FlexShopper, Inc. (NASDAQ:FPAY) Q2 2019 Earnings Conference Call - Final Transcript

Aug 13, 2019 • 10:30 am ET


FlexShopper, Inc. (NASDAQ:FPAY) Q2 2019 Earnings Conference Call - Final Transcript


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Brad Bernstein

to remind everyone that beginning with the back-to-school season and through the holiday season in Q4, we increased our direct-to-consumer marketing efforts, since our services are in greater demand. Historically, we have generated more than 45% of our B2C originations in the fourth quarter. With this demand, our marketing spend is typically the most sufficient and optimized during this period.

While the increased spend seasonally mutes fourth quarter results compared to other quarters, these originations drive revenues, gross profit and adjusted EBITDA in future periods. Each year, going back to the time we started FlexShopper over five years ago, we have been building upon building lease originations, which has led to this inflection point of a critical mass of annual lease originations. We are now very focused on surpassing that point and continuing to generate more adjusted gross profit, adjusted EBITDA and continued improvement in bottom line results.

In the second quarter of 2019, gross lease originations increased 43.4% to $13.2 million from $9.2 million for the same quarter of last year. Driving that growth was a combination of repeat customers, along with new customers, particularly through our B2B partners. Through June 30, 2019, our B2B retail channel contributed approximately 25% of all lease originations compared to less than 7% in the same period of 2018.

I'm very pleased to report that during the second quarter, we completed rollouts to over 560 locations between two regional retailers that increased our total retail store count and national footprint to over 1,200 retail locations compared to 322 locations this time last year. The full impact of these rollouts will obviously be seen in future quarters.

Again, this is a testament to our innovative lease purchase, finance approach at the point-of-sale and our mobile lease-to-own technology, which is turnkey, integrationless and pays the retailer immediately. We are very focused on parlaying this success into more retail partnership opportunities. Obviously, having satisfying retailers as points of reference is very helpful in growing this business.

For Q2 2019, we continue to lower our average quest to acquire customer, which came in at $58 compared to $167 for the same period in 2018. Our overall acquisition course of benefiting from the growth in our B2B retail channel, which is a great source of lower acquisition cost customers for FlexShopper.

I'm also pleased to report that repeat customers represented approximately 45% of lease originations in Q2 2019. And this is representative of the payback we get in future periods when we invest in our direct-to-consumer channel FlexShopper.com.

I'm now going to hand the call over to Russ Heiser, our CFO, to discuss our financial performance and provide an update on our 2019 outlook. Then I have some final commentary before we open the call for some questions.

Russell Heiser

Thanks, Brad. So I wanted to highlight some of my comments from previous calls, and review how ASC 842 changed the way we record revenue this year versus previous years.

Historically, FlexShopper reported all lease revenue, which is now, I