taxes
$	-		$	493
Deferred
$	-		$	4,060
Issuance of warrants to purchase common stock in connection with debt re
$	-		$	1,139
Right-of-use assets obtained in exchange for operating lease liabilities
Cash paid for operating leases	$	82		$	126

KATAPULT HOLDINGS, INC.

RECONCILIATION OF NON-GAAP MEASURES AND CERTAIN OTHER DATA (UNAUDITED)

(amounts in thousands)

	Three Months Ended March 31,
	2024			2023
				(As Restated)
Total revenue	$	65,061	$	55,083
Cost of revenue		48,573		43,213
Gross pro		16,488		11,870
Less:
Servicing costs		1,132		990
Underwriting fees		509		468
Adjusted gross pro	$	14,847	$	10,412