Argus Research Initiates Equity Research Report Coverage on FlexShopper, Inc. (NasdaqCM:FPAY)
FlexShopper (FPAY) has received coverage initiation from Argus Research, highlighting the company's position as a leader in LTO financing for nonprime consumers. The company achieved positive net income in Q3 2024 under new leadership and has shown significant improvements in loan quality, with bad debt declining by nearly 1000 basis points year over year.
Key developments include expansion of retail partnerships to approximately 7,800 locations (250% increase from 2023), an option to purchase 91% of Series 2 preferred stock at over 50% discount, and a rights offering of up to 70 million shares at $1.70 per share. The company has also filed patent infringement lawsuits against competitors. Argus Research sets a fair value of $5.50 per share based on EV/EBITDA analysis.
FlexShopper (FPAY) ha ricevuto l'inizio della copertura da Argus Research, evidenziando la posizione dell'azienda come leader nel finanziamento LTO per consumatori non prime. L'azienda ha raggiunto un reddito netto positivo nel Q3 2024 sotto una nuova direzione e ha mostrato miglioramenti significativi nella qualità dei prestiti, con i crediti deteriorati in calo di quasi 1000 punti base rispetto all'anno precedente.
Sviluppi chiave includono l'espansione delle partnership al dettaglio a circa 7.800 posizioni (un aumento del 250% rispetto al 2023), un'opzione per acquistare il 91% delle azioni privilegiate di Serie 2 con oltre il 50% di sconto, e un'offerta di diritti fino a 70 milioni di azioni a $1,70 per azione. L'azienda ha anche presentato cause per violazione di brevetto contro i concorrenti. Argus Research stima un valore equo di $5,50 per azione basato su un'analisi EV/EBITDA.
FlexShopper (FPAY) ha recibido el inicio de cobertura de Argus Research, destacando la posición de la empresa como líder en financiamiento LTO para consumidores no prime. La empresa logró ingresos netos positivos en el tercer trimestre de 2024 bajo un nuevo liderazgo y ha mostrado mejoras significativas en la calidad de los préstamos, con deudas incobrables disminuyendo casi 1000 puntos básicos año tras año.
Los desarrollos clave incluyen la expansión de asociaciones minoristas a aproximadamente 7,800 ubicaciones (un aumento del 250% desde 2023), una opción para comprar el 91% de las acciones preferentes de la Serie 2 con más del 50% de descuento, y una oferta de derechos de hasta 70 millones de acciones a $1.70 por acción. La empresa también ha presentado demandas por infracción de patentes contra competidores. Argus Research establece un valor justo de $5.50 por acción basado en un análisis de EV/EBITDA.
FlexShopper (FPAY)는 Argus Research로부터 보도 개시를 받았으며, 비프라임 소비자를 위한 LTO 금융의 선두주자로서 회사의 위치를 강조하고 있습니다. 회사는 새로운 리더십 아래에서 2024년 3분기 긍정적인 순이익을 달성했으며 대출 품질에서도 상당한 개선을 보였으며, 불량 채무가 전년 대비 거의 1000 베이시스 포인트 감소했습니다.
주요 개발 사항으로는 약 7,800개 매장으로의 소매 파트너십 확대(2023년 대비 250% 증가), 50% 이상의 할인으로 2차 선호 주식의 91%를 구매할 수 있는 옵션, 주당 $1.70에 7천만 주까지의 권리 제공이 포함됩니다. 회사는 또한 경쟁업체를 상대로 특허 침해 소송을 제기했습니다. Argus Research는 EV/EBITDA 분석을 기반으로 주당 $5.50의 공정 가치를 설정했습니다.
FlexShopper (FPAY) a reçu le début de couverture d'Argus Research, mettant en avant la position de l'entreprise en tant que leader dans le financement LTO pour les consommateurs non primes. L'entreprise a atteint un revenu net positif au T3 2024 sous une nouvelle direction et a montré des améliorations significatives dans la qualité des prêts, avec des créances douteuses en baisse de près de 1000 points de base d'une année sur l'autre.
