Catapult (KPLT) Q2 2025: App-Originated Leases Jump 81%, Marketplace Flywheel Accelerates
Catapult’s Q2 saw its marketplace strategy crystallize as app-originated lease-to-own (LTO) transactions surged and new customer acquisition accelerated, signaling a self-reinforcing growth loop. With disciplined cost management and a strengthened capital structure following a refinancing, Catapult is positioned to leverage its app-centric model for broader merchant and consumer engagement. The focus now shifts to converting top-of-funnel momentum into outsized origination growth and sustainable profitability.
Summary
- Marketplace Momentum: App-driven originations and cross-shopping point to a maturing two-sided platform model.
- Cost and Credit Discipline: Expense control and stable write-offs support early signs of operating leverage.
- Growth Pathways Expanding: New merchant channels and digital strategies set up continued origination gains.
Performance Analysis
Catapult delivered double-digit top-line growth with Q2 gross originations up 30% and revenue climbing 22% year over year, exceeding its own guidance and extending a multi-quarter streak of momentum. Notably, the core driver was the company’s app marketplace, where total app-originated leases grew 56% to $43.1 million, and K-PAY, the in-app checkout feature, surged 81% to $28.3 million—now representing 39% of total originations, up from 28% a year ago.
Customer acquisition and repeat engagement both accelerated: unique new customers rose 40%, and 58% of gross originations came from repeat users, demonstrating both the stickiness and expanding reach of the platform. Gross profit grew to $11.2 million, while gross margin compressed to 15.5% from 16.9% due to front-loaded lease depreciation tied to rapid origination growth. Write-offs as a percent of revenue remained within the 8-10% target range despite a modest uptick, reflecting ongoing credit diligence. Expense growth was muted, with fixed cash operating costs up just 0.6%, supporting a return to positive adjusted EBITDA ahead of expectations.
- App Marketplace Outperformance: App-originated leases now comprise 60% of total volume, reflecting deepening consumer engagement and merchant buy-in.
- Merchant Diversification: Direct and waterfall merchant originations (excluding home furnishings) grew 56%, highlighting success beyond legacy categories.
- Balance Sheet Flexibility: The Blue Owl refinancing increased liquidity and lowered interest costs, extending runway for growth investments.
With 11 quarters of consecutive origination growth and a sharpened focus on digital acquisition, Catapult’s business model is showing early signs of scale economics and ecosystem lock-in.
Executive Commentary
"Our exciting vision of building a successful two-sided marketplace shopping destination for lease-to-own consumers has become a reality. Perhaps this is best illustrated by our continued growth we're seeing in both total app originations and KPAY originations."
Orlando Zayas, Chief Executive Officer
"Our disciplined approach to expense management coupled with our top line growth is at the center of our financial model. This philosophy fuels our decision making and it is a core component of our long-term growth strategy."
Nancy Walsh, Chief Financial Officer
Strategic Positioning
1. Marketplace Ecosystem as Growth Engine
Catapult’s app marketplace, a digital platform connecting lease-to-own consumers with merchants, is now the primary engine of origination growth. By facilitating seamless journeys from app discovery to merchant checkout, Catapult has increased both consumer engagement and merchant value creation. Cross-shopping—customers leasing from multiple merchants—grew 74%, now representing a quarter of gross originations, signaling network effects and improved monetization per user.
2. Top-of-Funnel Expansion and Conversion Focus
Total applications rose over 91% year over year, with new customer acquisition up 40%. However, management highlighted that while application growth is robust, conversion rates are down versus last year. The company is actively refining pricing, UX, and referral partnerships to close this gap, with the goal of translating application momentum into outsized origination gains.
3. Merchant Diversification and Channel Buildout
Catapult added 48 new direct or waterfall merchant pathways in Q2, expanding its reach beyond traditional home furnishings into auto, appliances, electronics, and omnichannel retail. These pathways serve as new go-to-market channels, enabling Catapult to source customers independently and deliver incremental sales to merchants—a key differentiator in the competitive LTO landscape.
