PROG Q1 2026 Earnings Report

PROG EPS Results

• Actual EPS: $1.24
• Consensus EPS: $0.78
• Beat/Miss: Beat by +$0.46
• One Year Ago EPS: $0.90

PROG Revenue Results

• Actual Revenue: $742.67 million
• Expected Revenue: $732.70 million
• Beat/Miss: Beat by +$9.97 million
• YoY Revenue Growth: +11.10%

PROG Announcement Details

• Quarter: Q1 2026
• Date: 4/29/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 29, 2026
• Conference Call Time: 8:30AM ET

PROG (NYSE:PRG). is a financial technology company that provides consumer financing and lease-to-own solutions through its Progressive Leasing business. The company helps consumers obtain merchandise from participating retailers through flexible payment arrangements, including customers who may not qualify for traditional credit.

Progressive Leasing supports in-store, online and omnichannel transactions for products such as furniture, appliances, electronics, mattresses, jewelry and other household goods. Its technology and point-of-sale tools are designed to integrate with retail partners and provide an alternative payment option for consumers.

PROG Holdings began operating as an independent publicly traded company in 2020 following its separation from The Aaron’s Company. The company serves consumers and merchants across the United States and is headquartered in Draper, Utah. Steven Michaels serves as president and chief executive officer.

PROG Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Delivered a strong Q1, beating guidance with consolidated revenue of $743 million, Adjusted EBITDA of $90.3 million, Non-GAAP EPS of $1.24, and consolidated GMV up 54% year‑over‑year.
• Positive Sentiment: Four continued rapid, profitable scaling—Q1 GMV of $280 million (+134% YoY), revenue up 142%, and Adjusted EBITDA of $12.9 million with a 37% margin, showing improving unit economics.
• Neutral Sentiment: Progressive Leasing showed sequential improvement (January down high single digits → March up low single digits) but Q1 GMV was down 2.2% YoY and portfolio size remained down ~5.4% YoY, even as gross margin expanded ~210 bps and write‑offs stayed within the 6%–8% target.
• Neutral Sentiment: Purchasing Power delivered modest momentum with Q1 GMV +10.3% and revenue of $107.1 million, producing near‑breakeven Adjusted EBITDA (~$0.8M) while integration and employer distribution remain early‑stage growth drivers.
• Positive Sentiment: Balance sheet progress: paid down $210 million of recourse debt post‑acquisition, exiting Q1 at ~2.0x net leverage (within the 1.5–2.0x target), raised the quarterly dividend, and prioritized deleveraging, M&A, and potential buybacks.

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the PROG Holdings Q1 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, John Baugh, Vice President of Investor Relations. Please go ahead.

[John Baugh, VP of Investor Relations at PROG Holdings]

Thank you, and good morning, everyone. Welcome to the PROG Holdings first quarter 2026 earnings call. Joining me this morning are Steve Michaels, PROG Holdings President and Chief Executive Officer, and Brian Garner, our Chief Financial Officer. Many of you have already seen a copy of our earnings release issued this morning, which is available on our Investor Relations website, investor.progholdings.com. During this call, certain statements we make will be forward-looking, including comments regarding our revised 2026 full-year outlook and our outlook for the second quarter of 2026. 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.

[John Baugh, VP of Investor Relations at PROG Holdings]

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. These 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 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, PROG Holdings President and Chief Executive Officer. Steve?

[Steve Michaels, President and CEO at PROG Holdings]

Thanks, John. Good morning, everyone and thank you for joining us. I'll start by saying we delivered a strong first quarter. We are very happy with the start to the year and the momentum we're seeing in the business. Our results came in at the high end of our revenue outlook and exceeded the top end of our outlook for earnings and non-GAAP EPS. This outperformance reflects the discipline of our operating model and strong execution across the organization, supported by higher-than-expected GMV with improved economics at Four, as well as better portfolio yield at Progressive Leasing, primarily due to lower than expected utilization of 90-day purchase options. In an environment where the geopolitical and macroeconomic situation presents challenges, including from rising gas prices, our model performed as designed. This consistency is a direct result of how we built and managed this business over time.

