FlexShopper, Inc. Reports Second Quarter 2023 Financial Results

Rhea-AI Summary

FlexShopper, Inc. (Nasdaq:FPAY) announced its financial results for the quarter ended June 30, 2023. Total fundings decreased by 11.0% to $27.5 million, gross profit decreased by 52.0% to $8.4 million, and adjusted EBITDA decreased by 95.3% to $0.3 million. For the six months ended June 30, 2023, total fundings increased by 6.8% to $54.9 million, gross profit decreased by 18.2% to $22.0 million, and adjusted EBITDA increased by 6.3% to $6.7 million.

Positive

• Total fundings increased for the six months ended June 30, 2023, showing growth in the company's financial activities.
• Adjusted EBITDA increased by 6.3% for the six months ended June 30, 2023, indicating improved operational performance.
• The company's net loss and net loss attributable to common stockholders increased for both the quarter and six months ended June 30, 2023, reflecting financial challenges.

Negative

• Total fundings decreased by 11.0% for the quarter ended June 30, 2023, signaling a decline in the company's financial activities.
• Gross profit decreased by 52.0% for the quarter ended June 30, 2023, highlighting a significant decline in profitability.
• Adjusted EBITDA decreased by 95.3% for the quarter ended June 30, 2023, indicating a substantial reduction in operational performance.

BOCA RATON, Fla., Aug. 14, 2023 (GLOBE NEWSWIRE) -- 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 June 30, 2023.

Results for Quarter Ended June 30, 2023 vs. Quarter Ended June 30, 2022:

• Total fundings decreased 11.0% to $27.5 million from $30.9 million consisting of gross lease originations decreasing 32.7% from $19.9 to $13.4 million, loan participations decreasing 99.1% from $11.0 million to $0.1 million, and loan originations increasing from $0 to $14.0 million
  
  
• Total net lease and loan revenues and fees decreased 32.9% to $24.5 million from $36.5 million  
  
  
• Gross profit decreased 52.0% to $8.4 million from $17.5 million 
   
• Adjusted EBITDA¹ decreased 95.3% to $0.3 million compared to 6.4 million  
  
  
• Net loss of $5.3 million compared with net income of $14.4 million  
  
  
• Net loss attributable to common stockholders of $(6.3) million, or $(0.22) per diluted share, compared to net income attributable to common stockholders of $13.8 million, or $0.51 per diluted share

Results for Six Months Ended June 30, 2023 vs. Six Months Ended June 30, 2022:

• Total fundings increased 6.8% to $54.9 million from $51.4 million consisting of gross lease originations decreasing 26,5% from $36.2 million to $26.6 million, loan participations decreased 98.0% from $15.2 million to $0.3 million, and loan originations increasing from $0 to $28 million
    
• Total net lease and loan revenues and fees decreased 15.6% to $55.3 million from $65.5 million  
  
  
• Gross profit decreased 18.2.% to $22.0 million from $26.9 million  
  
  
• Adjusted EBITDA¹ increased 6.3% to $6.7 million compared to 6.3 million  
  
  
• Net loss of $5.5 million compared with net income of $12 million 
  
  
• Net loss attributable to common stockholders of $(7.5) million, or $(0.34) per diluted share, compared to net income attributable to common stockholders of $10.8 million, or $0.42 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: Monday August 14, 2023
Time: 8:30 a.m. Eastern Time
Participant Dial-In Numbers:

