FPAY - Earnings call 3 2023 | FlexShopper, Inc.

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Operator

Greetings. Welcome to the FlexShopper Third Quarter Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Carlos Sanchez of Investor Relations.

You may begin.

Carlos Sanchez

morning. good and you, Thank Welcome to Results Call. XXXX Third Quarter Financial Conference FlexShopper's Heiser, today Executive Operating me are our our Officer. With Russ Chief Davis, Chief John Officer; and this and our the during Investor release issued today. we'll yesterday We Relations referencing earnings call presentation morning, these and be corresponding be can website. our section of Investor Both Relations in our found

for available be prepared will following today's remarks. We Q&A

including market conjunction future Before financial will release performance. These contain call XXXX. with the recent our should we that cautionary company's the events our the our and XX-Q contained be periodic everyone earnings and XX, this considered growth quarter our begin, our I report future remind would reports, September including statements financial in of quarterly impact performance, in statements opportunity, most like SEC statements regarding regarding to in for ending initiatives forward-looking

assumptions reflect Except revise undertake actual a to that or any of management's or factors result current statements publicly as statements, of events no materially of These those a expectations differ otherwise. beliefs, to information, subject new law, whether update and we number required by to future from cause are may obligation and these results as statements.

with Reconciliation our on replacements our available earnings not GAAP results. section which we During These today's non-GAAP be measures financial that SEC also today's and together rules. and net income. of such Investors of GAAP income information release, adjusted be considered will our These as financial measures the measures are certain in provide included and read performance, should measurements discussion to certain information include non-GAAP financial financial contains website. additional under EBITDA, net should is

available on recorded, section webcast will Investor for website. call is Relations and a This replay being of our our be

CEO, will Heiser. now over the Russ to our turn call I

Harold Heiser

year. quarter results quarter are, income million morning, bit the was same up same Good last the the net same than $X you reported million year. $XX last the prior better Thank increased we in that over over whole, EBITDA on Carlos. versus quarter QX Yesterday, last joining quarter everyone. for And us. financial a versus year. Thanks,

in difficult continuing to our job experienced nonprime balanced economy inflation to by that significantly loss operating a environment hasn't still sector. an continue but base in meaningful We be customer the impact with

Out we of portfolio of an monitoring in to and us. very caution, our payment in does start our to from continue and customer abundance to selective as cushion be provide active move underwriting significant away environment and managing behavior the are

a any certain environment, While be times, or historically, whether loan of positioned payments in deterioration resumption from to of in recessionary our we resilience student face customers continued want economy. demonstrated for have negative the shifts, the

the has our engine marketplace continued to growth several months, the and direction last primary evolve FlexShopper into as leaning direct-to-consumer its are forward. going we over

site, but last over not of focuses We profit goods. the generating to of to on X from method also that quarters merchandising a enable website site generating have a diligently on our utilizing leases. leases a company transitioning from margin fulsome worked e-commerce evolve as more to only more to our the efforts retailer on capturing solely We're our

returns. the while Furthermore, maintaining recognize a we to our asset that initiatives all conversion opportunities to site into by are risk-based customers lease-to-own offer enabling on single have worked our increase not of or pricing attractive same level fit

on e-commerce more idea channels, providing purchase that traditional we're of broader other to not transact current have with selection that to consumers exploring financing partnerships platforms. the liquidity further, even Setting even options do

options. beyond that historical marketplace itself credit our positioning as is FlexShopper lease-to-own of an assortment larger consumers will payment of with options a universe the for extend challenge

that are expected will tools focused allow addition, These marketing In leverage on product verticals. of costs. customers acquisition reach micro provide utilizing AI create main our to site at to us we're and sites monetize generative significant versions decreased smaller to

greater will of marketplace With its place, in control FlexShopper changes these believe our we in all growth of opportunities. have

it most First, allows spend where is us to marketing it efficient. direct

constrained return verticals online where and on to Our achieving acquisition is like by foot be other appropriate a and the only capital, costs we upon dependent store. marketing spend traffic might

limits Second, online direct be our the us relationships. we that occur continuing benchmark to enterprise allows to achieving rates asset focused level or with without hit doesn't approval This mean trying customers. grow enterprise brick-and-mortar the it and on return ideal to can aren't spending as

a for marketplace and and are these higher fact, rates customers the our conversion providing enterprise approval rates value lot among In our developed permitting large customers. of more technologies to

line. and to new grow at our sure enterprise want be by will store the continues final enterprise Our X,XXX-plus that in the in on bottom of least experience we terms chase doors result originations just wins, to We making contract XX%. don't that focused in stages leasing stay originations, thoughtful are of instead we another big or

is storefront late momentum. year lending the that gaining we acquired business last Finally,

have past, our by segments we nonprime is develop the As state-licensed goal lease-to-own with and reach mentioned allow a can providers. the of other that large to framework in to combination customer liquidity us complemented products,

exclusive to providing consumers, a wider the retailers options of arrangements and we that assortment payment widest by providers. believe of to and we can continue and grow assortment have leverage We products service the with

expect the a to the as year, originations we early growth and our of marketplace see partners. forward FlexShopper enterprise to result new in improvements continued holiday Looking next season and in

gross merchandising of increase in focus level for our the decline, enhance will in on continue will doubtful performance, in declines products, The in a with accounts margin net merchandise. our depreciation All should percentage this resulting profit of term. lease resulting allowance a on near the leap forward as the Combined relative asset gross to billings continued the efforts over revenue.

management that in are forward. the forward The our inflection demonstrating team to progress believes point and at we at business FlexShopper look an going

I that, our COO, call John turn will With the to over Davis.

