Katapult Holdings, Inc. · NASDAQ:KPLT
Katapult — SPAC Merger (December 2020)
50 slides from Katapult's SPAC merger presentation, Dec 18, 2020
Slide 1: The leading e-commerce FinTech platform focused on nonprime consumers
The leading e - commerce FinTech platform focused on nonprime consumers INVESTOR PRESENTATION DECEMBER 2020
Slide 2: Contents
| 2 Contents 07 MEET KATAPULT 14 MARKET INSIGHTS 17 THE KATAPULT SOLUTION 33 GROWTH STRATEGY 35 FINANCIAL PERFORMANCE 39 VALUATION & BENCHMARKING 43 APPENDIX 26 TECHNOLOGY POWERING KATAPULT
Slide 3: Disclaimer and Forward Looking Statements
| 3 This presentation (this “Presentation”) is provided for informational purposes only and has been prepared to assist intereste d p arties in making their own evaluation with respect to a potential business combination between Katapult Holdings, Inc. (“Katapult”) and FinServ Acquisition Corp. (“Fi
Slide 4: Important Information And Where To Find It
| 4 Important Information And Where To Find It In connection with the Proposed Business Combination, FinServ intends to file a registration statement on Form S - 4, including a proxy statement/prospectus (the “Registration Statement”), with the Securities and Exchange Commission (the “SEC”), which w
Slide 5: FinServ Acquisition Corp.
| 5 FinServ Acquisition Corp. FinServ Acquisition Corp. (“FinServ”), a publicly traded company (Nasdaq: FSRV) founded by Lee Einbinder and Howard Kurz, raised $250 million on November 5, 2019 to acquire a FinTech business LEE EINBINDER CEO → Leading investment banker in the FinTech and financial ser
Slide 6: Transaction Overview
| 6 → Implied enterprise value of $ 993 million and equity value of $ 962 million (assuming net debt of $32 million) → Transaction expected to be funded through a combination of FSRV’s $250 million cash in trust and $150 million of PIPE financing 1 → Net proceeds from the transaction used to pay cas
Slide 7: Meet Katapult
Katapult : Meet Katapult
Slide 8: Presenters
| 8 Presenters ORLANDO ZAYAS Katapult CEO KARISSA CUPITO Katapult CFO
Slide 9: Katapult is an e-commerce focused FinTech company offering lease financing
| 9 Katapult is an e - commerce focused FinTech company offering an innovative lease financing solution to consumers and enabling essential transactions at the merchant point of sale → Merchants gain access to a new customer base driving material revenue growth → Consumers gain access to high qualit
Slide 10: Katapult provides underserved nonprime consumers flexibility to access durable goods
| 10 Katapult provides underserved nonprime consumers the flexibility they deserve to access the durable goods they need E - COMMERCE MERCHANTS UNDERSERVED CONSUMERS Recurring lease payments over time Upfront funding 38% of US Consumers 1 Nonprime and Underserved Next - Generation Tech Machine Learn
Slide 11: Mission
Katapult MISSION Our technologyy inspires finance possibility
Slide 12: Key Investment Highlights
| 12 Key Investment Highlights Massive, Underserved Addressable Market Supported by powerful consumer and retail trends Proprietary Technology Platform Platform provides scalability, operational efficiency and competitive differentiation Proven Management Team Experienced leadership team Clear And C
Slide 13: Financial Overview
($11) $40 $70 $151 $216 ($19) $27 $47 $95 $142 2019A 2020E 2021E 2022E 2023E $88 $201 $402 $606 $867 2019A 2020E 2021E 2022E 2023E $92 $250 $455 $799 $1,133 2019A 2020E 2021E 2022E 2023E | 13 Financial Overview BLUE - CHIP MERCHANTS INDUSTRY - LEADING PARTNERS & PLATFORMS SCALED, FINTECH COMPANY STR
