BOCA RATON, Fla., Nov. 14, 2017 (GLOBE NEWSWIRE) -- FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper” or the “Company”), a leading national online lease-to-own (“LTO”) retailer and LTO payment solution provider, today announced its financial results for the quarter ended September 30, 2017, highlighted by record third quarter revenue.
Management Commentary
Brad Bernstein, CEO, stated, “We are working to maximize the benefits of FlexShopper’s unique position as the only online “pure play” lease-to-own company in advance of the strongest seasonal period for our B2C business segment. We were pleased to report a quarter of both significant revenue growth and narrowing losses compared to the same period from last year. We were proactive in maintaining a streamlined marketing focus and have begun capitalizing on fourth quarter demand with a faster e-commerce site and enhanced user experience, currently generating quarter over quarter increases in lease originations. In addition, our underwriting initiatives are paying off with an enhanced and tested model providing 21% higher online approval rates. We are excited and well positioned to accelerate the promotion of FlexShopper products and services across a variety of sales channels this holiday season.”
Financial Highlights for the Three Months Ended September 30, 2017 vs. Three Months Ended September 30, 2016:
- Total revenues increased 34% to $16.5 million from $12.3 million
- Net loss decreased to $1.7 million compared to a net loss of $2.6 million
- Net loss attributable to common shareholders decreased to $2.3 million or $0.44 per diluted share compared to $3.2 million or $0.60 per diluted share
- Adjusted Gross Profit(1) increased 8.9% to $3.4 million from $3.1 million
- Adjusted EBITDA(1) improved to ($0.8) million from ($1.8) million
| (1)Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. Refer to the definitions and reconciliations of these measures under “Non-GAAP Measures”. |
Other Operating Highlights and Recent Developments
- Continued diversification of products leased including more furniture with addition of retailers such as Walmart and Overstock.com to FlexShopper’s e-commerce marketplace
- Appointed David Blum, formerly of Babbel and eharmony.com, as Chief Marketing Officer to lead the Company’s marketing team in continued optimization of customer acquisition costs and scaling across all channels
- Created and launched an automated pay per click advertising platform utilizing campaign segmentation and machine learning bid adjustments; FlexShopper is beginning to scale with this platform at its targeted customer acquisition cost.
- In recognition of its dedication to customers, FlexShopper received an A+ rating from the Better Business Bureau.
Upcoming Investor Relations Activities
- In coordination with FlexShopper's efforts to raise the Company's corporate profile, CEO Brad Bernstein and CFO Russell Heiser will be attending KeyBanc’s Consumer Conference in early December.
Non-GAAP Measures
The Company regularly reviews a number of metrics, including the following key metrics, to evaluate its business, measure its performance, identify trends affecting its business, formulate financial projections and make strategic decisions.
| Three Months ended September 30, | ||||||||||||||||
| Adjusted Gross Profit | 2017 | 2016 | $ Change | % Change | ||||||||||||
| Lease revenues and fees | $ | 16,144,184 | $ | 12,072,493 | $ | 4,071,691 | 33.7 | |||||||||
| Lease merchandise sold | 359,656 | 255,431 | 104,225 | 40.8 | ||||||||||||
| Less: Cost of merchandise sold | 280,130 | 182,879 | 97,251 | 53.2 | ||||||||||||
| Less: Provision for doubtful accounts | 4,681,832 | 3,501,023 | 1,180,809 | 33.7 | ||||||||||||
| Net revenues | 11,541,878 | 8,644,022 | 2,897,856 | 33.5 | ||||||||||||
| Less: Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 8,146,293 | 5,525,701 | 2,620,592 | 47.4 | ||||||||||||
| Adjusted gross profit | $ | 3,395,585 | $ | 3,118,321 | $ | 277,264 | 8.9 | |||||||||
| Gross profit margin | 29 | % | 36 | % | ||||||||||||
| Net revenues as a percentage of cost of lease revenue | 140 | % | 155 | % | ||||||||||||
| Three Months ended September 30, | ||||||||||||||||
| Adjusted EBITDA | 2017 | 2016 | $ Change | % Change | ||||||||||||
| Net Loss | $ | (1,727,617 | ) | $ | (2,613,492 | ) | $ | 885,875 | (33.9 | ) | ||||||
| Add back: Amortization of debt costs | 118,404 | 118,404 | - | - | ||||||||||||
| Add back: Other amortization and depreciation | 415,443 | 295,386 | 120,057 | 40.6 | ||||||||||||
| Add back: Interest expense | 385,989 | 340,955 | 45,034 | 13.2 | ||||||||||||
