FlexShopper, Inc. Reports Third Quarter 2023 Financial Results
15 November 2023 - 8:30AM
FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national
online lease-to-own (“LTO”) retailer and payment solution provider
for underserved consumers, today announced its financial results
for the quarter ended September 30, 2023.
Results for Quarter Ended September 30,
2023, vs. Quarter Ended September 30, 2022:
- Total fundings increased 10.7% to $28.9 million from $26.1
million consisting of gross lease originations decreasing 10.8%
from $15.7 to $14.0 million, loan participations decreasing 99.3%
from $10.4 million to $77 thousand, and loan originations
increasing from $0 to $14.8 million
- Total net lease and loan revenues and fees increased 20.3% to
$31.4 million from $26.1 million
- Gross profit increased 164.1% to $16.9 million from $6.4
million
- Adjusted EBITDA1 increased 389.7 to $8.4 million compared to
($2.9) million
- Net income of 940 thousand compared with net loss of $6.3
million
- Net loss attributable to common stockholders of $(129)
thousand, or $(0.01) per diluted share, compared to net loss
attributable to common stockholders of ($6.9) million, or ($0.32)
per diluted share
Results for Nine Months Ended September
30, 2023, vs. Nine Months Ended September 30, 2022:
- Total fundings increased 6.0% to $85.0 million from $80.2
million consisting of gross lease originations decreasing 19.3%
from $51.9 million to $41.9 million, loan participations decreased
98.6% from $28.3 million to $397 thousand, and loan originations
increasing from $0 to $42.7 million
- Total net lease and loan revenues and fees decreased 5.3% to
$86.7 million from $91.6 million
- Gross profit increased 16.8% to $38.9 million from $33.3
million
- Adjusted EBITDA1 increased 344.1% to $15.1 million compared to
$3.4 million
- Net loss of $4.6 million compared with net income of $5.7
million
- Net loss attributable to common stockholders of $7.6 million,
or $(0.35) per diluted share, compared to net income attributable
to common stockholders of $3.9 million, or $0.17 per diluted
share
1 Adjusted EBITDA is a non-GAAP financial measure. Refer to
the definition and reconciliation of this measure under “Non-GAAP
Measures”.
Conference Call and Webcast Details
Conference call
Date: Wednesday November 15, 2023Time: 8:00 a.m. Eastern
TimeParticipant Dial-In Numbers:
Domestic callers: (877) 407-2988International callers: +1 (201)
389-0923
Webcast:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=As6vTenB
The 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://hd.choruscall.com/InComm/?callme=true&passcode=13730035&h=true&info=company&r=true&B=6
An audio replay of the call will be archived on the Company’s
website.
FLEXSHOPPER,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited)
|
|
For the three months endedSeptember
30, |
|
|
For the nine months endedSeptember
30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Lease revenues and fees, net |
|
$ |
21,082,199 |
|
|
$ |
24,512,086 |
|
|
$ |
68,703,201 |
|
|
$ |
82,746,874 |
|
Loan revenues and fees, net of
changes in fair value |
|
|
10,304,247 |
|
|
|
1,629,365 |
|
|
|
18,001,057 |
|
|
|
8,897,964 |
|
Total revenues |
|
|
31,386,446 |
|
|
|
26,141,451 |
|
|
|
86,704,258 |
|
|
|
91,644,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and impairment of
lease merchandise |
|
|
13,061,958 |
|
|
|
18,746,897 |
|
|
|
42,893,163 |
|
|
|
56,114,813 |
|
Loan origination costs and
fees |
|
|
1,389,107 |
|
|
|
1,027,097 |
|
|
|
4,878,158 |
|
|
|
2,256,838 |
|
Marketing |
|
|
1,671,137 |
|
|
|
2,393,185 |
|
|
|
4,258,904 |
|
|
|
8,178,120 |
|