John Davis

Russ. Thanks,

lease both and quality loan segments. We continue of with our the be pleased to asset

the high inflationary transition a mentioned stimulus out As environment previous we calls, of for difficult to was have customers. the in coming our pandemic from government

During and within opportunities, targeted smaller enterprise towards improving continuing efforts our retail distribution via marketplace to margins this time, our develop channel manufacturer lease on debt levels partnership our partnerships. channel, were bad distributor and lease expand

to of continue achieve the our am state pleased of with profitable growth. these through activities sustainable, all to results Revolution I lending develop setting platform. FlexShopper business our model finance We to up

Lease July trending fundings the XXXX. October note was year-over-year, were the of versus XXXX of as of XX% fundings dollar the the had versus funding and to important which were first lease point also year-over-year, lease higher of monthly middle of XXXX. X% higher year-over-year since that higher highest An comp of XXXX. September QX QX is positive all fundings lease month. is also higher were November lower

$X.X million versus lease and were last lower year-over-year XX% Gross fees lower or year. billings

profitability this impairment factor lease. include has As asset lag doubtful in as the to of fees, The fundings the gross our billings a line for lease reminder, of a market. the recognized lease business and merchandise key this lease accounts, revenue depreciation item is and term of over provision and

we While we based components, improvements look been initiatives at these we have seeing on undertaking. are the

million million which million was was bad XXXX an of year-over-year. The $X.X in $XX.X versus expense of debt QX XXXX, in QX $XX.X of provision improvement for

with same versus occur or a of XX.X% a basis the including not underwriting As year, sales well last billings, year quarter was gross year-over-year delinquent year. and our which percentage is to QX tightening some XXX our strategies. this enhancements point credit XX.X% as last did of This for result a fraud even of risk lease receivables improvement and as capabilities continued XXXX improvement

past-due our leadership upgraded recently on our as have We agencies operational collection as team adding portfolios. new to work well

We way. expect leadership future a that keeping capabilities and new liquidations, improvement will expense to trending this due will provide favorable in result in this continued past in which support

of was versus merchandise or in $X QX of million $XX.X -- impairment QX lease lower of and expense Depreciation from X% $XX.X million XXXX million XXXX year-over-year.

for and XXXX billings, last lease lease a same our spread margin rollout which, product improvement was quarter life gross XXX QX is result a over the similar initiatives the the portfolio the XX.X% way into billing of of is percentage retail the in lease. a of year-over-year. gross fees, point to XX.X% or basis This out the year of versus As

selection as on wants we to the customers' margin evaluating what of that products our offer needs product match constantly as gross improve continue to are sell. to and well We we

Additionally, technology we add to flexibility already significant adding company. investing scalability is which platform initiative, our to in value important are and to the this

Marketing in of year-over-year. costs million QX million QX were $X.X of versus in XXXX lower XXXX $XXX,XXX $X.X or

XX% Importantly, funding total was XX% marketing year-over-year, year-over-year. lower spend was only lower while

to our volume. origination in between efficiency in the more spend year-over-year seeing marketing efforts last year difference comparison are with and We

conversion and our continuing our our price content are to better targeting capabilities and way products we lease marketplace for marketing testing efficiency partners costs revenue AI well of by this as new personalization, on on creation testing risk. adding and increase as optimize and to new traffic generative improve And both to and

the for XXXX million $X year-over-year. $X.X components lease of QX million revenue, year goods or for better million was same last of these $X.X marketing all lease up, for provision Putting versus the loss, quarter less and depreciation

With business levels, now the underlying components our to revenue. favorable increase goal of lease our at is

if As I continues, in October mentioned which eventually that and higher line September result earlier, lease were top trend revenue. funding up lease year-over-year, levels will, in

decline lease either our introducing with revenue the funding subsequent financing allow customers do product margin partner and for also payment that for will are new retail or that pricing convert increased we that on customers We our partners option marketplace approves. from not

cannibalization expect profile We are payment from minimize origination as partner a controlled lease standpoint credit our to on little our offerings overlap.

