FlexShopper, Inc. (NASDAQ:FPAY) Q1 2020 Earnings Conference Call - Final Transcript

May 07, 2020 • 11:00 am ET


FlexShopper, Inc. (NASDAQ:FPAY) Q1 2020 Earnings Conference Call - Final Transcript


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Greetings and welcome to the FlexShopper First Quarter 2020 Earnings Call. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to our host, Jeremy Hellman of The Equity Group. Thank you. 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 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 CEO, Rich House. Please go ahead, Rich.

Richard House

Thank you, Jeremy, and welcome, everyone, to our 2020 first quarter earnings call. Joining me today is Russ Heiser, our CFO; and Brad Bernstein, the Founder and President of FlexShopper. Russ is going to walk you through the results for our business, including financial details, and Brad is going to provide you an update on our business-to-business partnership operations. Brad is also going to provide some detail on how we've mobilized our operations to effectively conduct business in the COVID-19 business environment. I will conclude with a more detailed discussion of our view of credit risk, our direct-to-consumer marketing activities and a summary of our current strategy.

However, prior to turning the call over to Russ, I'm going to make some brief comments regarding the current impact of COVID-19, broad-based economic slowdown and how it has affected FlexShopper. We entered March with strong growth, which is reflected in our lease origination growth of 20.6% year-over-year for the total quarter. However, that growth slowed substantially in the second half of March and throughout April. This is due to a significant drop of consumers purchasing in our retail partner stores resulting from the shelter-at-home requirements across their geographic footprints.

Also contributing to the slowdown was the lower volume in our direct-to-consumer marketing in the second half of March based on our decision to prudently tighten our underwriting criteria as we assess the potential impact of the COVID-19 slowdown on consumer payment behavior. Fortunately, we have not seen any deterioration in consumer payment behavior in March or April. At the end of the quarter, percentage of leases being paid in a timely manner was higher in March of 2020 than in March of 2019. This payment pattern continued as of the end of the month in April. Timely payments were higher in April of 2020 than both April 2019 and March of 2020. While it is certainly difficult to see the future, we are happy our credit quality has remained strong to date.

Now I'll hand the call over to Russ now to discuss the financial highlights.

H. Russell Heiser

Thanks, Rich. A press release and investor deck on our website provides significant detail on the first quarter and trailing 12 months. So I'll focus on a few high-level metrics and a few key items.

As a reminder, due to the seasonality of our business, the best metrics are ones that compare across similar time periods. Therefore,