FlexShopper, Inc.

Greetings. Welcome to the Flex Shopper fourth quarter financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Carlos Sanchez, Investor Relations. Thank you. You may begin.

Thank you, and good morning. Welcome to Flex Shopper's fourth quarter 2023 financial results conference call. With me today are Russ Heiser, our chief executive officer, and John Davis, our chief operating officer. We issued earnings release yesterday, which we'll be referencing during today's call. Our earnings release and SEC filings can be found in our investor relations section of our website. We will be available for Q&A following today's prepared remarks. Before we begin, I would like to remind everyone that this call will contain forward-looking statements regarding future events and our financial performance, including statements regarding our market opportunity, the impact of our growth initiatives, and future financial performance. These should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC report. reports, including our annual report 10-K for the year ending December 31st, 2023. These statements reflect management's current beliefs, assumptions, and expectations, and are subject to a number of factors that may cause them to actual results to differ materially from those statements. Except as required by law, we undertake no obligation to publicly update or revise any of these statements whether as a result of any new information, future events, or otherwise. During today's discussion of our financial performance, we will provide certain financial information that contains non-GAAP financial measures under SEC rules. These include measures such as EBITDA, net income, and adjusted net income. These non-GAAP financial measures should not be considered replacements and should be read together with our GAAP results. Reconciliation to these gap measurements and certain additional information are also included in today's earning release, which is also available on the investor section of our website. This call is being recorded, and a webcast will be available for replay on our investor relations section of our website. I will now turn the call over to our CEO, Russ Heiser.

Thank you, Carlos, and thanks to everyone joining us this morning. We're excited to discuss our fourth quarter performance and provide some insights into the first quarter of 2024. Overall, the fourth quarter continued the financial progress from prior periods. Comparing the fourth quarter of 2023 versus the fourth quarter of the prior year, total fundings were up 7%. Net lease and loan revenues were up 42%. Gross profit was up over 300%. And operating income was a positive $5.6 million compared with the operating income loss of $5.5 million. And then moving on to 2023 full-year results, see a similar pattern. Total fundings were up 8% versus the prior year. Lease and loan revenues were up 3%. Gross profit was up 47%. And operating income was a positive $13.7 million compared with an operating income loss of $6.3 million in 2022. Despite all these financial improvements, the hallmark of the fourth quarter was the work going on behind the scenes. As we mentioned on the last call, we are continuing to transition our FlexShopper.com business significantly. What was traditionally an online lead generator for lease to own transactions is now transitioning into a retail platform with other payment options for consumers in addition to FlexShopper's lease to own product. The first quarter of 2024 There will be a new line on our income statement reflecting revenue from goods sold on FlexShopper.com that were not funded by us. Since February, we have been selling merchandise on our site that was funded via a payment option that was not a FlexShopper lease. The average margin on the products was approximately 23%. More importantly, this means that we are making more wholesale profit per day on FlexShopper.com than we are spending on daily marketing. Our next steps are fourfolds. First, we will continue to add additional payment options to FlexShopper.com so that almost every visitor can find a payment option that fits their credit profile. Whether it is a prime consumer looking for a 12-month deferred interest offering or a near-prime customer looking for pricing lower than our traditional lease-to-own product. As we have mentioned previously on these calls, we are monetizing less than 1% of the unique visitors to our site. More payment options lets us monetize the visitors that are already coming to FlexShopper.com. Second, we will continue expanding the number of SKUs on our site to provide our customers with a wider range of goods, both from a price perspective and from a product selection perspective. We want to continue to follow a no-inventory dropship model. Therefore, our merchandising team is adding manufacturer, distributor, and shipping partners that broaden our reach into the higher-margin appliance, furniture, and specialty goods markets to complement our traditionally strong electronics presence. Third, given that the margins on goods sold via other payment options are leased from FlexShopper per day is greater than our daily marketing spend, we are continually but prudently and cost-effectively increasing our marketing spend. This will allow us to grow not only the amount of goods sold on the site, but also the amount of goods leased from us on the site. As I mentioned, this venture only launched in mid-February, but we are excited about the runway in front of us. Finally, we launched the first of what we expect will be numerous microsites in early March, focused on individual product verticals that will expand our reach and efficiently adding new traffic to the FlexShopper ecosystem. Using generative AI, the goal is to quickly expand beyond the legacy FlexShopper.com marketplace experience to create streamlined sites for expediting item purchases and lease fulfillment. Our first was focused on gaming computers and consoles as that is a core competency, The microsites launched this year will range from jewelry to furniture, and over time represent all of the primary verticals for leaseable goods. Moving past the digital marketplace, FlexShopper continues to roll out the lease offering into new locations. Since the end of 2023, we have expanded into an additional 720 units through today, with an additional 580 more planned through the middle of May. And of course, further opportunity lies in improving the in-store leasing process with our current retailer partners. With another long-term partner, we're exploring how we can originate more leases together and are piloting an improved leasing and checkout process in a subset of locations that is currently sustaining an over 200% improvement in lease-through rate. After a bit more refinement and testing, we plan on rolling out the improved process into approximately 1,600 stores by the end of the summer. Finally, before I hand off the call to our CRO, I want to mention the recent positive support from our lender. Last Wednesday, we closed on a new credit facility that increased the funding commitment from $110 million to $150 million, pushed the maturity date to April 2027, and decreased our interest costs by 2% per year. And I'll hand the call over to John Davis to dive into the company's fourth quarter performance.