Yahoo Finance FlexShopper Inc (FPAY) Q4 2023 Earnings Call Transcript Highlights: Soaring Profits and ...
Total Fundings (Q4): Up 7% year-over-year.
Net Lease and Loan Revenues (Q4): Up 42% year-over-year.
Gross Profit (Q4): Up over 300% year-over-year.
Operating Income (Q4): $5.6 million, compared to a loss of $5.5 million in the prior year.
Total Fundings (Full Year): Up 8% from the previous year.
Net Lease and Loan Revenues (Full Year): Up 3% from the previous year.
Gross Profit (Full Year): Up 47% from the previous year.
Operating Income (Full Year): $13.7 million, compared to a loss of $6.3 million in 2022.
Adjusted EBITDA (Full Year): $23.2 million, a nearly $24 million improvement year-over-year.
Adjusted EBITDA (Q4): $8.2 million, compared to a loss of $4 million in the prior year.
Cost of Merchandise Sold (Full Year): 42.8% of lease revenues, down from 47% in 2022.
Cost of Merchandise Sold (Q4): 39.9%, down from 44.7% in Q4 2022.
Lease Bad Debt (Full Year): 32.2% of lease revenue, down from 37.1% in 2022.
Lease Bad Debt (Q4): 30.9%, down from 40.2% in Q4 of the previous year.
New Credit Facility: Increased funding commitment from $110 million to $150 million, maturity extended to April 2027, interest cost decreased by 2% per year.
Additional Storefronts: Expanded into an additional 720 units since the end of 2023, with 580 more planned through mid-May.
New Product Sales: Approximately $750,000 in the first two months of 2024 with over 20% markup on cost of goods sold.
Release Date: April 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Total fundings were up 7% in Q4 2023 compared to the previous year.
Net lease and loan revenues increased by 42% in Q4 2023.
Gross profit saw a significant increase of over 300% in Q4 2023.
Operating income was a positive $5.6 million in Q4 2023, a substantial improvement from an operating loss of $5.5 million in the prior year.
FlexShopper Inc is expanding its retail platform with additional payment options, aiming to monetize more visitors to FlexShopper.com.
Negative Points
Despite financial improvements, there is ongoing work behind the scenes to transition FlexShopper.com significantly.
The company is still in the process of adding additional payment options and expanding the number of SKUs on its site.
There is a need to improve the in-store leasing process with current retailer partners.
The company is piloting an improved leasing and checkout process, which is not yet fully implemented.
FlexShopper Inc faces the challenge of continually and prudently increasing marketing spend to grow goods sold on the site.
Q & A Highlights
Q: Can you provide an update on the state of the consumer and any shifts in demand or payment trends? A: As we've mentioned in the past, there tends to be some seasonal changes that always occur as we come into this tax refund season. We always see the lighter demand at the beginning of the year. We've been tightening, but not so much in response to what we've seen from a consumer perspective, but more based upon what we wanted to achieve asset level perspective. We've essentially been tightening, but not so much in response to what we've seen from a consumer perspective, but more based upon what we wanted to achieve asset level perspective.
Q: Are you adding items that would not typically be leasable that people can now pay for outright? A: No, we're not seeing that type of shift yet. That might be something we look at down the road. What we're really focused on now is bringing in goods that furniture goods, home goods et cetera, at that, extend beyond that $3,000 cap to really line up with other payment options like there's a lot to fill in from that perspective.
Q: What is the typical lag between opening up a new storefront location versus when you actually start to see some meaningful revenue contribution? A: That dynamic first starts with whether that location has had any type of financing or nonprime financing and it before, to the extent they're a little bit more experienced it speeds up the process. Given that they've this latest rollout has had subprime financing in the past, I expect three or four months, and we will be close to max originations out of those stores.
Q: Can you go over the numbers you mentioned on your retail strategies 720, another 580 eventually 1,600? A: In terms of the store count, since the end of 2023, we rolled out into additional 720 store locations. These are locations where we the or we're the exclusive lease to own provider and they're in the automotive segment goods and services segment, as we've done 723. Today, there's another almost 600, the 580 odd that we'll continue to and we'll continue to roll out in those locations.
Q: What would be the order of contribution among those strategies, which I think? A: From a new FlexShopper customer perspective, I expect it to be about 45% online and 55% retail from a total customer perspective. As we've mentioned before, the and retailer customer doesn't repeat quite as much. We expect to be more two-thirds online, one-third retailers.
The FlexShopper Inc. (NASDAQ:FPAY) earnings call highlighted the company's strategic initiatives and financial performance. CEO Russ Heiser and CFO John Davis discussed the state of the consumer, the addition of new payment options on the FlexShopper.com site, and the expansion into new storefront locations. They also provided insights into the company's retail strategies and the expected contribution from various segments. Despite seasonal changes and a focus on tightening credit to achieve desired asset levels, the company is seeing growth in lease originations and is expanding its product offerings to include higher-priced items. The rollout into additional store locations is expected to contribute significantly to revenue, and the company is optimistic about its momentum continuing into 2024.This article first appeared on GuruFocus.
