FPAY - Earnings call transcript Q2 2024

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Operator

Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the FlexShopper Second Quarter Financial Results Conference Call. [Operator Instructions] Thank you.

I would now like to turn the conference over to Carlos Sanchez, Investor Relations.

begin. may You

Carlos Sanchez

Chief good Financial and Russ to Second Davis, FlexShopper's our Thank Conference morning. Call. XXXX our John and Results Executive are Officer. With Quarter Chief you, Officer; Welcome Operating me Heiser, today

we'll We today's referencing call. yesterday, during be issued release an earnings which

Relations Our earnings Investor filings our website. found on can release of be and our SEC section

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

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

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

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

Russ our will I CEO, being is a over and of now on replay call This our to will turn Investors our section Heiser. call be available the website. webcast for recorded,

Harold Heiser

we'll today's our us I'll and discuss JD second will Carlos. you, over review are on the before take questions. this to financial turn call then start Thanks we call quarter update Thank for in with growth to we morning's the operations results performance. to detail more an and your call our strategies everyone joining who pursuing,

strong report revenues with growth that increasing FlexShopper by XX%. I'm year-over-year produced a pleased quarter over of to total

profitability is as addition, XX% EBITDA almost significantly expansion XXXX second gross $XXX,XXX level XXXX a the increased In Adjusted the years. in from quarter increased second EBITDA $X experienced we highest adjusted the quarter. in million in This to second quarter in profit. approximately X

performance growth we strategies reflects of to demonstrates we create drive platform It long-term also provide and retail created differentiated and for our lasting to the BXB pursuing value our Overall, partners. our customers success the second shareholders. the the quarter have are profitable XXXX and we to value

in our to a full our consists payment which strategies lease-to-own suite range financing and have expand e-commerce of products We financing a growing have marketplace. Today, within business of of solutions pursued a offerings, platform resulted with consumer options. retail options, loan unsecured our traditional traditional digital

our website through well retailers with segments. we brick-and-mortar e-commerce payment leading as electronics and pawn automotive, directly solutions the to through addition, diverse as In and customers offer partnerships in

to are that I'd like components created marketplace review There have we today. the important several to

unique we of to credit with applications network our routes The funding partnered flexible partners to our us our customers' technology multiple engages customer have any partners. solutions a have payment with that or and solution merchant seamlessly directly profile. created We technology to provide one for payment find through through

to proactively but our create and through it Not tech-enabled our convenient made FlexShopper application fast year have the a support marketing initiatives. risk only account capabilities. value internal significant digital our our partners and to manage the customers resources, effectiveness to our does over of We platform and process, upgrading collections investments past systems underwriting, also enhance servicing allows for

added capabilities FlexShopper.com resonating fit assortment their receive options allow to with available credit This website market marketplace credit on that recently profile. serve consumers the have payment FlexShopper.com. expanded for our new on have this, customers sale with and our regardless is of customers more product we broadens that score. broadened to We In conjunction addressable their

ended launching XXXX, steady for XXXX. $XXX,XXX March June first retail to quarter, the capabilities these seen ended $X.X Since increased and during million have the XX, quarter from we XXXX the growth, for revenue quarter XX,

its the our traffic addition, expand marketing to revenue drive have monthly as we and conversion. seen retail since to pursue consistent opportunities growth spend capabilities in launch, we improve In confidence increases, in our

we recent our retail FlexShopper on to marketplace, coming the revenue Based and the over increasing grow profit are performance gross expect strategies to and continue pursuing quarters. the we

As I and earlier, of add gain our to mentioned we customer sites categories continue the briefly spend. more also to SKUs a product to share larger FlexShopper

watches. personal and We sunglasses continue such supported we luxury to launched expand LTL handbags, in furniture and as freight have the by categories shipping, category,

