Katapult Group Navigates Macroeconomic Headwinds with Resilient Growth and Strategic Momentum

In an era of persistent macroeconomic uncertainty—marked by elevated inflation, shifting consumer preferences, and sector-specific headwinds—Katapult Group’s Q1 2025 results underscore the power of strategic execution and tech-driven financial innovation. Despite a challenging backdrop, the company delivered 15.4% year-over-year growth in gross originations to $64.2 million, while reaffirming its full-year targets of 20%+ originations growth and $10 million+ Adjusted EBITDA. This performance positions Katapult as a rare bright spot in the fintech landscape, leveraging scalable technology, merchant ecosystem expansion, and disciplined cost management to navigate turbulent waters.

A Resilient Start: Growth Amid Sector-Specific Challenges

Katapult’s Q1 results reflect a nuanced narrative. While net losses widened to $5.7 million due to higher operating expenses and cost of sales, the company’s focus on high-margin, app-driven originations and KPay adoption is laying the groundwork for sustained profitability. Gross originations grew 15.4% YoY, excluding the home furnishings segment—which itself surged 51%—highlighting Katapult’s ability to diversify revenue streams. The app marketplace, which now accounts for 59% of originations, grew 42% YoY to $37.9 million, while KPay’s surging 57% YoY growth to $22.8 million underscores its role as a strategic growth lever.

The company’s merchant partnerships—expanded to 35 partners including Ashley and Bed Bath & Beyond—have been pivotal. Co-branded marketing campaigns are driving originations growth of 7% to over 75%, while repeat customers account for 57.4% of originations. This sticky customer base, combined with a robust Net Promoter Score of 66, suggests Katapult is building a loyal, high-value user community.

The Path to $10M+ Adjusted EBITDA: Cost Discipline and KPay’s Scalability

Katapult’s Q1 Adjusted EBITDA of $2.2 million, down from $5.6 million in Q1 2024, reflects both short-term challenges and long-term strategic bets. The company attributes the decline to prior-period factors—such as lower costs in 2024—and elevated originations-driven expenses. However, management remains confident in its ability to achieve breakeven EBITDA in Q2 and $10 million+ for the full year. This confidence is rooted in three key pillars:

1. Expense Management: Katapult is streamlining operations while prioritizing investments in its core tech infrastructure and merchant relationships.
2. KPay Adoption: As KPay’s originations grow (now 35% of total), its higher margins and reduced reliance on third-party processors should bolster profitability.
3. Merchant Diversification: Expanding beyond home furnishings into underserved verticals—such as healthcare or education—can reduce sector-specific risks and tap into new revenue streams.

The company’s financial flexibility remains intact, with $14.3 million in unrestricted cash and a strong balance sheet to support strategic initiatives.

Strategic Positioning for Long-Term Dominance

Katapult’s Q1 results and outlook reveal a company primed to capitalize on its scalable tech platform and financial inclusion mission. By focusing on underserved markets—where credit access remains fragmented—Katapult is building a moat through its app-driven ecosystem and KPay’s growing merchant network. The company’s ability to maintain write-offs within its 8%-10% target (9.0% in Q1) further signals operational discipline.

While near-term pressures—such as macroeconomic uncertainty and sector-specific slowdowns—may weigh on near-term margins, the long-term thesis is compelling. Katapult’s 20%+ annual originations growth target is achievable through its merchant diversification strategy and the continued penetration of KPay, which already drives nearly 40% of total originations.

Why Invest Now?

Katapult’s stock—down nearly 20% over the past year—now offers a compelling entry point for long-term investors. The company’s reaffirmed EBITDA targets and robust customer metrics suggest it is on track to deliver $10 million+ in Adjusted EBITDA by year-end, a critical milestone for valuation re-rating.

The broader opportunity lies in Katapult’s position as a tech-driven financial services disruptor. In an era where traditional lenders struggle to adapt to digital-first consumers, Katapult’s ecosystem—spanning credit, payments, and merchant partnerships—positions it to capture share in underserved markets. With 57.4% of originations coming from repeat customers, the company is also demonstrating the power of its platform to drive loyalty and recurring revenue.

Risks and Considerations

No investment is without risk. Katapult faces headwinds in its home furnishings segment, which remains a key revenue driver, and must continue to demonstrate margin expansion despite rising costs. Additionally, the broader fintech sector remains highly competitive, with giants like PayPal and Square (now part of Square) eyeing similar markets. However, Katapult’s focus on niche underserved segments and its merchant-driven ecosystem provide a defensible edge.

Conclusion: A Strategic Bet on Tech-Driven Financial Innovation

Katapult Group’s Q1 results and full-year outlook reveal a company executing decisively against its strategic pillars: scaling its app and KPay platforms, diversifying its merchant base, and managing costs to fuel profitability. While near-term volatility persists, the path to $10 million+ Adjusted EBITDA is clear, and the long-term opportunity in underserved markets remains vast. For investors willing to look past short-term noise, Katapult presents a compelling opportunity to invest in a scalable, mission-driven fintech leader poised to thrive in an evolving landscape.

The time to act is now—before the market fully recognizes Katapult’s potential.