Business Context and Reporting Period
Katapult Holdings, Inc. (KPLT) is a technology-driven lease-to-own (LTO) platform serving underserved U.S. non-prime consumers. The company integrates with omnichannel retailers and e-commerce platforms to facilitate the purchase of durable goods. This Form 10-K covers the fiscal year ended December 31, 2025.
On December 11, 2025, Katapult entered into a definitive merger agreement with CCF Holdings LLC (CCFI) and Aaron's Intermediate Holdco, Inc. (Aaron's). If completed, expected in Q2 2026, CCFI and Aaron's will become wholly-owned subsidiaries. Post-merger, existing Katapult stockholders are expected to hold approximately 6% of the combined entity, while CCFI and Aaron's equityholders will hold approximately 80% and 14%, respectively.
Key Financial Metrics
| Metric (in thousands) | 2025 | 2024 |
|---|---|---|
| Total Revenue | $291,761 | $247,194 |
| Gross Profit | $51,603 | $45,771 |
| Gross Margin | 17.7% | 18.5% |
| Net Income (Loss) | $1,365 | $(25,915) |
| Net Loss Attributable to Common Stockholders | $(557) | $(25,915) |
| Adjusted EBITDA | $12,379 | $4,770 |
| Operating Cash Flow | $(11,933) | $(32,569) |
| Total Debt (Revolving Facility) | $78,727 | $82,582 |
| Cash and Cash Equivalents | $22,432 | $3,465 |
Key Performance Indicators:
- Gross Originations: $278.5 million in 2025, up 17.3% from $237.3 million in 2024.
- KPay Contribution: Transactions via the Katapult App (KPay) represented 42% of gross originations in 2025.
- Merchant Concentration: Wayfair represented 25% of gross originations in 2025 (down from 36% in 2024).
Material Changes vs. Prior Period
- Profitability Turnaround: The company reported a net income of $1.4 million in 2025, a significant improvement from a net loss of $25.9 million in 2024. This was driven by a $17.4 million non-cash gain from the change in fair value of derivative liabilities and warrants, and a $5.1 million gain on the extinguishment of a term loan.
- Revenue Growth: Total revenue increased 18.0% year-over-year, attributed to efficient gross origination growth and healthy customer collections.
- Expense Management: Total operating expenses decreased 3.3% to $52.1 million, primarily due to a $2.9 million reduction in litigation and settlement expenses and lower stock-based compensation, partially offset by $3.0 million in merger-related transaction costs.
- Debt Restructuring: In June 2025, the company entered into an Amended and Restated Loan Agreement, upsizing the revolving facility to $110 million. A term loan was fully repaid in November 2025 using proceeds from a preferred stock issuance.
- Capital Structure: In November 2025, the company issued Series A and Series B Convertible Preferred Stock to Hawthorn, raising $65.0 million. These instruments carry cumulative dividends (initially 18% annually) and include embedded derivative features.
Outlook, Risks, and Contingencies
Going Concern Warning: The company's auditors (Grant Thornton LLP) issued an opinion expressing substantial doubt about Katapult's ability to continue as a going concern. The New Revolving Facility matures on December 4, 2026, and the company does not have sufficient cash to repay the outstanding balance at maturity absent refinancing or extension.
Covenant Compliance: The company has repeatedly failed to meet the "Minimum Trailing Three-Month Net Originations" covenant under its loan agreement throughout 2025 and into early 2026. While lenders have granted waivers, future compliance is uncertain, and failure to obtain waivers could trigger an event of default and acceleration of debt.
Merger Risks: The pending mergers with CCFI and Aaron's are subject to customary closing conditions, including stockholder and regulatory approvals. If the mergers fail to close, Katapult may be required to pay a termination fee of $1.5 million.
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. Previous shareholder class actions were settled in 2024 and 2025.
Investor Verification Checklist
- Debt Refinancing Status: Verify the company's progress in refinancing or extending the $78.7 million revolving credit facility maturing in December 2026.
- Covenant Waivers: Monitor the frequency of waivers required for the "Minimum Trailing Three-Month Net Originations" covenant and the lender's willingness to continue granting them.
- Merger Closing: Track the status of stockholder and regulatory approvals for the CCFI and Aaron's mergers, which are critical to the company's strategic future.
- Preferred Stock Dividends: Assess the impact of the 18% cumulative dividend accrual on the Series A and B Preferred Stock on future cash flows and common equity dilution.
- Merchant Concentration: Evaluate the stability of the relationship with Wayfair, which accounted for 25% of gross originations in 2025.