In micro the addition, recently have focused greater in site. than single to a many the sites marketplace FlexShopper.com with we additional a on reach site electronics have launched works

inventory It's on websites. offered note our any we important that to do of not take products

allows and a We map, relationships marketing products inventory risks the to capital We competitive to reducing growth. capital advantage our business. provides support believe strategic our who and of this developed lease to turn, loan us in with invest technology have drop-ship us distributors and by This, programs and directly manufacturers customers. requirements with eliminating road

opportunity with business. with direct-to-consumer continue believe offerings, incremental we a add capabilities In regional technology financing to our national addition partnerships to and seamless to retail solutions and We retailers. their retail to add our sales offer partners

quarter. retail by the has since end of of end the XXXX, the of QX increased number a second storefronts by result, the XXX As

XXX we incremental half second expect in the Additionally, will storefronts retail XXXX. launch of

we can their pipeline other potential of payment active similar being you are new that discussed lending As partnerships see, providers and a enterprise-level robust very have as tightened requirements.

and versus fundings FlexShopper up as as the spend same ramp investments quarter you XXXX, our was up see total XX% financials, well in in strategic retail reflecting As can grow marketing revenue. marketing to

Total approvals year. the funding to the prospecting this our approvals in and of resulted retail Marketing use period AI broader partner strategies product credit-tier customer versus lease last expansion from in has category-specific include underway marketing and mix credit outbound total a targeting to attract quarter funding lease expanding this activity door sites, marketplace. micro doubling same types of

significant growth review final objective The customer conversion. I'd like today a is to to opportunity increase

rate This approval be by We're will conversion, been part solutions higher of customers. with believe our Over months, significantly multiple provides to visitors. X% the of revenue, website expansion us our to XX large especially unique conversion our which past grow driven has the to in pursuing strategies enhance opportunity with our under levels. payment year-over-year funding we available

to to retail the been face detail, from environment. to consumer optimizing in portfolio significant has returns. This at our level of fraud the This has enhancements consumer headwinds our the our versus non-prime to more in to engagements. focused order grow Looking a continues asset the increased required pricing consumer on cost balance enhancements macroeconomic lending the algorithms environment that produces risk-based to correct

discuss lenders focus to standards. stable created tighten will to in a detail, has gain believe portfolio risk and allow and we healthy management as market pricing us on JD As other and share our providers will that LTO prudent continue more

solutions of efforts capabilities, protected to increased by patents the can profitability. market-leading producing is are payment best-in-class patents. past and see, by which supported and growth over As our FlexShopper FlexShopper pending year transform you technology levels multiple strong and

unique, committed we and have headed. We shareholders. by addition, FlexShopper defensible we strong In experienced for are believe team direction a is asset-light associates of have customers, a created value and our that model. creating to excited business I'm partners and the

I'll overview, hand to John the to quarter company's dive Davis second this call With into over the performance.

John Davis

Thanks, Russ.

of on key items. business long-term our stated for calls, I've our prior lease As plan X consists

in asset inflation periods to paying where overall improve more of quality First, consumer removal the stimulus a time higher reduced performance. we caused price savings from want government and challenging deterioration

roll out we strategy originations Second, we to we to margin product these sell want take where them. we online realized And in the marketplace. FlexShopper.com continue want third, and revenue retail on our products quality our grow to

of we as profitability quarter against making asset the XX.X% percentage demonstrates X,XXX reduction revenue QX the doubtful strong year-over-year. progress a On A point significant a strategies. improvement and quality, fees growth a for provision is basis executing XX.X% of XXXX, and which gross accounts of over XX.X% QX to compares This or in in in improvement XXXX. was are lease second these billings

asset Improved period the same $X.X million a benefit year. last second in quality to compared drove quarter the provision

provision year-over-year versus which level should macroeconomic New same originations its any unforeseen favorable favorability, continue the suggests early short-term payment to continue last demonstrate period performance the impacts. absent year,

we retail realize online strategy, product enabled by our introducing to business, Regarding of margin the benefits to our FlexShopper.com marketplace. our continue

was benefit and percentage a billings to of the XXXX product to XX.X% year-over-year of in merchandise lease impairment $XXX,XXX lease. over improve and lease by of XX.X% revenue continues goods the that is lease margin The as on recognized and year. sold and depreciation in depreciation Our in cost the same term of compared fees impairment of last gross was quarter QX costs driven

