FlexShopper, Inc. (NASDAQ:FPAY) Q4 2018 Earnings Conference Call Transcript

Mar 12, 2019 • 10:00 am ET


FlexShopper, Inc. (NASDAQ:FPAY) Q4 2018 Earnings Conference Call Transcript


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Brad Bernstein

adjusted EBITDA loss narrowed to $3.1 million.

For Q4, our average cost to acquire a customer was $118 versus $198 last year. For the full year, our customer acquisition cost was $135 versus $194. Our success in reducing this cost was due to several factors, including continued optimization of our marketing and underwriting activities coupled with a growing contribution from our B2B retail channel, which is a great source of lower acquisition cost customers for FlexShopper.

We added approximately 25,500 new customers in Q4 compared with approximately 17,500 in the year ago quarter. For all of 2018, we added approximately 52,300 new customers, up from approximately 31,400 in 2017. As a reminder, these new customers ultimately expand our returning customer base and our revenue potential going forward. As such, repeat customers continue to be a growing segments of our business and represented approximately 58% of lease originations in 2018, proving that our offering resonates with consumers.

While approximately 85% of our lease originations in 2018 came from our direct to consumer channel, FlexShopper.com, we are continuing to see great progress with our business to business efforts, highlighted by a 730 tire store rollout that we completed in the third quarter of 2018. Off of this success, we commenced the pilot with a separate 400 plus store tire chain that is performing very well. Each retail wins reaffirm the merits of our mobile lease to own technology that provide a quick and seamless process for retailers and consumers to transact on a lease to own basis. As a reminder, our method has key competitive advantages since it requires no equipment in stores and no integration in the retailers point of sale system.

From start to finish, the lease to own transaction is executed through our mobile application and completed with the consumers entering a virtual credit card number at the point of sale to pay for the item. Our customer centric approach has been positively received because retailers are always juggling many initiatives to a program that requires no integration and minimal employee effort is very attractive. Logically in 2019, we are actively targeting tire stores and promoting this strategy heavily. We also want to build a diversified portfolio of retail verticals, so we are also targeting furniture retailers, which are traditionally a focus of lease to own companies.

I'd also like to provide an update on our third lease origination channel, which is our patented lease to own payment method at checkout on third party e-commerce sites. The significant potential of this channel is best illustrated by a 2018 success story. In May 2018, a fast growing online bed-in-the-box company contacted us to help save or convert their primary credit providers, 1,000 plus credit declines per month into sales. We integrated within 60 days and declined customers were directed to apply in check out with FlexShopper. Today, that e-retailer is saving approximately $2 million in annualized sales with FlexShopper, which also represents incremental lease originations for FlexShopper at a very