KPLT

Katapult Holdings, Inc. (KPLT) - Q1 2026 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended March 31, 2026. Katapult Holdings, Inc. operates a technology-driven lease-to-own (LTO) platform for underserved U.S. non-prime consumers. The company is currently a non-accelerated filer and a smaller reporting company. As of May 4, 2026, there were 4,765,058 shares of common stock outstanding.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Turnaround: The company reported a net income of $5.7 million in Q1 2026, a reversal from a net loss of $5.7 million in Q1 2025. This improvement was primarily driven by a $4.3 million non-cash gain from the remeasurement of a derivative liability associated with convertible preferred stock.
• Revenue Growth: Total revenue increased 9.8% year-over-year, driven by a larger base of active leases and increased buyout activity, despite gross originations remaining relatively flat ($64.2 million vs. $64.2 million).
• Interest Expense Reduction: Interest expense decreased by $2.0 million (39.0%) due to the extinguishment of a term loan in November 2025, which eliminated payment-in-kind (PIK) interest and related amortization costs.
• Operating Expenses: Operating expenses decreased 6.9% to $13.9 million, largely due to lower compensation and G&A expenses, partially offset by $1.7 million in transaction costs related to pending mergers.

Guidance, Outlook, Risks, and Contingencies

• Pending Mergers: Katapult is in the process of merging with CCFI and Aaron's. The transaction is expected to close in Q3 2026. Upon closing, existing Katapult stockholders are expected to own approximately 6.0% of the combined entity, while CCFI and Aaron's equityholders will own 79.9% and 14.1%, respectively.
• Going Concern Warning: The company's independent auditors have issued an opinion expressing substantial doubt about its ability to continue as a going concern. The New Revolving Facility matures on December 4, 2026, and the company lacks sufficient cash to repay it without refinancing or extension.
• Covenant Compliance: The company has recently obtained limited waivers for failing to meet the "Minimum Trailing Three-Month Net Originations" covenant as of March 31 and April 30, 2026. Future compliance may require additional waivers.
• Preferred Stock: The company holds Series A and Series B Convertible Preferred Stock with a combined liquidation preference of approximately $70 million. These accrue dividends at 19% annually (compounding weekly) until specific stockholder approvals are obtained.
• Legal Proceedings: The company is defending a patent infringement lawsuit filed by FlexShopper (now owned by Snap Finance). No loss contingency has been recorded as the outcome is not probable or estimable.

Investor Verification Checklist

• Refinancing Status: Verify the company's progress in refinancing or extending the $71.6 million revolving credit facility maturing in December 2026.
• Mergers Closing Conditions: Monitor the status of regulatory approvals and stockholder votes required to close the CCFI and Aaron's mergers.
• Covenant Waivers: Track the company's ability to maintain financial covenants or secure necessary waivers from lenders to avoid default.
• Derivative Liability Volatility: Assess the impact of future fair value remeasurements of the convertible preferred stock derivative on reported earnings.
• Merchant Concentration: Review the stability of the relationship with Wayfair, which represented 18% of gross originations in Q1 2026.