Salaries and benefits |
|
|
3,231,100 |
|
|
|
2,820,033 |
|
|
|
8,933,998 |
|
|
|
8,799,395 |
|
Operating expenses |
|
|
6,080,725 |
|
|
|
5,702,800 |
|
|
|
17,666,366 |
|
|
|
17,124,288 |
|
Total costs and
expenses |
|
|
25,434,027 |
|
|
|
30,690,012 |
|
|
|
78,630,589 |
|
|
|
92,473,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income/
(loss) |
|
|
5,952,419 |
|
|
|
(4,548,561 |
) |
|
|
8,073,669 |
|
|
|
(828,616 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense including
amortization of debt issuance costs |
|
|
(4,746,801 |
) |
|
|
(3,030,142 |
) |
|
|
(13,846,685 |
) |
|
|
(7,336,048 |
) |
Income/ (loss) before income
taxes |
|
|
1,205,618 |
|
|
|
(7,578,703 |
) |
|
|
(5,773,016 |
) |
|
|
(8,164,664 |
) |
(Loss)/ benefit from income
taxes |
|
|
(265,517 |
) |
|
|
1,298,269 |
|
|
|
1,185,247 |
|
|
|
13,892,516 |
|
Net income/
(loss) |
|
|
940,101 |
|
|
|
(6,280,434 |
) |
|
|
(4,587,769 |
) |
|
|
5,727,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Series 2
Convertible Preferred Shares |
|
|
(1,069,456 |
) |
|
|
(609,778 |
) |
|
|
(3,034,182 |
) |
|
|
(1,829,332 |
) |
Net (loss)/ income
attributable to common and Series 1 Convertible Preferred
shareholders |
|
$ |
(129,355 |
) |
|
|
(6,890,212 |
) |
|
|
(7,621,951 |
) |
|
|
3,898,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
(loss)/ income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.01 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.35 |
) |
|
$ |
0.18 |
|
Diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.35 |
) |
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
21,716,852 |
|
|
|
21,681,853 |
|
|
|
21,740,027 |
|
|
|
21,611,879 |
|
Diluted |
|
|
21,716,852 |
|
|
|
21,681,853 |
|
|
|
21,740,027 |
|
|
|
22,403,447 |
|
FLEXSHOPPER,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
September 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
Cash |
|
$ |
5,732,483 |
|
|
$ |
6,051,713 |
|
Restricted cash |
|
|
5,326 |
|
|
|
121,636 |
|
Lease receivables, net |
|
|
41,421,040 |
|
|
|
35,540,043 |
|
Loan receivables at fair
value |
|
|
31,679,882 |
|
|
|
32,932,504 |
|
Prepaid expenses and other
assets |
|
|
2,839,591 |
|
|
|
3,489,136 |
|
Lease merchandise, net |
|
|
23,596,608 |
|
|
|
31,550,441 |
|
Total current assets |
|
|
105,274,930 |
|
|
|
109,685,473 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
9,011,047 |
|
|
|
8,086,862 |
|
Right of use asset, net |
|
|
1,281,918 |
|
|
|
1,406,270 |
|
Intangible assets, net |
|
|
13,833,595 |
|
|
|
15,162,349 |
|
Other assets, net |
|
|
1,809,511 |
|
|
|
1,934,728 |
|
Deferred tax asset, net |
|
|
13,206,051 |
|
|
|
12,013,828 |
|
Total assets |
|
$ |
144,417,052 |
|
|
$ |
148,289,510 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
4,010,544 |
|
|
$ |
6,511,943 |
|
Accrued payroll and related
taxes |
|
|
603,838 |
|
|
|
310,820 |
|
Promissory notes to related
parties, including accrued interest |
|
|
192,009 |
|
|
|
1,209,455 |
|
Accrued expenses |
|
|
2,834,954 |
|
|
|
3,988,093 |
|
Lease liability - current
portion |
|
|
236,628 |
|
|
|
208,001 |
|
Total current liabilities |
|
|
7,877,973 |
|
|
|
12,228,312 |
|
Loan payable under credit
agreement to beneficial shareholder, net of unamortized issuance
costs of $141,148 at September 30, 2023 and $352,252 at December
31, 2022 |
|
|
86,063,852 |
|
|
|
80,847,748 |
|
Promissory notes to related
parties, net of unamortized issuance costs of $764,651 at September
30, 2023 and $0 at December 31, 2022 and net of current
portion |
|
|
9,985,349 |
|
|
|
10,750,000 |
|
Promissory note related to
acquisition, net of discount of $987,313 at September 30, 2023 and
