Katapult Holdings, Inc.

Good day, ladies and gentlemen, and welcome to the Catapult second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. If anyone should require assistance, please press star and then zero on your touchstone telephone. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Bill Wright, Vice President of Investor Relations. Sir, you may begin.

Thank you and good morning. Welcome to the Catapult Second Quarter 2021 Earnings Conference Call. With me today are Orlando Zayas, Chief Executive Officer, Derek Medlin, Chief Operating Officer, and Carissa Caputo, Chief Financial Officer. We will all be available for Q&A following today's prepared remarks. Before we begin, I would like to remind everyone that this call will contain forward-looking statements regarding future events and financial performance. including statements regarding our market opportunity, impact of our growth initiatives, and our future financial performance, and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC reports. These statements reflected management's current beliefs, assumptions, and expectations and are subject to a number of factors that may cause actual results to differ material from those statements. Except as required by law, we undertake no obligation to publicly update or revise any of these statements, whether as a result of any new information, future events, or otherwise. During today's discussion of our financial performance, we will provide certain information that constitute non-GAAP financial measures under SEC rules. These include measures such as adjusted EBITDA and adjusted net income. These non-GAAP financial measures should not be considered replacements for and should be read together with GAAP results. Reconciliations to GAAP measures and certain additional information are also included in today's earnings release, which are available in the investor relations section of our company website at www.ir.catapult.com. This call is being recorded, and a webcast will be available for replay on our investor relations website. I would now like to turn the call over to Orlando.

