Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FlexShopper Inc (FPAY, Financial) reported a strong year-over-year revenue growth of over 29% for the second quarter.
- The company achieved a significant 90% increase in gross profit, reflecting improved profitability.
- Adjusted EBITDA rose from approximately $300,000 in Q2 2023 to nearly $5 million in Q2 2024, marking the highest second quarter adjusted EBITDA in two years.
- FlexShopper expanded its marketplace with new product categories and payment solutions, broadening its addressable market.
- The company successfully increased the number of retail storefronts by 150 in Q2 and plans to add 500 more in the second half of 2024.
Negative Points
- The nonprime consumer segment continues to face challenges due to macroeconomic headwinds.
- Net revenue for the state-licensed loan business declined by 10% year-over-year as the company focuses on profitability and risk management.
- The conversion rate of unique website visitors remains under 1%, indicating room for improvement in customer engagement.
- FlexShopper's marketing spend increased by 71% compared to the same quarter in 2023, which may impact short-term profitability.
- The company is still in the process of finding a new bank partner to reintroduce high APR loans, following the exit of their previous partner.
Q & A Highlights
Q: Can you explain the change from reporting total fundings to total lease funding approvals, and what were the actual fundings in the quarter?
A: The change was made to highlight the number of approvals given, as customers may not use them immediately but over time. Actual fundings were not specified, but the focus is on the approvals as a measure of potential future transactions. - H. Russell Heiser, CEO & CFO
Q: Can you provide an update on the microsites and their rollout process?
A: The first microsite, focusing on gaming and electronics, is live. Two more microsites in different categories are planned to launch by the end of the year. The strategy aims to provide focused content for better marketing efficiency and relevance. - John Davis, COO
Q: How long does it typically take for a new retail location to start generating meaningful volume?
A: The setup can be done in a couple of days, followed by training for local operators. Engagement depends on the partnership between local operators and our team. Recent launches have shown an 80% active rate within 60 days. - John Davis, COO
Q: What is the expected cadence for the rollout of 500 new retail locations in the second half of the year?
A: Most retailers prefer to complete rollouts before the holiday season, so expect all locations to be operational by mid-October. - John Davis, COO
Q: What is the typical time period for a lease funding approval, and how does it vary by product category?
A: Approvals typically last 90 days but are being extended. The take rate varies by product, with essential items like tires having a higher rate (up to 75%) compared to consumer electronics (as low as 30%). - H. Russell Heiser, CEO & CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