Domestic callers: (877) 407-2988
International callers: +1 (201) 389-0923

Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=dtM9EZ6E 

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 ended June 30,								For the six months ended June 30,
		2023				2022				2023				2022
Revenues:
Lease revenues and fees, net		$	22,906,843			$	30,468,476			$	47,621,001			$	58,234,788
Loan revenues and fees, net of changes in fair value			1,625,193				6,079,675				7,696,810				7,268,599
Total revenues			24,532,036				36,548,151				55,317,811				65,503,387
Costs and expenses:
Depreciation and impairment of lease merchandise			14,485,417				18,207,305				29,831,205				37,367,916
Loan origination costs and fees			1,655,424				804,228				3,489,051				1,229,741
Marketing			1,488,578				3,770,820				2,587,767				5,784,935
Salaries and benefits			2,976,008				3,014,920				5,702,898				5,979,362
Operating expenses			5,957,932				5,748,286				11,585,640				11,421,488
Total costs and expenses			26,563,359				31,545,559				53,196,561				61,783,442
Operating (loss)/ income			(2,031,323	)			5,002,592				2,121,250				3,719,945
Interest expense including amortization of debt issuance costs			(4,568,557	)			(2,347,838	)			(9,099,884	)			(4,305,906	)
(Loss)/ income before income taxes			(6,599,880	)			2,654,754				(6,978,634	)			(585,961	)
Benefit from income taxes			1,302,225				11,734,467				1,450,764				12,594,247
Net (loss)/ income			(5,297,655	)			14,389,221				(5,527,870	)			12,008,286
Dividends on Series 2 Convertible Preferred Shares			(992,493	)			(609,777	)			(1,964,726	)			(1,219,554	)
Net (loss)/ income attributable to common and Series 1 Convertible Preferred shareholders		$	(6,290,148	)			13,779,444				(7,492,596	)			10,788,732
Basic and diluted (loss)/ income per common share:
Basic		$	(0.22	)		$	0.63			$	(0.34	)		$	0.49
Diluted		$	(0.22	)		$	0.51			$	(0.34	)		$	0.42
WEIGHTED AVERAGE COMMON SHARES:
Basic			28,923,393				21,605,234				21,751,807				21,576,312
Diluted			28,923,393				27,898,824				21,751,807				28,193,268

FLEXSHOPPER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,				December 31,
		2023				2022
		(unaudited)
ASSETS
CURRENT ASSETS:
Cash		$	6,372,699			$	6,051,713
Restricted cash			6,285				121,636
Lease receivables, net			39,227,399				35,540,043
Loan receivables at fair value			25,105,046				32,932,504
Prepaid expenses and other assets			3,068,559				3,489,136
Lease merchandise, net			24,597,836				31,550,441
Total current assets			98,377,824				109,685,473
Property and equipment, net			8,830,978				8,086,862
Right of use asset, net			1,324,953				1,406,270
Intangible assets, net			14,276,231				15,162,349
Other assets, net			1,832,175				1,934,728
Deferred tax asset, net			13,471,568				12,013,828
Total assets		$	138,113,729			$	148,289,510
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	4,005,219			$	6,511,943
Accrued payroll and related taxes			299,741				310,820
Promissory notes to related parties, including accrued interest			1,207,798				1,209,455
Accrued expenses			2,386,547				3,988,093
Lease liability - current portion			228,358				208,001
Total current liabilities			8,127,663				12,228,312
Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of $211,516 at June 30, 2023 and $352,252 at December 31, 2022			80,943,484				80,847,748
Promissory notes to related parties, net of unamortized issuance costs of $879,348 at June 30, 2023 and $0 at December 31, 2022 and net of current portion			9,870,652				10,750,000
Promissory note related to acquisition, net of discount of $1,046,551 at June 30, 2023 and $1,165,027 at December 31, 2022			3,133,617				3,158,471
Loan payable under Basepoint credit agreement, net of unamortized issuance costs of $112,197 at June 30, 2023			7,300,408				-
Purchase consideration payable related to acquisition			-				8,703,684
Lease liabilities, net of current portion			1,447,788				1,566,622
Total liabilities			110,823,612				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 June 30, 2023 and 21,750,804 shares at December 31, 2022			2,176				2,176
Additional paid in capital			41,602,734				39,819,420
Accumulated deficit			(37,118,453	)			(31,590,583	)
Total stockholders’ equity			27,290,117				31,034,673
		$	138,113,729			$	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 June 30, 2023 and 2022 are as follows:

		Three months ended June 30,
		2023				2022				$ Change				% Change
Gross Profit:
Gross lease billings and fees		$	32,501,656			$	39,596,845			$	(7,095,189	)			(17.9	)
Provision for doubtful accounts			(10,847,413	)			(15,732,876	)			4,885,463				(31.1	)
Gain on sale of lease receivables			1,252,600				6,604,507				(5,351,907	)			(81.0	)
Net lease billing and fees		$	22,906,843			$	30,468,476			$	(7,561,633	)			(24.8	)
Loan revenues and fees			3,446,893				3,098,400				348,493				11.2
Net changes in the fair value of loans receivable			(1,821,700	)			2,981,275				(4,802,975	)			(161.1	)
Net loan revenues		$	1,625,193			$	6,079,675			$	(4,454,482	)			(73.3	)
Total revenues		$	24,532,036			$	36,548,151			$	(12,016,115	)			(32.9	)
Depreciation and impairment of lease merchandise			(14,485,417	)			(18,207,305	)			3,721,888				(20.4	)
Loans origination costs and fees			(1,655,424	)			(804,228	)			(851,196	)			105.8
Gross profit		$	8,391,195			$	17,536,618			$	(9,145,423	)			(52.2	)
Gross profit margin			34	%			48	%

