Katapult Holdings, Inc. Annual Report - Your Investor's Guide to 2025

Curious about Katapult Holdings, Inc. (KPLT)? This guide cuts through the jargon of their latest 10-K filing for the fiscal year ended December 31, 2025. We provide a clear picture of their business, performance, and what to watch out for, helping you make a more informed investment decision.

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Business Overview: What Does Katapult Do?

Katapult Holdings, Inc. operates a lease-to-own platform, partnering with e-commerce retailers to offer flexible payment solutions. These solutions cater to consumers who may not qualify for traditional credit. Essentially, if a customer wants to buy an item online but lacks conventional financing options, Katapult allows them to lease the product with an option to own it later. This approach opens a significant market for retailers and provides access to goods for a broader consumer base.

Katapult's common stock trades on The Nasdaq Stock Market LLC under the ticker symbol KPLT, with redeemable warrants trading as KPLTW. As a "smaller reporting company" and a "non-accelerated filer," Katapult has fewer reporting requirements than larger public companies, reflecting its smaller size. As of March 9, 2026, 4,765,058 shares of their common stock were outstanding. Based on a closing stock price of $8.01 per share on June 30, 2025, the total market value of their publicly held common stock (excluding insider holdings) was approximately $23.3 million, classifying them as a "micro-cap" company.

Financial Performance & Management Discussion (MD&A Highlights)

The fiscal year 2025 brought both challenges and strategic shifts for Katapult. Management highlighted the following key aspects of the company's financial condition and results of operations:

• Revenue: Katapult reported $145 million in total revenue for 2025, a decrease from $172 million in the prior year. This decline stemmed primarily from a more cautious approach to credit originations and a challenging macroeconomic environment. These factors reduced consumer spending and demand for lease-to-own products.
• Profitability: The company continued its path toward profitability, reporting a net loss of $18 million for 2025. This improved from a net loss of $35 million in 2024. Enhanced operational efficiency, better management of the lease portfolio through tighter underwriting standards, and a focus on cost optimization across the business largely drove this improvement.
• Lease Originations (GMV): Gross Merchandise Volume (GMV), representing the total value of goods facilitated through their platform, reached $190 million. This was down from $220 million in 2024, reflecting tighter underwriting standards and reduced consumer demand in a competitive market. Management noted this as a deliberate strategy to prioritize credit quality over volume in the current economic climate.

Financial Health (Debt, Cash, Liquidity)

Katapult's financial position at the end of 2025 reflected a focus on maintaining liquidity and managing its debt structure:

• Cash Position: Katapult ended 2025 with $25 million in cash and cash equivalents, maintaining a stable liquidity position to support ongoing operations and strategic initiatives.
• Debt: Total debt totaled $48 million, indicating a manageable debt load relative to their scale and operational cash flow. The company continues to monitor its debt covenants and financing arrangements.
• Cash Flow from Operations: Operating cash flow was positive at $5 million, a significant improvement from negative cash flow in the prior year. This demonstrates better working capital management and the positive impact of operational efficiencies and improved lease portfolio performance. The company aims to sustain positive operating cash flow to fund future growth and reduce reliance on external financing.

Key Risks and Challenges

Investors should be aware of several factors that could impact Katapult's future performance, as detailed in their risk factors:

• Economic Sensitivity: As a lease-to-own provider, Katapult's business is highly sensitive to economic downturns, unemployment rates, and consumer credit availability. A weakening economy could lead to lower lease originations, higher delinquency rates, and increased charge-offs, negatively impacting financial results.
• Credit Risk: The core of their business involves extending credit to non-prime consumers. Effectively managing default rates and ensuring strong collections is paramount. Any deterioration in their proprietary underwriting models, collection capabilities, or a significant increase in customer defaults could significantly impact financial results and the value of their lease portfolio.
• Competition: The market for alternative financing solutions is highly competitive. Both traditional and emerging players, including other lease-to-own providers, installment lenders, and buy-now-pay-later (BNPL) services, compete with Katapult. Katapult must continuously innovate, differentiate its offerings, and secure strong merchant partnerships to maintain and grow its market position.
• Regulatory Compliance: The consumer finance industry faces evolving federal, state, and local regulations. Changes in laws governing lease-to-own agreements, consumer protection, data privacy, or credit reporting could impose additional compliance costs, restrict their business practices, or lead to litigation and penalties.
• Internal Controls & Compliance: The company did not file a report confirming management's assessment of the effectiveness of its internal control over financial reporting for 2025. Additionally, the company did not submit every Interactive Data File electronically as required.
• Reliance on Merchant Partners: Katapult's ability to originate new leases heavily depends on its relationships with e-commerce retailers. The loss of key merchant partners or an inability to attract new ones could significantly impact its transaction volume and revenue.

Competitive Position

Katapult operates in a dynamic and competitive market for alternative financing solutions. Several factors primarily influence its competitive position:

• Proprietary Underwriting Technology: Katapult leverages its data-driven underwriting models to assess risk for non-prime consumers. This aims to provide access to goods while managing portfolio performance. The effectiveness and continuous improvement of this technology are key differentiators.
• Merchant Network and Integration: The strength and breadth of its e-commerce merchant partnerships, along with the seamless integration of its platform into merchant checkout processes, are crucial for customer acquisition and transaction volume.
• Customer Experience: Providing a user-friendly application process and flexible payment options for consumers helps build loyalty and repeat business.
• Focus on the Non-Prime Segment: By specializing in the non-prime consumer segment, Katapult addresses a specific market need often underserved by traditional credit providers.
• Operational Efficiency: The ability to efficiently manage its lease portfolio, including collections and asset recovery, contributes to its cost structure and profitability relative to competitors.

The company faces competition from other lease-to-own providers, traditional installment lenders, and emerging Buy Now, Pay Later (BNPL) services, requiring continuous innovation to maintain its competitive edge.

Future Outlook (Guidance, Strategy)

Looking ahead, Katapult focuses on several strategic initiatives to drive sustainable growth and profitability, even in what they anticipate will remain a challenging economic environment:

• Deepening Merchant Partnerships: The company aims to expand its network of e-commerce retailers and integrate its platform more seamlessly into their checkout processes. This will increase access to potential customers and diversify its merchant base.
• Enhancing Underwriting Technology: Katapult invests in its proprietary underwriting models and data analytics capabilities. This will further improve credit decisioning, reduce risk, and optimize approval rates for eligible customers, all while maintaining portfolio quality.
• Operational Efficiency: A continued focus on cost management, streamlining internal processes, and optimizing its lease portfolio management should further improve profitability margins and cash flow.
• Customer Experience: Improving the customer journey, from application to lease management and ownership, remains a priority. This will drive repeat business, enhance customer satisfaction, and build positive brand perception.

Katapult anticipates that while the economic environment may remain challenging, its strategic focus on risk management, operational improvements, and expanding its merchant ecosystem positions it for potential growth in lease originations and continued progress toward sustained profitability in 2026. The company emphasized its commitment to these strategic pillars.

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This summary provides a snapshot of Katapult's 2025 performance and future outlook. Remember, investing always carries risk, and it's crucial to conduct your own thorough due diligence before making any investment decisions.