4. Credit Resilience and Portfolio Quality
Write-offs remained within targeted levels despite macro headwinds, reflecting strong underwriting and portfolio management. Management cited the resilience of its customer base and the seasonal nature of delinquency spikes, with expectations for normalization in future quarters.
5. Capital Structure Optimization
The refinancing with Blue Owl Capital increased revolving credit capacity and reduced interest costs, extending the maturity to December 2026 and improving advance rates. This positions Catapult to fund originations growth while maintaining liquidity and flexibility for opportunistic investments or macro shocks.
Key Considerations
Catapult’s Q2 results reinforce the company’s transition from a transactional LTO provider to a platform-centric, two-sided marketplace. As the business scales, the interplay between consumer acquisition, merchant engagement, and credit discipline will determine the durability of growth and margin expansion.
Key Considerations:
- Marketplace Flywheel Strength: App-driven origination and cross-shopping are driving compounding engagement, but conversion rates must improve to unlock full potential.
- Merchant Channel Resilience: Excluding home furnishings, merchant originations are accelerating, indicating successful diversification and reduced category risk concentration.
- Expense and Margin Management: Tight cost control is enabling operating leverage, but gross margin will remain pressured by front-loaded lease depreciation amid rapid growth.
- Capital Flexibility: The Blue Owl refinancing materially increases borrowing capacity and reduces interest burden, supporting growth and de-risking liquidity.
- Competitive Differentiation: Personalized pricing and digital acquisition strategies are key to defending share as LTO competition intensifies.
Risks
Catapult faces risks from macro volatility, including potential tariffs and inflation, which could impact consumer demand and credit performance. Competitive dynamics in LTO and adjacent financing segments remain fluid, with pricing and credit ladder movement by peers. Sustained margin pressure from lease depreciation and conversion rate challenges could temper near-term profitability if not addressed.
Forward Outlook
For Q3 2025, Catapult guided to:
- Gross originations growth of 25% to 30%
- Revenue growth of 20% to 25%
- Adjusted EBITDA of $3 to $3.5 million
For full-year 2025, management raised gross originations guidance to 20% to 25% growth (from at least 20%), and reiterated:
- Revenue growth of at least 20%
- At least $10 million in positive adjusted EBITDA
Management emphasized that guidance excludes any extraordinary macro impacts from tariffs or credit environment shifts, and expects non-home furnishings categories to outpace overall growth.
- Focus remains on converting application growth into originations
- Continued merchant channel expansion and digital marketing investment
Takeaways
Catapult’s marketplace model is gaining traction, with app-originated leases and cross-shopping fueling a self-reinforcing growth loop. Merchant diversification, disciplined expense management, and enhanced capital flexibility position the company for continued scale. However, closing the conversion gap and maintaining credit quality amid macro uncertainty will be critical to sustaining momentum.
- Marketplace Model Scaling: App and K-PAY traction is translating into higher engagement and merchant value, but conversion optimization is the next frontier.
- Cost and Credit Execution: Margin pressure from lease depreciation is a near-term headwind, but stable write-offs and tight cash discipline support the path to profitability.
- Future Watch: Monitor conversion rate improvement, merchant channel mix, and macro sensitivity as leading indicators for sustained growth and margin expansion.
Conclusion
Catapult’s Q2 results underscore a business at a strategic inflection, with its app marketplace and merchant ecosystem creating compounding advantages. The next phase depends on translating application growth into originations and margin, while navigating an evolving credit and competitive landscape.
Industry Read-Through
Catapult’s results highlight a broader industry shift toward platform-centric models in lease-to-own and alternative financing. The surge in app-originated transactions and cross-shopping behavior signals consumer appetite for digital-first, flexible purchasing solutions. For other LTO and fintech players, the imperative is clear: invest in digital engagement, merchant partnerships, and personalized pricing to drive sustainable growth. The refinancing move also signals that capital access remains a differentiator in scaling asset-backed lending models as macro volatility persists.