[Steve Michaels, President and CEO at PROG Holdings]

Let me provide some additional color on the quarter before walking through our strategic priorities. As I mentioned in February, we have begun framing growth through the lens of consolidated GMV, which grew 54% in Q1 compared to the same period last year. These results reflect the addition of Purchasing Power and the triple-digit growth of Four. As our portfolio of solutions expands, GMV is generated through multiple products across Leasing, Four, and Purchasing Power, and this consolidated view better reflects the full scale of our platform. It's a great example of how we are deploying an integrated ecosystem of solutions to better reach underserved individuals and families. Starting with Progressive Leasing, GMV for the first quarter came in at 2.2% below the same period last year.

[Steve Michaels, President and CEO at PROG Holdings]

However, trends improved meaningfully as the quarter progressed, with January down high single digits, February down low single digits, and March up low single digits. As a reminder, throughout last year, our leasing business faced GMV headwinds from deliberate tightening actions and the bankruptcy of Big Lots. As we lapped both of those headwinds, particularly through February, Leasing's GMV trends inflected positively in March. From a GMV standpoint, the quarter played out largely as expected, and we are excited to exit the quarter on a growth trajectory. Four's GMV for the quarter was 134% high year-over-year. Customer demand for our BNPL product remains robust, and importantly, we are seeing that growth translate into attractive economics and profitability, which I'll discuss in more detail shortly. Purchasing Power's Q1 GMV grew double digits at 10.3% year-over-year.

[Steve Michaels, President and CEO at PROG Holdings]

This growth was due to favorable performance within existing employer accounts. We also added several new employer clients during the quarter, bringing tens of thousands of new eligible employees onto the platform and supporting future growth. Consolidated revenue came in at $743 million, representing 11% year-over-year growth. This performance was primarily as a result of the addition of Purchasing Power along with growth at Four and partially offset by a revenue decline at Progressive Leasing due to a lower portfolio size throughout the quarter. Consolidated adjusted EBITDA was $90.3 million, and non-GAAP EPS was $1.24, both exceeding the high end of our outlook. This outperformance was fueled by better-than-expected portfolio yield and customer payment performance at Progressive Leasing, as well as increased customer demand and profitability at Four.

[Steve Michaels, President and CEO at PROG Holdings]

To summarize the quarter, we delivered results above expectations, saw improving GMV trends while maintaining portfolio health at Leasing, drove profitable triple-digit growth with improving economics at Four, achieved double-digit GMV growth at Purchasing Power, and continued to execute against our ecosystem strategy. Before we shift into our strategic priorities, I want to briefly address the broader environment and how it informs our updated outlook. The consumer we serve remains resilient, but they are facing real challenges. Gas prices are elevated, and there is increased uncertainty in the macro backdrop. We remain committed to continue to deliver consistent portfolio performance across all our businesses and managing costs prudently to achieve our earnings outlook. Our track record demonstrates our ability to adapt quickly, and we will do so as conditions evolve. Let me now turn to our three strategic pillars, Grow, Enhance, and Expand, to share some highlights from the quarter.

[Steve Michaels, President and CEO at PROG Holdings]

Starting with the Grow pillar, we saw encouraging traction at Progressive Leasing and Purchasing Power, with remarkable growth at Four, which collectively resulted in consolidated GMV being up 54% year-over-year. For Leasing, Q1 applications grew double digits year over year, and GMV trends improved sequentially month-over-month, with March up low single digits compared to the prior year. In addition to lapping the tightening actions from early 2025, these results reflect our investments in technology to enhance customer experience and in marketing to promote engagement across both new and existing customers. You heard about many of these initiatives at our recent Investor Day. We're pleased to say that they are continuing to have a positive impact on our business.

[Steve Michaels, President and CEO at PROG Holdings]

Our long-term distribution base of exclusive retail partners with approximately 70% of Progressive Leasing GMV secured into the 2030s provides a durable foundation for growth as we also gain balance of share within existing key retail partners. Additionally, our direct-to-consumer efforts spanning both marketing and digital channels have been meaningful drivers of growth. Within marketing at Progressive Leasing, we leaned into customer acquisition, partner marketing, and cross-product campaigns, which drove increased engagement and incremental GMV. We focused further up the funnel while maintaining flat acquisition costs year over year. At the same time, our outreach channels, including email, SMS, and push notifications, generated incremental GMV, reinforcing healthy consumer demand and improving return on ad spend. On the digital front, PROG Marketplace delivered another notable quarter, growing at 169% year-over-year.

