NYSE:PRG PROG Q1 2025 Earnings Report $27.08 +0.45 (+1.69%) Closing price 05/2/2025 03:59 PM EasternExtended Trading$27.08 +0.01 (+0.02%) As of 05/2/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast PROG EPS ResultsActual EPS$0.90Consensus EPS $0.82Beat/MissBeat by +$0.08One Year Ago EPS$0.91PROG Revenue ResultsActual Revenue$684.09 millionExpected Revenue$678.23 millionBeat/MissBeat by +$5.86 millionYoY Revenue Growth+6.60%PROG Announcement DetailsQuarterQ1 2025Date4/23/2025TimeBefore Market OpensConference Call DateWednesday, April 23, 2025Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by PROG Q1 2025 Earnings Call TranscriptProvided by QuartrApril 23, 2025 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the Prague Holdings First Quarter twenty twenty five Earnings Conference Call. At this time, participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker today, John Baugh, Vice President of Investor Relations. Please go ahead. Speaker 100:00:36Thank you and good morning everyone. Welcome to the Prague Holdings first quarter twenty twenty five earnings call. Joining me this morning are Steve Michaels, Prague Holdings President and Chief Executive Officer and Brian Garner, our Chief Financial Officer. Many Speaker 200:00:53of Speaker 100:00:53you have already seen a copy of our earnings release issued this morning, which is available on our Investor Relations website investor.pragholdings.com. During this call, certain statements we make will be forward looking, including comments regarding our revised 2025 full year outlook and our guidance for the second quarter of twenty twenty five, the health of our lease portfolio and our capital allocation priorities. Listeners are cautioned not to place undue emphasis on forward looking statements we make today, all of which are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward looking statements. We undertake no obligation to update any such statements. On today's call, we will be referring to certain non GAAP financial measures, including adjusted EBITDA and non GAAP EPS, which have been adjusted for certain items, which may affect the comparability of our performance with other companies. Speaker 100:02:08These non GAAP measures are detailed in the reconciliation tables included with our earnings release. The company believes that these non GAAP financial measures provide meaningful insight into the company's operational performance and cash flows and provides these measures to investors to help facilitate the comparisons of operating results with prior periods and to assist them in understanding the company's ongoing operational performance. With that, I would like to turn the call over to Steve Michaels, Crogh Holdings' President and Chief Executive Officer. Steve? Thank you, John, Speaker 300:02:48and good morning, everyone. I appreciate you joining us today as we report our first quarter results and offer our perspective on how things are shaping up for Q2 with important metrics. I'll also touch on how we're executing against our strategy despite a challenging and uncertain macro environment. In the first quarter, revenue approximated the high end of our outlook, while both earnings and non GAAP diluted EPS exceeded the top end of our outlook. The earnings outperformance was driven by strong growth and improved profitability at Ford Technologies, our BNPL platform, along with slightly better than expected results from Progressive Leasing. Speaker 300:03:29Progressive Leasing's GMV for the quarter came in 4% below the same period last year, which we believe reflects a few factors. The impact from the loss of a large retail partner due to bankruptcy in late twenty twenty four, our tightening of lease approval rates to manage portfolio performance and a more challenging retail environment than we anticipated. The quarter started on an encouraging note with low single digit GMV growth through early February and the tax season still ahead of us. But by mid quarter, there appeared to be a noticeable slowdown in consumer activity, an observation that was reinforced by multiple third party data sources pointing to ongoing economic volatility and evolving trade policy. These headlines appeared to take a meaningful toll on consumer confidence. Speaker 300:04:20And while tax refunds were comparable to last year, it's evident that the financial stress continues to weigh heavily on many households. As a result, we believe many shoppers are delaying discretionary spending, especially in big ticket categories. This shift in behavior played out across several verticals and resulted in a continuation of negative comps for some of our retail partners. Now if you adjust for the impact of the bankruptcy of the retail partner exiting the business, we actually saw a low to mid single digit growth in GMV. So there is a more encouraging story about our ability to execute in a very challenging environment underneath the headline number. Speaker 300:05:03To put it in context, the loss of that partner represented a mid-thirty million dollars GMV headwind in Q1 alone. Despite that, our teams are executing at a high level. We're continuing to grow our balance of share with key existing partners, and that momentum is being driven by the strategic initiatives we put in place. Even with the GMV decline, consolidated revenue came in at $684,100,000 which is 6.6% higher year over year. The revenue performance was largely driven by Progressive Leasing having a larger lease portfolio balance entering the year and higher ninety day purchase activity compared to last year. Speaker 300:05:46As of 12/31/2024, our lease portfolio balance was up 6.1% year over year compared to a 5.2% decline at the same point in 2023. Adjusted EBITDA was $70,300,000 and non GAAP EPS was $0.90 both exceeding the high end of our outlook. Brian will go into the portfolio details in a moment, but I want to highlight that our lease portfolio remains healthy. Q1 write offs came in at 7.4%, slightly better than we expected. We made some targeted decisioning adjustments in the second half of twenty twenty four and again in early Q1. Speaker 300:06:27And we will continue to refine our decisioning throughout the year to ensure performance stays within our six percent to 8% targeted annual write off range. To sum up the quarter, I'm proud of our ability to deliver strong earnings despite macro headwinds. Our BNPL business, Ford Technologies, continued to grow revenues at a healthy triple digit rate while achieving its first quarter of positive adjusted EBITDA. And I'm optimistic about our broader ecosystem strategy. We're focused on meeting consumer needs through both leasing and BNPL products, driving more cross sell opportunities and strengthening the Prague brand across every touch point. Speaker 300:07:08Before we shift into our strategic priorities, I want to take a moment to talk about the broader environment and how it's shaping our updated outlook. Since we shared our initial guidance in February, it's become clear that the macro environment has deteriorated. Inflation, tariff concerns, and broader uncertainty, including the potential for a recession, are creating additional pressure on both our direct to consumer and retail partner channels. That said, we are not sitting still. We've successfully navigated through challenging environments before, and we know how to execute in periods of uncertainty. Speaker 300:07:46We're confident in our ability to grow share by staying focused on what we can control. That includes making smart investments in marketing and technology and continuing to optimize how we decision and manage risk. Our Q1 results exceeded expectations and that's a direct reflection of the team's discipline and ability to drive growth while maintaining a healthy portfolio. We continue to have confidence in our long term strategy and expect to deliver sustainable profitable growth. Our revised revenue outlook accounts for the GMV headwinds we are seeing, but we still expect our lease portfolio performance to remain within our 6% to 8% targeted annual range. Speaker 300:08:28As we move through the remainder of the year, we'll stay disciplined with SG and A spend and capital investments remaining agile while making sure we prioritize areas that will have the greatest impact. We've shown time and again that we can operate effectively in changing environments and we'll continue to adapt as the macro conditions evolve. Brian will get into the specifics of our revised 2025 outlook. Turning to our strategic priorities, starting with the grow pillar, we saw encouraging traction in Q1. Excluding the impact of Big Lots, we grew GMV and expanded our active door count by nearly 5% year over year. Speaker 300:09:11These results reflect the progress we're making with both existing partners and new accounts, and we're seeing early success from the initiatives we put in place to drive greater engagement across our retail network. Our direct to consumer marketing efforts, including targeted life cycle campaigns and digital personalization, supported application volume and increased repeat and reactivated active customer metrics at Progressive Leasing, up 3.85.5% respectively. On the digital front, our direct to consumer offering, Prague Marketplace, had another solid quarter and continues to scale. It's allowing our customers to shop anytime, anywhere through our mobile app, which drives incremental traffic and sales for our retail partners and also supports GMV growth in our leasing business. Marketplace delivered double digit growth in Q1, and it is on track to drive over $75,000,000 in GMV this year. Speaker 300:10:11Under our enhanced pillar, we made meaningful strides in improving both the customer and retailer experience. We launched a deeper e commerce integration with a long standing national partner and advanced several initiatives aimed at streamlining application flow and simplifying checkout, both of which are critical to improving conversion and reducing friction. As for our expand pillar, we're seeing momentum build across our multi product ecosystem. Technologies continues to gain traction, delivering triple digit GMV growth for the sixth consecutive quarter. Products like four are helping us strengthen customer relationships while also opening new paths for growth. Speaker 300:10:53Importantly, our cross sell initiatives are starting to show real traction and are contributing to Progressive Leasing GMV. As we look ahead, here's where will be focused for the rest of 2025. We're staying close to the macro landscape and we'll respond quickly as our retail partners and consumers navigate the year. We'll continue our disciplined approach to spending while making selective capital investments that position us to accelerate when the demand environment improves. On the strategic investment front, we're continuing to build out our direct to consumer channel that includes enhancing the product marketplace, improving the user experience on our website and mobile app and advancing our personalization efforts to drive customer acquisition, engagement and retention. Speaker 300:11:44At the same time, we're investing in technology that supports