KPLT

Katapult Holdings, Inc. (KPLT) - 10-Q Summary for Period Ended June 30, 2026

Business Context and Reporting Period

This Quarterly Report on Form 10-Q covers the period ended June 30, 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. A material development is the pending merger with CCFI Holdings, LLC and Aaron's Intermediate Holdco, Inc., expected to close in August 2026, which will result in a change of control.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased 4.0% year-over-year (Q2) and 6.9% year-over-year (YTD), driven by gross originations growth and improved collections. Gross originations rose 4.7% in Q2 and 2.5% YTD.
• Profitability: The company reported a net loss of $4.4 million in Q2 2026, a significant improvement from the $7.8 million loss in Q2 2025. For the six months ended June 30, 2026, the company reported a net income of $1.3 million, compared to a $13.5 million loss in the prior year period.
• Interest Expense: Interest expense decreased significantly (40.8% in Q2, 39.9% YTD) due to the extinguishment of the term loan in November 2025 and lower SOFR rates.
• Derivative Liability: A non-cash gain of $4.9 million was recognized YTD due to the remeasurement of the derivative liability associated with convertible preferred stock, which was a primary driver of the YTD net income.
• Operating Expenses: Operating expenses increased 6.8% in Q2 primarily due to transaction-related costs ($0.8 million) and litigation settlement expenses ($0.5 million) related to the FlexShopper settlement.

Guidance, Outlook, Risks, and Unusual Items

• Pending Mergers: The company expects to close the mergers with CCFI and Aaron's in August 2026. Upon closing, existing Katapult stockholders are expected to own approximately 6.0% of the combined company. Transaction costs of $2.7 million were incurred YTD.
• Liquidity and Going Concern: The New Revolving Facility matures on December 4, 2026. Management stated that standalone liquidity is insufficient to repay the facility at maturity, raising substantial doubt about the ability to continue as a going concern. However, management believes this doubt is alleviated by plans to refinance and the expected proceeds from the pending mergers.
• Convertible Preferred Stock: The company holds Series A and Series B Convertible Preferred Stock with a liquidation preference of $39.5 million and $33.8 million, respectively. Dividends accrue at 19% annually (stepped up from 18%) until stockholder approval is obtained to remove ownership limitations.
• Legal Proceedings: The company resolved patent litigation with FlexShopper (now ReadySett) in June 2026 via a license agreement. A settlement liability remains accrued and is expected to be paid in Q3 2026.
• Merchant Concentration: Wayfair represented 17% of gross originations in Q2 2026 and 18% YTD, down from 27% in the prior year periods.

Investor Verification Checklist

• Merger Closing: Verify the status of the CCFI and Aaron's mergers and the timeline for closing in August 2026.
• Debt Refinancing: Confirm the company's ability to refinance or extend the $74.1 million revolving credit facility maturing in December 2026.
• Preferred Stock Dividends: Monitor the accrual of 19% dividends on convertible preferred stock and the status of the stockholder vote to remove ownership limitations.
• Non-GAAP Adjustments: Review the reconciliation of Net Income to Adjusted EBITDA, noting the significant impact of the $4.9 million non-cash derivative gain.
• Merchant Concentration: Assess the risk associated with the reliance on Wayfair and other top merchants for gross originations.