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Overview of FlexShopper, Inc. (NASDAQ: FPAY)
FlexShopper, Inc. is a prominent financial technology company specializing in lease-to-own (LTO) solutions, catering to consumers who face challenges accessing traditional credit. Headquartered in Boca Raton, Florida, FlexShopper operates through a dual-channel strategy: a direct-to-consumer (DTC) e-commerce marketplace and a business-to-business (B2B) partnership model. The company’s innovative payment solutions empower underserved consumers to obtain durable goods, such as electronics, appliances, furniture, and automotive parts, through flexible leasing options tailored to their financial situations.
Business Model and Revenue Streams
FlexShopper’s primary revenue streams are derived from its proprietary LTO platform, which facilitates transactions between consumers and merchants, and from its e-commerce marketplace at FlexShopper.com. The platform enables consumers to lease brand-name products while offering merchants upfront payments for goods sold, effectively mitigating retailer risk. Additionally, FlexShopper licenses its LTO technology to third-party retailers and e-tailers, allowing them to integrate flexible payment options into their sales channels. This B2B service broadens the company’s reach and enhances its revenue diversification.
Core Offerings
- Direct-to-Consumer Marketplace: FlexShopper.com offers over 80,000 products across categories like electronics, home appliances, furniture, and automotive essentials. The marketplace simplifies the leasing process through an easy-to-navigate platform.
- Retailer Partnerships: FlexShopper collaborates with both online and brick-and-mortar retailers, integrating its LTO payment solutions into their sales processes. This enables retailers to attract a broader customer base, including credit-constrained consumers.
- Technology Licensing: Retailers and e-tailers can leverage FlexShopper’s patent-pending LTO technology to enhance their payment offerings, driving higher sales conversions and customer satisfaction.
Market Position and Industry Significance
FlexShopper operates in the rapidly growing financial technology sector, addressing the needs of the underbanked and credit-constrained population in the United States. By offering flexible payment options, the company bridges the gap between consumers and durable goods, fostering financial inclusivity. Its partnerships with major retailers and e-commerce platforms further solidify its market presence, making it a key player in the LTO and alternative financing space.
Competitive Landscape
FlexShopper faces competition from traditional financing institutions, other LTO providers, and buy-now-pay-later (BNPL) platforms. However, its proprietary technology, extensive product catalog, and dual-channel approach provide a competitive edge. The company’s ability to integrate seamlessly with retailer systems and its focus on underserved credit tiers differentiate it from competitors.
Challenges and Opportunities
While FlexShopper’s business model addresses a critical market need, it also faces challenges such as regulatory compliance, credit risk management, and competition from emerging fintech solutions. However, its ongoing expansion into new retail partnerships and product categories presents significant growth opportunities. By leveraging its technology and market insights, FlexShopper is well-positioned to adapt to evolving consumer and retailer demands.
Conclusion
FlexShopper, Inc. exemplifies innovation in financial technology, offering accessible payment solutions that benefit both consumers and retailers. Its lease-to-own model, supported by a robust technology platform, addresses a vital market gap, making it a valuable player in the alternative financing industry.
FlexShopper (FPAY) reported strong operating results for January 2025, with total new customer applications increasing 130% year-over-year and total originations up 44% compared to January 2024. The company achieved its highest level of January lease originations in 4 years, with marketplace originations up 93% year-over-year.
Key performance indicators showed significant improvements, including a 105% increase in FlexShopper.com gross margin dollars, a 34% reduction in marketplace marketing cost per new customer, and stable asset quality. The B2B partnership saw substantial growth with application volume up 279% year-over-year, while marketplace application volume increased 58%. The Revolution Loan business recorded its 5th consecutive month of growth, with new customer originations up 88% year-over-year.
FlexShopper (Nasdaq: FPAY) provided an update on its rights offering, announcing the completion of its initial unit subscription that raised approximately $12 million, including $9.4 million in gross proceeds and $2.5 million from debt conversion with NRNS Capital Holdings. The proceeds were used to reduce borrowings under the company's credit agreement with Waterfall Asset Management.
The company estimates the initial unit subscription would have been approximately 15% accretive to pro-forma earnings per share for Q3 2024. Shareholders who participated in the unit subscription closing on January 10, 2025, can now participate in Series A, B, and C rights, with respective expiration dates of February 15, March 17, and April 16, 2025. Exercise prices start at $1.70 with varying VWAP calculations and maximum caps ranging from $2.55 to $4.25.
FlexShopper Inc. (Nasdaq: FPAY) announced the appointment of Patrick McCrory as an independent board member and the retirement of T. Scott King from the Board of Directors effective January 20. McCrory, who served as the 74th governor of North Carolina (2013-2017) and as Charlotte's longest-serving mayor (1995-2009), brings extensive leadership and public policy experience.
McCrory's background includes serving on the U.S. Homeland Security Advisory Council (2002-2006), chairing various U.S. Conference of Mayors committees, and holding senior executive positions at Duke Energy (1978-2008). He previously served on the boards of Kewaunee Scientific and LendingTree, and was Senior Director of Strategic Initiatives at Moore & Van Allen PLLC (2009-2012).