Thanks, Bill. Good morning, and thank you for joining us. On today's call, we'll review our second quarter 2021 results, share what we're seeing in the current macro environment, and provide an update on our near-term outlook. Lastly, we will go into greater detail on our long-term growth strategy in this addressable market. We are enthusiastic about our market-leading technology that is delivering on our mission of financial inclusion for the non-prime consumer. We believe it's extremely powerful to enable this customer base to get the items they need and for e-commerce and omnichannel merchants to access a new market. Carissa, our CFO, will provide more details on our second quarter performance in a few minutes, but let me give you some second quarter highlights. Total revenue for Q2 2021 was $77.5 million, an increase of 28% year over year. Revenue year-to-date reached 158.1 million versus 103.6 million last year, an increase of 53% year-over-year. Gross originations were 64.4 million in Q2 2021, up 1% compared to Q1 2021, and down 17% year-over-year. Our compound annual growth rate for gross originations is 75% from Q2 2019 to Q2 2021. As we previously indicated in our first quarter earnings call, the second quarter represented a difficult comp due to the pandemic-related surge in demand for e-commerce durable goods in the spring of 2020. Nevertheless, originations were roughly flat sequentially versus Q1 2021 and have been steady in the $60 million to $65 million range over the past four quarters. Our adjusted EBITDA for Q2 2021 was $3.9 million down 65% from $11.1 million in Q2 2020, reflecting our increased investment in growth initiatives, more normalized seasonal lease payment performance, new higher costs, and incremental public company costs. On the macro front, it is a rapidly changing and complex environment that we have not previously faced in our business, which makes forecasting difficult. Since our Q1 earnings call and continuing to date, many new developments emerged that have impact on our business. Starting in late June and noticeably picking up during the July 4th weekend, we began seeing macro headwinds consistent with what you have heard from several retailers. First, we observed our consumers shift their focus toward new spending categories and away from durable goods as summer activities increased and restrictions abated. Coupled with this consumer category spend shift, external data has become available suggesting e-commerce sales will likely slow for the balance of the year. The combination of these two factors created uncertainty regarding our expectations for gross originations in the critical seasonal windows and for the balance of the year. Another key market factor that we monitor is the activity of prime credit and financing providers that offer solutions to consumers with higher quality credit or repayment histories. With historically high savings rate and low delinquency rates, some consumers buoyed by stimulus and a recovering jobs market, we are observing prime providers stretching further down the credit spectrum to capture consumer transactions in our highest score bands, which is negatively impacting our volume. We are optimistic that this competitive dynamic in the prime segments to be temporary and will subside as credit environments normalize. However, it is difficult to have certainty in the timing of these changes. On the retail side, our merchants continue to be impacted by supply chain constraints, stock levels that are reduced or bottlenecked. This produces longer wait times for consumers and depressed conversion rates in certain categories and transaction types. Though we are optimistic that these industry trends to be transitory, we think they will continue throughout 2021. Finally, COVID-19 and the recent announcement of new restrictions, virus variants, and vaccination activities is further complicating an already incredibly dynamic macro environment. As we sit here today, there is just too much uncertainty and multiple macro cross-currents to accurately predict our consumers' buying behaviors for back-to-school and the remainder of the year, which are important drivers in our 2021 forecast. We expect to have more insight into these new and evolving patterns by our November earnings call, but for now we feel it's best to remove explicit guidance for the balance of 2021. While the short-term outlook may not be 100% clear, we do continue to believe in our mission and our core business fundamentals. We are extremely pleased with the progress of our strategic investments that will drive long-term growth. Despite this current market uncertainty, we believe there is tremendous opportunity to serve the needs of the non-prime consumer with our best-in-class technology and customer-centered approach. We believe we are in an excellent position to continue our mission to serve the true e-commerce and omnichannel needs of this consumer segment. You see, Catapult's technology is delivering full click-to-ship capability for our customers and merchant community. This seamless experience reduces friction and enables a transparent and customer-friendly approach to the shopping process. We believe this capability and our ongoing platform enhancements are truly market-leading and we are excited to elaborate further on our progress. Specifically, the second quarter marked several milestones for Catapult resulting from recent growth investments. During the second quarter, we added 31 merchants to our platform, bringing our total to 57 new merchants for the first half of the year. As discussed on our last earnings call, we started investing in our sales and marketing organization to expand product awareness and availability to thousands of online and omnichannel merchants offering durable goods. This momentum is continuing in July, and I am thrilled to share that we have launched 15 new merchants last month, bringing a year-to-date total through July to 72. Since the end of the year, we've doubled the number of merchants that are partnered with both Catapult and Affirm through the Affirm Connect Waterfall Solutions. Despite the recent merchant deal sizes being on the smaller size, we are closing more of them and more quickly. Make no mistake, we are still engaged with larger merchants, but these deals are taking longer to move, partially due to IT constraints, competing priorities, and temporary inventory logistics issues that these merchants currently face. We have high confidence in our technology and expect ongoing traction as these factors are resolved. On the customer side, our clear and transparent approach is resonating, and our net promoter score was 60 as of July 2021, up from 53 in January 2021 and 46 in July 2020. We have built a rich and rapidly growing database of nearly 2 million approved customers. This is just beginning as we are focused on understanding all the ways we can support their financial progress to access the things they need. We are confident in our strategy to deliver value to our business partners and consumers and are excited about the growing interest in Catapult from both merchants, e-commerce platforms, and prime partners. In fact, we are pleased with all the expansion of point of sale solutions, the buy now, pay later providers focused on the prime consumer segments. This wave of exposure to merchants and consumers is increasing the awareness that there are more opportunities in the checkout experience than ever before, which accrues to our benefit. Catapult, with our leading technology platform, is perfectly positioned to take share of this expansion of BNPL adoption reaches the non-prime customer. Our vision is to expand financial possibilities for consumers that are left behind and looking for the items they need. Financial inclusion of the non-prime consumer drives us to continue innovating and delivering new solutions to this market. And while there may be some variability in the near-term macro trends, We are steadfast in our business model. In fact, we believe the time is now to accelerate our investment, access the market opportunity in front of us. With that, I'll turn it over to Derek to elaborate on our growth activities and platform advancements over the quarter. Derek? Hello.