Slide 14: Market Insights
Market Insights « A
Slide 15: Massive Segment of Essential Consumer Spend
| 15 Massive Segment of Essential Consumer Spend DURABLE GOODS E - COMMERCE MARKET 1 <1% of 2020E durable goods e - commerce market currently captured by Katapult 5 1. Wall Street equity research, June 2020. Includes Home & Furniture, Electronics, and Automotive categories. 2. Federal Reserve Bank o
Slide 16: E-Commerce Born & Bred
E - Commerce Born & Bred Sole e - commerce financing platform focused on nonprime consumers Robust Consumer, Merchant & Partner Ecosystem Solving critical consumer pain points and driving significant upside for merchants Proprietary Technology Platform Flexible, automated and customizable tech incre
Slide 17: The Katapult Solution
\ The Katapult We &
Slide 18: E-Commerce Born and Bred
| 18 E - Commerce Born and Bred 1 Pure Click to Ship Simple application and transparent checkout process makes our lease - to - own financing option easy and understandable 2 100% Digital Systems, interactions and payments are all digital, giving customers and merchants flexibility while enabling gr
Slide 19: Proprietary tech solution drives a virtuous cycle
| 19 Our proprietary tech solution drives a virtuous cycle of engagement between consumers and merchants Our platform solves critical consumer pain points and drives higher conversion for merchants. We are transforming the way nonprime consumers shop and how merchants access this underserved segment
Slide 20: Clear and Compelling Value to Consumers
| 20 Clear and Compelling Value to Consumers POWERED BY KATAPULT’S PROPRIETARY END - TO - END TECHNOLOGY PLATFORM Enables the lease - purchase of durable goods No credit score required Fully - automated approval in <5 seconds Digitally native platform, anyone, anywhere access Simplified ‘click - to
Slide 21: Superior pricing to consumers for necessary goods
| 21 Katapult’s tech - powered platform delivers superior pricing to consumers for necessary goods MAXIMUM FINANCED COST CASH PRICE GE Top Mount Refrigerator P.C. Richard & Son Price: $639 $716 1 $1,323 2 Katapult $1,146 3 $1,819 4 Legacy, Branch - based LTO Competitor $639 5 $1,838 6 Private Label
Slide 22: Flexible & Transparent Payment Options Drive Customer Loyalty
FIRST 90 DAYS → During the first 90 days an option is available to buyout for the cash price plus 5% fee 1 Flexible & Transparent Payment Options Drive Customer Loyalty POST 90 DAYS → An early purchase option is available anytime after the initial 90 days allowing consumer to purchase for significan
Slide 23: Clear and Compelling Value to Merchants
| 23 Access to new shoppers drives incremental sales and lowers customer acquisition cost Higher repeat purchase rates (~45%) Multiple integration options – flexibility to address broad range of merchants Treating customers with respect – high customer satisfaction (+47 NPS) SELECT MERCHANT PARTNERS
Slide 24: Differentiated technology and integration capabilities win merchants
| 24 1. Merchants with >$5mm revenue in relevant goods segments. Partner # of Eligible Merchants 1 ~600 ~1,600 ~70 ~100 ~1,900 ~1,400 SELECT PARTNER INTEGRATIONS Differentiated technology and integration capabilities wins merchants DIRECT INTEGRATION → Off - the - shelf & custom integration options
Slide 25: Prime Lending Partnership Opportunity & Waterfall Effect
| 25 Illustrative Prime Lending Partnership Opportunity & Waterfall Effect 1 Million PRIME LENDER APPLICATIONS 650,000 WATERFALL APPLICATIONS ~65% DECLINE RATE ~60% KATAPULT APPROVAL RATE 390,000 APPROVALS ~60% CONVERSION RATE 195,000 INCREMENTAL LEASES $600 Avg. Order Value ~$117 Million ANNUAL EMB
