PROG (US:PRG)2024-04-24 17:41Financial Data and Key Metrics Changes - Q1 2024 consolidated revenues declined 2% to $641.9 million compared to $655.1 million in the same quarter last year, driven by a smaller portfolio in the progressive leasing segment [23][68] - Consolidated adjusted EBITDA was $72.6 million, which was 11.3% of revenue, exceeding the high-end of the outlook, driven by GMV growth in the second half of the quarter [12][70] - Non-GAAP EPS for Q1 2024 came in at $0.91, exceeding the top-end of the outlook, primarily due to earnings beat and lower share count from the share repurchase program [70] Business Line Data and Key Metrics Changes - GMV for the progressive leasing segment ended flat year-over-year, exceeding expectations of a low single-digit decline [20][68] - Progressive leasing's SG&A expenses as a percentage of revenue increased slightly year-over-year to 12.3% in Q1 2024 from 11.9% in Q1 2023, driven by ongoing investments in sales, technology, and marketing [22] - The gross leased asset balance at the end of Q1 2024 was down 4.7% compared to the same period last year, an improvement from the 5.2% decline entering the period [68] Market Data and Key Metrics Changes - The company expects retail headwinds in the majority of its leasable categories to persist, but anticipates GMV growth in the low single digits for Q2 2024 [18][25] - The provision for leased merchandise write-offs was 7%, with expectations for full-year 2024 write-offs to remain within the targeted range of 6% to 8% [69] Company Strategy and Development Direction - The company is focused on strategic initiatives under the pillars of grow, enhance, and expand, aiming to onboard new retailers and improve customer experiences through technology investments [60][62] - Direct-to-consumer marketing efforts are being enhanced to drive incremental traffic and sales to retail partners, with significant growth anticipated from the Prague Marketplace [61][99] - The company remains disciplined on spending and is on track to deliver on full-year SG&A expectations [72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strategic direction and growth initiatives despite macroeconomic challenges, with expectations for GMV growth in Q2 2024 [11][18] - The outlook for 2024 assumes a difficult operating environment with soft demand for leasable consumer goods, but management remains focused on balancing profitability with GMV growth [27][66] - The company expects to generate meaningful cash flow from operations for the full year and continue returning excess cash to shareholders through dividends and share repurchases [19][72] Other Important Information - The company paid a quarterly cash dividend of $0.12 per share and repurchased approximately 781,000 shares during the quarter [19][24] - The revised consolidated outlook for 2024 calls for revenues in the range of $2.285 to $2.360 billion, adjusted EBITDA in the range of $240 to $255 million, and non-GAAP EPS in the range of $2.85 to $3.10 [74] Q&A Session Summary Question: What drove the GMV growth during the quarter? - Management noted that the GMV trend had some fluctuations, starting sluggishly in January but rebounding in the second half of February and March due to calendar dynamics [30][76] Question: How is the competitive landscape affecting the company? - Management described the market as bifurcated, with competition in both enterprise accounts and the SMB space, and expressed confidence in gaining market share [35][39] Question: What is the impact of the CFPB late fee proposal on the POS financing world? - Retail partners are having discussions with credit providers regarding potential changes, but the timing and extent of these changes remain uncertain [77] Question: Can you provide more details on the marketing strategies that were successful? - The company is focusing on joint marketing campaigns with retail partners and enhancing direct-to-consumer marketing to drive traffic and sales [99][100]