FlexShopper, Inc. (NASDAQ:FPAY) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 09:00 am ET


FlexShopper, Inc. (NASDAQ:FPAY) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings and welcome to the FlexShopper Third Quarter 2019 Earnings Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host, Jeremy Hellman of The Equity Group. Thank you, sir. You may begin.

Jeremy Hellman

Thank you, operator. I would like to remind everyone that we have posted an updated investor presentation within the IR section of the company website, www.flexshopper.com, and I encourage everyone to review the forward-looking statement on Page 2 of that presentation.

With that, I would like to turn the call over to FlexShopper's Founder and President, Brad Bernstein. Please go ahead, Brad.

Brad Bernstein

Thank you, Jeremy and welcome everyone to our 2019 third quarter earnings call. Joining me today are Rich House, our new CEO; and Russ Heiser, our CFO. I want to take this opportunity to formally introduce Rich to all of our investors and analysts. Rich came aboard a month ago, and it is a great addition to our executive team. With our B2B retail channel kicking in, our surpassing a critical inflection point in lease originations and our continued significant growth, the company recognized that the executive leadership team needed additional bench strength. Rich brings significant knowledge and experience in the consumer credit arena and I look forward to working with him as we continue to grow our company.

Now on to the highlights from Q3. In short, our third quarter was a solid continuation of the excellent momentum recorded throughout the first half of the year. We continue to originate leases at a robust rate, with net lease revenues following net growth as everyone familiar with our model might expect. We've coupled that top line growth with excellent margin performance in the quarter, resulting in another quarter of positive earnings of $800,000 or $0.02 per share. That also translated into adjusted EBITDA of $3.2 million for the third quarter and $7.2 million for the nine-month period.

Both of those figures are ahead of our expectations and guidance as our B2B retail channel's lease performance positively impacted our lease portfolio performance and overall company performance. We originated 38% more leases in the third quarter of 2019 by gross origination dollars for the same quarter last year. Driving that growth was a combination of repeat customers along with new customers, particularly through our B2B partners. For the trailing 12 months ended September 30, 2019, our B2B retail channel contributed approximately 33% of all lease originations compared to approximately 10% in the same period a year ago.

During the third quarter, we again lowered our average cost to acquire a customer to $67 from the prior year, when it was $133. Our overall acquisition costs continue to benefit from the growth in our B2B retail channel, which is a great source of lower acquisition cost customers for FlexShopper. Repeat customers represented approximately 40% of lease originations in Q3 2019. This also helps drive down our customer acquisition costs, while providing strong validation of the value we