$1,165,027 at December 31, 2022 |
|
|
3,191,272 |
|
|
|
3,158,471 |
|
Loan payable under Basepoint
credit agreement, net of unamortized issuance costs of $102,580 at
September 30, 2023 |
|
|
7,310,025 |
|
|
|
- |
|
Purchase consideration payable
related to acquisition |
|
|
- |
|
|
|
8,703,684 |
|
Lease liabilities, net of
current portion |
|
|
1,386,769 |
|
|
|
1,566,622 |
|
Total liabilities |
|
|
115,815,240 |
|
|
|
117,254,837 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Series 1 Convertible Preferred
Stock, $0.001 par value - authorized 250,000 shares, issued and
outstanding 170,332 shares at $5.00 stated value |
|
|
851,660 |
|
|
|
851,660 |
|
Series 2 Convertible Preferred
Stock, $0.001 par value - authorized 25,000 shares, issued and
outstanding 21,952 shares at $1,000 stated value |
|
|
21,952,000 |
|
|
|
21,952,000 |
|
Common stock, $0.0001 par
value - authorized 40,000,000 shares, issued and outstanding
21,752,304 shares at September 30, 2023 and 21,750,804 shares at
December 31, 2022 |
|
|
2,176 |
|
|
|
2,176 |
|
Treasury shares, at cost –
100,775 shares at September 30, 2023 |
|
|
(100,225 |
) |
|
|
- |
|
Additional paid in
capital |
|
|
42,074,553 |
|
|
|
39,819,420 |
|
Accumulated deficit |
|
|
(36,178,352 |
) |
|
|
(31,590,583 |
) |
Total stockholders’
equity |
|
|
28,601,812 |
|
|
|
31,034,673 |
|
|
|
$ |
144,417,052 |
|
|
$ |
148,289,510 |
|
Non-GAAP Measures
We 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 merchandise), 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 months
ended September 30, 2023, and 2022 are as follows:
|
|
Three months endedSeptember
30, |
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
% Change |
|
Gross
Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
Gross lease billings and fees |
|
$ |
31,266,666 |
|
|
$ |
38,580,116 |
|
|
$ |
(7,313,450 |
) |
|
|
(19.0 |
) |
Provision for doubtful accounts |
|
|
(10,038,122 |
) |
|
|
(15,075,109 |
) |
|
|
5,036,987 |
|
|
|
(33.4 |
) |
Gain / (loss) on sale of lease receivables |
|
|
(146,345 |
) |
|
|
1,007,079 |
|
|
|
(1,153,424 |
) |
|
|
(114.5 |
) |
Net lease billing and fees |
|
$ |
21,082,199 |
|
|
$ |
24,512,086 |
|
|
$ |
(3,429,887 |
) |
|
|
(14.0 |
) |
Loan revenues and fees |
|
|
3,208,920 |
|
|
|
6,025,786 |
|
|
|
(2,816,866 |
) |
|
|
(46.7 |
) |
Net changes in the fair value of loans receivable |
|
|
7,095,327 |
|
|
|
(4,396,421 |
) |
|
|
11,491,748 |
|
|
|
(261.4 |
) |
Net loan revenues |
|
$ |
10,304,247 |
|
|
$ |
1,629,365 |
|
|
$ |
8,674,882 |
|
|
|
532.4 |
|
Total revenues |
|
$ |
31,386,446 |
|
|
$ |
26,141,451 |
|
|
$ |
5,244,995 |
|
|
|
20.1 |
|
Depreciation and impairment of lease merchandise |
|
|
(13,061,958 |
) |
|
|
(18,746,897 |
) |
|
|
5,684,939 |
|
|
|
(30.3 |
) |
Loans origination costs and fees |
|
|
(1,389,107 |
) |
|
|
(1,027,097 |
) |
|
|
(362,010 |
) |
|
|
35.2 |
|
Gross profit |
|
$ |
16,935,381 |
|
|
$ |
6,367,457 |
|
|
$ |
10,567,924 |
|
|
|
166.0 |
|
Gross profit margin |
|
|
54 |
% |
|
|
24 |
% |
|
|
|
|
|
|
|
|
|
|
Three months endedSeptember
30, |
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
% Change |
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income/ (loss) |
|
$ |
940,101 |
|
|
$ |
(6,280,434 |
) |
|
$ |
7,220,535 |
|
|
|
(115.0 |
) |
Income taxes |
|
|
265,517 |
|
|
|
(1,298,269 |
) |
|
|
1,563,786 |
|
|
|
(120.5 |
) |
Amortization of debt issuance
costs |
|
|
194,682 |
|
|
|
56,283 |
|
|
|
138,399 |
|
|
|
245.9 |
|
Amortization of discount on
the promissory note related to acquisition |
|
|
59,238 |
|
|
|
- |
|
|
|
59,238 |
|
|
|
|
|
Other amortization and
depreciation |
|
|
1,964,229 |
|
|
|
1,244,267 |