our retail partners, whether that's faster onboarding, smarter tools to serve leaf customers or integrations that deepen our partnerships and make us easier to do business with. Finally, on the topic of capital allocation, our priorities haven't changed. We'll continue to invest in the business to fund growth, pursue strategic M and A opportunities and return excess cash to shareholders through dividends and share repurchases. I want to close by emphasizing the strength of our business. Even in periods with little or no incremental GMV growth, we have generated significant cash flow and we believe we will continue to do so through this cycle. Speaker 300:12:29To be clear, growth remains a top priority, but our model is built to endure and we've shown that even in challenging environments, we can control unit economics, align costs with revenue and continue to deliver strong cash flow. With that, I'll turn it over to Brian for more detail on Q1 results and updated 2025 outlook. Brian? Thanks, Steve, and Speaker 400:12:53good morning, everyone. As Steve mentioned, we exceeded our first quarter outlook on earnings and approximated the top end of our revenue expectations, despite the challenging macro environment we are operating in. This performance reflects the positive momentum we're seeing from last year's growth initiatives at Progressive Leasing, the strength for our portfolio management and impressive growth at four. The strategic actions we executed throughout 2024 Progressive Leasing helped drive improvement in our gross leased asset balance year over year. That said, by mid quarter, we began to see signs of broader macroeconomic uncertainty was starting to weigh on consumer confidence. Speaker 400:13:33We believe, particularly for our core customer base, this weakening sentiment contributed to a pullback in discretionary spending for the categories we serve. Shifting to Q1 results, the Progressive Leasing segment's GMV came in at $4.00 $2,000,000 which is down 4% from last year. The decline was primarily driven by the Big Lots bankruptcy announced in 2024, lower approval rates year over year due to the appropriate tightening actions taken over the last few quarters and the broader challenges around the demand environment as consumer sentiment overall has declined significantly. Despite these headwinds, as Steve mentioned, excluding the impact of Big Lots, GMV was up low to mid single digits for the rest of the business as our team continues to drive balance of share improvements within key retail relationships and makes progress on the number of active doors we serve. We also saw meaningful contribution from our direct to consumer as well as cross selling marketing efforts and the growth of the product marketplace. Speaker 400:14:40Q1 revenues for our Progressive Leasing segment grew 5% from $620,600,000 to $651,600,000 primarily driven by a larger portfolio size year over year throughout the period and higher levels of ninety day early purchase activity. Portfolio performance in Q1 for Progressive Leasing was better than expected, and that helped push earnings to above the high end of our outlook. The provision for lease merchandise write offs was 7.4% and gross margin was 29.3, down about 112 basis points from last year. To offer a bit more clarity on the lease portfolio performance, as we mentioned previously, we made proactive changes to our decisioning posture beginning in Q3 of twenty twenty four and iterative improvements have made sense, including during Q1. We're encouraged by what we have seen thus far as the leases originated after the deployment of these tightening efforts have shown the intended improvement in early performance indicators. Speaker 400:15:46We are watching early stage delinquencies and other payment behavior metrics to ensure alignment with our targeted six to 8% annual write off range. We have a track record of delivering consistent portfolio performance and remain confident in our ability to stay within this range for 2025. Looking ahead to write offs in Q2, seasonally, revenue is lower in Q2 as tax season buyouts subside. We expect write offs as a percentage of lease revenue for the second quarter to approximate the high end of our targeted annual write off range of 6% to 8%. This is a function of the denominator of quarterly revenue decreasing sequentially as compared to the first quarter rather than any further expected degradation of the numerator or write offs overall. Speaker 400:16:36Progressive Leasing's SG and A expenses as a percentage of revenue increased slightly year over year to 12.6% in Q1 of twenty twenty five from 12.3% in Q1 of twenty twenty four. We're keeping a close eye on cost discipline, while also continuing to invest in key areas like marketing, technology and sales enablement to support long term growth. As we've demonstrated in the past, we will continue to seek operational efficiencies and manage our costs in line with revenue expectations. Adjusted EBITDA for Progressive Leasing declined from $74,100,000 in Q1 of twenty twenty four to $67,200,000 in Q1 of twenty twenty five. Pivoting to consolidated results, our Q1 non GAAP EPS came in at $0.90 exceeding the top end of our outlook, primarily due to strong earnings and in part to a lower share count from our share repurchase program. Speaker 400:17:39Q1 twenty twenty five consolidated revenues grew 6.6% to $684,100,000 compared to $641,900,000 in the same quarter last year, driven by larger lease portfolio coming into 2025 and higher ninety day purchases at the Progressive Leasing segment combined with triple digit revenue growth at Ford Technologies. Consolidated adjusted EBITDA was $70,300,000 compared to $72,600,000 in the year ago period. On the balance sheet, we ended the first quarter with $213,300,000 in cash and $600,000,000 in gross debt, resulting in a net leverage ratio of 1.42 times our trailing twelve months adjusted EBITDA. We are undrawn on our $350,000,000 revolver. We also returned capital to shareholders through our dividend and share buyback program, paying a quarterly cash dividend of $0.13 per share and repurchasing 936,000 shares of common stock at a weighted average price of $27.87 per share. Speaker 400:18:50We currently have $335,200,000 remaining under our $500,000,000 share repurchase program. To summarize, I'm pleased with the first quarter performance across both revenue and earnings. It was a solid start to the year, and I'm proud of how our teams executed. We took proactive steps to manage portfolio performance, and we'll continue to adjust as needed based upon early indicators and insights from our dynamic decisioning models. We've consistently shown we can adjust quickly and effectively in challenging environments, and we expect to carry that same approach forward as we move through 2025. Speaker 400:19:30Looking ahead, we have revised our full year 2025 outlook as reflected in this morning's earnings release. We've attempted to reflect the increase in macro uncertainty and decline in consumer confidence that has emerged since we issued our original outlook in February. These headwinds are weighing on demand in our key leasable categories like furniture, electronics, mattress and jewelry. At this point, it's difficult to predict when conditions will normalize. However, we believe we can continue gaining balance of share in this environment by executing well and leaning into areas we can control, such as the health of our portfolio and SG and A. Speaker 400:20:17Even with the revised top line expectations, we continue to focus on driving profitable GMV, and we expect our lease portfolio performance to stay within our targeted six to 8% annual write off range. We will remain disciplined on spending, but as noted in February, Progressive Leasing's SG and A is expected to deleverage slightly year over year as we continue specific investments in the business. Our revised consolidated outlook for 2025 calls for revenue in the range of 2,425,000,000.000 to 2,500,000,000.0 adjusted EBITDA in the range of $245,000,000 to $265,000,000 and non GAAP EPS in the range of 2.9 to $3.3 This outlook assumes a difficult operating environment with soft demand for consumer durable goods, no material changes in the company's current decisioning posture, an effective tax rate for non GAAP EPS of approximately 28% and no impact from additional share repurchases. Additionally, the company has not assumed a recession, which, among other things, would likely be accompanied by a rise in the unemployment rate. We're staying focused on what we can control and remain committed to creating long term value for shareholders. Speaker 400:21:36Our priorities haven't changed. We're helping our retail partners drive incremental sales, remaining focused on our ecosystem strategy, managing our lease portfolio responsibly, and continuing to invest in areas that support growth. At the same time, we're being disciplined with how we manage expenses. Our performance over the past few years proves the strength and resiliency of our business model even in a tougher consumer environment. With that, I'll turn the call back over to the operator for questions. Speaker 400:22:09Operator? Operator00:22:10Thank you. Our first question comes from the line of Bobby Griffin with Raymond James. Your line is now open. Speaker 500:22:32Good morning, buddy. Thanks for taking my questions. Speaker 300:22:36Good morning, Steve and team. Speaker 500:22:37The first thing I wanted to touch on maybe was just kind of the trade down environment, separate out the retail softness across the durable categories that I think we've talked about. But what are you seeing today versus three months ago versus six months ago on actually trade down? One would think with the retail environment and maybe some more expensive stuff coming on tariffs that you could see a little acceleration trade down. Has that been stable? Just anything there to help kind of unpack the difference between just general retail softness as well as what we're seeing trade down? Speaker 300:23:13I mean, trade down, Bobby, still exists. I think we're starting to as we exited the quarter, we're starting to lap comp against last year when we really started to see the trade down. So from a I can't speak for the prime providers, but what we're observing and what our experience shows from a credit stack standpoint is we're not seeing, let's say, additional tightening, but we're not seeing any evidence that there's been additional approvals up the stack from us in retail point of sale waterfalls. I think that the so the trade down is still there. It's probably a little more muted than it was in the back half of 2024. Speaker 300:23:58I think the retail softness that you referred to and the hesitation, if you will, is certainly the larger macro force. But the top of the funnel is still, I would say, more open today than it was last year at the same time. Speaker 500:24:15Okay. And then on retail side of things, the softness, we've kind of all of us here on the call saw some of it in February. It seems like March and April got a little bit better. I wouldn't call it great, but maybe bounced a little off the February lows. Just