[Steve Michaels, President and CEO at PROG Holdings]

We are scaling this channel through ongoing product enhancements, increased traffic, and improved conversion. Our e-commerce channel also grew meaningfully due to deeper integrations with retail partners and improved digital checkout experiences. Q1 e-commerce GMV was 25.7% of total Progressive Leasing GMV, up from 16.8% in the same period last year and the highest first quarter mix to date. Shifting to Four, we delivered another triple-digit growth quarter, our 10th in a row, with performance powered by both customer acquisition and engagement. The team rolled out AI-driven product enhancements that simplify the shopping experience and average order values increased year over year. Monthly active users more than doubled compared to a year ago, reflecting growing consumer interest. On the marketing side, spend was deployed efficiently to support growth, maintaining a healthy balance between paid and organic customer acquisition.

[Steve Michaels, President and CEO at PROG Holdings]

Finally, Purchasing Power delivered double-digit GMV growth, reinforcing the strength of its model and its strategic role within our ecosystem. Its payroll deduction model represents a differentiated distribution mode, serving employees who value predictable, convenient purchasing options through their paycheck. We remain in the early stages of deeper integration, including introducing Purchasing Power to our retail partner employee bases and leveraging addressable employer relationships to expand leasing distribution. Over time, we believe this opportunity represents a meaningful incremental growth lever. From a marketing perspective, early media testing at Purchasing Power is showing encouraging results, demonstrating our ability to improve penetration within the eligible population. Under the Enhanced pillar, our investments in improving both customer and retailer experiences are progressing, with several initiatives beginning to deliver positive results. Our AI-driven lease eligibility engine is scaling meaningfully.

[Steve Michaels, President and CEO at PROG Holdings]

We've expanded our leasing product catalog and improved response times from three seconds down to a tenth of a second. At the same time, we are advancing customer experience enhancements that are driving higher conversion. We deployed multiple AI-driven improvements across our PROG Marketplace, including an AI chatbot assistant, enhanced payments navigation, and a new AI-powered checkout flow that simplifies and streamlines the transaction process. These PROG Marketplace enhancements have delivered an approximately 20 percentage point improvement in checkout conversion versus the prior experience, while also lowering cost to serve and improving operational efficiency. The focus remains clear. Enhance the customer experience to support higher customer lifetime value while improving the economics of the business. Under the Expand pillar, Four is scaling and Purchasing Power is growing double digits in line with expectations as integration efforts advance. We remain intensely focused on strengthening our ecosystem.

[Steve Michaels, President and CEO at PROG Holdings]

Four, executed at a high level, delivering 142% revenue growth in Q1 2026, the 10th consecutive quarter of triple-digit GMV and revenue growth. Q1 GMV reached $280 million, more than doubling Q1 2025, and March 2026 GMV of $108 million was the second-highest month in company history. Customer engagement trends remain favorable, with average purchase frequency of approximately five transactions per quarter and more than 130% growth in active shoppers year over year. New shoppers grew approximately 80% year-over-year, representing expansion of the platform's customer base. Four subscription model remains a key driver, with Four+ subscribers continuing to contribute approximately 80% of total GMV.

[Steve Michaels, President and CEO at PROG Holdings]

Four's take rate, defined as revenue generated as a percentage of GMV over the trailing-12-month period, remained consistent at approximately 10%, indicating positive monetization efficiency as the business scales. From a profitability standpoint, Four generated adjusted EBITDA of $12.9 million in Q1 2026, already exceeding full-year 2025 adjusted EBITDA of $9.9 million. Q1 adjusted EBITDA margin was 37%, reflecting the benefits of scale. While Q1 is seasonally the highest margin quarter following elevated GMV from the holiday period, the business continues to demonstrate meaningful operating leverage. Money App, our cash advance product, grew revenue over 50% in the first quarter and continues to play an important role as both an engagement and cross-sell driver within our ecosystem.

[Steve Michaels, President and CEO at PROG Holdings]

Growth was as a result of higher average advance sizes as well as early traction from a new product we introduced in December called Top-Ups, which allows qualifying customers to responsibly access additional funds on top of an existing advance. While still early, Top-Ups are beginning to generate incremental revenue and represent another avenue for us to deepen customer engagement and expand the platform over time. Our ecosystem strategy is gaining traction. At our Investor Day in March, I highlighted that cross-product engagement is a strategic priority because we believe it is a key component of long-term growth and value creation. We are seeing progress from our ecosystem-first approach, with customers increasingly engaging across multiple products, driving higher lifetime value and improved acquisition efficiency. Four is currently our most connected product, often serving as an entry point and engagement driver across our platform.

