FlexShopper, Inc.

Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the Flex Shopper second quarter financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Carlos Sanchez, Investor Relations. You may begin.

Thank you and good morning. Welcome to Flex Shopper's second quarter 2024 financial results conference call. With me today are Russ Heiser, our Chief Executive Officer, and John Davis, our Chief Operating Officer. We issued an 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 financial performance, including statements regarding our market opportunity, the impact of our growth initiatives, and future financial performance. These statements should be considered in conjunction with cautionary statements and our earnings release and the company's most recent periodic SEC reports, including our annual report and quarterly report 10Q for the quarter ended June 30th, 2024. These statements reflect management's current beliefs, assumptions, and expectations, and are subject to a number of factors that may cause 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 new information, future events, or otherwise. During today's discussion over financial performance, we will provide certain financial information that contains non-GAAP financial measures under SEC rule. 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 for these measurements and certain additional information are also included in today's earnings 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 section of our website. I will now turn the call over to our CEO, Russ Heiser.

Thank you, Carlos. Thanks to everyone joining us for this morning's call to review our second quarter performance. We'll start today's call with an update on the growth strategies we are pursuing, and then we'll turn the call over to JD, who will discuss our operations and financial results in more detail before we take your questions. I'm pleased to report that Flex Shopper produced a strong quarter of year-over-year growth with total revenues increasing by over 29%. In addition, profitability increased significantly as we experienced a 90% expansion in gross profit. adjusted EBITDA increased from approximately 300,000 in the 2023 second quarter to almost 5 million in the 2024 second quarter. This is the highest second quarter adjusted EBITDA level in two years. Overall, our 2024 second quarter performance reflects the success of the long-term strategies we are pursuing to drive profitable growth and to create lasting value for our shareholders. It also demonstrates the differentiated platform we have created and the value we provide to our retail customers and B2B partners. We have pursued strategies to expand our financing options, which have resulted in a full suite of payment solutions within our digital marketplace. Today, our platform consists of traditional lease to own offerings, unsecured consumer loan products, and a traditional e-commerce retail business with a growing range of financing options. In addition, we offer a diverse payment solutions to customers directly through our website, as well as through partnerships with leading e-commerce and brick and mortar retailers in the automotive electronics and pawn segments. There are several important components of the marketplace we have created that I'd like to review today. We have partnered with multiple technology and funding partners to provide flexible payment solutions to any customer that engages with us directly or through one of our merchant partners. The technology we have created seamlessly routes applications through our network to find a payment solution for our customers' unique credit profile. We have made significant investments over the past year upgrading our digital resources, partners, and systems to support our internal underwriting, collections, and account servicing capabilities. Not only does our tech-enabled platform create value for our customers through a fast and convenient application process, but it also allows FlexShopper to proactively manage risk and enhance the effectiveness of our marketing initiatives. We have recently added new capabilities that allow customers on our FlexShopper.com website to receive payment options that fit their credit profile. In conjunction with this, we have broadened the product assortment available for sale on FlexShopper.com. This expanded marketplace is resonating with consumers and broadens our addressable market to serve more customers regardless of their credit score. Since launching these capabilities during the 2024 first quarter, we have seen steady growth in retail revenue increase from $780,000 for the quarter ended March 31st, 2024 to $1.4 million for the quarter ended June 30th, 2024. In addition, since its launch, we have seen consistent growth in monthly retail revenue as the confidence in our capabilities increases, we expand our marketing spend to drive traffic and pursue opportunities to improve conversion. Based on our recent performance and the strategies we're pursuing to grow the FlexShopper marketplace, we expect retail revenue and gross profits continue increasing over the coming quarters. As I briefly mentioned earlier, we also continue to add more SKUs and product categories to the FlexShopper site to gain a larger share of our customer spend. We continue to expand in the furniture category supported by LTL freight shipping, and we have launched personal luxury categories such as handbags, sunglasses, and watches. In addition, we have recently launched a microsite focused on electronics with many additional sites in the works to have a greater reach than the single FlexShopper.com marketplace site. It's important to note that we do not take inventory of any products offered on our websites. We have developed strategic relationships with distributors and manufacturers who drop ship products directly to customers. We believe this provides us with a competitive advantage by eliminating inventory risks and reducing the capital requirements of our business. This in turn allows us to invest capital, support our technology roadmap, marketing programs, and loan and lease growth. In addition to our direct-to-consumer offerings, we continue to add retail partnerships with regional and national retailers. We believe our financing solutions and technology capabilities offer retail partners with a seamless opportunity to add incremental sales to their business. As a result, since the end of Q1 2024, the number of retail storefronts has increased by 150 by the end of the second quarter. Additionally, we expect 500 incremental retail storefronts will launch in the second half of 2024. As you can see, we have a very robust and active pipeline of new potential enterprise-level partnerships that are being discussed as other similar payment providers tighten their lending requirements. As you can see in our financials, marketing spend was up 71% versus the same quarter in 2023, reflecting strategic investments to ramp up marketing and grow total Flex Shopper fundings as well as retail revenue. Total lease funding approvals from this marketing activity and retail partner door expansion has resulted in doubling our total lease funding approvals this quarter versus the same period last year. Marketing strategies underway include product category specific microsites, expanding use of AI and customer targeting, and outbound credit tier prospecting to attract a broader mix of credit types to the marketplace. The final growth objective I'd like to review today is a significant opportunity to increase customer conversion. For the past 12 months, our conversion rate has been under 1% of unique website visitors. We're pursuing multiple strategies to enhance our conversion, which we believe provides us with opportunities to significantly grow our revenue, especially with higher year-over-year funding approval levels. This will be in large part driven by expansion of payment solutions available to our customers. Looking at the retail lending environment in more detail, our non-prime consumer continues to face headwinds from the macroeconomic environment. This has been increased focused on enhancements to our risk-based pricing to balance the cost to the consumer versus optimizing consumer engagement. This has required significant enhancements to our fraud algorithms in order to grow a portfolio that produces the correct level of asset returns. As JD will discuss in more detail, our prudent focus on risk management and pricing has created a stable and healthy portfolio that we believe will allow us to gain market share as other lenders and LTO providers continue to tighten standards. As you can see, our efforts over the past year to transform FlexShopper are producing strong growth and increased levels of profitability. FlexShopper is supported by market leading payment solutions and best in class technology capabilities, which are protected by multiple patents and pending patents. In addition, we have a strong and experienced team of associates that are committed to creating value for our customers, partners, and shareholders. We believe we have created a unique asset light and defensible business model. I'm excited by the direction FlexShopper is headed. With this overview, I'll hand the call over to John Davis to dive into the company's second quarter performance.