FlexShopper, Inc. Reports 2020 Third Quarter Financial Results; Net Revenues Up 5.0% to $23.4 million; Originations Ramped Up Into Quarter End
BOCA RATON, Fla., Nov. 09, 2020 (GLOBE NEWSWIRE) — FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and LTO payment solution provider, today announced its financial results for the quarter ended September 30, 2020, highlighted by sharp growth in originations in the last month of the quarter.
Results for Quarter Ended September 30, 2020 vs. Quarter Ended September 30, 2019:Net lease revenues and fees increased 5.0% to $23.4 million from $22.3 millionFlexShopper originated 47,317 gross leases, up 29.5% from 36,531Gross lease originations increased $5.6 million, or 32.8%, to $22.7 million from $17.1 millionThe average origination value increased by 2.5%, to $480 from $468Net income of $289 thousand compared with net income of $1.4 millionNet loss attributable to common stockholders of $(0.3) million, or $(0.02) per diluted share, compared net income of $0.8 million, or $0.04 per diluted shareGross profit increased 8.4% to $8.9 million from $8.2 millionAdjusted EBITDA1 decreased to $2.1 million compared to $3.2 millionResults for Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019:Net lease revenues and fees increased 9.4% to $69.9 million from $63.9 millionFlexShopper originated 117,294 gross leases, up 22.5% from 95,731Gross lease originations increased $10.5 million, or 23.5%, to $55.1 million from $44.6 millionThe average origination value increased to $470 from $466Net income of $79 thousand compared with net income of $1.6 millionNet loss attributable to common stockholders, inclusive of deemed dividend expense of $0.7 million in Q1, of $(2.4) million, or $(0.12) per diluted share, compared to $(0.2) million, or $(0.01) per diluted shareGross profit increased 15.5% to $24.3 million from $21 millionAdjusted EBITDA1 decreased to $6.2 million from $7.3 million¹Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.
Third Quarter 2020 Highlights and Recent DevelopmentsRate of origination growth accelerated through the quarter. FlexShopper recorded growth in gross lease originations of 32.8% in the third quarter with month of September originations representing the largest non-holiday month of originations in the Company’s history. The strong activity experienced in September followed market testing in August and into early September that was undertaken in order to confirm payment activity would conform to expectations.Payments activity continues to be firm. Continuing the trend cited by the Company on its Q2 earnings call, customer payment activity has remained firm. Additionally, market testing performed by the company beginning late in the second quarter and continuing through mid-third quarter demonstrated a continuation of this trend.B-to-B lease originations in September set a record high. The addition of new retail partners, the rebounding from COVID and optimizing of existing retail relationships made September our largest B-to-B lease origination month since inception. We are also successfully broadening our retail categories across tires, furniture and electronics.Investments in marketing during the third quarter and continuing in the fourth quarter. Following market testing noted earlier, FlexShopper began ramping up its digital marketing during the third quarter and expects to continue doing so in the fourth quarter. This marketing program began to yield results as originations accelerated into quarter-end and have continued into the fourth quarter.Enhanced underwriting methodologies are expected to drive improved returns. As noted on prior investor calls, the company has emphasized a focus on Return on Investment/Return on Capital-oriented management. The company has worked to bolster its underwriting algorithms which, coupled with renewed investment in marketing, are expected to produce revenue growth and further improvements in profitability.Rich House, CEO, stated, “We have discussed previously our methodical approach to marketing and underwriting in response to the COVID-impacted landscape. In particular, we thought it prudent to conduct market testing before pursuing significant origination growth in the B-to-C channel. I am pleased to report that our testing yielded the results we desired and, as a result, we sharply increased our digital marketing efforts during the third quarter for the B-to-C segment. That push resulted in significant growth in originations in September, with the month’s originations of 13,575 leases, representing the best non-holiday month for B-to-C originations in the Company’s history.”
Mr. House continued, “Our historical retail partners are still contending with physical store activity that is roughly 20% below pre-COVID levels and that impacts the volume of originations we have seen in our B-to-B channel. At the same time, our new partners, that we mentioned on the last call, enabled September to be the largest B-to-B channel origination month in the Company’s history. Although significant, virus-driven macro uncertainty exists, we believe our business is poised for growth.”Additionally, Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition of this measure under “Non-GAAP Measures.”Conference Call Details
Date: Tuesday, November 10, 2020
Time: 9:00 a.m. Eastern TimeParticipant Dial-In Numbers:
Domestic callers: (877) 407-3944
International callers: (412) 902-0038Access by WebcastThe call will also be simultaneously webcast over the Internet via the “Investor” section of the Company’s website at www.flexshopper.com or by clicking on the conference call link:
https://78449.themediaframe.com/dataconf/productusers/fpay/mediaframe/41428/indexl.html. An audio replay of the call will be archived on the Company’s website.FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)FLEXSHOPPER, INC.
CONSOLIDATED BALANCE SHEETSFLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months ended September 30, 2020 and 2019
(unaudited)Non-GAAP MeasuresWe regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.Adjusted EBITDA represents net income before interest, stock-based compensation, taxes, depreciation (other than depreciation of leased inventory), amortization, and one-time or non-recurring items. We believe that Adjusted EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes.Key performance metrics for the three and nine months ended September 30, 2020 and 2019 were as follows:
The Company refers to Adjusted EBITDA in the above table as the Company uses this measure to evaluate operating performance and to make strategic decisions about the Company. Management believes that Adjusted EBITDA provides relevant and useful information which is widely used by analysts, investors and competitors in its industry in assessing performance.About FlexShopperFlexShopper, LLC, a wholly owned subsidiary of FlexShopper, Inc. (FPAY), is a financial and technology company that provides brand name electronics, home furnishings and other durable goods to consumers on a lease-to-own (LTO) basis through its e-commerce marketplace (www.FlexShopper.com) as well as its patented and patent pending systems. FlexShopper also provides LTO technology platforms to retailers and e-retailers to facilitate transactions with consumers that want to acquire their products, but do not have sufficient cash or credit. FlexShopper approves consumers utilizing its proprietary consumer screening model, collects from consumers under an LTO contract and funds the LTO transactions by paying merchants for the goods.Forward-Looking StatementsAll statements in this release that are not based on historical fact are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include the Company’s financial guidance for fiscal year 2019. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “seek,” “intend,” “plan,” “goal,” “estimate,” “anticipate,” or other comparable terms. Examples of forward-looking statements include, among others, statements we make regarding expectations of lease originations during the holiday season, the expansion of our lease-to-own program; expectations concerning our partnerships with retail partners; investments in, and the success of, our underwriting technology and risk analytics platform; our ability to collect payments due from customers; expected future operating results and; expectations concerning our business strategy. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including, among others, the following: our limited operating history, limited cash and history of losses; our ability to obtain adequate financing to fund our business operations in the future; the failure to successfully manage and grow our FlexShopper.com e-commerce platform; our ability to maintain compliance with financial covenants under our credit agreement; our dependence on the success of our third-party retail partners and our continued relationships with them; our compliance with various federal, state and local laws and regulations, including those related to consumer protection; the failure to protect the integrity and security of customer and employee information; and the other risks and uncertainties described in the Risk Factors and in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q. The forward-looking statements made in this release speak only as of the date of this release, and FlexShopper assumes no obligation to update any such forward-looking statements to reflect actual results or changes in expectations, except as otherwise required by law.Contact:Jeremy Hellman
Vice President
The Equity Group
212-836-9626
jhellman@equityny.comFlexShopper, Inc.
Investor Relations
ir@flexshopper.comFlexShopper, Inc.