|
|
|
719,962 |
|
|
|
57.9 |
|
Interest expense |
|
|
4,492,881 |
|
|
|
2,973,859 |
|
|
|
1,519,022 |
|
|
|
51.1 |
|
Stock-based compensation |
|
|
471,819 |
|
|
|
387,298 |
|
|
|
84,521 |
|
|
|
21.8 |
|
Adjusted EBITDA |
|
$ |
8,388,467 |
|
|
$ |
(2,916,996 |
) |
|
$ |
11,305,463 |
|
|
|
(387.6 |
) |
Key performance metrics for the nine months ended September 30,
2023 and 2022 are as follows:
|
|
Nine months endedSeptember
30, |
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
% Change |
|
Gross
Profit: |
|
|
|
|
|
|
|
|
|
Gross lease billings and fees |
|
$ |
98,023,406 |
|
|
$ |
117,774,390 |
|
|
$ |
(19,750,984 |
) |
|
|
(16.8 |
) |
Provision for doubtful accounts |
|
|
(32,123,950 |
) |
|
|
(42,639,102 |
) |
|
|
10,515,152 |
|
|
|
(24.7 |
) |
Gain on sale of lease receivables |
|
|
2,803,745 |
|
|
|
7,611,586 |
|
|
|
(4,807,841 |
) |
|
|
(63.2 |
) |
Net lease billing and fees |
|
$ |
68,703,201 |
|
|
$ |
82,746,874 |
|
|
$ |
(14,043,673 |
) |
|
|
(17.0 |
) |
Loan revenues and fees |
|
|
11,742,778 |
|
|
|
10,836,534 |
|
|
|
906,244 |
|
|
|
8.4 |
|
Net changes in the fair value of loans receivable |
|
|
6,258,279 |
|
|
|
(1,938,570 |
) |
|
|
8,196,849 |
|
|
|
(422.8 |
) |
Net loan revenues |
|
$ |
18,001,057 |
|
|
$ |
8,897,964 |
|
|
$ |
9,103,093 |
|
|
|
102.4 |
|
Total revenues |
|
$ |
86,704,258 |
|
|
$ |
91,644,838 |
|
|
$ |
(4,940,580 |
) |
|
|
(5.4 |
) |
Depreciation and impairment of lease merchandise |
|
|
(42,893,163 |
) |
|
|
(56,114,813 |
) |
|
|
13,221,650 |
|
|
|
(23.6 |
) |
Loans origination costs and fees |
|
|
(4,878,158 |
) |
|
|
(2,256,838 |
) |
|
|
(2,621,320 |
) |
|
|
116.2 |
|
Gross profit |
|
$ |
38,932,937 |
|
|
$ |
33,273,187 |
|
|
$ |
5,659,750 |
|
|
|
17.0 |
|
Gross profit margin |
|
|
45 |
% |
|
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
Nine months endedSeptember
30, |
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
% Change |
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/ income |
|
$ |
(4,587,769 |
) |
|
$ |
5,727,852 |
|
|
$ |
(10,315,621 |
) |
|
|
(180.1 |
) |
Income taxes |
|
|
(1,185,247 |
) |
|
|
(13,892,516 |
) |
|
|
12,707,269 |
|
|
|
(91.5 |
) |
Amortization of debt issuance
costs |
|
|
376,857 |
|
|
|
163,169 |
|
|
|
213,688 |
|
|
|
131.0 |
|
Amortization of discount on
the promissory note related to acquisition |
|
|
177,714 |
|
|
|
- |
|
|
|
177,714 |
|
|
|
|
|
Other amortization and
depreciation |
|
|
5,674,931 |
|
|
|
3,303,590 |
|
|
|
2,371,341 |
|
|
|
71.8 |
|
Interest expense |
|
|
13,292,114 |
|
|
|
7,172,879 |
|
|
|
6,119,235 |
|
|
|
85.4 |
|
Stock-based compensation |
|
|
1,336,367 |
|
|
|
950,003 |
|
|
|
386,364 |
|
|
|
40.7 |
|
Adjusted EBITDA |
|
$ |
15,084,967 |
|
|
$ |
3,424,977 |
|
|
$ |
11,659,990 |
|
|
|
340.4 |
|
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 FlexShopper
FlexShopper, Inc. (FPAY) is a financial
technology company that provides electronics, home furnishings and
other durable goods to underserved consumers on a lease-to-own
(LTO) basis through its patented e-commerce marketplace
(www.FlexShopper.com). FlexShopper also provides LTO and loan
technology platforms to a growing number of retailers and
e-retailers to facilitate transactions with consumers without
access to traditional financing.
Forward-Looking Statements
All 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. 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, 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 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:
FlexShopper, Inc.Investor
Relationsir@flexshopper.com
FlexShopper, Inc.
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