Katapult Holdings, Inc. · NASDAQ:KPLT
Katapult — FinServ Acquisition — SPAC Merger (April 2021)
51 slides from Katapult's SPAC merger presentation, Apr 21, 2021
Slide 1: Analyst Day Presentation April 2021
The leading e - commerce FinTech platform focused on nonprime consumers ANALYST DAY PRESENTATION APRIL 2021
Slide 2: Contents
Contents 05 MEET KATAPULT 13 MARKET INSIGHTS 18 THE KATAPULT SOLUTION 36 GROWTH STRATEGY 41 FINANCIAL PERFORMANCE 47 APPENDIX 28 TECHNOLOGY POWERING KATAPULT / 2
Slide 3: Disclaimer and Forward Looking Statements
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. (“FinSer
Slide 4: Important Information And Where To Find It
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 wil l
Slide 5: Meet Katapult
Meet Katapult
Slide 6: Presenters
Presenters ORLANDO ZAYAS Katapult CEO KARISSA CUPITO Katapult CFO DEREK MEDLIN Katapult COO ROLANDO DE GRACIA Katapult CCO / 6
Slide 7: Katapult is an e-commerce focused FinTech company
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 quality e
Slide 8: Katapult provides underserved nonprime consumers flexibility
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 Learning P
Slide 9: Clear and Compelling Value to Consumers
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 - shi
Slide 10: Clear and Compelling Value to Merchants
Access to new shoppers drives incremental sales and lowers customer acquisition cost Higher repeat purchase rates (~48%) Multiple integration options – flexibility to address broad range of merchants Treating customers with respect – high customer satisfaction (+58 NPS) SELECT MERCHANT PARTNERS 150+
Slide 11: Key Investment Highlights
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 Compel
Slide 12: Financial Overview
($15) ($5) $41 ($24) ($19) $23 2018 2019 2020 $43 $92 $247 2018 2019 2020 $49 $88 $192 2018 2019 2020 Financial Overview BLUE - CHIP MERCHANTS INDUSTRY - LEADING PARTNERS & PLATFORMS SCALED, FINTECH COMPANY STRONG GROWTH TRAJECTORY LEADING PROFITABILITY LTO Originations $Millions ‘18 - ’20 CAGR 98%
Slide 13: Market Insights
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Slide 14: 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 15: Massive Segment of Essential Consumer Spend
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 of New
Slide 16: Market Trends Supporting E-Commerce Growth
$154 $170 $201 $397 $439 $482 12% 12% 14% 30% 31% 33% 2017E 2018E 2019E 2020E 2021E 2022E $99 $120 $146 $231 $236 $253 30% 33% 35% 53% 52% 54% 2017E 2018E 2019E 2020E 2021E 2022E $50 $63 $66 $75 $91 $106 2% 3% 3% 4% 5% 5% 2017E 2018E 2019E 2020E 2021E 2022E Market Trends Supporting E - Commerce Grow
Slide 17: Providing Solutions to the Next Generation
Gen Z & Y 52% 57% 59% 36% 34% 31% 13% 10% 9% 2019 2020 2021 1 Providing Solutions to the Next Generation 42% of adult consumers in the U.S. are Gen Z & Gen Y Gen Z and Gen Y use lease - to - own financing not as last resort, but rather as part of an assortment of flexible financing tools they can ac
Slide 18: The Katapult Solution
» The Katapult Ne olution
Slide 19: E-Commerce Born and Bred
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 growth
Slide 20: Proprietary tech solution drives a virtuous cycle
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. CON
Slide 21: Superior pricing to consumers for necessary goods
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 Credi
Slide 22: Flexible & Transparent Payment Options
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: Illustrative Pricing Timeline
$1,000 Lease 1. Includes $45 initial fee. Illustrative Pricing Timeline EXAMPLE LEASE ORIGINATION / 23 LEASE ORIGINATION 90 DAYS AVG. TIME IN LEASE 7 MONTHS FULL TERM 12 MONTHS $45 $1,095 1 $1,753 1 $2,045 1 Initial Fee $45 90 - Day Buyout 5% Fee on Lease Amount Post 90 - Day Buyout 65% of Remaining
Slide 24: Differentiated technology and integration capabilities wins merchants
1. Merchants with >$5mm revenue in relevant goods segments. Differentiated technology and integration capabilities wins merchants DIRECT INTEGRATION → Off - the - shelf & custom integration options → Self - identifying customers easily find their purchasing option PLATFORM INTEGRATION → Plugins with
Slide 25: Prime Lending Partnership Opportunity and Waterfall Effect
Illustrative Prime Lending Partnership Opportunity and Waterfall Effect PRIME LENDING PARTNERSHIP INTEGRATION → Highly successful integration experience with financing waterfall → Complementary service to significantly enhance prime partner offerings 1 Million Prime Lender Applications 650,000 WATER
Slide 26: Katapult Welcomes Simply Mac
/ 26 Katapult Welcomes Simply Mac Simply Mac, an Apple Premier Partner, partners with Katapult to give their customers a no credit required, lease to own option when shopping in every channel. 31% OF ORIGINATED LEASES by existing Katapult customers who are new to Simply Mac TIMELINE DAY 1 Signed agr
Slide 27: Technology Powering Katapult
Technology Powering atapult