Les développements clés incluent l'expansion des partenariats de vente au détail à environ 7 800 emplacements (augmentation de 250 % par rapport à 2023), une option d'achat de 91 % des actions privilégiées de la Série 2 avec plus de 50 % de rabais, et une offre de droits allant jusqu'à 70 millions d'actions à 1,70 $ par action. L'entreprise a également déposé des poursuites pour violation de brevet contre ses concurrents. Argus Research fixe un valeur juste de 5,50 $ par action sur la base d'une analyse EV/EBITDA.
FlexShopper (FPAY) hat die Berichterstattung von Argus Research initiiert erhalten, die die Position des Unternehmens als Marktführer im Bereich LTO-Finanzierung für Nicht-Prima-Verbraucher hervorhebt. Das Unternehmen erzielte im dritten Quartal 2024 ein positives Nettoergebnis unter neuer Führung und zeigte erhebliche Verbesserungen bei der Kreditqualität, da die notleidenden Kredite im Jahresvergleich um fast 1000 Basispunkte gesenkt wurden.
Wichtige Entwicklungen umfassen die Erweiterung der Einzelhandelspartnerschaften auf etwa 7.800 Standorte (250%-ige Steigerung gegenüber 2023), eine Option zum Erwerb von 91% der Serie 2 Vorzugsaktien mit über 50% Rabatt sowie eine Bezugsrechtsemission von bis zu 70 Millionen Aktien zu je 1,70 $. Das Unternehmen hat außerdem Patentverletzungsklagen gegen Wettbewerber eingereicht. Argus Research setzt einen fairen Wert von 5,50 $ pro Aktie basierend auf einer EV/EBITDA-Analyse fest.
- Achieved first positive net income in Q3 2024
- Bad debt reduction by nearly 1000 basis points year-over-year
- Retail partnerships expanded to 7,800 locations (250% increase from 2023)
- Option to purchase 91% of Series 2 preferred stock at >50% discount, potentially saving $4M in annual dividends
- Rights offering at $1.70 per share expected to be accretive to 2024 results
- Potential dilution from 70 million share rights offering
- Ongoing patent litigation outcomes uncertain
Insights
A comprehensive transformation is underway at FlexShopper, marked by three key developments: achieving profitability in Q3 2024, expanding retail partnerships by
The company's improved underwriting algorithms have led to a notable
FlexShopper's strategic positioning in the non-prime consumer financing space, targeting FICO scores below 660, represents a significant market opportunity. The company's dual-channel approach - direct-to-consumer marketplace and B2B retail partnerships - provides a competitive advantage over traditional BNPL providers. The expansion to 7,800 retail locations demonstrates strong market penetration and validates the business model.
The combination of improved underwriting technology, expanded payment options and strategic retail partnerships positions FlexShopper well in the growing alternative financing market. The company's valuation gap compared to traditional LTO peers suggests potential for multiple expansion as the market recognizes its superior growth profile and technological advantages.
Click Here to view full Argus Equity Research Report.
COMPANY HIGHLIGHTS: Excerpts (as conveyed by Argus Analyst Steve Silver) include:
FPAY: A Leader in LTO Financing
- Leader in the LTO Financing Market: In our view, FlexShopper is executing on a growth strategy to establish leading DTC and B2B solutions for nonprime consumers (typically those with FICO scores below 660). The company operates an Amazon-like marketplace to purchase goods in their DTC channel and provides multiple financing options (including internal and third-party) to serve a wider base of customers with limited access to credit. FlexShopper also works with B2B retail channel partners, both online and offline, to provide financing for customers that traditional "buy now pay later" (BNPL) companies, such as Affirm, would typically not fund.
- New Leadership Drives Transition to Profitability: Over the past two years, a new leadership team has repositioned FlexShopper's operating model, which resulted in the achievement of positive net income in 3Q24. We expect the company's profitability to continue to expand moving forward, and see multiple operational catalysts in 2025 that should continue to drive improved investor sentiment.
