Summary of PROG Holdings Business Update Conference Call Company and Industry Overview - **Company**: PROG Holdings - **Acquisition Target**: Purchasing Power - **Industry**: E-commerce and Financial Services Key Points and Arguments Acquisition Details - PROG Holdings has entered into a definitive agreement to acquire Purchasing Power for **$420 million in cash** [15] - The acquisition is expected to close in **early 2026** [15] - Approximately **$330 million** of Purchasing Power's non-recourse funding debt will remain post-transaction [15] Strategic Alignment - The acquisition aligns with PROG's mission to provide **transparent, flexible, and inclusive payment options** to underserved consumers [3] - Purchasing Power adds new capabilities, established partners, and millions of eligible customers to PROG's ecosystem [3] - The acquisition is expected to create **revenue and cost synergies** across PROG's platforms [3][20] Growth Strategy - PROG's three-pillared strategy focuses on **growing GMV**, enhancing consumer experience, and expanding the ecosystem [4] - Purchasing Power expands PROG's partner base into **more than 25 industries**, including **48 Fortune 500 companies** [4] - The expected revenue for Purchasing Power in **2026** is projected to be between **$680 million and $730 million**, with adjusted EBITDA of **$50 million to $60 million** [5] Business Model and Operations - Purchasing Power operates as an e-commerce platform allowing customers to purchase goods and services through **payroll deduction** [5][7] - The platform has relationships with over **360 employers**, providing access to **over 7 million employees** [5] - The business boasts a **98% client revenue retention rate** and strong customer repeat rates [5] Financial Performance and Projections - The current margin profile for Purchasing Power is in the **mid to high single digits**, with expectations to improve to the **low double digits** over the next 24 months [30] - The interest rate on the non-recourse funding debt is approximately **6.5%** [28] - The write-off rate for credit losses is historically around **9%** of revenue [38] Synergies and Future Opportunities - There are significant opportunities for **cross-selling** and introducing PROG's broader ecosystem to Purchasing Power's customer base [8][20] - The integration of Purchasing Power's payroll deduction model is expected to enhance PROG's competitive positioning in the near and subprime market [11] - Cost synergies are anticipated from consolidating operations and leveraging data across both businesses [46][47] Capital Allocation and Financial Strategy - PROG's capital allocation priorities remain focused on investing in product offerings, evaluating M&A opportunities, and returning excess capital to shareholders [12] - The company aims to manage long-term net leverage targets of **1.5 to 2 times**, excluding non-recourse funding debt [12] Additional Important Information - The demographic profile of Purchasing Power's customers shows that approximately **80%** have credit scores below **650** and household incomes around **$78,000** [9] - The acquisition is expected to solidify PROG's foundation for sustained multi-year growth by diversifying its payment solutions [11] This summary encapsulates the key points discussed during the PROG Holdings Business Update conference call, focusing on the acquisition of Purchasing Power and its implications for the company's strategy and financial outlook.

Financial Data and Key Metrics Changes - Non-GAAP diluted EPS for the third quarter was $0.90, exceeding the outlook range of $0.70 to $0.75 per share, marking the third consecutive earnings beat this year [7][28] - Consolidated revenue for Q3 was $595.1 million, reflecting a slight decline compared to $606.1 million in the same period last year [27][28] - Consolidated adjusted EBITDA was $67 million, or 11.3% of revenue, compared to $63.5 million, or 10.5% of revenue in Q3 of 2024 [27][28] Business Line Data and Key Metrics Changes - Progressive Leasing GMV was $410.9 million, representing a year-over-year decline of 10%, but underlying performance showed mid-single-digit growth when adjusting for the Big Lots bankruptcy and tightening of lease approvals [23][24] - Revenue for Progressive Leasing was down approximately 4.5% at $556.6 million compared to $582.6 million in the prior year [24] - Four Technologies delivered triple-digit revenue growth for the eighth consecutive quarter, with a year-to-date adjusted EBITDA of $11.1 million, representing a 23% margin on revenue [18][19] Market Data and Key Metrics Changes - E-commerce GMV accounted for 23% of total Progressive Leasing GMV in Q3 2025, up from 20.9% in Q2 and 16.6% in Q3 2024 [13] - The overall demand environment remains soft across many