Slide 26: Technology Powering Katapult
Technology - Powering ha Katapult
Slide 27: End-to-End Technology Enabled E-Commerce Platform
PRE - DECISIONING POST - DECISIONING Identity and Fraud Decisioning Engine POS Integration Behavioral Learning Model (proprietary Katapult Score) Payment System Real - time Insights Security Proprietary Customer Scoring Merchant Portal Customer Portal Digital Customer Support | 27 End - to - End Tec
Slide 28: A Seamless Digital Consumer Experience
INTUITIVE USER INTERFACE A Seamless Digital Consumer Experience | 28 FLEXIBLE & TRANSPARENT PAYMENT OPTIONS → Digitally native, mobile - ready → Easy 3 - step application → Simple information requirements → Multiple payment options available → Immediate shipping after initial payment → On - demand a
Slide 29: Technology is at the core of everything we do
| 29 CUSTOMER MARKETING SUPPORT Technology is at the core of everything we do - simplifying the financing process and driving repeat transactions MERCHANT INTEGRATION Flexible API Options Platform Extensions Omni - channel Portal Hosted Portal Acquisition Retention Conversion Repeat as fast as <30 m
Slide 30: Proprietary risk model drives higher approval rates and contribution margin
| 30 Our proprietary risk model translates to higher approval rates and higher contribution margin → Lease history → Prior payment behavior → Behavioral biometrics → Shopping behavior → Mobile device information → Cart information SELECTED ATTRIBUTES FOR DECISIONING UNDERWRITING INPUTS 7 Min. User I
Slide 31: Katapult's proprietary score outperforms the industry
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% TRUE POSITIVE RATE FALSE POSITIVE RATE | 31 Katapult’s highly predictive proprietary score outperforms the industry Immediate Approvals with No Credit Check Less Than 3% Fraud Rates Across the Portfolio Recover 8
Slide 32: Our platform performs better as we grow
| 32 Source: Company estimates. Note: Return on leases indexed to Q4 2018 value. + 28% + 35% + 40% 1H'19 2H'19 1H'20 Our platform performs better as we grow INDEXED RETURN ON LEASES TECH AND DATA DRIVES RESULTS → Repayment history → Approval limit utilization → Lifetime value As additional data from
Slide 33: Growth Strategy
Katapult
Slide 34: Significant Levers For Continued Organic Growth
| 34 DEEPEN RELATIONSHIPS WITH EXISTING MERCHANTS CONTINUED E - COMMERCE ADOPTION PRODUCT ENHANCEMENTS AND NEW PRODUCT DIVERSIFICATION NEW MERCHANT & PARTNER POS INTEGRATIONS MERCHANT CO - MARKETING & DYNAMIC CONSUMER SCORING MODELS We have already achieved significant scale and are just getting sta
Slide 35: Financial Performance
Financial 2. Performance \~ | } ‘
Slide 36: Highly Attractive Scale, Growth and Profitability
($11) $40 $70 $151 $216 ($19) $27 $47 $95 $142 2019A 2020E 2021E 2022E 2023E $92 $250 $455 $799 $1,133 2019A 2020E 2021E 2022E 2023E $88 $201 $402 $606 $867 2019A 2020E 2021E 2022E 2023E | 36 ORIGINATIONS $Millions ’19 - ’23E CAGR 77% ’19 - ’23E CAGR 87% REVENUE $Millions EBITDA & NET INCOME $Millio
Slide 37: Powerful Business Model that Generates Profitable Growth
| 37 Powerful Business Model that Generates Profitable Growth FINANCIAL OVERVIEW $Millions 2019A 2020E 2021E 2022E 2 2023E LTO Originations $88 $201 $402 $606 $867 Revenue $92 $250 $455 $799 $1,133 EBITDA 1 ($11 ) $40 $70 $151 $216 Net Income 1 ($19 ) $27 $47 $95 $142 KEY METRICS Origination Growth