FlexShopper (Nasdaq: FPAY), a leading national online lease-to-own retailer and payment solutions provider, has announced its participation in the upcoming Sidoti Micro-Cap Virtual Conference. CEO Russ Heiser and COO John Davis will be presenting and conducting one-on-one meetings during the conference on January 22-23, 2025.
The company's presentation is scheduled for Thursday, January 23, 2025, at 9:15 AM ET. The event will include a live presentation and Q&A session, accessible through a webcast link. Registration for the conference is complimentary and open to all interested participants, regardless of Sidoti client status.
FlexShopper (NASDAQ: FPAY) has announced preliminary results of its unit rights offering, which expired on January 10, 2025. The company raised approximately $9.4 million in gross proceeds through the initial subscription rights exercise, with units sold at $1.70 (15% discount to 3-day VWAP). About 5,547,993 subscription rights were exercised, representing approximately 21% of the company's common stock.
Additionally, NRNS Capital Holdings has elected to convert $2.5 million of its $10.75 million subordinated debt into equity through the Rights Offering, reducing the proforma outstanding balance to $8.25 million and saving approximately $0.5 million in annual interest expense.
The company has an additional 21 million rights that can be exercised over the next 90 days at 30-day intervals. Similar participation levels in the Series A, B, and C rights could raise approximately $48 million, potentially saving $8.5 million in annual dividend and interest expense. Proceeds will be used to repurchase over 90% of Series 2 Convertible Preferred Stock and repay portions of credit facilities.
FlexShopper (FPAY) reported strong operating results for Q4 2024 and the holiday season, marking significant growth across key metrics. December 2024 saw record lease originations, up 35% year-over-year, with marketplace originations increasing 42%. The company achieved record new customer application volume, up 45% year-over-year, while reducing marketplace marketing costs per new customer by 40%.
Notable Q4 2024 achievements include a 58% increase in total lease originations compared to Q3 2024, and a 152% rise in flexshopper.com marketplace originations. The retail product margin reached a record $1.4 million in December, representing a 34% year-over-year increase. The Revolution Loan business showed strong performance with a 95% year-over-year increase in new customer originations.
Asset quality improved with 12 consecutive months of enhanced cumulative payment rates. The company expects these strong origination trends to support continued growth in revenue and profitability throughout 2025.
FlexShopper (FPAY) has successfully expanded its lease-to-own (LTO) payment solutions to over 100 Jiffy Lube and Meineke Car Care Center locations, with plans to add 75-100 additional stores within the next 60 days. The expansion comes through a strategic partnership with PayTomorrow, scaling from just 8 stores initially. The company aims to tap into approximately 2,100 franchise locations between both brands.
The implementation supports the owner/operator model of franchisees, helping optimize sales and profitability. This expansion adds to FlexShopper's existing network of over 2,000 tire and automotive locations with other national retailers, with a near-term pipeline of over 2,000 additional tire and auto retail locations.
FlexShopper (FPAY) reported record initial holiday season results for October and November 2024, with lease gross revenue up 15% and lease net revenue increasing over 25% compared to the same period in 2023. The company experienced a 51% increase in lease gross profit while reducing lease marketing expenses by over 40%. Bad debt expense declined by 600 basis points, and new loan originations grew by 34%.
The company's success is attributed to its direct-to-consumer and business-to-business growth strategies. From January to November 2024, FlexShopper expanded to over 5,600 retail locations and added 12+ new eCommerce websites. In Q3 2024, total revenue increased 23% to $38.6 million, with Adjusted EBITDA growing 45% to $12.2 million, and net income reaching $1.2 million ($0.05 per diluted share).
FlexShopper (FPAY) has extended its rights offering expiration date to January 10, 2025, citing market disruption, budget deadlines, and Canadian postal strike delays. The offering allows stockholders of record as of December 2, 2024, to purchase up to 35 million units at $1.70 per unit. Each unit includes one common stock share plus Series A, B, and C rights for additional stock purchases at discounted market prices.
The offering provides two non-transferable subscription rights per share owned, with an over-subscription privilege for those who exercise all basic rights. Series A, B, and C rights expire 30, 60, and 90 days after the subscription offering closes. Moody Capital Solutions serves as dealer-manager, offering broker-dealers a $0.051 per unit fee and 3% on Series A, B, and C rights exercises.
FlexShopper (NASDAQ: FPAY) reminds right holders about upcoming deadlines for their rights offering subscription process. While the offering expires on December 20, 2024, many broker-dealers require submissions by December 18, 2024. The company aims to raise capital by offering up to 35,000,000 units at $1.70 per unit to stockholders of record as of December 2, 2024.
Each unit includes one common stock share and Series A, B, and C rights for additional shares at discounted market-based prices. The offering includes an over-subscription privilege for those who exercise all basic subscription rights. Officers and directors have indicated intentions to purchase at least $5.0 million in units. The capital raised will be used to repurchase over 90% of Series 2 Convertible Preferred Stock, repay credit facilities, and fund general corporate purposes including potential acquisitions.
FAQ
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