durable goods categories, which is expected to continue into Q4 [21] Company Strategy and Development Direction - The company is focused on improving capital efficiency and profitability through the sale of the VIVE Financial Credit Card Receivables Portfolio, which strengthens the balance sheet and allows for better capital allocation [11][29] - Strategic priorities include investing in growth, exploring M&A opportunities, and returning excess cash to shareholders through share repurchases and dividends [12][29] Management's Comments on Operating Environment and Future Outlook - Management noted persistent consumer challenges due to inflationary pressures and financial stress among lower-income households, impacting discretionary spending [8][21] - The company anticipates that GMV pressures will continue into Q4, with expectations for improvement in Q1 2026 as the toughest year-over-year comparisons will roll off [36][52] Other Important Information - The company ended Q3 with $292.6 million in cash and $600 million of gross debt, resulting in a net leverage ratio of 1.1 times [29][30] - The sale of the VIVE portfolio is expected to provide approximately $150 million, enhancing liquidity and creating flexibility for future investments [29][30] Q&A Session Summary Question: Update on consumer pulse amid economic pressures - Management acknowledged elevated delinquencies but noted improvements in write-offs due to prior tightening actions, indicating a cautious but stable portfolio [34][35] Question: GMV outlook for the rest of the year - Management indicated that Q3 was a tough comp and that pressures would likely persist into Q4, with expectations for improvement in Q1 2026 [36][37] Question: Discussion on trade down effects - Management noted that while there has been tightening in the market, they have not observed significant trade down effects impacting their customer base [45][46] Question: Insights on Four Technologies and customer acquisition - Management highlighted that Four Technologies has seen organic growth driven by referrals and user-generated content, indicating strong customer engagement [85]

Financial Data and Key Metrics Changes - Non-GAAP diluted EPS for Q3 was $0.90, exceeding the outlook range of $0.70-$0.75, marking a 17% increase year-over-year [6][28] - Consolidated revenue for Q3 was $595.1 million, reflecting a slight decline from $606.1 million in the same period last year [10][26] - Consolidated adjusted EBITDA was $67 million, or 11.3% of revenue, compared to $63.5 million, or 10.5% of revenue in Q3 of 2024 [27] Business Line Data and Key Metrics Changes - Progressive Leasing GMV was $410.9 million, representing a year-over-year decline of 10%, but underlying performance showed mid-single-digit growth when adjusting for the Big Lots bankruptcy and tightening of lease approvals [23][24] - Revenue for Progressive Leasing was down approximately 4.5% at $556.6 million compared to $582.6 million in the prior year [24] - Four Technologies delivered triple-digit revenue growth for the eighth consecutive quarter, with year-to-date adjusted EBITDA of $11.1 million, representing a 23% margin on revenue [18][19] Market Data and Key Metrics Changes - E-commerce GMV accounted for 23% of total Progressive Leasing GMV in Q3 2025, up from 20.9% in Q2 and 16.6% in Q3 2024 [13] - Write-offs for Progressive Leasing were 7.4%, showing improvement both sequentially and year-over-year, reflecting effective risk management [9][25] Company Strategy and Development Direction - The company is focused on improving capital efficiency and profitability through the sale of the Vive Financial credit card receivables portfolio to Atlanticus Holdings Corporation [11][12] - Strategic pillars include growing direct-to-consumer performance, enhancing technology for customer experience, and expanding the multi-product ecosystem [12][16][18] - The company aims to deepen partner engagement and drive sustainable, profitable revenue through its multi-product ecosystem [21] Management's Comments on Operating Environment and Future Outlook - Management noted persistent consumer challenges due to inflation and financial stress among lower-income households, impacting discretionary spending [8] - The company anticipates continued softness in demand for durable goods in Q4 but remains focused on portfolio health and disciplined spending [20][21] - The revised outlook for 2025 reflects consolidated revenues in the range of $2.41 billion to $2.435 billion, adjusted EBITDA of $258 million to $265 million, and non-GAAP EPS of $3.35 to $3.45 [30][31] Other Important Information - The company ended Q3 with $292.6 million in cash and $600 million of gross debt, resulting in a net leverage ratio of 1.1x [29] - The company did not repurchase shares