| Add back: Stock compensation | 22,685 | 45,863 | (23,178 | ) | (50.5 | ) | ||||||||||
| Adjusted EBITDA | $ | (785,096 | )* | $ | (1,812,884 | )* | $ | 1,027,788 | (56.7 | ) | ||||||
Financial Review for Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016:
- Total revenues increased 52% to $50.6 million from $33.3 million
- Net loss decreased to $4.3 million compared to a net loss of $8.8 million
- Net loss attributable to common shareholders decreased to $6.1 million or $1.14 per diluted share compared to $9.4 million or $1.80 per diluted share
- Adjusted Gross Profit(1) increased 61% to $10.7 million from $6.7 million
- Adjusted EBITDA(1) improved to ($1.5) million from ($6.4) million
Key performance metrics for the nine months ended September 30, 2017 are as follows:
| Nine Months ended September 30, | ||||||||||||||||
| Adjusted Gross Profit | 2017 | 2016 | $ Change | % Change | ||||||||||||
| Lease revenues and fees | $ | 49,458,109 | $ | 32,505,343 | $ | 16,952,766 | 52.1 | |||||||||
| Lease merchandise sold | 1,174,608 | 747,747 | 426,861 | 57.0 | ||||||||||||
| Less: Cost of merchandise sold | 816,058 | 498,594 | 317,464 | 63.7 | ||||||||||||
| Less: Provision for doubtful accounts | 14,357,461 | 9,260,469 | 5,096,992 | 55.0 | ||||||||||||
| Net revenues | 35,459,198 | 23,494,027 | 11,965,171 | 50.9 | ||||||||||||
| Less: Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 24,733,915 | 16,817,016 | 7,916,899 | 47.1 | ||||||||||||
| Adjusted gross profit | $ | 10,725,283 | $ | 6,677,011 | $ | 4,048,272 | 60.6 | |||||||||
| Gross profit margin | 30 | % | 28 | % | ||||||||||||
| Net revenues as a percentage of cost of lease revenue | 142 | % | 139 | % | ||||||||||||
| Nine Months ended September 30, | ||||||||||||||||
| Adjusted EBITDA | 2017 | 2016 | $ Change | % Change | ||||||||||||
| Net Loss | $ | (4,345,131 | ) | $ | (8,759,916 | ) | $ | 4,414,785 | (50.4 | ) | ||||||
| Add back: Amortization of debt costs | 355,212 | 332,900 | 22,312 | 6.7 | ||||||||||||
| Add back: Other amortization and depreciation | 1,181,279 | 778,125 | 403,154 | 51.8 | ||||||||||||
| Add back: Interest expense | 1,256,475 | 1,112,642 | 143,833 | 12.9 | ||||||||||||
| Add back: Stock compensation | 64,896 | 124,244 | (59,348 | ) | (47.8 | ) | ||||||||||
| Adjusted EBITDA | $ | (1,487,269 | )* | $ | (6,412,005 | )* | $ | 4,924,736 | (76.8 | ) | ||||||
| * Represents loss | ||||||||||||||||
The Company refers to Adjusted Gross Profit and Adjusted EBITDA in the above tables as it uses these measures to evaluate its operating performance and make strategic decisions about the Company. Management believes that Adjusted Gross Profit and Adjusted EBITDA provide relevant and useful information which is widely used by analysts, investors and competitors in its industry in assessing performance.
Adjusted Gross Profit represents GAAP revenue less the provision for doubtful accounts and cost of leased inventory and inventory sold. Adjusted Gross Profit provides us with an understanding of the results from the primary operations of its business. The Company uses Adjusted Gross Profit to evaluate its period-over-period operating performance. This measure may be useful to an investor in evaluating the underlying operating performance of its business.
About FlexShopper
FlexShopper, LLC, a wholly owned subsidiary of FlexShopper, Inc. (FPAY), is a financial and technology company that provides brand name electronics, home furnishings and other durable goods to consumers on a lease-to-own (LTO) basis through its e-commerce marketplace (www.FlexShopper.com) and patent pending LTO payment method. FlexShopper also provides LTO technology platforms to retailers and e-retailers to facilitate transactions with consumers that want to acquire their products, but do not have sufficient cash or credit. FlexShopper approves consumers utilizing its proprietary consumer screening model, collects from consumers under an LTO contract and funds the LTO transactions by paying merchants for the goods. Follow us on Facebook or Twitter @FlexShopper.
Forward-Looking Statements
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.
Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 those risks and uncertainties described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections of the Company’s most recently filed Annual Report on Form 10-K and its subsequently filed Quarterly Reports on Form 10-Q. The Company urges you to consider those risks and uncertainties in evaluating its forward-looking statements. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Contact:
FlexShopper, Inc.
Investor Relations
ir@flexshopper.com
FlexShopper Inc.