FlexShopper, Inc. Reports 2018 Third Quarter Financial Results Highlighted by 90% Growth in Lease Originations and 27% Revenue Growth

Company Provides 2019 Guidance

BOCA RATON, Fla., Nov. 05, 2018 (GLOBE NEWSWIRE) — FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and LTO payment solution provider, today announced its financial results for the quarter ended September 30, 2018, highlighted by record third quarter revenue and lease originations.

Results for Three Months Ended September 30, 2018 vs. Three Months Ended September 30, 2017:

  • Total revenues increased 27.3% from $16.5 million to $21.0 million
  • Gross lease originations increased from $6.5 million to $12.4 million, or 90%
  • Net loss increased to $2.7 million compared to a net loss of $1.7 million
  • Net loss attributable to common shareholders increased to $3.3 million, or $0.56 per diluted share, compared to $2.3 million, or $0.44 per diluted share

Results for Nine Months Ended September 30, 2018 vs. Nine Months Ended September 30, 2017:

  • Total revenues increased 18.6% from $50.6 million to $60.0 million
  • Gross lease originations increased from $20.9 million to $30.8 million, or 47.3%
  • Net loss increased to $7.0 million compared to a net loss of $4.3 million
  • Net loss attributable to common shareholders increased to $8.8 million, or $1.59 per diluted share, compared to $6.1 million, or $1.14 per diluted share
  • Adjusted Gross Profit¹ increased 19.1% from $10.7 million to $12.8 million
  • Adjusted EBITDA¹ was ($2.3) million compared to ($1.5) million

¹Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. Refer to the definitions and reconciliations of these measures under “Non-GAAP Measures”.

Other Highlights and Recent Developments

  • In the third quarter of 2018, our average cost to acquire a new customer was at its lowest ever at $133 compared to $249 for the same quarter last year. This decrease is the result of continued optimization of our marketing and underwriting strategies combined with increased lease originations through retail partners. While marketing expense increased compared to the same period last year, our investments in marketing at targeted acquisition costs drives revenues and gross profits in future periods and are within the Company’s budget.
  • Initiated cost reduction plan with up to $1.4 million in annualized cash savings. This includes personnel reductions made in October. The cost reductions and continued lease origination growth are part of the Company’s proactive plan to become EBITDA positive and profitable.
  • Strong increase in lease originations continued through October. October gross lease originations were $5.0 million, an increase of 82.6% from $2.7 million during the same period in 2017. Cumulative gross lease originations for the ten months ended October 31, 2018 were $35.8 million representing a 51.4% increase from $23.6 million in the same period in 2017.
  • Company launched its largest retail rollout to 730 retail stores, accelerating its B2B2C business. This rollout successfully demonstrated our “integrationless” mobile application technology, which provides a quick and seamless process for retailers and consumers to transact on an LTO basis. Our technology does not require integration into the retailer’s point of sale and enables retailers to get paid instantly at the point of sale.
  • Received a Patent from the United States Patent and Trademark Office (USPTO). The patent is for a system that enables e-commerce servers to complete LTO transactions through their e-commerce websites.

Brad Bernstein, CEO, stated, “We are pleased to report another quarter of continued revenue and lease origination growth. In the third quarter, the combination of well-executed underwriting and marketing initiatives and increased retail lease originations resulted in our lowest customer acquisition costs ever. With our recent $10 million growth capital raise and continued strong momentum through October, we are ready to execute for the holiday season, during which we typically originate up to 35% of our annual lease originations.  We are excited, as our record lease originations are expected to translate into revenues and gross profits in future periods and give us the confidence to provide financial guidance for 2019.”

Financial Outlook – FY 2018 and FY2019 Guidance

Current Guidance
Gross Lease Originations  > $52 million (FY 2018)
Gross Revenue  > $105 million (FY 2019)
Adjusted Gross Profit  > $24 million (FY 2019)
Adjusted EBITDA  > $3 million (FY 2019)

 

The Company’s guidance for Gross Lease Originations, Gross Revenue, Adjusted Gross Profit and Adjusted EBITDA are forward-looking statements. They are subject to various risks and uncertainties that could cause the Company’s actual results to differ materially from the anticipated targets. There can be no assurance the Company will meet these financial projections. See the cautionary information about forward-looking statements in the “Forward-Looking Statements” section of this press release. Additionally, Adjusted Gross Profit and Adjusted EBITDA are non-GAAP financial measures. Refer to the definitions of these measures under “Non-GAAP Measures,” but note that information reconciling forward-looking non-GAAP measures to GAAP measures is not available without unreasonable effort.

Conference Call Details
Date:   Monday, November 5, 2018
Time:   10:00 a.m. Eastern Time

Participant Dial-In Numbers:
Domestic callers:    (877) 407-3944
International callers:   (412) 902-0038

Access by Webcast
The call will also be simultaneously webcast over the Internet via the “Investor” section of the Company’s website at www.flexshopper.com or by clicking on the conference call link: https://78449.themediaframe.com/dataconf/productusers/fpay/mediaframe/27326/indexl.html. An audio replay of the call will be archived on the Company’s website.

FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

For the three months ended
September 30,
For the nine months ended
September 30,
2018 2017 2018 2017
Revenues:
Lease revenues and fees $ 20,514,492 $ 16,144,184 $ 58,439,865 $ 49,458,109
Lease merchandise sold 490,208 359,656 1,592,556 1,174,608
Total revenues 21,004,700 16,503,840 60,032,421 50,632,717
Costs and expenses:
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise 10,289,709 8,146,293 29,684,867 24,733,915
Cost of lease merchandise sold 349,209 280,130 1,007,677 816,058
Provision for doubtful accounts 5,905,083 4,681,832 16,563,888 14,357,461
Marketing 1,596,322 994,576 4,025,509 2,625,367
Salaries and benefits 2,186,835 1,900,925 6,397,999 5,567,082
Operating expenses 2,206,496 1,723,309 6,163,680 5,266,278
Total costs and expenses 22,533,654 17,727,065 63,843,620 53,366,161
Operating loss (1,528,954 ) (1,223,225 ) (3,811,199 ) (2,733,444 )
Loss on extinguishment of debt 126,622 126,622
Interest expense including amortization of debt issuance costs 1,061,827 504,392 3,040,832 1,611,687
Net loss (2,717,403 ) (1,727,617 ) (6,978,653 ) (4,345,131 )
Dividends on Series 2 Convertible Preferred Shares 609,168 603,680 1,817,672 1,712,716
Net loss attributable to common shareholders $ (3,326,571 ) $ (2,331,297 ) $ (8,796,325 ) $ (6,057,847 )
Basic and diluted (loss) per common share:
Net loss $ (0.56 ) $ (0.44 ) $ (1.59 ) $ (1.14 )
WEIGHTED AVERAGE COMMON SHARES:
Basic and diluted 5,950,161 5,292,281 5,539,815 5,290,077

FLEXSHOPPER, INC.
CONSOLIDATED BALANCE SHEETS

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