anything there on just progression of how you saw things? Speaker 500:24:33I mean, you guys with tax refund season, it becomes a little bit more different than just the general retail trends. But is there any hope that things have firmed up a little here of late in the last couple of weeks? Or is it still pretty weak across all the categories? Speaker 300:24:47Yeah. I mean, there's a lot of data out there and you write on it about traffic trends and year over year, I guess, just trends. You have to really dig into that data and parse it on what does it look like for the prime customer versus the lower income consumer, even just general consumer spending trends where you hear some of the banks say that the consumer is still spending and card data show plus 5% year over year or whatever. That is less so in big ticket and even, I think, less so when you drill down into lower income. So as we said in the remarks, the quarter started off pretty encouraging. Speaker 300:25:32And then when there was a downshift in sentiment and it was reflected in activity, we haven't really seen any kind of inflection point or not a continued deterioration, I would say, but not a rebound or anything. Speaker 500:25:50Okay. That's helpful. And then one quick modeling one, Brian, is the $30,000,000 headwind of GMV that you guys called out for the lost customer, is that relatively consistent across the four quarters of this year? Speaker 400:26:04Yes, think that's a fair way to think about it. Obviously, Steve gave, I think on the Q4 call, some rough annual range. I think it was 130,000,000 to $150,000,000 for that customer. And there's obviously some level of seasonality inherent in the business overall, but I think you can look at our overall GMV and kind of model that out. I think you're roughly in the ballpark. Speaker 300:26:30I would just add on that. Did I would just add on that. We did have some GMV in Q1 from the execution of the liquidation sales that is over now. And so there'll be a slight step up in Q2 from a headwind standpoint. But then that stays fairly consistent in the back half. Speaker 500:26:52Makes sense. I appreciate the details. Best of luck here navigating a challenging environment. Thank you, guys. Speaker 300:26:58Thank you. Operator00:26:59Our next question comes from the line of Brad Thomas with KeyBanc Capital Markets. Clearly Speaker 600:27:09an unusual environment that we're in here right now. Guess my first question was maybe more big picture around how you all are thinking about the potential impact inflation and the tariffs as they flow to your retail partners and then ultimately onto your customers. On the one hand, I would think that it could certainly pressure spending power for consumers and be a challenge and headwind. On the other hand, higher prices for durable goods certainly may push for the need for more use of lease to own. And so just curious in the last few weeks, have you as you've been talking to your retail partners, what are you hearing? Speaker 600:27:49How do you think your partnership with them may play out going forward here? Speaker 300:27:56Yeah, thanks, Brad. And you're right. We've got two attack vectors here. We've got the impact and the pricing actions from our retail partners, and then we have behavioral impact on end consumers. And as you pointed out, and we've talked about in the past, modest increases in ticket or average selling price could actually be a positive for us from a bigger ticket is actually better from a dollars of marginal cash contribution, but also that incremental buyer might need a payment plan. Speaker 300:28:34But price shocks and demand destruction are certainly not good. And so it really depends on where on that continuum or that spectrum we end up. And I think that's going to vary well, it varies by the day or even the hour if you just get caught up reading the headlines. But it will also vary by the vertical and the category. So we have great relationships with our top partners, and we talk to them a lot. Speaker 300:29:00And we are privy to some of their plans that are not necessarily public, so we're not going to break news here. But we're staying in contact. But certainly, the large magnitude of potential tariffs are causing uncertainty. Think currently, the behavioral impact on our consumer and the somewhat frozen consumer is more of an impact than actually what the prices are going to be. So we'll see how that plays out and if there's any kind of relief or pause or rollback or negotiation, which I expect there'll be all of those things. Speaker 300:29:47But it has caused a volatile and uncertain situation now that we're all just trying to navigate through. Speaker 600:29:57I appreciate that. Thank you. And if I can ask a follow-up just on how things are playing out with Big Lots demise here. Curious what you're seeing from some of the legacy Big Lots customers. You cited GMV growth excluding Big Lots. Speaker 600:30:16Are you still growing new customers? Is this because you're doing being very successful transferring old Big Lots customers to other retailers? Just any more color on how this is kind of flowing through the system since this was such a big partner for you would be greatly appreciated. Thanks. Speaker 300:30:34Yeah, mean, we obviously have a very strategic marketing plan to keep the previous Big Lots customers in the family, if you will, and have our other partners benefit from our connectivity to those customers. And that is playing out. We are seeing well, we're not only seeing, but we're actively directing our database of Big Lots customers into other partners, whether that be in a similar vertical, another furniture, mattress retailer, or it could be in a different vertical with an electronics or an appliance purchase or lease. So we're seeing that. We're tracking it. Speaker 300:31:18We have an internal goal. Obviously, not every lease customer repeats every year. We do have high repeat, it's generally around eighteen months. But we do have customers from last year and the year before that we're reaching out to and trying to reactivate. And so we're having some success there. Speaker 300:31:40And the folks that are in the system are benefiting from that. And we'll continue to do that. Speaker 600:31:49Great. Thank you, Steve. Speaker 300:31:52Thanks, Brad. Operator00:31:53Our next question comes from the line of Kyle Joseph with Stephens. Your line is now open. Speaker 700:32:00Hey, good morning guys. Thanks for taking my questions. Just want to talk about kind of the shifts in macro and obviously, you guys have covered it, but to get into it, just want to kind of get the sense, It's primarily more on the demand side. Like, have you seen any kind of changes in terms of credit? It's probably too early for that. Speaker 700:32:20But just based on your commentary, it sounds like credit actually outperformed in the quarter, so no impacts there. Is that am I reading that the right way? Speaker 300:32:29On the on the on the write offs, you mean? Speaker 700:32:32Yeah. Just in terms of kind of really, you know, how credit performance has has changed versus mid February. It sounds like the big change to guidance is really stemming Speaker 300:32:45Yeah, think that's right. Certainly, impact of the lower GMV and early GMV has a bigger impact on the current year than late GMV, obviously. But from a portfolio standpoint, we've made some adjustments, iterative adjustments in the back half of 'twenty four and again early in Q1 of this year. And as we said, write offs came in slightly better than expected for Q1. There is a little bit of a, as we've said before, pig through the python dynamic that we're going to deal with in Q2. Speaker 300:33:20But the portfolio is healthy. And what we're seeing from an early indicator of FPBs or first pay balances or early four week delinquencies, The pools are performing as we would expect. And kudos to our decision science team for pulling the appropriate levers and really demonstrating once again that this short duration portfolio, we have our hands firmly on the wheel and in control of it. So the story is not really a portfolio performance story. It is a demand story. Speaker 300:33:58And that could be in the form of just application volume or even conversion after the approval. Approval rates are down year over year, but that was expected. And we knew that, and it was baked into our outlook. So the other areas of funnel conversion is where the GMV, I'll say, miss happened. Speaker 700:34:27Yeah. Operator00:34:31Thank you. Our next question comes from the line of Wong Yuan with TD Cowen. Your line is now open. Your line is open. Please check your mute button. Operator00:35:09Thank you. Our next question comes from the Speaker 800:35:11line of John Hecht with Jefferies. Your line is now open. Good morning, guys. Thanks for taking my question. Actually, most of my questions have been asked and answered, but I guess one question I have is maybe discuss the American Signature ramp. Speaker 800:35:25I know it is a topsy-turvy environment, but maybe talk about the pipeline of new retailers and kind of what the environment is around that. Speaker 300:35:38Yeah, without getting into too much specifics, the ASI or American Signature is going very well. They're a great partner. They are bought into the program. And we have great connectivity from the top to the bottom and are training in stores. And as we talked about in previous calls, they had LTO in the past, so it wasn't starting from a standing start education process. Speaker 300:36:07A little bit of a different motion, but we're really pleased with where we are and what we think we can accomplish this year with them even in a soft traffic and demand environment. As it relates to just pipeline, as we've talked about before, the challenging environment is conducive environment for having pipeline conversations. Clearly, we call out any specific logo publicly until it's actually across the goal line. But we're encouraged by some of the conversations we're having. And we think that we are in a great position to help more and more retailers just save sales. Speaker 300:36:57And we can drive incremental traffic to them during this interesting and challenging time. Speaker 800:37:04Okay. Appreciate the color. Thanks very much. Operator00:37:08Thank you. Our next question comes from the line of Anthony Chukumba with Loop Capital Markets. Your line is now open. Speaker 900:37:17Good morning. Thanks for taking my question. So you talked about credit tightening and a lower lease approval rate. Can you just give us kind of order of magnitude in terms of the reduction in the lease approval rate and also maybe contrast that with lease application volume? Speaker 300:37:39Yeah. So the approval rate and I would start by saying the approval rate's a dynamic metric because we have taken some tightening actions. And the result is that the approval rate throughout the quarter was kind of 300 to 400 basis points lower than the same period a year ago. But it's not accurate to just assume that all of that is due to the tightening actions that we took. Some of it is due to channel shift because we have just lower