FlexShopper, Inc. Reports Second Quarter 2023 Financial Results
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.
08/14/2023 - 04:30 PM
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 t o $13.4 million , loan participations decreasing 99.1% from $11.0 million to $0.1 million , and loan originations increasing from $0 t o $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 t o $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
Conference Call and Webcast Details
Conference call
Date: Monday August 14, 2023
Domestic callers: (877) 407-2988
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, $0.00 1 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, $0.00 1 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, $0.00 01 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.
FlexShopper, Inc.
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.