[Steve Michaels, President and CEO at PROG Holdings]

Progressive Leasing showed the most meaningful improvement in cross-product engagement during the quarter, with more of its customers interacting with other offerings. Notably, we also drove the largest overlap and fastest growth in overlap between Progressive Leasing and Four customers. Before turning over to Brian, let me touch on capital allocation. Our priorities remain unchanged. Invest in the business, pursue strategic M&A, and return excess capital to shareholders through share repurchases and dividends. In February, I told you that in the near term, we will focus on prioritizing debt reduction as we work toward our long-term net leverage target of 1.5x-2x, and we did. During the quarter, we paid down $210 million in recourse debt, ending Q1 with a net leverage ratio of 2x.

[Steve Michaels, President and CEO at PROG Holdings]

To summarize the quarter, we delivered results above expectations, led by consistent execution and improving demand trends across the business. Importantly, these results were achieved while continuing to invest in our strategic priorities, advancing our direct consumer capabilities, scaling our digital channels, and deepening integration across our platform. Overall, our distribution moat, diversified ecosystem, and data-driven decisioning capabilities position us well to perform across a range of environments. I firmly believe the best chapters of PROG's story are still ahead of us. With that, I'll turn the call over to Brian. Brian?

[Brian Garner, CFO at PROG Holdings]

Thanks, Steve, and good morning, everyone. Our strong performance in the first quarter was broad-based and reflects disciplined execution across each of our businesses, as well as some margin favorability from consumer behavior in the Leasing segment. In a short period of time, we made significant progress against our goal of deleveraging following the Purchasing Power acquisition. As we exit the quarter, we are within our target net leverage range of 1.5x-2x. I'll begin with our Q1 results of Progressive Leasing, followed by Four Technologies, Purchasing Power, and then move to consolidated results. I'll close with an update on our balance sheet, capital allocation, and our revised full-year 2026 outlook.

[Brian Garner, CFO at PROG Holdings]

While more broadly, consumer demand across several discretionary categories remains pressured, our teams executed well on the areas within our control, including targeted growth initiatives, decisioning, expense discipline, and capital deployment, enabling us to deliver results ahead of expectations and reinforcing the underlying opportunities within the business. Starting with Progressive Leasing, first quarter GMV came in at $393 million, representing a 2.2% decline year-over-year, which was in line with our expectations. As Steve outlined, this performance reflects two primary factors in the first half of the quarter. The tightening actions we implemented last year to preserve portfolio performance and the lapping of remaining GMV from Big Lots following their bankruptcy. As we progress through the quarter and move past these headwinds, GMV trends improve sequentially, returning to low single-digit growth in March.

[Brian Garner, CFO at PROG Holdings]

Revenue for the Progressive Leasing segment was $597 million in the first quarter, down 8.4% year-over-year, primarily a result of a smaller average lease portfolio throughout the quarter. The lower gross leased asset balance, which is down 9.4% entering the quarter compared to a year ago, created a headwind to Q1 revenue. We ended the first quarter with a portfolio size down 5.4% year-over-year. As we executed against our growth initiatives at Progressive Leasing, we expect this portfolio headwind to subside and the revenue compare will become less difficult as the year progresses. Additionally, utilization of the 90-day early purchase option, which is seasonally high in Q1 due to tax refund season, came in lower than expected for the quarter and below 2025.

[Brian Garner, CFO at PROG Holdings]

While an environment where fewer customers electing to exercise their 90-day purchase option represents a revenue headwind in the period, over time, we expect total revenue, gross profit and margins to trend favorably. Gross margin for Progressive Leasing was 31.5% in the quarter, up 210 basis points year-over-year. Margin expansion stemmed from improved portfolio yield and a higher proportion of customers choosing to remain in their lease agreements longer, which in part ties to a lower 90-day purchase option activity. Leased merchandise write-offs came in at 7.3% of lease revenue within our targeted annual range of 6%-8% and a 10-basis point improvement from the Q1 2025 rate of 7.4%.