XX% quarter. enterprise our count and On smaller our approximately partner lease increased had that last channel, partnership point-of-sale from door lease available product the

this different into potential discussion. that with currently expect will XXXX XXXX QX of in of new partners We continue into stages and

We provide, also revenue growth these only about offerings. advantage that may not of take that our partnerships for the are for the marketplace this direct channel, but increased customers excited

compares Revolution year $XX.X On our last participation in acquired which loan of through through $X.X and we finance with our Revolution, originations million lending $XX.X in QX our year. in QX last program program. This our we no of in platform through front, million to QX participation million loan originated

XXX As Liberty of loans stores Tax locations using own a virtual within locations within reminder, licenses. physical consumer we approximately state consisting issued and lending storefronts,

Revolution year-over-year We platform overall originations year this within invested growth and related accelerate and a to Similar the XXXX. growth Revolution our a we've within lease in with are to lending leadership incremental seeing into increase of in into X% QX expect last and from XX% in increase to operations, funding. quarter

our to lease our P&L. top and we loan an partners, As and technology we the our in due favorable in million resulted capabilities invest in achieve the and future change has growth cash within mentioned which saw that the due simultaneously To distribution value operations and collections end, of we loan $X.X expect our participation receivables agency in portfolio a to and our earlier, net to higher bank increase investments I economics portfolio. that partnerships servicing positive in expected leadership from team, line flows fair

these and with our investments do. what strategy very continue personally about we I'm technology, excited people, As business in can

With the that, let back operator over the to turn me for any questions. call

Operator

Wainwright. the H.C. first Our line Instructions] Scott question [Operator with Buck of comes from

Scott Buck

rollout, the before on is First is momentum it can some for of relationships mean, I the kind to there? us XX months one, start remind mature? X cadence enterprise typical door you what really to see you those or months

Harold Heiser

wish as having for these standard I was cadence enterprises. as simple it all a of

the was fully We as it and while. locations, for And we was one months. and just X fuller paused out then rolled XXX started a it just have about a pilot a and for then that took a little recent then summer rollout into

months So be that X months on was so. recent This or probably earlier finish. XX was from it mentioned probably, that start most call I process will one entire the to

fixed really have a doesn't it So pattern.

in add been, it area look than of stores it hope for expand the sort X,XXX years, opportunities acquisition the little focus the approach better the on to -- X,XXX we've achieve the to that. of past of let's a has looks right of to think can we've year. continue resources growth to we I cost, type at where a for right couple to bit And and like done

Scott Buck

you can are Or seeing space? on one, environment? aggressively? on second us your the an And update Anybody encroaching Russ. act generally give helpful, That's Great. competitive more anybody you

Harold Heiser

ended the bank there. What seen as actually have more banks sectors programs pullback have is some pullback those We've we've in bit programs. become a sustain couple as seen little a a difficult partnership to more of our

no it new of right verticals. congested the all about but than more think choosing are some I others, Obviously, is entrants.

Scott Buck

Great. me. And one for just last then

originations? If kind an we we've you bump, update where on fourth quarter historically could with guess, in in of are give us I versus the a some seasonal seen what

Harold Heiser

let one. I'll take John Sure. this

John Davis

Yes.

early. I our positive seeing are seeing both well pleased to closer on this And comps we're enterprise what earlier actually September We and as with marketplace. period. side the mentioned remarks, a in and are getting as increase had pretty as we we're our was those my closer prepared comp, holiday

holiday the festive Black of Monday Cyber seen then Our to from accelerates into mid-December. past trend period are we've into But and coming in favorable the Friday compare years. what we if peaking period, really probably couple the we

Scott Buck

added the appreciate and quarter. color, That's guys. you congrats Great. I again on the helpful. Thank

Operator

comes question with Diana next the Group. Our from of Michael line Maxim

Michael Diana

Actually, I the going to was ask two topics. same about

let me a So question. little just different ask

correctly So rollout, by think saying enterprise this your that XX%? on should I the you increase store lease in X,XXX hear you did volume

Harold Heiser

lease volume -- the well, XX%. Sure. enterprise And by

Michael Diana

holiday right? the right? So that season fully Okay. coming program rolled well, Right. to won't and be be on in should months, but about here, running that's it Is you And fully said I impact out. that X -- it up guess you expect just

Harold Heiser

That's correct. you would retailer season. not the the partners the holiday out -- fully first rolled our of end should quarter. a as expect always It's But priorities before the it be imagine, the of lot can I during have rollout.

Michael Diana

the my be holiday because typical quarter doing then big a the less obviously expect next off? everything in the fourth to is, first 'XX evidence relates of to Okay. Do so that which you're And of been fall quarter. may of Or downturn? big quarter you've a lately, it question, expecting you

John Davis

now, that our if we're to will as comes higher of This the Roughly, drop But year-over-year see is QX always right seeing XXXX. downtick. typically you'll XX% QX. a volume a we're John. them seasonal you versus year. from Yes, expecting continue trends see But QX from QX origination every

season. important So obviously, very a it's

store, enterprise thing bringing But sale dependent. these that online, tire about, rollouts year-round a And for that at are we're a look seasonally is the you us. good if not those especially as

out smooth overall lease us help our origination should that So volume.

Operator

management the call back remarks. the reached have over the for session. question-and-answer we And of to end turn now I'll closing

Harold Heiser

past dialing everyone hard holiday great thank want appreciate catching we their a all forward and We season all in and up our results to with to the full to shortly. quarter this you this team over morning. We for year and report the generated look work results

Operator

today's concludes may you and disconnect lines time. Thank this your And for this you your participation. at conference,

FlexShopper (FPAY) 15 Nov 232023 Q3 Earnings call transcript