FlexShopper (FPAY) 15 May 232023 Q1 Earnings call transcript

Greetings. Welcome to the FlexShopper First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the format presentation. [Operator Instructions] Please note, this conference is being recorded.

the to turn Relations. Sanchez, now will conference Carlos over Investor I you. Thank

You may begin.

our good FlexShopper's Russ Welcome Financial you, issued Davis, morning. Thank and Officer. Operating to Executive and Call. We me can week, Relations earnings be the during our referencing last Chief Chief Results Investor be in With presentation First today Investor and website. Both our found on of our release of are this Heiser, our Relations section Officer; these John call corresponding Conference Thursday morning, we'll today. XXXX Quarter and

available following We for will prepared be Q&A today's remarks.

opportunity, should including from financial company's we contain and events, actual quarter those and future impact to for publicly growth or annual release, statements. be in to no forward-looking of future any like These otherwise. as whether required remind current management's of factors reflect a our any I expectations XX, may our contained reports, future subject we conjunction of assumptions March and that will cause regarding XX-Q market statements statements, beliefs the call and quarterly and events information, obligation materially statements this law, number update undertake Except as XXXX. differ by statements and the Before are performance. to statements, these revise of or SEC with a ending new the to result results including our begin, in periodic financial our considered cautionary initiatives everyone earnings report would report performance, most that our recent These regarding

available in be webcast certain income which together as today's call GAAP will being measures measures read on should non-GAAP website. information our that a section SEC replay of measures During financial rules. our considered included and net website. for be also These non-GAAP net with section today's Relations These financial This we and such are is provide Investor earnings financial replacements will certain on information results. Reconciliation available the of to release, and income. is contains discussion additional financial not and our our be our of GAAP Investors under recorded should include measurements EBITDA adjusted performance,

over will turn Russ our CEO, now I the call to Heiser.

Thanks share morning. new metrics Carlos. some initiatives appreciate in I I'll and a COO, dialing to our call further morning. will few off the the on John Good handing Today, insights questions. operational open and he then everyone to can Davis, before so discuss highlights, this we

off over was with to of gross good a revenue over of XXXX quarter million. million, net first of EBITDA profit start The $XX $X $XX and million,

loss to Our have underwriting resulted substantial improvements solid rates. our risk in adjustments management and to

we on portfolio. seen have early a payoffs yield the Additionally, the increases which decline also in

rates other substantive as with loss quarters, of environment that through We current tightened to levels. no continue expect the cycle that we to we had portfolio to the originated increases, height underwriting changes at will improve was over before the our inflationary year's last historical macro two next the

now consequences we positioning negative this customers for the us, our inflationary we what With most environment focused take hope to behind are opportunities. of are of advantage ourselves on

credit profiles for underwriting. lease-to-own, continued the should traditional credit applying from of providers tighten Additional as come more upside stronger own consumer their to

applicants. meaningful So in profiles have improvement the a see to risk far, new yet we and

making to be liquidity by to of compelling we going forward. model, source of these types our hope pricing adjustments a However, some for customers

our the the our finish partners team last been On top progressing and partner a enterprise call, largest approaching we the on contract of with mentioned retail extension, few line. sales has with large are

of meaningful of on-boarded second this the year. a the half on impact new expect originations amount we in customer through result, a As retailers

have that on yet outside of Furthermore, long-time small many medium initiatives, and are aware we to our a focus select investors as of businesses. few

macro on flexshopper.com the is as will team segments time the launch to complement showing that some a marketplace. focused environment sales well this efforts, Now, the our as believe we our stabilization, is enterprise sales

lending on-boarding regulatory quarter, On this its will longer front, platform virtual to locations franchisees get Tax I new begin six with necessary Revolution almost Liberty new to rolling enhancements the infrastructure be took locations. the now we than expected first storefront this but point, out months to the and have framework

of to provide up. takes as should grow the at lift a rollout location, new the magnitude while portfolio it While size potential each the speed locations

the turn I'll to operations. over call to John Now discuss our

economy cautiously the relating optimistic trends to about Thanks, the FlexShopper be Russ. typical continue the of customer. I to

last of expenses, With core by such housing. experienced their observed and transportation as take-home recession, personal own the their reduced rise increases food, in customer inflation year, typical our pay

year-over-year leads inflation stability dropping XXth the in report, week's month of payment some their rate more expenses, which to last consecutive for our monthly getting obligations rates on government With their FlexShopper. the in customers predictable