- Analytical, Risk-Based Algorithms Driving Loan Growth and Improved Asset Quality: We view positively FlexShopper's investments in its digital and analytics infrastructure, which is supporting improved underwriting decisions and improving portfolio asset quality. Since late 2022, FlexShopper has seen growth in loan originations, with better asset yield and with bad debt declining by nearly 1000 basis points year over year. In 3Q24, improved asset quality drove a
$2 million - Expanding Retail Channel and Payment Provider Partnerships: Across 2024, FlexShopper has expanded a retail partner channel built upon largely exclusive relationships that we see driving loan originations both in-store and on retailer websites while driving traffic back to FlexShopper's e-commerce marketplace. Year-to-date, the company has signed partnerships for approximately 7,800 retail locations, representing a
250% increase over the end of 2023, and has exceeded its initial 2024 retail store count goal by the third quarter of the year. FlexShopper has also launched partnerships with multiple payment solution providers to expand customer payment options and expand its reach. Despite these results, we still see the company as being in the early stages of its growth cycle. - Discount Purchase of Series 2 Preferred Stock: In October 2024, FlexShopper entered into a purchase option agreement with the majority holder of its Series 2 preferred stock, which gives FlexShopper a one-year option to redeem
91% of the preferred stock at a substantial discount of more than50% to its liquidation value of around$43 million $23 million $1 $4 million - Rights Offering Launched to Equitize its Balance Sheet: FlexShopper has filed an S-1 with the SEC for an up to 70 million share rights offering, at a price of
$1.70 $25 million $4.5 million 13% for new investors, starting with the elimination of the Series 2 preferred stock. - Defending IP Position: On September 30, 2024, FlexShopper filed patent infringement lawsuits against Upbound Group Inc. and Katapult Holdings Inc., alleging infringement and unauthorized use of five key FlexShopper patents that protect FlexShopper's computer-implemented LTO technology. We expect initial responses to be filed by early 2025 and view the Eastern District of
Texas , a jurisdiction that tends to move quickly, positively for a swift adjudication pathway, which we think could lead to similar suits against other LTO companies. - Fair Value: FPAY is trading below its LTO peers, even those low-growth companies whose operations are largely offline and operate out of legacy brick-and-mortar locations. We expect this gap to narrow significantly over time, as FlexShopper executes on its growth strategy and commands multiple expansion. Based on our enterprise value (EV)/EBITDA analysis, we see a fair value of
$5.50
INVESTMENT THESIS: Click Here to view full Argus Equity Research Report and Investment Thesis.
About FlexShopper, Inc. (NasdaqCM:FPAY) www.flexshopper.com
Founded in 2013,
For more information please contact:
For FlexShopper:
Investor Relations
ir@flexshopper.com
Investor and Media Contact:
Andrew Berger, Managing Director
SM Berger & Company, Inc.
Tel: (216) 464-6400
andrew@smberger.com
About Argus Research Corp.
Headquartered in NYC, Argus Research (www.argusresearch.com) is a leading independent equity research firm (est. 1934) ̶ providing fundamental and quantitative research coverage on more than 1,600 companies across all 11 sectors of the S&P 500, as well as macroeconomic and equity market forecasts, thematic research, model portfolios and IPO research. In addition, Argus has recently committed to providing a company sponsored research solution for small & mid-cap companies seeking coverage. Argus's CSR Research Reports & earnings estimates (if applicable) are available on major research / earnings estimate aggregator platforms, including Bloomberg, Thomson Reuters, Factset and S&P Global.
For more Information please contact:
Darrell Stone
646-747-5438
dstone@argusresearch.com
Argus Research Co. has received a flat fee from the company discussed in this report as part of a Sponsored Research agreement between Argus and the company. No part of Argus Research's compensation is directly or indirectly related to the content of this assessment or to other opinions expressed in this report. Please refer to the full Argus report and the disclaimer for complete disclosures.
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SOURCE Argus Research
FAQ
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