FlexShopper, Inc.

Ladies and gentlemen, good morning and welcome to the Flex Shopper Inc. Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andrew Berger, from Investor Relations. Please go ahead.

Thank you, Ryan, and good morning, everyone. Welcome to Flex Shopper's third 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 this morning, which we'll be referencing during today's call. Our earnings release can be found on 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 the growth initiatives underway, and future financial performance. These statements should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic SEC reports, including our annual report and most recent 10Q. 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 may 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 of these measurements and certain additional information are also included in today's earnings release, which is also available on the Investor Relations 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. Russ, go ahead.

Thank you, Andy. And thanks to everyone for joining us for this morning's call to review our third quarter performance. I'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. Third quarter was an exceptionally busy period, demonstrating the growing momentum underway across our business. As a result, we believe 2024 is shaping up to be a transformative year for Flex Shopper, as the strategies we are pursuing to profitably grow our business take hold and more retail partners and consumers recognize the value of our unique payment solutions. More importantly, our strong third quarter results reflect the hard work and commitment of our team members. As we mentioned last quarter, 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 our traditional e-commerce retail business with a growing range of financing options. In addition, we offer our 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 spaces. After making meaningful investments across our business, including enhancements to our internal underwriting, collections, and account servicing capabilities, we are now focused on pursuing proactive growth strategies within our B2C and B2B channels. Our third quarter of 2024 results demonstrate the successful transformation underway as we increased total revenue 23% to a quarterly record of nearly $39 million, increased adjusted EBITDA by 45% to a quarterly record of more than $12 million, and produced net income attributable to common stockholders of $1.2 million, or $0.05 per diluted share. So let's look at the third quarter's performance in more detail, starting with the growth in our B2B channel. Trends within our B2B business are accelerating as we partner with more payment platforms and retailers. To date, we have announced new partnerships with leading payment platforms, including Paid Tomorrow, Terrace Finance, Versatile Credit, and Pay Possible. As these platforms integrate Flex Shopper into their payment waterfalls, we can leverage their networks to provide our leading LTO solutions to their merchant partners. In addition, we continue to pursue retailers directly that need an LTO solution. As a result of our efforts, total lease funding approvals compared to the prior year period increased 33% during the third quarter to 77 million. To date, we have a signed store count of approximately 7,800 locations, nearly 250% increase from approximately 2,300 retail locations at the end of 2023. This includes the upcoming rollout of over 3,700 new locations associated with our recent partnership with the aftermarket Auto Parts Alliance. We have also recently announced retail partnership partnerships with Randy's Worldwide and Monroe. Location growth has exceeded our projections. We have a strong pipeline of potential payment and retail partners. We expect to announce new partners in the coming months. Higher demand for our payment solutions is being driven by the investments we have made to our platform and the growth strategies we are pursuing. In addition, as other lenders have tightened their credit box, we believe we have opportunities to provide our retail partners with the resources needed to capture incremental customers. Looking at our emerging B2C marketplace, we continue to pursue growth strategies to increase sales at FlexShopper.com, which is the leading LTO marketplace in the industry. We have added new capabilities that allow customers on our 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 first quarter of 2024, we have seen steady growth in retail revenue increase from 780,000 for the quarter ended March 31st, 2024 to 1.2 million for the quarter ended September 30th, 2024. We continue to test, learn, and adjust our approach to focus on profitably growing retail sales. We plan to expand our marketing spend to drive traffic and increase conversion. Based on our recent performance and the strategies we're pursuing to grow the FlexShopper marketplace, we expect retail revenue to continue increasing over the coming quarters. 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 expanding the furniture category supported by LTL freight shipping, and we have launched personal luxury categories such as handbags, sunglasses, and watches. In addition, we continue to look at launching microsites that have the potential to reach more customers than a 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 to support our technology roadmap marketing programs, and loan and lease growth. As you can see, positive growth trends are underway, and we feel really good about the direction of our business. Before I turn the call over to JD to provide more detail on our performance, I want to review important actions that we have recently announced, including the patent infringement lawsuits we filed against two of our competitors, the opportunity to redeem our Series 2 preferred stock, and I'll review the proposed rights offering at the end of the call. As we've outlined historically, Flex Shopper has invested heavily with both our time and capital to create an innovative next-generation LTO platform, and the five issued patents we have received are central to our business and strategies. As a result, we have retained Quinta Manuel to represent the company. We filed initial patent infringement lawsuits in the U.S. District Court for the Eastern District of Texas against Upbound and Catapult. The lawsuits revolve around five key patents granted between 2018 and the present, which protect Flex Shopper's online LTO technology. The lawsuits against Upbound and Catapult were initially filed on September 30th. Investors should read our complaints to gain more insight into our rationale and position. We look forward to these two lawsuits moving forward quickly and will be updating investors along the way. Going forward, we plan to vigorously defend against LTO competitors who are infringing on our patented technologies. The next action I want to review today is the opportunity to redeem 91% of our Series 2 preferred stock. This preferred stock is the last remaining investment from a fund that is winding down. As a result, we have the opportunity to redeem a majority of our preferred stock at a greater than 50% discount to its liquidation value of $44 million at September 30, 2024. We believe this opportunity will enhance shareholder value by improving our cost of capital, simplifying our capital structure, and transferring the discount of $23 million of equity value to our common shareholders, representing approximately $1 per share. In addition, the redemption of our Series 2 preferred stock will be highly accretive to earnings and will contribute over $4 million to annual operating income. The 50% discount is based upon the date of repayment and the option to purchase last for a one-year period. In addition, further payments to the seller of the preferred stock may be required based upon the purchase price and a change of control in the next 12 months or patent settlement announcements in the next 24 months. We're working hard to redeem the Series 2 preferred stock owned in the near term so common shareholders can unlock this significant value. We believe our third quarter performance demonstrates the significant transformation underway at the company. The positive momentum and favorable trends underway across many aspects of our business are supporting additional opportunities to create significant value for our shareholders in 2025 and beyond. I'm excited by the direction we're headed and I look forward to updating our investors on Flex Shopper's success in the months ahead. Before I turn the call over to JD, I want to apologize for our last minute earnings release and mention that Grant Thornton may need additional time to finalize the audit of the company's third quarter financial results. If so, we plan to file an automatic extension with the SEC later today. We'll file our 10Q for the quarter ended September 30th, 2024 within the five business day extension window. We don't anticipate any changes to financial results present in our earnings release or communicated in today's conference call. So with this overview, I'll hand the call over to JD to dive into the company's third quarter performance.