approval rates online than we do in store. Speaker 300:38:15Some of that is due to just the quality of the application coming in is a little bit worse this year than last year. And so even in the same algorithm or the same model, the approval rate would be impacted lower. So there's a lot of variables that go into the resulting approval rate. But the headline number is it's about 300 to 400 basis points lower than the previous year. And that's roughly in the ballpark of what we expected when we were creating the plan for 2025. Speaker 300:38:48So the move there is not not a surprise. On the application volume side, we did have application growth excluding big lots. So if you take out the year over year impact of Big Lots application growth. But we did see some conversion degradation. And that, we believe, through talking to customers and talking to our sales folks that are out there in the stores and the retail sales associates is maybe a little less purchase intent from an applicant. Speaker 300:39:31Now that doesn't mean that that's going to be that conversion won't come with a lag because our approvals are open for ninety days. But we did see a decline in conversion post approval even on the ones that we did approve in the quarter. Speaker 900:39:47Got it. And then just one quick follow-up, just a clarification. You say the gross leased assets were up 6.6% year over year heading into the second quarter. I just want to clarify that. Speaker 400:40:02They were up 6.1% entering the quarter. So that was at Jan one? Yes, Jan one. And they finished up just a couple of percent. And that's going to be a dynamic of obviously demand headwinds that we're talking about and also ninety day buyouts were slightly higher year over year. Speaker 900:40:23Okay. So at the end of the quarter, there were a couple, call Speaker 300:40:27it, 2% year over year. Is that correct? Just a hair over 2%. Speaker 900:40:31Got it. Okay. Thank you. Operator00:40:34Thank you. Our next question comes from the line of Kyle Joseph with Stephens. Your line is now open. Speaker 700:40:44Good morning again, guys. Sorry about that. Anyway, just one follow-up from me and apologies if you covered it. But just want to talk about the kind of different dynamics between FOR and the progressive business. It looks like guidance at other at least in primarily four was maintained. Speaker 700:41:02Is that a function of kind of a different customer, kind of a different merchandise vertical? What are the different dynamics there and how are they being impacted by macro differently? Speaker 300:41:16Yeah. Thanks, Kyle. We're excited about the four business. It's, as we said, grown GMV triple digits for six consecutive quarters, and then importantly, achieved the first quarter of basically positive adjusted EBITDA and positive earnings here in Q1. So really happy with the trajectory. Speaker 300:41:37It's going to more than double its GMV for the full year 'twenty five. And to your point, it does serve a different customer, but it also serves an overlapped customer with the leasing segment. The average order value is $120 and there's apparel and cosmetics and other consumables. And so it is a different purchase motion. And so I think that it has not been impacted as much as the big ticket items, the durable goods. Speaker 300:42:15Certainly, fix on durable goods and replacement are happening. It's the aspirational purchases that might be more impacted by being on hold. But four has really good demand signals, exceedingly doing great in the app store, lots of organic momentum. And we're growing the base in a very healthy way with new customers and a lot of repeat customers continuing to transact multiple, multiple times a year. We're very pleased with the trajectory of four and look forward to continuing to report to you guys how it's going over there. Speaker 700:43:05Got it. Thanks for taking my question. Operator00:43:08Thank you. Our next question comes from the line of Wong Yuan with TD Cowen. Your line is now open. Speaker 200:43:16Hi, guys. And I'm sorry for the hiccup earlier. Thanks for taking my questions. Maybe I want to touch on the guidance a little bit. I mean, it looks like your GMV in 1Q came in maybe about four points below what you previously guided. Speaker 200:43:32So, mean, I just want to kind of dive into the guidance. I mean, much of a guide down, I guess, is because of that lower GMV in 1Q and I guess lower exiting gross lease assets versus how much of that is further incremental weakening for the rest of the year versus the baseline? And maybe can you talk about the GMV outlook for the rest of the year and maybe for 2Q? And I have a follow-up. Speaker 400:43:59Huang, this is Brian, and I'll start and Steve can certainly overlay any commentary. I think Steve alluded to this, but the demand side, particularly the miss here in Q1 and then kind of a consideration of how prolonged the impact of these demand headwinds will last, I think is part of the uncertainty. But GMV headwinds early in the year certainly have a as a portfolio business has a more pronounced impact on the P and L than say missing it in Q4. And so we've attempted to incorporate that miss in the plan. As we look through the rest of the P and L and any other areas of uncertainty, I think we talked a great deal about the credit side and how we're feeling about the portfolio performance. Speaker 400:44:52And that's an area that understand there's a lot of uncertainty around there. But think our track record and the team that we have and the visibility we feel like we have into keeping that credit side within that 68% range, think we're comfortable there. And then on the SG and A side, I think we're we feel like that's a controllable element that we have visibility into. So really to answer your question, it was a it was a GMV particularly front half of the year GMV that drove the revision in guidance as we work through the motions. Steve, if you have anything to add more broadly about the Speaker 300:45:34No, you covered it. We certainly have a known known, which is the GMV that came in during Q1. And it's difficult more difficult than normal in this environment to predict GMV for the rest of the year. We can hope that things get more stable and recover, But hope is not a strategy, and hope doesn't fill a cell in a spreadsheet to create a forecast. So we took a shot at what we thought the GMV would be for the rest of the year. Speaker 300:46:12It's important to note that we did grow GMV ex Big Lots. Our major partners were up year over year, which is good because my guess is that their headline business was not up. We continue to gain balance of share. But admittedly, we weren't up as much as we expected we would be up in Q1. And so all those factors baked into the revised view of the year, which admittedly has more uncertainty, I'd say, today than it might have had in previous years. Speaker 400:46:50The only one thing that I'd add and just make sure that it's understood, and we mentioned this in prepared remarks, is we think about the trajectory of credit throughout the rest of the year on the write off side. We do expect and we have modeled it and we can see it, the maybe slight step up from Q1 to Q2 on write offs overall. And that's really a function, not so much as a degradation in any of the trends that we're seeing, but it's just a function of the buyout revenue that we have here in Q1 and the seasonally high Q1 revenue that will step down in Q2. And so it's a denominator dynamic more than anything. Line item for write offs on the P and L will actually should be flat to maybe slightly down as go into Q2. Speaker 400:47:45And then the back and the Q2 should be the high watermark for write offs. And we should see some relief as that pig moves through the Python on the old portfolio or the portfolio that still exists prior to the decisioning actions. So that's how we're shaping up. So it won't be a we won't be surprised when we see just a slight uptick in write offs in Q2 and then and looking for that to be the high watermark. Speaker 200:48:12Got it. And maybe the GMV outlook for 2Q and for the rest of the year? Sorry if I missed that earlier. Speaker 300:48:21No, you didn't miss it. We did not provide it. It's a function of our lack of clarity. So we're not providing a GMV guide for the rest of the year. Speaker 200:48:34Got it. And maybe the last one for me. In a time like this, can you discuss about you know, what kind of conversations you're having with your partners? I mean, I guess, I mean, you can take the view that they view lease to own now is something that would tremendously help with affordability. But, you know, at the same time, this tariff thing makes this conversation sort of less of a priority for them. Speaker 200:48:58So can you talk about the discussion that you're having with, I guess, your pipeline? Speaker 300:49:06Yeah. Well, with our current partners, I can tell you the discussions are very, very positive and partnership oriented. We alluded to, without naming the retailer in the prepared remarks, but we did get across the goal line an e commerce integration with a longtime national partner. And it's actually outperforming our expectations. So we look forward to continued enhancements to that and helping them continue move up the productivity curve and do more with us. Speaker 300:49:42And we become a bigger and deeper partner for them. That's one instance of these initiatives that we've been talking about for the last two years that have been getting across the goal line and getting prioritized by our partners. So really pleased with the team's efforts and results, actually, not just efforts in that regard. And I talked about the pipeline earlier. Those conversations are positive. Speaker 300:50:09And I would say that, yes, tariffs are I don't know if it's a distraction, but it's certainly taking up a lot of mindshare and strategic planning about how they're going to react and how they're going to adjust and consume and see who along the value chain shares the pain. But we can be viewed as a potential solution for some of the pain that's being felt. And so we're certainly leaning into that and trying to offer our assistance certainly. Speaker 200:50:47Got it. Thank you and best of luck. Speaker 300:50:50Thank you. Operator00:50:51Thank you. And I'm currently showing no further questions at this time. I'd like to turn the call back over to Steve Michaels for closing remarks. Speaker 300:51:00Thank you, and thank you all for joining us this morning and your continued interest in Prague Holdings. We delivered another good quarter and start to the year, but obviously we're currently dealing with an uncertain macro backdrop. But it's important to remember that the business has proven to be very resilient in previous challenging times and we expect with continued great execution we'll successfully navigate this one as well. So thanks again and we look forward to updating you on our progress in July. Operator00:51:31This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallPROG Q1 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) PROG Earnings HeadlinesPROG Holdings, Inc. 