While everyone is focusing on Katapult's impressive fourth-quarter performance and the addition of Walmart to its Katapult Pay platform, there's a hidden gem in the first-quarter transcript that might just be the key to their long-term success: **Lowe's.** Yes, the home improvement giant has quietly joined Katapult Pay, and the implications could be huge.

Now, I know what you're thinking: "Lowe's, big deal, they're just another retailer." But hold on, because this move is far more strategic than it appears at first glance. Let's break it down.

First, Katapult Pay is rapidly becoming a powerhouse for the company. It's not just driving repeat customer purchases, it's attracting new customers at an impressive rate. In 2023, 14% of Katapult Pay leases were from brand new customers, showcasing its ability to tap into a previously untouched market. This aligns with Katapult's vision of transforming their platform into a shopping destination, not just a financing option.

Now, enter Lowe's. The home improvement sector has historically been a strong performer for Katapult, especially during the holiday season. Unlike furniture, customers are more inclined to buy home improvement products as gifts, making it a potentially lucrative market during Q4. By adding Lowe's to the mix alongside Home Depot and Menards, Katapult has effectively cornered the home improvement market within its Katapult Pay ecosystem. This creates a powerful trifecta that could drive significant holiday sales, potentially even surpassing last year's impressive numbers.

But it's not just about the holiday season. The addition of Lowe's strengthens Katapult's position in a sector that's already proving successful for them. Let's remember that furniture, excluding Wayfair, saw a 30% growth in Q4 2023, largely driven by 1Stop Bedrooms and the implementation of user-friendly features like a price calculator. This suggests that Katapult's approach to transparency and customer experience resonates with home-focused consumers.

Here's where things get interesting. Katapult is actively exploring product-based search within its marketplace. This means customers would be able to search for the specific product they want to lease, instead of having to navigate through individual retailer pages. Imagine a customer searching for "lawnmower" within the Katapult app and being presented with options from Home Depot, Lowe's, and Menards, all available for lease through Katapult. This would streamline the customer experience, making it even easier to find and lease the products they desire.

Now, let's combine this with Katapult's strategic marketing efforts, which saw a 500% increase in email volume in 2023 and the addition of SMS and push notifications. The company is actively targeting existing and potential customers with personalized messages based on their shopping habits and preferences. With Lowe's on board, imagine receiving a push notification during the spring season promoting a lease deal on a new grill or patio furniture set from Lowe's, conveniently accessible through the Katapult app.

The potential for increased customer engagement and conversion rates is enormous.

Hypothetical Impact of Lowe's on Katapult Pay Leases

Here's a hypothesis to consider: If Katapult can leverage the Lowe's addition to drive a 10% increase in Katapult Pay leases within the home improvement sector during the 2024 holiday season, and assuming an average lease value of $500, this could translate to an additional $5 million in gross originations for Q4 2024. This is a conservative estimate, especially considering the potential for customer acquisition through targeted marketing and product-based search.

Furthermore, the success of 1Stop Bedrooms suggests that the implementation of a similar price calculator for Lowe's products could further boost conversion rates. If this feature leads to a 5% increase in Lowe's Katapult Pay leases throughout 2024, that's an additional $2.5 million in gross originations.

Katapult Pay Performance

Below is a table showcasing Katapult Pay's performance based on information from the Q4 2023 and Q1 2024 earnings calls. It highlights the remarkable growth of the platform and its potential to contribute to Katapult's success.

The takeaway? While the market is fixated on Walmart, Lowe's might be the quiet giant in Katapult's arsenal. By capitalizing on this strategic addition through targeted marketing, product-based search, and user-friendly features, Katapult could be positioning itself for a significant leap forward in the LTO landscape. It's a move that could shift the power dynamics in the industry, with Katapult leading the charge.

"Fun Fact: Katapult achieved a customer repeat purchase rate of 56% in Q1 2024. This impressive figure indicates high customer satisfaction and loyalty, highlighting the company's successful approach to building long-term customer relationships."