8-K: FlexShopper Reports Strong 2024 Results Driven by DTC and B2B Growth

FlexShopper announces a 19.5% year-over-year increase in annual revenue, driven by growth in its direct-to-consumer (DTC) and business-to-business (B2B) strategies.

Summary

• FlexShopper reported its financial results for the quarter and year ended December 31, 2024.
• Annual revenue increased by 19.5% year-over-year.
• Operating income for 2024 increased by 66% to $22.8 million.
• Adjusted EBITDA increased by 43.1% to $33.3 million.
• The company expanded its LTO offerings to 7,900 locations, a ~250% increase.
• FlexShopper raised $12.2 million in proceeds through a rights offering since November 2024.
• Lease originations for the first quarter of 2025 increased by 49.7% compared to the same period in 2024.
• The company anticipates full-year 2025 gross profit between $90 million and $100 million.
• FlexShopper expects full-year 2025 adjusted EBITDA of $40 million to $45 million.
• FlexShopper received a notification from Nasdaq on April 17, 2025, regarding non-compliance with listing rules due to a delay in filing the Form 10-K.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to strong growth in key financial metrics and expansion of the business. However, the delay in filing the Form 10-K and the net loss temper the overall positive outlook.

Positives

• The company experienced significant growth in revenue, operating income, and adjusted EBITDA.
• FlexShopper expanded its LTO offerings to a significantly larger number of locations.
• The company successfully raised capital through a rights offering.
• Lease originations are showing strong growth in the first quarter of 2025.
• The company anticipates continued progress in 2025 with increased gross profit and adjusted EBITDA.
• Gross profit margin increased from 47% to 55% for the year.

Negatives

• FlexShopper reported a net loss attributable to common stockholders of ($4.7) million, or ($0.22) per diluted share for the year.
• The company received a notification from Nasdaq regarding non-compliance with listing rules due to a delay in filing the Form 10-K.
• Net loss attributable to common stockholders of ($1.9) million, or ($0.09) per diluted share, compared to net loss attributable to common stockholders of ($715) thousand or ($0.03) per diluted share for the quarter.

Risks

• The company's ability to file the Form 10-K in a timely manner and regain compliance with Nasdaq listing rules is uncertain.
• The forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially.
• The company's ability to obtain adequate financing to fund its business operations in the future is a risk.
• Dependence on third-party retail partners and maintaining those relationships is a risk.

Future Outlook

FlexShopper anticipates continued progress in 2025, with expected full-year gross profit between $90 million and $100 million and adjusted EBITDA of $40 million to $45 million.

Management Comments

• Russ Heiser, Jr, Chief Executive Officer, stated, 'As expected, 2024 was a transformative year for FlexShopper highlighting the successful technology investments we made over the past two years and the progress of our DTC and B2B growth strategies.'
• Mr. Heiser continued, 'We continue to look for strategic opportunities to repurchase 91% of our series 2 convertible preferred stock at a 50+% discount to its liquidation preference, which we believe will be highly accretive to FlexShoppers common shareholders.'
• Mr. Heiser concluded, 'In addition, we believe profitability will improve further in 2025 as we benefit from higher sales on flexshopper.com, stable operating expenses and credit quality, and the contribution of payments on leases that were originated in 2024.'

Industry Context

The announcement reflects the ongoing growth in the online lease-to-own market, driven by increasing demand from underserved consumers and the expansion of e-commerce. FlexShopper's focus on DTC and B2B strategies aligns with industry trends towards diversified distribution channels and partnerships with retailers.

Comparison to Industry Standards

• FlexShopper's growth in lease funding approvals (79.3%) outpaces some of its competitors in the fintech space, such as Katapult, which has seen more modest growth in similar metrics.
• The adjusted EBITDA margin of FlexShopper is comparable to other players in the alternative financing sector, such as Affirm, but FlexShopper's focus on the lease-to-own model differentiates it from companies primarily focused on point-of-sale financing.
• The company's expansion to 7,900 locations demonstrates a significant increase in market presence, rivaling the distribution networks of established players like Rent-A-Center in the LTO space.

Stakeholder Impact

• Shareholders can expect potential accretion from the repurchase of preferred stock.
• Employees may benefit from the company's growth and improved financial performance.
• Customers will have access to expanded LTO offerings and payment solutions.
• Retail partners can expect continued collaboration and growth opportunities.

Next Steps

• FlexShopper plans to issue audited financial results as soon as the review of consolidated financial statements is completed.
• The company intends to file the Form 10-K as soon as practicable and, if necessary, submit a plan with Nasdaq to regain compliance.

Key Dates

Keywords

FlexShopper, lease-to-own, LTO, financial results, revenue, EBITDA, retail, DTC, B2B