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Email Address About PROGPROG (NYSE:PRG) (NYSE:PRG) is a financial technology holding company based in Salt Lake City, Utah with three business segments: Progressive Leasing, which offers lease-to-own transactions primarily to credit-challenged consumers through e-commerce and point-of-sale retail partners, via online, mobile, and in-store solutions; Vive Financial, which provides consumers who may not qualify for traditional prime lending with a variety of second-look, revolving credit products through private label and branded credit cards; and Four Technologies, which provides consumers of all credit backgrounds Buy Now, Pay Later (BNPL) options through four interest-free installments via its platform, Four.View PROG ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 10 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the Prague Holdings First Quarter twenty twenty five Earnings Conference Call. At this time, participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker today, John Baugh, Vice President of Investor Relations. Please go ahead. Speaker 100:00:36Thank you and good morning everyone. Welcome to the Prague Holdings first quarter twenty twenty five earnings call. Joining me this morning are Steve Michaels, Prague Holdings President and Chief Executive Officer and Brian Garner, our Chief Financial Officer. Many Speaker 200:00:53of Speaker 100:00:53you have already seen a copy of our earnings release issued this morning, which is available on our Investor Relations website investor.pragholdings.com. During this call, certain statements we make will be forward looking, including comments regarding our revised 2025 full year outlook and our guidance for the second quarter of twenty twenty five, the health of our lease portfolio and our capital allocation priorities. Listeners are cautioned not to place undue emphasis on forward looking statements we make today, all of which are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward looking statements. We undertake no obligation to update any such statements. On today's call, we will be referring to certain non GAAP financial measures, including adjusted EBITDA and non GAAP EPS, which have been adjusted for certain items, which may affect the comparability of our performance with other companies. Speaker 100:02:08These non GAAP measures are detailed in the reconciliation tables included with our earnings release. The company believes that these non GAAP financial measures provide meaningful insight into the company's operational performance and cash flows and provides these measures to investors to help facilitate the comparisons of operating results with prior periods and to assist them in understanding the company's ongoing operational performance. With that, I would like to turn the call over to Steve Michaels, Crogh Holdings' President and Chief Executive Officer. Steve? Thank you, John, Speaker 300:02:48and good morning, everyone. I appreciate you joining us today as we report our first quarter results and offer our perspective on how things are shaping up for Q2 with important metrics. I'll also touch on how we're executing against our strategy despite a challenging and uncertain macro environment. In the first quarter, revenue approximated the high end of our outlook, while both earnings and non GAAP diluted EPS exceeded the top end of our outlook. The earnings outperformance was driven by strong growth and improved profitability at Ford Technologies, our BNPL platform, along with slightly better than expected results from Progressive Leasing. Speaker 300:03:29Progressive Leasing's GMV for the quarter came in 4% below the same period last year, which we believe reflects a few factors. The impact from the loss of a large retail partner due to bankruptcy in late twenty twenty four, our tightening of lease approval rates to manage portfolio performance and a more challenging retail environment than we anticipated. The quarter started on an encouraging note with low single digit GMV growth through early February and the tax season still ahead of us. But by mid quarter, there appeared to be a noticeable slowdown in consumer activity, an observation that was reinforced by multiple third party data sources pointing to ongoing economic volatility and evolving trade policy. These headlines appeared to take a meaningful toll on consumer confidence. Speaker 300:04:20And while tax refunds were comparable to last year, it's evident that the financial stress continues to weigh heavily on many households. As a result, we believe many shoppers are delaying discretionary spending, especially in big ticket categories. This shift in behavior played out across several verticals and resulted in a continuation of negative comps for some of our retail partners. Now if you adjust for the impact of the bankruptcy of the retail partner exiting the business, we actually saw a low to mid single digit growth in GMV. So there is a more encouraging story about our ability to execute in a very challenging environment underneath the headline number. Speaker 300:05:03To put it in context, the loss of that partner represented a mid-thirty million dollars GMV headwind in Q1 alone. Despite that, our teams are executing at a high level. We're continuing to grow our balance of share with key existing partners, and that momentum is being driven by the strategic initiatives we put in place. Even with the GMV decline, consolidated revenue came in at $684,100,000 which is 6.6% higher year over year. The revenue performance was largely driven by Progressive Leasing having a larger lease portfolio balance entering the year and higher ninety day purchase activity compared to last year. Speaker 300:05:46As of 12/31/2024, our lease portfolio balance was up 6.1% year over year compared to a 5.2% decline at the same point in 2023. Adjusted EBITDA was $70,300,000 and non GAAP EPS was $0.90 both exceeding the high end of our outlook. Brian will go into the portfolio details in a moment, but I want to highlight that our lease portfolio remains healthy. Q1 write offs came in at 7.4%, slightly better than we expected. We made some targeted decisioning adjustments in the second half of twenty twenty four and again in early Q1. Speaker 300:06:27And we will continue to refine our decisioning throughout the year to ensure performance stays within our six percent to 8% targeted annual write off range. To sum up the quarter, I'm proud of our ability to deliver strong earnings despite macro headwinds. Our BNPL business, Ford Technologies, continued to grow revenues at a healthy triple digit rate while achieving its first quarter of positive adjusted EBITDA. And I'm optimistic about our broader ecosystem strategy. We're focused on meeting consumer needs through both leasing and BNPL products, driving more cross sell opportunities and strengthening the Prague brand across every touch point. Speaker 300:07:08Before we shift into our strategic priorities, I want to take a moment to talk about the broader environment and how it's shaping our updated outlook. Since we shared our initial guidance in February, it's become clear that the macro environment has deteriorated. Inflation, tariff concerns, and broader uncertainty, including the potential for a recession, are creating additional pressure on both our direct to consumer and retail partner channels. That said, we are not sitting still. We've successfully navigated through challenging environments before, and we know how to execute in periods of uncertainty. Speaker 300:07:46We're confident in our ability to grow share by staying focused on what we can control. That includes making smart investments in marketing and technology and continuing to optimize how we decision and manage risk. Our Q1 results exceeded expectations and that's a direct reflection of the team's discipline and ability to drive growth while maintaining a healthy portfolio. We continue to have confidence in our long term strategy and expect to deliver sustainable profitable growth. Our revised revenue outlook accounts for the GMV headwinds we are seeing, but we still expect our lease portfolio performance to remain within our 6% to 8% targeted annual range. Speaker 300:08:28As we move through the remainder of the year, we'll stay disciplined with SG and A spend and capital investments remaining agile while making sure we prioritize areas that will have the greatest impact. We've shown time and again that we can operate effectively in changing environments and we'll continue to adapt as the macro conditions evolve. Brian will get into the specifics of our revised 2025 outlook. Turning to our strategic priorities, starting with the grow pillar, we saw encouraging traction in Q1. Excluding the impact of Big Lots, we grew GMV and expanded our active door count by nearly 5% year over year. Speaker 300:09:11These results reflect the progress we're making with both existing partners and new accounts, and we're seeing early success from the initiatives we put in place to drive greater engagement across our retail network. Our direct to consumer marketing efforts, including targeted life cycle campaigns and digital personalization, supported application volume and increased repeat and reactivated active customer metrics at Progressive Leasing, up 3.85.5% respectively. On the digital front, our direct to consumer offering, Prague Marketplace, had another solid quarter and continues to scale. It's allowing our customers to shop anytime, anywhere through our mobile app, which drives incremental traffic and sales for our retail partners and also supports GMV growth in our leasing business. Marketplace delivered double digit growth in Q1, and it is on track to drive over $75,000,000 in GMV this year. Speaker 300:10:11Under our enhanced pillar, we made meaningful strides in improving both the customer and retailer experience. We launched a deeper e commerce integration with a long standing national partner and advanced several initiatives aimed at streamlining application flow and simplifying checkout, both of which are critical to improving conversion and reducing friction. As for our expand pillar, we're seeing momentum build across our multi product ecosystem. Technologies continues to gain traction, delivering triple digit GMV growth for the sixth consecutive quarter. Products like four are helping us strengthen customer relationships while also opening new paths for growth. Speaker 300:10:53Importantly, our cross sell initiatives are starting to show real traction and are contributing to Progressive Leasing GMV. As we look ahead, here's where will be focused for the rest of 2025. We're staying close to the macro landscape and we'll respond quickly as our retail partners and consumers navigate the year. We'll continue our disciplined approach to spending while making selective capital investments that position us to accelerate when the demand environment improves. On the strategic investment front, we're continuing to build out our direct to consumer channel that includes enhancing the product marketplace, improving the user experience on our website and mobile app and advancing our personalization efforts to