significant This and QX of that margin in XX% gross to The are in retail XX% the I gross growth report profit a capture am in our pleased result quarter we to and gross pursuing XXXX. revenue XX% expanded addition, second is direct produced In profit margin. a margin QX year-over-year. to XXXX gross strategies compared

that transact marketplace. for solutions credit their fits It to profile another marketplace what can now options offer our We offer on they multiple on obtain payment an provider. the credit provides from with more than customers

sales panel to attract that should subsequently and range We of expand on increase payment of this are interest FlexShopper.com. to customers providers broader working a

year, credit working to We season, of the QX this on stack. prime issuer credit are in on in adding partners planning specific large multiple our segments a time and fill later are holiday for

show positive the and second quarter levels Our continues performance during improving profitability. to of trends

drive to As while quality. asset the we continue to opportunities strategically maintaining result, growth revenue in invest robust a

channel. space, the is year-over-year in driven dollars partnership is in which again our within by We well growth and QX, rollout expectations. FlexShopper as as this lease activity point-of-sale ahead within running our a new origination marketplace grew in partnership marketplace tire of expanded QX launched both our

this new and origination that expect a growing growth over tailwind have of We coming additional pipeline the partnerships for an is quarters. potential

Total approvals $XX.X higher million at QX million of were $XX.X XXXX. XXXX XXX.X% year-over-year QX funding in lease in versus

higher half funding lease XX.X% year-over-year. were approvals First

XX% profitability revenue rate loan year-over-year declined business. this higher state-licensed funding So in approvals accelerated Net of risk as the focus QX in business and we lease on our versus managing QX. for growth

we seen increased We which an our APR purchasing Additionally, this higher net to business. collections loan XXX% from partner. last resulted partner revenue in partnership in our partner originating into chose bank better-than-expected stopped on interest loan high loans new portfolio, fair the year since our portfolio bank assumption value from exit have bank the

retail our partners bank are our customers. to a However, partner list pursuing back we of and this serve actively bring to options new to better

activities expanded combined these EBITDA, from The in in million in QX $XXX,XXX of of which adjusted material results $X.X of increase produced XXXX. QX to a XXXX

revenue, a margin pursuing, XX.X% of period our As the We strategies same EBITDA adjusted X.X% of be we to XXXX. favorable with EBITDA was asset will the margin of compared for total believe quality, our percentage are the last adjusted supportive year. remainder combined for

Our and remains is loan plan we expand to favorable business with online to are the lease which place, our us. in opportunity strategic in front on that grow that continue is of seeing performance retail and asset

stabilizing remain interest job as within slowdown, but continue will growth see potential signs consumer economic unemployment to prices. of continued vigilant We and customer our the channels, to low future in as any regards shopping rates well in we

have. team our to any for I XXXX hard and to our thank operator me in that, over what call look want turn the and beyond. let to can that forward With questions achieve and we the for may results we work

Operator

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

Scott Buck

funding then give And I total actual think color on new if what the from total why Can little lease providing. approvals the metric bit were possible, you're just a fundings a in change is of you quarter? funding?

Harold Heiser

Sure, Scott.

to I in of out second and approvals time, So be and fundings. lot compile that our make of customers of a that when over was using terms it think lot give decide consumers of we're approvals me are putting those just immediately, it -- using essentially it's a a getting but it given not convert. using switching important clear actual to a matter then there to But maybe then metric, it the

Scott Buck

and And is makes to with what's you an kind sites, sense, where on with rollouts? going on That possible are micro Russ. of process the that it Okay. update get

John Davis

Sure. This is John.