during the quarter due to ongoing discussions regarding the Vive portfolio [22][28] Q&A Session Summary Question: Update on consumer pulse amid current challenges - Management acknowledged elevated delinquencies but noted improvements in write-offs due to prior tightening actions, indicating a cautious but stable portfolio [35][36] Question: GMV outlook for the rest of the year - Management indicated that Q3 was a tough comp and that pressures would continue into Q4, with expectations for improvement in Q1 2026 [37][38] Question: Discussion on trade down effects - Management noted no significant trade down observed in the credit stacks, but acknowledged the potential for tightening in the future [48][49] Question: Insights on Four Technologies and customer acquisition - Management highlighted that Four's growth has been driven by organic referrals and word-of-mouth, with plans to enhance cross-selling opportunities [78][79]

Financial Data and Key Metrics Changes - Non-GAAP diluted EPS for the third quarter was $0.90, exceeding the outlook range of $0.70 to $0.75 per share, marking the third consecutive earnings beat this year [6][24] - Consolidated revenue for Q3 was $595.1 million, reflecting a slight decline compared to $606.1 million in the same period last year, primarily due to the impact of the Big Lots GMV loss [10][29] - Consolidated adjusted EBITDA was $67 million, representing an increase from $63.5 million year over year, with an adjusted EBITDA margin of 11.3% [29] Business Line Data and Key Metrics Changes - Progressive Leasing GMV for Q3 was $410.9 million, a year-over-year decline of 10%, but underlying performance showed mid-single-digit growth when adjusting for the Big Lots bankruptcy and tightening of lease approvals [25][26] - Revenue for Progressive Leasing was approximately $556.6 million, down about 4.5% from $582.6 million in the prior year, impacted by GMV headwinds [26] - Write-offs for Progressive Leasing were 7.4%, showing improvement both sequentially and year over year, reflecting effective risk management [9][27] Market Data and Key Metrics Changes - E-commerce GMV represented 23% of total Progressive Leasing GMV in Q3, up from 20.9% in Q2 and 16.6% in Q3 2024, indicating strong growth in online channels [13] - Ford Technologies continued to show strong performance with triple-digit GMV and revenue growth for the eighth consecutive quarter, contributing significantly to overall company performance [19][20] Company Strategy and Development Direction - The company announced the sale of its VYVE Financial credit card receivables portfolio to Atlantica Holdings Corporation, aimed at improving capital efficiency and profitability [11][30] - Strategic priorities include investing in growth, exploring M&A opportunities, and returning excess cash to shareholders through share repurchases and dividends [22][31] - The company is focused on enhancing its omni-channel ecosystem and strengthening relationships with retail partners, with nearly 70% of Progressive Leasing GMV renewed to exclusive contracts [14][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing consumer challenges due to inflation and financial stress among lower-income households, impacting discretionary spending [6][21] - The company expects continued headwinds in Q4 due to the macroeconomic environment but remains committed to driving sustainable, profitable revenue [21][22] - The revised outlook for 2025 anticipates consolidated revenues between $2.41 billion and $2.43 billion, with adjusted EBITDA in the range of $258 million to $265 million [33] Other Important Information - The company ended Q3 with a strong cash position of $292.6 million and a net leverage ratio of 1.1 times, indicating financial stability [32] - The VYVE divestiture is expected to provide approximately $150 million in liquidity, enhancing the company's balance sheet [30][32] Q&A Session Summary Question: Update on consumer pulse and write-offs - Management noted improvements in write-offs due to earlier tightening actions, but acknowledged elevated delinquencies and ongoing consumer stress [35][37] Question: GMV outlook for the rest of the year - Management indicated that Q3 was a tough comp and expected similar headwinds in Q4, with a clearer outlook anticipated in Q1 2026 [40][41] Question: Capital allocation strategy post-Vibe sale - Management emphasized a disciplined approach to capital allocation, prioritizing growth investments and strategic M&A before considering share repurchases [67][70] Question: Current environment and trade down effects - Management observed no significant trade down effects from higher-tier providers but noted the need for ongoing monitoring of the consumer landscape [50][52] Question: Insights on FORWARD customer acquisition - Management highlighted strong organic growth driven by referrals and word-of-mouth, with plans to enhance cross-selling opportunities between products [94][95]