		Three months ended June 30,
		2023				2022				$ Change				% Change
Adjusted EBITDA:
Net (loss)/ income		$	(5,297,655	)		$	14,389,221			$	(19,686,876	)			(136.8	)
Income taxes			(1,302,225	)			(11,734,467	)			10,432,242				(88.9	)
Amortization of debt issuance costs			111,807				56,283				55,524				98.7
Amortization of discount on the promissory note related to acquisition			59,238				—				59,238
Other amortization and depreciation			1,884,544				1,122,263				762,281				67.9
Interest expense			4,397,513				2,291,555				2,105,958				91.9
Stock-based compensation			443,800				257,476				186,324				72.4
Adjusted EBITDA		$	297,022			$	6,382,331			$	(6,085,309	)			(95.3	)

Key performance metrics for the six months ended June 30, 2023 and 2022 are as follows:

		Six months ended June 30,
		2023				2022				$ Change				% Change
Gross Profit:
Gross lease billings and fees		$	66,756,740			$	79,194,274			$	(12,437,534	)			(15.7	)
Provision for doubtful accounts			(22,085,828	)			(27,563,993	)			5,478,165				(19.9	)
Gain on sale of lease receivables			2,950,089				6,604,507				(3,654,418	)			(55.3	)
Net lease billing and fees		$	47,621,001			$	58,234,788			$	(10,613,787	)			(18.2	)
Loan revenues and fees			8,533,858				4,810,748				3,723,110				77.4
Net changes in the fair value of loans receivable			(837,048	)			2,457,851				(3,294,899	)			(134.1	)
Net loan revenues		$	7,696,810			$	7,268,599			$	428,211				5.9
Total revenues		$	55,317,811			$	65,503,387			$	(10,185,576	)			(15.5	)
Depreciation and impairment of lease merchandise			(29,831,205	)			(37,367,916	)			7,536,711				(20.2	)
Loans origination costs and fees			(3,489,051	)			(1,229,741	)			(2,259,310	)			183.7
Gross profit		$	21,997,555			$	26,905,730			$	(4,908,175	)			(18.2	)
Gross profit margin			40	%			41	%

		Six months ended June 30,
		2023				2022				$ Change				% Change
Adjusted EBITDA:
Net (loss)/ income		$	(5,527,870	)		$	12,008,286			$	(17,536,156	)			(146.0	)
Income taxes			(1,450,764	)			(12,594,247	)			11,143,483				(88.5	)
Amortization of debt issuance costs			182,174				106,886				75,288				70.4
Amortization of discount on the promissory note related to acquisition			118,476				—				118,174
Other amortization and depreciation			3,710,703				2,059,323				1,651,380				80.2
Interest expense			8,799,234				4,199,020				4,600,214				109.6
Stock-based compensation			864,548				562,705				301,843				53.6
Adjusted EBITDA		$	6,696,501			$	6,341,973			$	354,226				5.6

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 Relations
ir@flexshopper.com

FlexShopper, Inc.

FAQ

What is the ticker symbol of FlexShopper, Inc.?

The ticker symbol of FlexShopper, Inc. is FPAY.

What were the total fundings for the quarter ended June 30, 2023?

Total fundings decreased by 11.0% to $27.5 million for the quarter ended June 30, 2023.

What was the gross profit for the quarter ended June 30, 2023?

Gross profit decreased by 52.0% to $8.4 million for the quarter ended June 30, 2023.

What was the adjusted EBITDA for the quarter ended June 30, 2023?

Adjusted EBITDA decreased by 95.3% to $0.3 million for the quarter ended June 30, 2023.

What were the total fundings for the six months ended June 30, 2023?

Total fundings increased by 6.8% to $54.9 million for the six months ended June 30, 2023.

What was the gross profit for the six months ended June 30, 2023?

Gross profit decreased by 18.2% to $22.0 million for the six months ended June 30, 2023.

What was the adjusted EBITDA for the six months ended June 30, 2023?

Adjusted EBITDA increased by 6.3% to $6.7 million for the six months ended June 30, 2023.