drive customer acquisition, engagement and retention. Speaker 300:11:44At the same time, we're investing in technology that supports our retail partners, whether that's faster onboarding, smarter tools to serve leaf customers or integrations that deepen our partnerships and make us easier to do business with. Finally, on the topic of capital allocation, our priorities haven't changed. We'll continue to invest in the business to fund growth, pursue strategic M and A opportunities and return excess cash to shareholders through dividends and share repurchases. I want to close by emphasizing the strength of our business. Even in periods with little or no incremental GMV growth, we have generated significant cash flow and we believe we will continue to do so through this cycle. Speaker 300:12:29To be clear, growth remains a top priority, but our model is built to endure and we've shown that even in challenging environments, we can control unit economics, align costs with revenue and continue to deliver strong cash flow. With that, I'll turn it over to Brian for more detail on Q1 results and updated 2025 outlook. Brian? Thanks, Steve, and Speaker 400:12:53good morning, everyone. As Steve mentioned, we exceeded our first quarter outlook on earnings and approximated the top end of our revenue expectations, despite the challenging macro environment we are operating in. This performance reflects the positive momentum we're seeing from last year's growth initiatives at Progressive Leasing, the strength for our portfolio management and impressive growth at four. The strategic actions we executed throughout 2024 Progressive Leasing helped drive improvement in our gross leased asset balance year over year. That said, by mid quarter, we began to see signs of broader macroeconomic uncertainty was starting to weigh on consumer confidence. Speaker 400:13:33We believe, particularly for our core customer base, this weakening sentiment contributed to a pullback in discretionary spending for the categories we serve. Shifting to Q1 results, the Progressive Leasing segment's GMV came in at $4.00 $2,000,000 which is down 4% from last year. The decline was primarily driven by the Big Lots bankruptcy announced in 2024, lower approval rates year over year due to the appropriate tightening actions taken over the last few quarters and the broader challenges around the demand environment as consumer sentiment overall has declined significantly. Despite these headwinds, as Steve mentioned, excluding the impact of Big Lots, GMV was up low to mid single digits for the rest of the business as our team continues to drive balance of share improvements within key retail relationships and makes progress on the number of active doors we serve. We also saw meaningful contribution from our direct to consumer as well as cross selling marketing efforts and the growth of the product marketplace. Speaker 400:14:40Q1 revenues for our Progressive Leasing segment grew 5% from $620,600,000 to $651,600,000 primarily driven by a larger portfolio size year over year throughout the period and higher levels of ninety day early purchase activity. Portfolio performance in Q1 for Progressive Leasing was better than expected, and that helped push earnings to above the high end of our outlook. The provision for lease merchandise write offs was 7.4% and gross margin was 29.3, down about 112 basis points from last year. To offer a bit more clarity on the lease portfolio performance, as we mentioned previously, we made proactive changes to our decisioning posture beginning in Q3 of twenty twenty four and iterative improvements have made sense, including during Q1. We're encouraged by what we have seen thus far as the leases originated after the deployment of these tightening efforts have shown the intended improvement in early performance indicators. Speaker 400:15:46We are watching early stage delinquencies and other payment behavior metrics to ensure alignment with our targeted six to 8% annual write off range. We have a track record of delivering consistent portfolio performance and remain confident in our ability to stay within this range for 2025. Looking ahead to write offs in Q2, seasonally, revenue is lower in Q2 as tax season buyouts subside. We expect write offs as a percentage of lease revenue for the second quarter to approximate the high end of our targeted annual write off range of 6% to 8%. This is a function of the denominator of quarterly revenue decreasing sequentially as compared to the first quarter rather than any further expected degradation of the numerator or write offs overall. Speaker 400:16:36Progressive Leasing's SG and A expenses as a percentage of revenue increased slightly year over year to 12.6% in Q1 of twenty twenty five from 12.3% in Q1 of twenty twenty four. We're keeping a close eye on cost discipline, while also continuing to invest in key areas like marketing, technology and sales enablement to support long term growth. As we've demonstrated in the past, we will continue to seek operational efficiencies and manage our costs in line with revenue expectations. Adjusted EBITDA for Progressive Leasing declined from $74,100,000 in Q1 of twenty twenty four to $67,200,000 in Q1 of twenty twenty five. Pivoting to consolidated results, our Q1 non GAAP EPS came in at $0.90 exceeding the top end of our outlook, primarily due to strong earnings and in part to a lower share count from our share repurchase program. Speaker 400:17:39Q1 twenty twenty five consolidated revenues grew 6.6% to $684,100,000 compared to $641,900,000 in the same quarter last year, driven by larger lease portfolio coming into 2025 and higher ninety day purchases at the Progressive Leasing segment combined with triple digit revenue growth at Ford Technologies. Consolidated adjusted EBITDA was $70,300,000 compared to $72,600,000 in the year ago period. On the balance sheet, we ended the first quarter with $213,300,000 in cash and $600,000,000 in gross debt, resulting in a net leverage ratio of 1.42 times our trailing twelve months adjusted EBITDA. We are undrawn on our $350,000,000 revolver. We also returned capital to shareholders through our dividend and share buyback program, paying a quarterly cash dividend of $0.13 per share and repurchasing 936,000 shares of common stock at a weighted average price of $27.87 per share. Speaker 400:18:50We currently have $335,200,000 remaining under our $500,000,000 share repurchase program. To summarize, I'm pleased with the first quarter performance across both revenue and earnings. It was a solid start to the year, and I'm proud of how our teams executed. We took proactive steps to manage portfolio performance, and we'll continue to adjust as needed based upon early indicators and insights from our dynamic decisioning models. We've consistently shown we can adjust quickly and effectively in challenging environments, and we expect to carry that same approach forward as we move through 2025. Speaker 400:19:30Looking ahead, we have revised our full year 2025 outlook as reflected in this morning's earnings release. We've attempted to reflect the increase in macro uncertainty and decline in consumer confidence that has emerged since we issued our original outlook in February. These headwinds are weighing on demand in our key leasable categories like furniture, electronics, mattress and jewelry. At this point, it's difficult to predict when conditions will normalize. However, we believe we can continue gaining balance of share in this environment by executing well and leaning into areas we can control, such as the health of our portfolio and SG and A. Speaker 400:20:17Even with the revised top line expectations, we continue to focus on driving profitable GMV, and we expect our lease portfolio performance to stay within our targeted six to 8% annual write off range. We will remain disciplined on spending, but as noted in February, Progressive Leasing's SG and A is expected to deleverage slightly year over year as we continue specific investments in the business. Our revised consolidated outlook for 2025 calls for revenue in the range of 2,425,000,000.000 to 2,500,000,000.0 adjusted EBITDA in the range of $245,000,000 to $265,000,000 and non GAAP EPS in the range of 2.9 to $3.3 This outlook assumes a difficult operating environment with soft demand for consumer durable goods, no material changes in the company's current decisioning posture, an effective tax rate for non GAAP EPS of approximately 28% and no impact from additional share repurchases. Additionally, the company has not assumed a recession, which, among other things, would likely be accompanied by a rise in the unemployment rate. We're staying focused on what we can control and remain committed to creating long term value for shareholders. Speaker 400:21:36Our priorities haven't changed. We're helping our retail partners drive incremental sales, remaining focused on our ecosystem strategy, managing our lease portfolio responsibly, and continuing to invest in areas that support growth. At the same time, we're being disciplined with how we manage expenses. Our performance over the past few years proves the strength and resiliency of our business model even in a tougher consumer environment. With that, I'll turn the call back over to the operator for questions. Speaker 400:22:09Operator? Operator00:22:10Thank you. Our first question comes from the line of Bobby Griffin with Raymond James. Your line is now open. Speaker 500:22:32Good morning, buddy. Thanks for taking my questions. Speaker 300:22:36Good morning, Steve and team. Speaker 500:22:37The first thing I wanted to touch on maybe was just kind of the trade down environment, separate out the retail softness across the durable categories that I think we've talked about. But what are you seeing today versus three months ago versus six months ago on actually trade down? One would think with the retail environment and maybe some more expensive stuff coming on tariffs that you could see a little acceleration trade down. Has that been stable? Just anything there to help kind of unpack the difference between just general retail softness as well as what we're seeing trade down? Speaker 300:23:13I mean, trade down, Bobby, still exists. I think we're starting to as we exited the quarter, we're starting to lap comp against last year when we really started to see the trade down. So from a I can't speak for the prime providers, but what we're observing and what our experience shows from a credit stack standpoint is we're not seeing, let's say, additional tightening, but we're not seeing any evidence that there's been additional approvals up the stack from us in retail point of sale waterfalls. I think that the so the trade down is still there. It's probably a little more muted than it was in the back half of 2024. Speaker 300:23:58I think the retail softness that you referred to and the hesitation, if you will, is certainly the larger macro force. But the top of the funnel is still, I would say, more open today than it was last year at the same time. Speaker 500:24:15Okay. And then on retail side of things, the softness, we've kind of all of us here on the call saw some of it in February. It