And and the are site, our micro categories accessing we holiday the some various invested catalogs. our end focuses live which season. another year, in by fulfillment So this before technology allows X of leverage our back-end plan product the and on us gaming with And first in on that launch electronics. to micro is infrastructure we've to different sites

with more to trying better we're focused marketing to what which efficiency, comes better information category that be more it marketplace. might generally, online more the So us in to to able gives be the is to customers to specific a category searching for micro-site be specific do generic relevance and then versus when more strategy our a a content, bit bit provide FlexShopper

Scott Buck

Great. That's And for me. helpful, one JD. last then

With the locations for can what you retail to actually second of mature the XXX potential us half a meaningful location volume? for year, new start new set takes or it generating remind typically this

John Davis

local Then up. can the all those then have a models. locations comes get of a to it business, be couple training we our When getting of that about Yes. of such days operators for to which set online, it it the couple it's is different technology

can training virtual stores. we push have out to that We

We to of operator to do and then of the that. that on go And the team. that team the dependent between really store able a acceptance partnership our is really, be have and out will then new kind local support program visits

easy same-store partner can program a provides space generating And we and been our on the creates, customer originations sale of partner the retail underserved comments serves tire our And as leadership side statement, had, which prepared team an very has the credit because comps. that has value we see that's in launched generating this mentioned partners the the fairly in and with in that way engaged just growth. exceeded that expectations I the

for really it so kind side, partners' down other of the the on depends the So on customizable needs. our gotten it's we've leadership process but really that

Harold Heiser

XX that lease. a store good through tail think last a very it, XQ end they stores on the metric call, we that XQ, think I had early completed of at discussed that a active approximately days, within the XXX rate, the launched to XX% were meaning

So as it. pushes how and JD with use their to engages product mentioned, management the it's store employees really about

last to But -- value years, the consumers to people X.X more and to it as we it engagement norms. seems itself. proposition historical the like the And we continue to over with retailer obviously more we continue and see continue, their understand see outperforming just

Scott Buck

And back-end I'm second cadence I year the is think for to mean weighted? Or trying half the or is I figure contribution guess, are Okay. the they this half second more what XXXX? of how the it in just rollout? I of out about

Harold Heiser

much No, of way I think through think the don't best retailers to to say, the Year. it most do is New Halloween want we'll the, between to that

So think October. middle of about the all of of them before kind

Operator

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

Michael Diana

your Russ, so metric, my lease approvals. new was question about also main funding

customers which your the is been very good. your using engage? to approvals actually So explanation, What's your in I experience heard

Harold Heiser

of takes when days. Michael, It's view a understand as Memorial, lot be the difficult holidays a take a Labor place. it, demand the -- the And engagement it's and there's place. involved of to when seasonality backlog, of lot to exactly it tend end-of-the-year will it in in we back-to-school, Obviously, terms

to give just there soliciting this It's consistently feel people But over as transact. obviously, approvals. as to handing end tires When closer the low sets, like life and electronics of important and it more based think tend that customers, what to and need-to-have upon up so to they we understand seeing have are much really items their XX%. we time, comes XX%. we marker others, it as But more when up a -- customer consumer to higher dip we out take to rate, as product it's can out cycle new

Michael Diana

approval? the what's And of the time Right. period

Harold Heiser

short of with been that over days, few has some of XX some our and changes, but the of now, out going underwriting years. historically, not understanding that typically the quite were that experienced is downs extending environment as the consumer ups we're this through It in past

Michael Diana

the right do to half the year have XXX and you that half add in I the partner And on Okay. your maybe of locations, second it added about double XXX retail count? another you or first the then expect in

Harold Heiser

course. of Sure,

was the that slated the XXX to that is the sort in roll half year of end low the are the There it from June. XQ, rolled that out additional of XQ. second the for of think expectations XXX end was then beginning of of rollout I was out. the XXX And

Michael Diana

Okay. the XXX? And remind me, will what be the total with locations

Harold Heiser

I think end just total with short the up XXX, we'll X,XXX. close of to

Michael Diana

Great. Okay.

Okay.

the have than will past in XXXX? like in you that or So more in added past, added XX% the

Harold Heiser

Correct.

Operator

There questions. are over will back no Heiser, Russ for closing more CEO, now to turn I remarks. conference the

Harold Heiser

here to our in past look at which want all FlexShopper We over thank another to is work team their I we quarter, the appreciate results, everyone by the dialing morning. great this evident forward for quarter. hard and

Operator

joining. today's all for Ladies and that gentlemen, Thank you call. concludes

You may now disconnect.

FlexShopper (FPAY) 7 Aug 242024 Q2 Earnings call transcript