Gross increased profit increased and XX% increased by year-over-year net $X.X QX improved year-over-year. $XXX,XXX year-over-year. profit from approximately from a loans gross margin by and originations points million $X.X our basis profit by approximately million year. Gross X,XXX from by dollars increased funded profit leases last Total gross

origination For lease reduction our applications tighter remain our lease a channel, a XX% lower in lease rate significantly year-over-year and approval underwriting on dollars. with year-over-year, standards submitted XX%

lapping changes a in further are QX made beginning lap last underwriting year with We to QX. in

growth, increases levels. and to in move through of that partnerships observed average rest positive from should Also, XXXX. origination approval provide continuing lease to the in existing conversion volume result higher order value as of we bricks-and-mortar significant have we year-over-year current rollouts start Also, increases

our inflationary Absent profitability stabilizing debt strategies, pleased our be percentage XXX basis debt am to a with QX a collection results With relapse that I I the combination improved lease to from XXXX. and unfavorable the percentage economic improvement an over has see to year. a bad point of expect underwriting tailwind bad environment FlexShopper and our in this to continue conditions, lease of

proactive QX $X approximately lower fees merchandise credit Offsetting this of million margin over were quarters. impairment lower billing lease quarter, a QX was tightening and and is the depreciation lower billing few Net the versus was past year, our percentage approximately and due year-over-year levels -- due $X.X of for fees million to from in this lease Depreciation net expansion lease as a in seasoning or This of our XX.X% improvement. efforts. gross retail part a point of last to expense. basis XXX origination XX.X%

this percentage with mature a margin depreciation leases lease costs as As additional gross included, our retail of billings. decreased

debt increase rates profit was year-over-year year-over-year. bad in net drop approval and result retail the lease with the The an gross in significant of margin moderation seasoning $XXX even

doors, to overall results. credit profitability should tailwinds and the As out we roll provide unit tightening store let improved new front

$XX On Revolution originated our front, through in we our lending QX million finance platform.

virtual an we As for a using locations licenses. become consumer with XXX total has physical of issued These and within represented over originations reminder, own Liberty originations QX state immediately approximately of one-half stores business. our Tax our loans important lending locations consisting of and part storefronts

originating, team network. expand into looking with same-store are looking Tax Liberty We the through both loan happy virtual initiatives, to we marketing as volumes credit and within the quality expand to loans locations the as the new is are of well

channel gross profit provided As higher approximately QX million and I XXXX. of versus earlier, $X.X mentioned this

higher expense and business offset Revolution from $XXX,XXX the expense operating by are loan significantly operating year-over-year, last by origination benefit expenses of while the Salary We was lease lower efficiently revenue lower more X%. introduction year. were year-over-year volume. and costs marketing also growing versus Also,

Excluding impairment basis ratio the depreciation and merchandise, of XXX expense improved points operating lease by year-over-year.

we possible. achieve will discipline we growth as of and grow, mindful existing platform As be as continue efficiently to to expense leverage our

partnerships to our contribute us. a members and develop platform much to achieving. our team our continue we between profitable about we proprietary that for opportunities thank diverse partners so summary, in will I'm want FlexShopper. also Revolution a our our loan marketplace, lease the personally front to excited As and revenue we the lease who which of results loan provide stream growth and bricks-and-mortar are have I

With me let turn call back that, over to Russ. the

John. Thanks,

As previous the and on well at EBITDA demonstrated revenue is this way benchmarks. quarter, surpassing team to its FlexShopper

results the what's taking continues achieve frame. all -- to place. We're mentioned, with of John an team accelerated As time pleased continued significant on

questions take have. we'll might that, With you any

Instructions] [Operator Scott H.C. is Buck Please from Our with proceed. question first Wainwright.

my to morning model bit you Thanks little give you color customers. the are doing you Could what in guys. a making changes more taking some on new questions. for some guys pricing Russ, there? you're attract Good mentioned

Sure.

come I they $X.X where -- think and as as a I we potentially of continue in in spot result think markup. tightening that necessarily in isn't above us, to see a customers new million a come probably can there's necessarily fill

go sorry -- That's ahead. Okay.

and and to and between to where potentially No. customers those be -- additional of we lot we was are for million make denied that want going a room sure being just No, them. can bring a customers attractive $X.X as there's to know I these markup just liquidity you

down improved efficiency looks No. seasonality were then sequentially internal the some meaningfully tightening? pretty on just is both Are of plus a That year-over-year. like marketing, makes bit and And that seeing a the sense. just you market factor of it guys you little folks, you or way in

combination This really. a John. is Yeah. There's Hi. two the of

our efficiency We are in marketing. certainly seeing more

mindful higher. our low see I There's money improving. marketing factor Our returns a spend rates are has application actually less on QX less changes And to customers the cost function because start to -- third, approval of the significantly to marketing we cost during certainly to tax improve unit a approval as conversion bring and also think expect customers higher to acquire than been on rate. cost lot more approved A rates The the in in we lap then what season. in have an rates. there's always actually will we're forward, going expect rate and QX to seasonality that. approval play. with more certainly because and be and to liquidity demand put usually But is we is of of of effort spend approval holiday

The going John. tax last one talking else is to then And there prepayments, helpful, for just refunds we are me. the something early up or quarter, on? in that That's

think and a the platform frequently paid online off some as on we that's as the less available also into There's in customers changes as prepayments our a liquidity, they thus paying not and market past. how also XX-day cash income function really frequently of is in same off having decrease. been the in decline we resulted The disposable

Russ. Got it,

much very it. was appreciate you it for misheard. but the decline, must I Thank I guys. time So a

Thanks.

Thanks.

We have closing like comments. of to the session. the for I reached to conference our back turn Russ over end would question-and-answer

look morning. Thanks with XQ to again our presentation. that XXXX we joined you Feel you questions of you reach out have and this catching the forward free for to might all additional call with for up any

conclude will This you. today's Thank conference.

this at your lines your and disconnect may time participation. you for You thank