FlexShopper, Inc.

Total revenue increased 23% year over year to nearly $39 million, with net revenue up 22.9% to $38.6 million. Adjusted EBITDA increased 45% year over year to $12.2 million, and adjusted EBITDA margin was 31.5% versus 26.7% a year ago. Net income attributable to common stockholders was $1.2 million, or $0.05 per diluted share. Gross profit increased 32.9% year over year, and gross margin was 58% versus 54% in Q3 2023 and 50% in Q2 2024. Lease funding approvals were $77 million, up 33% year over year, and signed store count was approximately 7,800, up nearly 250% from about 2,300 at the end of 2023. For asset quality, provision for doubtful accounts as a percentage of gross lease billings and fees was 22.2% versus 32.1% a year ago. Forward-looking commentary centered on continued retail revenue growth, further B2B location rollouts, and the proposed rights offering; management said that for every $25 million of net proceeds raised, it estimates net income would increase by $4.5 million, and that $50 million of net proceeds could contribute about $9 million of annual net income to common shareholders through debt reduction and preferred redemption.

Russ Heiser framed the quarter as evidence that FlexShopper's transformation is taking hold, pointing to a fuller payment-solution stack across lease-to-own, unsecured consumer loans, and e-commerce retail. He stressed that B2B partnerships are accelerating, the signed store base has surpassed the company’s original 5,000-location target for year-end 2024, and more retail and payment partners should be announced in coming months. His tone was upbeat and opportunistic, but he also highlighted strategic moves aimed at simplifying the balance sheet, including the preferred stock redemption and rights offering.

John Davis focused on execution across three priorities: better asset quality, higher retail product margins, and growth in profitable revenue. He said the provision for doubtful accounts fell to 22.2% of gross lease billings and fees from 32.1% a year earlier, gross margin improved to 58%, gross profit rose 32.9%, and adjusted EBITDA increased to $12.2 million. He also noted operating leverage, with salaries and operating expenses excluding marketing improving by about 130 basis points and marketing and loan origination costs and fees improving by about 280 basis points as a percentage of revenue.

Analysts pressed management on what is driving the improvement in payment performance, and JD said improved underwriting and fraud evaluation were the biggest factor, followed by better borrower mix and some tailwind from tighter credit at competing lenders; he added that AI-driven servicing automation is planned for 2025. Questions also focused on the B2B rollout timeline and whether the business has a store concentration effect; Russ said a few deciles of stores generate most of the volume and that store-level adoption can take six to nine months, with holidays helping faster adopters and slower rollout for others. Another question asked whether retail revenue should seasonally mix higher in Q4; Russ said Q4 is big for retail and marketing/originations, but much of the revenue impact is typically realized in Q1 of the following year.