Q3 2025 Financial Performance - Consolidated revenues reached $595.1 million[5], a decrease of 1.8% year-over-year, primarily due to a smaller lease portfolio, but this was partially offset by growth in Four Technologies[11, 12, 17] - Net earnings amounted to $33.1 million[5, 17] - Adjusted EBITDA stood at $67.0 million, with an adjusted EBITDA margin of 11.3% of PROG Holdings consolidated revenues[5, 11, 17] - Diluted EPS was $0.82, while Non-GAAP Diluted EPS reached $0.90, a 16.9% increase year-over-year[5, 11, 17] Progressive Leasing Segment - Progressive Leasing GMV totaled $410.9 million, a 10.0% decrease year-over-year due to a large national partner's bankruptcy and tighter decisioning[5, 14, 15, 18] - Progressive Leasing revenue was $556.6 million, a 4.5% decrease year-over-year[14, 15, 18] - Write-offs as a percentage of Progressive Leasing revenue were 7.4%, showing sequential and year-over-year improvement[14, 15, 18] - Progressive Leasing adjusted EBITDA was $64.5 million, representing 11.6% of Progressive Leasing revenues[18] Four Technologies - Four Technologies experienced GMV growth of 162.8% and achieved its third consecutive quarter of positive Adjusted EBITDA[5] 2025 Outlook - The company revised its full-year 2025 revenue outlook to $2.41 billion - $2.435 billion[21] - The company revised its full-year 2025 adjusted EBITDA outlook to $258 million - $265 million[21]

Financial Data and Key Metrics Changes - Non-GAAP EPS for Q2 was $1.02, significantly exceeding the outlook range of $0.75 to $0.85 per share [5][20] - Consolidated revenue reached $604.7 million, reflecting low single-digit growth year-over-year [7][27] - Consolidated adjusted EBITDA was $73.5 million, slightly up from $72.3 million in Q2 of the previous year [8][27] Business Line Data and Key Metrics Changes - Progressive Leasing's GMV was $413.9 million, down 8.9% year-over-year, primarily due to the Big Lots bankruptcy and tightening of approval rates [21][22] - Four Technologies delivered over 200% revenue growth, contributing significantly to overall performance [8][27] - Write-offs for Q2 were 7.5%, which is 20 basis points better than the previous year, indicating effective portfolio management [9][25] Market Data and Key Metrics Changes - E-commerce represented approximately 21% of total leasing GMV, marking an all-time high for Progressive Leasing [10] - Millennials and Gen Z account for about 70% of GMV, highlighting a shift in customer demographics [24] Company Strategy and Development Direction - The company is focused on improving results through pipeline opportunities, online platform expansion, and enhancing customer experiences [5][11] - Strategic pillars include growth, enhancement of technology, and expansion of services, with a commitment to sustainable unit economics [11][13] - The company is exploring strategic M&A opportunities while maintaining a balanced approach to capital returns [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing softness in demand for consumer durable goods but expressed confidence in the ability to gain market share and drive sustainable growth [18][30] - The outlook for 2025 includes consolidated revenues projected between $2.45 billion and $2.5 billion, with adjusted EBITDA between $255 million and $265 million [30][31] Other Important Information - The company ended Q2 with $222 million in cash and $600 million in gross debt, resulting in a net leverage ratio of 1.38x [27][28] - The recent legislative changes are expected to positively impact cash tax outlook by allowing immediate expensing of lease merchandise [28] Q&A Session Summary Question: What is the underlying growth considering the Big Lots bankruptcy and underwriting tightening? - Management indicated that excluding Big Lots, GMV would have been up approximately 1%, and the tightening actions contributed an additional 800 to 900 basis points drag on GMV [34][36] Question: What is the outlook for the pipeline with retailers? - Management noted increased engagement with retailers, including RFIs and RFPs, indicating a positive trend in considering leasing products [44] Question: What factors influenced the guidance update for the second half of the year? - Management highlighted that while write-offs were lower than anticipated, the impact of Big Lots and portfolio size would create headwinds in the back half of the year [60][62] Question: How is the company leveraging its customer database for growth? - Management stated that there are synergies between the leasing business and the four platform, with initiatives in place to drive customer acquisition and engagement [76][78] Question: What is the competitive landscape for the subscription product in the BNPL space? - Management acknowledged strong competition but expressed confidence in the value proposition of their four plus subscription service, which has seen robust adoption [94][95]