seems like March and April got a little bit better. I wouldn't call it great, but maybe bounced a little off the February lows. Just anything there on just progression of how you saw things? Speaker 500:24:33I mean, you guys with tax refund season, it becomes a little bit more different than just the general retail trends. But is there any hope that things have firmed up a little here of late in the last couple of weeks? Or is it still pretty weak across all the categories? Speaker 300:24:47Yeah. I mean, there's a lot of data out there and you write on it about traffic trends and year over year, I guess, just trends. You have to really dig into that data and parse it on what does it look like for the prime customer versus the lower income consumer, even just general consumer spending trends where you hear some of the banks say that the consumer is still spending and card data show plus 5% year over year or whatever. That is less so in big ticket and even, I think, less so when you drill down into lower income. So as we said in the remarks, the quarter started off pretty encouraging. Speaker 300:25:32And then when there was a downshift in sentiment and it was reflected in activity, we haven't really seen any kind of inflection point or not a continued deterioration, I would say, but not a rebound or anything. Speaker 500:25:50Okay. That's helpful. And then one quick modeling one, Brian, is the $30,000,000 headwind of GMV that you guys called out for the lost customer, is that relatively consistent across the four quarters of this year? Speaker 400:26:04Yes, think that's a fair way to think about it. Obviously, Steve gave, I think on the Q4 call, some rough annual range. I think it was 130,000,000 to $150,000,000 for that customer. And there's obviously some level of seasonality inherent in the business overall, but I think you can look at our overall GMV and kind of model that out. I think you're roughly in the ballpark. Speaker 300:26:30I would just add on that. Did I would just add on that. We did have some GMV in Q1 from the execution of the liquidation sales that is over now. And so there'll be a slight step up in Q2 from a headwind standpoint. But then that stays fairly consistent in the back half. Speaker 500:26:52Makes sense. I appreciate the details. Best of luck here navigating a challenging environment. Thank you, guys. Speaker 300:26:58Thank you. Operator00:26:59Our next question comes from the line of Brad Thomas with KeyBanc Capital Markets. Clearly Speaker 600:27:09an unusual environment that we're in here right now. Guess my first question was maybe more big picture around how you all are thinking about the potential impact inflation and the tariffs as they flow to your retail partners and then ultimately onto your customers. On the one hand, I would think that it could certainly pressure spending power for consumers and be a challenge and headwind. On the other hand, higher prices for durable goods certainly may push for the need for more use of lease to own. And so just curious in the last few weeks, have you as you've been talking to your retail partners, what are you hearing? Speaker 600:27:49How do you think your partnership with them may play out going forward here? Speaker 300:27:56Yeah, thanks, Brad. And you're right. We've got two attack vectors here. We've got the impact and the pricing actions from our retail partners, and then we have behavioral impact on end consumers. And as you pointed out, and we've talked about in the past, modest increases in ticket or average selling price could actually be a positive for us from a bigger ticket is actually better from a dollars of marginal cash contribution, but also that incremental buyer might need a payment plan. Speaker 300:28:34But price shocks and demand destruction are certainly not good. And so it really depends on where on that continuum or that spectrum we end up. And I think that's going to vary well, it varies by the day or even the hour if you just get caught up reading the headlines. But it will also vary by the vertical and the category. So we have great relationships with our top partners, and we talk to them a lot. Speaker 300:29:00And we are privy to some of their plans that are not necessarily public, so we're not going to break news here. But we're staying in contact. But certainly, the large magnitude of potential tariffs are causing uncertainty. Think currently, the behavioral impact on our consumer and the somewhat frozen consumer is more of an impact than actually what the prices are going to be. So we'll see how that plays out and if there's any kind of relief or pause or rollback or negotiation, which I expect there'll be all of those things. Speaker 300:29:47But it has caused a volatile and uncertain situation now that we're all just trying to navigate through. Speaker 600:29:57I appreciate that. Thank you. And if I can ask a follow-up just on how things are playing out with Big Lots demise here. Curious what you're seeing from some of the legacy Big Lots customers. You cited GMV growth excluding Big Lots. Speaker 600:30:16Are you still growing new customers? Is this because you're doing being very successful transferring old Big Lots customers to other retailers? Just any more color on how this is kind of flowing through the system since this was such a big partner for you would be greatly appreciated. Thanks. Speaker 300:30:34Yeah, mean, we obviously have a very strategic marketing plan to keep the previous Big Lots customers in the family, if you will, and have our other partners benefit from our connectivity to those customers. And that is playing out. We are seeing well, we're not only seeing, but we're actively directing our database of Big Lots customers into other partners, whether that be in a similar vertical, another furniture, mattress retailer, or it could be in a different vertical with an electronics or an appliance purchase or lease. So we're seeing that. We're tracking it. Speaker 300:31:18We have an internal goal. Obviously, not every lease customer repeats every year. We do have high repeat, it's generally around eighteen months. But we do have customers from last year and the year before that we're reaching out to and trying to reactivate. And so we're having some success there. Speaker 300:31:40And the folks that are in the system are benefiting from that. And we'll continue to do that. Speaker 600:31:49Great. Thank you, Steve. Speaker 300:31:52Thanks, Brad. Operator00:31:53Our next question comes from the line of Kyle Joseph with Stephens. Your line is now open. Speaker 700:32:00Hey, good morning guys. Thanks for taking my questions. Just want to talk about kind of the shifts in macro and obviously, you guys have covered it, but to get into it, just want to kind of get the sense, It's primarily more on the demand side. Like, have you seen any kind of changes in terms of credit? It's probably too early for that. Speaker 700:32:20But just based on your commentary, it sounds like credit actually outperformed in the quarter, so no impacts there. Is that am I reading that the right way? Speaker 300:32:29On the on the on the write offs, you mean? Speaker 700:32:32Yeah. Just in terms of kind of really, you know, how credit performance has has changed versus mid February. It sounds like the big change to guidance is really stemming Speaker 300:32:45Yeah, think that's right. Certainly, impact of the lower GMV and early GMV has a bigger impact on the current year than late GMV, obviously. But from a portfolio standpoint, we've made some adjustments, iterative adjustments in the back half of 'twenty four and again early in Q1 of this year. And as we said, write offs came in slightly better than expected for Q1. There is a little bit of a, as we've said before, pig through the python dynamic that we're going to deal with in Q2. Speaker 300:33:20But the portfolio is healthy. And what we're seeing from an early indicator of FPBs or first pay balances or early four week delinquencies, The pools are performing as we would expect. And kudos to our decision science team for pulling the appropriate levers and really demonstrating once again that this short duration portfolio, we have our hands firmly on the wheel and in control of it. So the story is not really a portfolio performance story. It is a demand story. Speaker 300:33:58And that could be in the form of just application volume or even conversion after the approval. Approval rates are down year over year, but that was expected. And we knew that, and it was baked into our outlook. So the other areas of funnel conversion is where the GMV, I'll say, miss happened. Speaker 700:34:27Yeah. Operator00:34:31Thank you. Our next question comes from the line of Wong Yuan with TD Cowen. Your line is now open. Your line is open. Please check your mute button. Operator00:35:09Thank you. Our next question comes from the Speaker 800:35:11line of John Hecht with Jefferies. Your line is now open. Good morning, guys. Thanks for taking my question. Actually, most of my questions have been asked and answered, but I guess one question I have is maybe discuss the American Signature ramp. Speaker 800:35:25I know it is a topsy-turvy environment, but maybe talk about the pipeline of new retailers and kind of what the environment is around that. Speaker 300:35:38Yeah, without getting into too much specifics, the ASI or American Signature is going very well. They're a great partner. They are bought into the program. And we have great connectivity from the top to the bottom and are training in stores. And as we talked about in previous calls, they had LTO in the past, so it wasn't starting from a standing start education process. Speaker 300:36:07A little bit of a different motion, but we're really pleased with where we are and what we think we can accomplish this year with them even in a soft traffic and demand environment. As it relates to just pipeline, as we've talked about before, the challenging environment is conducive environment for having pipeline conversations. Clearly, we call out any specific logo publicly until it's actually across the goal line. But we're encouraged by some of the conversations we're having. And we think that we are in a great position to help more and more retailers just save sales. Speaker 300:36:57And we can drive incremental traffic to them during this interesting and challenging time. Speaker 800:37:04Okay. Appreciate the color. Thanks very much. Operator00:37:08Thank you. Our next question comes from the line of Anthony Chukumba with Loop Capital Markets. Your line is now open. Speaker 900:37:17Good morning. Thanks for taking my question. So you talked about credit tightening and a lower lease approval rate. Can you just give us kind of order of magnitude in terms of the reduction in the lease approval rate and also maybe contrast that with lease application volume? Speaker 300:37:39Yeah. So the approval rate and I would start by saying the approval rate's a dynamic metric because we have taken some tightening actions. And the result is that the approval rate throughout the quarter was kind of 300 to 400 basis points lower than the same period a year ago. But it's not accurate to just assume