Slide 38: Liquidity Framework and Capital Allocation
The image part with relationship ID rId3 was not found in the file. LIQUIDITY Expected 2020 year - end cash position of $60 million Total committed credit facilities of $175 million with accordion feature for an additional $125 million borrowing capacity → First lien asset backed facility of $ 125 m
Slide 39: Valuation & Benchmarking
Katapult e Valuation & - Benchmarking
Slide 40: Point of Sale Payment Peers
| 40 Point of Sale Payment Peers Description Non - Prime Focus E - Commerce Centric High Growth → The only LTO company focused almost exclusively on e - commerce → Growing at very compelling rates, which should continue for the foreseeable future → Buy - now, pay later, fully integrated e - commerce
Slide 41: Superior Growth Rate to Peers
79% IPO filed 52% 47% 19% 20% 12% | 41 ‘ 20E - ‘ 22E REVENUE CAGR Source: Company information, FactSet. Note: Market data as of 12/15/2020 . Estimates represent FactSet median consensus . Superior Growth Rate to Peers 93% IPO filed 108% NM 20% 21% 8% ‘ 20E - ‘ 22E EBITDA CAGR The image part with rel
Slide 42: Attractive Entry Valuation
35.3x 27.2x 10.1x 14.1x 29.4x 23.2x 8.9x 6.6x 30.4x 8.7x 10.2x 11.9x 1.3x 2.2x 21.2x 6.3x 8.6x 10.1x 1.1x 1.2x EV / 2021E EBITDA EV / 2022E EBITDA | 42 Attractive Entry Valuation Source: Company filings, FactSet, industry research. Note: Market data as of 12/15/2020 .. Estimates represent FactSet me
Slide 43: Appendix
Katapult
Slide 44: Lease to Own Product Overview
| 44 Payments set up to match consumers’ pay dates on a weekly, biweekly, semi - monthly or monthly payment schedule No credit score required for approval $45 initial fee allows consumers to enjoy their leased items immediately 1 Path to ownership over term of the lease: pay over time, early purchas
Slide 45: Transaction Overview
| 45 The image part with relationship ID rId3 was not found in the file. The image part with relationship ID rId5 was not found in the file. PRO FORMA ENTERPRISE VALUATION AT CLOSE $Millions, except for Share Price Katapult Illustrative Share Price $10.00 Shares Outstanding 2 96.2m Equity Value $ 96
Slide 46: Unaudited Historical Income Statement
| 46 Unaudited Historical Income Statement Nine Months Ended September 30, $Millions 2019A 2020A Selected Income Statement Total Revenue 1 $60 $175 Cost of Revenue $52 $124 Gross Profit $8 $51 Servicing Costs, Underwriting Fees & Processing Fees $6 $8 Operating Expenses 2 $12 $14 Income (Loss) from
Slide 47: Unaudited Historical Balance Sheet
| 47 Unaudited Historical Balance Sheet As Of $Millions 12/31/2019 9/30/2020 Selected Balance Sheet Cash $8 $36 Restricted Cash $5 $3 Property Held for Sale, Net of Accumulated Depreciation & Impairment $35 $66 Other Assets 1 $2 $3 Total Assets $49 $108 Revolving Line of Credit $40 $73 Other Debt $2
Slide 48: Katapult's Proven Leadership Team
| 48 Katapult’s Proven Leadership Team ORLANDO ZAYAS Chief Executive Officer → Joined Katapult in Sept 2017 → Past: CEO of TEMPOE & DRB Financial Solutions → Executive at General Electric for 15 years KARISSA CUPITO Chief Financial Officer → Joined Katapult in Dec 2017 → Past: CFO of TEMPOE → 10+ ye
Slide 49: Katapult's Board of Directors
| 49 Katapult’s Board of Directors ORLANDO ZAYAS Chief Executive Officer → Joined Katapult in Sept 2017 → Past: CEO of TEMPOE & DRB Financial Solutions → Executive at General Electric for 15 years BRIAN HIRSCH Director → Co - founder & Managing Partner of Tribeca Venture Partners → Past: Founder & M
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