Q1 2025 Financial Performance - Consolidated revenues reached $684.1 million[5], a 6.6% increase year-over-year[12, 17] - Net earnings totaled $34.7 million[5], with a diluted EPS of $0.83[5] - Adjusted EBITDA amounted to $70.3 million[5], representing 10.3% of consolidated revenues[11] - Non-GAAP diluted EPS was $0.90[5], relatively flat year-over-year[12] Segment Results - Progressive Leasing's GMV was $402.0 million[5], a 4.0% decrease year-over-year[15, 20] - Progressive Leasing's revenue increased 5.0% year-over-year to $651.6 million[15, 20] - Progressive Leasing's write-offs as a percentage of revenue was 7.4%, within the targeted annual range of 6-8%[14, 15] - Four Technologies experienced GMV growth of 145.7% and achieved quarterly positive Adjusted EBITDA[5] 2025 Outlook - The company revised its full-year 2025 revenue outlook to $2.425 billion - $2.5 billion[21] - The company projects Q2 2025 revenues between $575 million and $595 million[24]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $684.1 million, a 6.6% increase year over year, driven by a larger lease portfolio and higher purchase activity [9][27] - Adjusted EBITDA was $70.3 million, slightly down from $72.6 million in the previous year [27] - Non-GAAP EPS was $0.90, exceeding the high end of the outlook [10][27] - The lease portfolio balance increased by 6.1% year over year, compared to a 5.2% decline at the same point in 2023 [10] Business Line Data and Key Metrics Changes - Progressive Leasing's GMV for Q1 was $402 million, down 4% from the previous year, primarily due to the bankruptcy of a large retail partner [22][24] - Excluding the impact of the Big Lots bankruptcy, GMV growth was low to mid-single digits [8][24] - Ford Technologies, the BNPL platform, achieved triple-digit revenue growth and positive adjusted EBITDA for the first time [11][80] Market Data and Key Metrics Changes - The macroeconomic environment has deteriorated, with inflation and tariff concerns impacting consumer confidence and spending [12][29] - Consumer behavior has shifted, with many delaying discretionary spending, particularly in big-ticket categories [8][12] Company Strategy and Development Direction - The company is focused on executing its ecosystem strategy, which includes enhancing both leasing and BNPL products to meet consumer needs [11][19] - Strategic investments in marketing and technology are prioritized to drive growth and optimize risk management [12][19] - The company aims to maintain a disciplined approach to spending while making selective capital investments [14][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment but expressed confidence in the company's ability to navigate through it [12][29] - The revised 2025 outlook reflects increased macro uncertainty and a decline in consumer confidence, particularly in key categories [29][30] - Management expects lease portfolio performance to remain within the targeted 6% to 8% annual write-off range [30] Other Important Information - The company returned capital to shareholders through dividends and share repurchases, with a quarterly cash dividend of $0.13 per share [27] - The company has $335.2 million remaining under its $500 million share repurchase program [27] Q&A Session Summary Question: What are the dynamics of the trade-down environment? - Management noted that trade-down behavior still exists but is more muted compared to the latter half of 2024, with no significant tightening observed [36] Question: How has retail softness progressed? - Management indicated that while the quarter started encouragingly, there was a noticeable downshift in consumer sentiment, with no significant rebound observed [40] Question: What is the impact of the Big Lots bankruptcy on GMV? - Management confirmed that the $30 million GMV headwind from the lost customer is expected to be consistent across the quarters [41][42] Question: How are inflation and tariffs impacting retail partners? - Management highlighted that modest price increases could be beneficial, but significant price shocks and demand destruction are concerning [46] Question: What is the status of the American Signature partnership? - Management reported positive progress with American Signature, indicating strong connectivity and training efforts [64] Question: What is the reduction in lease approval rates? - Management stated that lease approval rates are approximately 300 to 400 basis points lower year over year, influenced by tightening actions and a shift in application quality [70]