Slide 28: 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 End - to - End Technolo
Slide 29: A Seamless Digital Consumer Experience
INTUITIVE USER INTERFACE A Seamless Digital Consumer Experience 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 access
Slide 30: Product Demonstration
Product Demonstration
Slide 31: Proprietary risk model drives higher approval rates
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 Inputs
Slide 32: Layered Data and AI Driving Scale and Returns
x Machine - learning and AI - driven approach x Flexible decision engine x Proprietary modeling for non - prime and Cx dynamics x Performance management and data x Lifecycle approach FRAUD & IDENTITY DETECTION CUSTOMIZED UNDERWRITING PAYMENT TOOLS COLLECTIONS STRATEGY EXISTING CUSTOMER MGMT REPEAT C
Slide 33: Katapult 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 Katapult’s highly predictive proprietary score outperforms the industry Immediate Approvals with No Credit Check Less Than 3% Fraud Rates Across the Portfolio Recover 80 – 9
Slide 34: Growth Strategy
Katapult ©
Slide 35: Technology powers our commercial strategy
CUSTOMER MARKETING SUPPORT Our technology powers our commercial strategy - 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 min In
Slide 36: Investing in Business Development
Investing in Business Development → Expansion of business development team → Deploying referral and connector programs → Strengthening sales relationships with platforms >2x # OF MERCHANT LAUNCHES in Q1 2021 vs. Q1 2020 / 36
Slide 37: Driving Growth through Communications & Marketing
/ 37 ~75% INCREASE IN Q1 YOY ORIGINATIONS for Top 10 merchants 1.9 Driving Growth through Communications & Marketing → Increasing expertise & capabilities → Best - in - class CRM and promotions platforms → Focus on lifecycle marketing & lifetime value → Bringing our merchants new customers AVG. LEAS
Slide 38: Strategic Growth Investment Opportunities
Strategic Growth Investment Opportunities / 38 ENTERPRISE SALES TECHNOLOGY SALES & MARKETING → Improve our commercial offering to primary lenders and merchants → Optimize customer promotions → Enhance marketplace cross - shopping → Invest in additional capabilities, partnerships, and staffing → Focu
Slide 39: Significant Levers For Continued Organic Growth
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 started
Slide 40: Financial Performance
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Slide 41: Highly Attractive Scale, Growth and Profitability
($15) ($5) $41 ($24) ($19) $23 2018 2019 2020 $43 $92 $247 2018 2019 2020 $49 $88 $192 2018 2019 2020 ORIGINATIONS $Millions ’18 - ’20 CAGR 98 % ’18 - ’20 CAGR 139% REVENUE $Millions ADJUSTED EBITDA & NET INCOME $Millions Highly Attractive Scale, Growth and Profitability Source: Company estimates. A
Slide 42: LTO Originations Growth
LTO Originations Growth Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Distribution % ORIGINATIONS $Millions 22% 18% 21% 39% 13% 22% 26% 39% 16% 33% 25% 26% Q2 ‘20 LTO originations driven by COVID stimulus and “stay - at - home” shopping Q4 ‘20 LTO originations w
Slide 43: Financial Overview and 2021 Outlook
→ Our expectations for the financial performance of our business remain unchanged → Originations and new merchants coming online are tracking to plan → We see an opportunity to accelerate investment in key growth areas of the business, including sales and marketing, business development and technolo
Slide 44: 2021 Growth Investment Amount
2021 Growth Investment Amount → We are the leader in a LARGE addressable market with low penetration → Focused on long - term GROWTH and revenue acceleration in 2022 and beyond → Strategic Investments aimed at WIDENING OUR MOAT AND DATA ADVANTAGE Investment Areas → Incremental capabilities, partners
Slide 45: Liquidity Framework and Capital Allocation
LIQUIDITY (1) 2020 year - end cash position of $66 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 million with $74 million drawn at 12/31/2020 → Additional accordion feature
Slide 46: Appendix
Katapult!
Slide 47: Historical Income Statement
Historical Income Statement Twelve Months Ended December 31, $Millions 2018A 2019A 2020A Selected Income Statement Total Revenue 1 $43 $92 $247 Cost of Revenue $39 $71 $167 Gross Profit $4 $21 $80 Servicing Costs & Underwriting Fees $2 $5 $6 Operating Expenses 2 $19 $25 $36 Income (Loss) from Operat
Slide 48: Historical Balance Sheet
Historical Balance Sheet As Of $Millions 12/31/2018 12/31/2019 12/31/2020 Selected Balance Sheet Cash $1 $8 $66 Restricted Cash $1 $5 $4 Property Held for Sale, Net of Accumulated Depreciation & Impairment $16 $35 $67 Other Assets 1 $2 $2 $3 Total Assets $21 $49 $140 Revolving Line of Credit $20 $40
Slide 49: Katapult's Proven Leadership Team
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+ years i
Slide 50: Katapult's Board of Directors
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 & Managi
Slide 51: Katapult
Katapult!