FlexShopper(US:FPAY)2023-05-15 16:53Financial Data and Key Metrics Changes - In Q1 2023, the company reported net revenue of over $30 million, gross profit of $13 million, and EBITDA exceeding $6 million [8] - Total funded originations increased by 29% year-over-year, with gross profit dollars rising by approximately $4.2 million year-over-year [17] - The gross profit margin improved by approximately 1,200 basis points from Q1 last year [17] - Operating expenses decreased by $283,000 year-over-year while revenue grew by 6% [26] Business Line Data and Key Metrics Changes - Gross profit from loans increased by a net $3.5 million, while gross profit from leases rose by $800,000 year-over-year [17] - Lease bad debt percentage improved by over 800 basis points from Q4 2022, contributing positively to profitability [20] - Lease net billing and fees were approximately $3 million lower year-over-year due to lower origination levels from proactive credit tightening [21] Market Data and Key Metrics Changes - The company observed a decline in early payoffs, attributed to customers having less available liquidity [9][37] - The typical customer experienced a personal recession due to inflation, but with inflation rates dropping, there is potential for more predictable payment rates [12] Company Strategy and Development Direction - The company is focusing on expanding its sales team to target small and medium businesses, complementing its enterprise sales efforts [16] - The Revolution storefront platform is onboarding new virtual locations, which is expected to accelerate growth in the portfolio size [10] - The company aims to adjust its pricing model to attract new customers as traditional providers tighten their underwriting [33] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding economic trends and the potential for improved credit profiles among applicants [13] - The company expects loss rates to continue improving over the next two quarters as they cycle through historical portfolios [9] - Management is focused on leveraging existing platforms to achieve growth efficiently while maintaining expense discipline [27] Other Important Information - The company is experiencing improved efficiency in operations, with a significant reduction in salary and benefit expenses year-over-year [26] - The company is developing a diverse revenue stream through its proprietary lease marketplace, bricks-and-mortar partnerships, and the Revolution loan platform [28] Q&A Session Summary Question: Changes in pricing model to attract new customers - Management indicated that adjustments are being made to attract customers who are currently being denied additional liquidity [33][35] Question: Marketing efficiency and seasonal factors - Management noted that marketing efficiency has improved, with higher conversion rates, and acknowledged the seasonal demand fluctuations [36] Question: Decline in early prepayments - Management attributed the decline in early prepayments to customers having less disposable income and changes in marketing frequency [37]