Yahoo Finance FlexShopper Inc (FPAY) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and Strategic ...
Total Revenue: Increased by 10% from the previous year.
Gross Profit: Rose by 31% compared to the same quarter last year.
Pre-Marketing EBITDA: Up by 25% year-over-year.
Core Earnings: Increased by 65% from the prior year.
Retail Revenue: Expected to grow, with new funding options introduced.
Marketing Spend: Increased by 60% versus the same quarter in 2023.
Provision for Doubtful Accounts: Improved to 26.9% from 32.8% year-over-year.
Depreciation and Impairment of Lease Merchandise Costs: Decreased to 41.6% from 44.8%.
Additional Revenue from New Payment Partner: Contributed approximately $800,000 this quarter.
Net Revenue for State License Loan Business: Grew 19% versus last year.
Adjusted EBITDA: Increased by 18% year-over-year to $7.6 million.
Retail Expansion: Achieved expansion of around 580 doors by the end of April.
Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
FlexShopper Inc (NASDAQ:FPAY) reported a 10% increase in total revenue and a 31% increase in gross profit in Q1 2024 compared to Q1 2023.
Pre-marketing EBITDA and core earnings saw significant increases of 25% and 65% respectively, indicating strong operational performance.
The introduction of new lines on the income statement for retail revenue and cost of retail revenue reflects the company's expansion and diversification of revenue streams.
FlexShopper Inc (NASDAQ:FPAY) successfully expanded its retail presence to 580 doors by the end of April, ahead of the mid-May target, showing effective execution of expansion strategies.
The company has improved asset quality and reduced the provision for doubtful accounts by approximately 590 basis points year-over-year, resulting in a $1.75 million benefit.
Negative Points
Marketing expenses increased by 60% compared to the same quarter last year, indicating a significant rise in spending that could impact profitability if not managed effectively.
The non-prime consumer segment continues to face macroeconomic headwinds, which could affect payment performance and overall financial stability.
FlexShopper Inc (NASDAQ:FPAY) noted the need for significant enhancements to fraud algorithms to manage risk, suggesting potential vulnerabilities in current systems.
The company's reliance on adding new funding options and partners to drive growth introduces dependency on external parties and market conditions.
While the company stopped originating new loans in its bank partner loan portfolio due to partners exiting the high APR business, this could limit financial flexibility and customer offerings until a new banking partner is found.
Q & A Highlights
Q: Hi, good morning, guys. Thanks for taking my questions. Russ, I was hoping you could give us a little color now that we're halfway through the second quarter on whether or not the traditional seasonal patterns have kind of held here in terms of originations going from first quarter to second quarter. A: We continue to see similar patterns where we have a sequencing much larger fourth quarter that's then tempered by the slower first quarter. We see a good number of early payoffs coming out of the tax refunds. What we've tried to do, though, by having these additional funding options is tried to mitigate some of that seasonality that we've experienced in the past and also by adding additional skews to the site by not being so consumer electronics heavy, get out of that cycle of fourth quarter high originations, but the same cycle still persists. I think we'll continue to see it for a good while now until we continued to transition away from consumer electronics as being a large portion of the goods on our sites, but still the same dynamics remain.
Q: Perfect. That's helpful. And I'm curious when in the quarter, did you guys start collecting the retail revenue or revenue from additional payment options. You said it was a partial quarter. So just trying to understand. A: Right. Sure. Late February is when we kicked it off.
Q: Okay. Perfect. And then last one, wanted to ask about marketing OpEx, seems like you have an opportunity here to really drive some new volumes by ramping that up a bit. What are kind of the thoughts here for the remainder of 2024 in terms of how we should be modeling a marketing line and the P&L. A: So as we continue to add new financing options to the site, the expectation is and thus monetize more consumers, the expectation that we'll continue to grow marketing spend. It's really going to be dependent upon when other funders join and how successful they are. But as we've mentioned in the past, we want to stay at that spot where margin, both on the FlexShopper goods and on the other funders goods equals our online marketing spend. So as we continue to -- so it should be symbiotic as we continue to grow. Hopefully, it will -- we'll continue to grow the margins to offset that enhanced marketing cost. Obviously, there are some limits as to how much you can grow marketing without having some inefficiencies. So we'll continue to scale it as it makes sense, as we bring on new funders, especially funders that are more in the prime [ish] category. We expect that will give us more runway to grow marketing. The expert, but sort of in whole, the expectation is to continue to grow at about 20% per quarter. But we'll continue to monitor it based upon what we actually are seeing occurring on the site and with our consumers.
Q: Right. That's helpful. I appreciate the time, guys. Thank you. A: Thanks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