that all of that is due to the tightening actions that we took. Some of it is due to channel shift because we have just lower approval rates online than we do in store. Speaker 300:38:15Some of that is due to just the quality of the application coming in is a little bit worse this year than last year. And so even in the same algorithm or the same model, the approval rate would be impacted lower. So there's a lot of variables that go into the resulting approval rate. But the headline number is it's about 300 to 400 basis points lower than the previous year. And that's roughly in the ballpark of what we expected when we were creating the plan for 2025. Speaker 300:38:48So the move there is not not a surprise. On the application volume side, we did have application growth excluding big lots. So if you take out the year over year impact of Big Lots application growth. But we did see some conversion degradation. And that, we believe, through talking to customers and talking to our sales folks that are out there in the stores and the retail sales associates is maybe a little less purchase intent from an applicant. Speaker 300:39:31Now that doesn't mean that that's going to be that conversion won't come with a lag because our approvals are open for ninety days. But we did see a decline in conversion post approval even on the ones that we did approve in the quarter. Speaker 900:39:47Got it. And then just one quick follow-up, just a clarification. You say the gross leased assets were up 6.6% year over year heading into the second quarter. I just want to clarify that. Speaker 400:40:02They were up 6.1% entering the quarter. So that was at Jan one? Yes, Jan one. And they finished up just a couple of percent. And that's going to be a dynamic of obviously demand headwinds that we're talking about and also ninety day buyouts were slightly higher year over year. Speaker 900:40:23Okay. So at the end of the quarter, there were a couple, call Speaker 300:40:27it, 2% year over year. Is that correct? Just a hair over 2%. Speaker 900:40:31Got it. Okay. Thank you. Operator00:40:34Thank you. Our next question comes from the line of Kyle Joseph with Stephens. Your line is now open. Speaker 700:40:44Good morning again, guys. Sorry about that. Anyway, just one follow-up from me and apologies if you covered it. But just want to talk about the kind of different dynamics between FOR and the progressive business. It looks like guidance at other at least in primarily four was maintained. Speaker 700:41:02Is that a function of kind of a different customer, kind of a different merchandise vertical? What are the different dynamics there and how are they being impacted by macro differently? Speaker 300:41:16Yeah. Thanks, Kyle. We're excited about the four business. It's, as we said, grown GMV triple digits for six consecutive quarters, and then importantly, achieved the first quarter of basically positive adjusted EBITDA and positive earnings here in Q1. So really happy with the trajectory. Speaker 300:41:37It's going to more than double its GMV for the full year 'twenty five. And to your point, it does serve a different customer, but it also serves an overlapped customer with the leasing segment. The average order value is $120 and there's apparel and cosmetics and other consumables. And so it is a different purchase motion. And so I think that it has not been impacted as much as the big ticket items, the durable goods. Speaker 300:42:15Certainly, fix on durable goods and replacement are happening. It's the aspirational purchases that might be more impacted by being on hold. But four has really good demand signals, exceedingly doing great in the app store, lots of organic momentum. And we're growing the base in a very healthy way with new customers and a lot of repeat customers continuing to transact multiple, multiple times a year. We're very pleased with the trajectory of four and look forward to continuing to report to you guys how it's going over there. Speaker 700:43:05Got it. Thanks for taking my question. Operator00:43:08Thank you. Our next question comes from the line of Wong Yuan with TD Cowen. Your line is now open. Speaker 200:43:16Hi, guys. And I'm sorry for the hiccup earlier. Thanks for taking my questions. Maybe I want to touch on the guidance a little bit. I mean, it looks like your GMV in 1Q came in maybe about four points below what you previously guided. Speaker 200:43:32So, mean, I just want to kind of dive into the guidance. I mean, much of a guide down, I guess, is because of that lower GMV in 1Q and I guess lower exiting gross lease assets versus how much of that is further incremental weakening for the rest of the year versus the baseline? And maybe can you talk about the GMV outlook for the rest of the year and maybe for 2Q? And I have a follow-up. Speaker 400:43:59Huang, this is Brian, and I'll start and Steve can certainly overlay any commentary. I think Steve alluded to this, but the demand side, particularly the miss here in Q1 and then kind of a consideration of how prolonged the impact of these demand headwinds will last, I think is part of the uncertainty. But GMV headwinds early in the year certainly have a as a portfolio business has a more pronounced impact on the P and L than say missing it in Q4. And so we've attempted to incorporate that miss in the plan. As we look through the rest of the P and L and any other areas of uncertainty, I think we talked a great deal about the credit side and how we're feeling about the portfolio performance. Speaker 400:44:52And that's an area that understand there's a lot of uncertainty around there. But think our track record and the team that we have and the visibility we feel like we have into keeping that credit side within that 68% range, think we're comfortable there. And then on the SG and A side, I think we're we feel like that's a controllable element that we have visibility into. So really to answer your question, it was a it was a GMV particularly front half of the year GMV that drove the revision in guidance as we work through the motions. Steve, if you have anything to add more broadly about the Speaker 300:45:34No, you covered it. We certainly have a known known, which is the GMV that came in during Q1. And it's difficult more difficult than normal in this environment to predict GMV for the rest of the year. We can hope that things get more stable and recover, But hope is not a strategy, and hope doesn't fill a cell in a spreadsheet to create a forecast. So we took a shot at what we thought the GMV would be for the rest of the year. Speaker 300:46:12It's important to note that we did grow GMV ex Big Lots. Our major partners were up year over year, which is good because my guess is that their headline business was not up. We continue to gain balance of share. But admittedly, we weren't up as much as we expected we would be up in Q1. And so all those factors baked into the revised view of the year, which admittedly has more uncertainty, I'd say, today than it might have had in previous years. Speaker 400:46:50The only one thing that I'd add and just make sure that it's understood, and we mentioned this in prepared remarks, is we think about the trajectory of credit throughout the rest of the year on the write off side. We do expect and we have modeled it and we can see it, the maybe slight step up from Q1 to Q2 on write offs overall. And that's really a function, not so much as a degradation in any of the trends that we're seeing, but it's just a function of the buyout revenue that we have here in Q1 and the seasonally high Q1 revenue that will step down in Q2. And so it's a denominator dynamic more than anything. Line item for write offs on the P and L will actually should be flat to maybe slightly down as go into Q2. Speaker 400:47:45And then the back and the Q2 should be the high watermark for write offs. And we should see some relief as that pig moves through the Python on the old portfolio or the portfolio that still exists prior to the decisioning actions. So that's how we're shaping up. So it won't be a we won't be surprised when we see just a slight uptick in write offs in Q2 and then and looking for that to be the high watermark. Speaker 200:48:12Got it. And maybe the GMV outlook for 2Q and for the rest of the year? Sorry if I missed that earlier. Speaker 300:48:21No, you didn't miss it. We did not provide it. It's a function of our lack of clarity. So we're not providing a GMV guide for the rest of the year. Speaker 200:48:34Got it. And maybe the last one for me. In a time like this, can you discuss about you know, what kind of conversations you're having with your partners? I mean, I guess, I mean, you can take the view that they view lease to own now is something that would tremendously help with affordability. But, you know, at the same time, this tariff thing makes this conversation sort of less of a priority for them. Speaker 200:48:58So can you talk about the discussion that you're having with, I guess, your pipeline? Speaker 300:49:06Yeah. Well, with our current partners, I can tell you the discussions are very, very positive and partnership oriented. We alluded to, without naming the retailer in the prepared remarks, but we did get across the goal line an e commerce integration with a longtime national partner. And it's actually outperforming our expectations. So we look forward to continued enhancements to that and helping them continue move up the productivity curve and do more with us. Speaker 300:49:42And we become a bigger and deeper partner for them. That's one instance of these initiatives that we've been talking about for the last two years that have been getting across the goal line and getting prioritized by our partners. So really pleased with the team's efforts and results, actually, not just efforts in that regard. And I talked about the pipeline earlier. Those conversations are positive. Speaker 300:50:09And I would say that, yes, tariffs are I don't know if it's a distraction, but it's certainly taking up a lot of mindshare and strategic planning about how they're going to react and how they're going to adjust and consume and see who along the value chain shares the pain. But we can be viewed as a potential solution for some of the pain that's being felt. And so we're certainly leaning into that and trying to offer our assistance certainly. Speaker 200:50:47Got it. Thank you and best of luck. Speaker 300:50:50Thank you. Operator00:50:51Thank you. And I'm currently showing no further questions at this time. I'd like to turn the call back over to Steve Michaels for closing remarks. Speaker 300:51:00Thank you, and thank you all for joining us this morning and your continued interest in Prague Holdings. We delivered another good quarter and start to the year, but obviously we're currently dealing with an uncertain macro backdrop. But it's important to remember that the business has proven to be very resilient in previous challenging times and we expect with continued great execution we'll successfully navigate this one as well. So thanks again and we look forward to updating you on our progress in July. Operator00:51:31This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by