[Brian Garner, CFO at PROG Holdings]

This result reflects the benefits of the tightening actions taken a year ago, and we have been largely comfortable with the trends we have been seeing since those changes. As we've consistently emphasized, protecting portfolio health remains our top priority, and we are closely monitoring payment behavior, delinquencies and vintage-level performance, and we are pleased with what we have seen year to date. Progressive Leasing's SG&A for the quarter was $81.3 million, or 13.6% of revenue, compared to 12.6% in Q1 of 2025, and was flat in total SG&A dollars spent even as we invest selectively in areas that support long-term growth, including technology modernization, customer experience, and AI initiatives. As we've demonstrated over time, we remain focused on balancing near-term expense discipline with investments that enhance the durability and scalability of the business.

[Brian Garner, CFO at PROG Holdings]

Adjusted EBITDA for Progressive Leasing was $77 million or 12.9% of revenue at the high end of our long-term target range of 11%-13%, representing a 260-basis point improvement year over year. This performance was primarily the result of operational execution, including managing portfolio performance and yield, partially offset by the revenue headwind of a smaller lease portfolio throughout the quarter. Turning to Four Technologies. Q1 GMV reached $280 million, representing growth of 134% year-over-year, and marking the 10th consecutive quarter of triple-digit GMV growth. March alone generated $108 million in GMV, the second highest month in company history. Revenue of $35 million exceeded expectations, growing 142% year-over-year. Adjusted EBITDA was $12.9 million, representing a margin of 37%.

[Brian Garner, CFO at PROG Holdings]

I would note that Q1 is the strongest margin period for Four, and throughout the remainder of the year, I expect margins to moderate to the range implied in the revised outlook for the segment. Underlying economics are improving, and we remain highly encouraged by the performance of the business across both growth and profitability metrics. Finally switching to Purchasing Power. Q1 GMV was $132.7 million, representing 10.3% growth. Revenue for Purchasing Power was $107.1 million in the first quarter, with adjusted EBITDA of $0.8 million, consistent with the near breakeven results we expected. As a reminder, Purchasing Power seasonally generates a greater proportion of its revenue and earnings in the back half of the year, particularly in the fourth quarter.

[Brian Garner, CFO at PROG Holdings]

Integration efforts are on track. We remain encouraged by the progress we are making across both front-end and back-end synergies, as well as its strategic fit within our broader ecosystem. Transitioning to consolidated results. We delivered strong GMV growth, with continuing operations increasing 54% year-over-year to $806 million, driven by the addition of Purchasing Power and growth at Four. Revenue from continuing operations grew 11.1% year-over-year to $742.7 million, reflecting the addition of Purchasing Power and triple-digit growth at Four Technologies, partially offset by the revenue decline at Progressive Leasing.

[Brian Garner, CFO at PROG Holdings]

From an earnings perspective for continuing operations, consolidated adjusted EBITDA was $90.3 million, or 12.2% of revenue, and non-GAAP diluted EPS was $1.24, both exceeding the high end of our February outlook and delivering 29% and 38% year-over-year growth respectively. Turning to the balance sheet, we ended the first quarter with $69.4 million of unrestricted cash and total available liquidity of $419.4 million, including our revolving credit facility. We ended the quarter with $650 million of recourse debt. Since closing the acquisition, we paid down recourse debt by $210 million, resulting in a net leverage ratio of 2x trailing 12-month adjusted EBITDA.

[Brian Garner, CFO at PROG Holdings]

As a reminder, this ratio excludes the non-recourse ABS debt used to fund Purchasing Power operations, does not add back the associated interest expense to adjusted EBITDA, and only includes the Purchasing Power adjusted EBITDA since the acquisition. Importantly, net leverage was approximately 2.5x immediately following the acquisition on January 2nd of 2026. Since then, our focus has been on integrating Purchasing Power and driving meaningful deleveraging, and we have made material progress in the quarter, bringing net leverage back within our long-term target range of 1.5x-2x. As we move through the balance of the year, we expect to remain below two turns. We returned capital to shareholders in the first quarter through our quarterly dividend, paying $0.14 per share, a 7.7% increase from the prior year quarter.

[Brian Garner, CFO at PROG Holdings]

I would now like to touch on a few key aspects of our second quarter and revised full-year outlook, which was provided in this morning's earnings release. Despite their macroeconomic challenges, we believe our GMV momentum at a consolidated level will carry into the remainder of the year. The improving leasing GMV trends positively impact the gross leased asset balance, which is a leading indicator of future period revenue. Four is delivering strong growth with improving economics, and Purchasing Power is just getting started on realizing its GMV and margin potential. Portfolio performance at leasing is expected to remain healthy as we actively manage yields while balancing GMV growth. We expect full-year 2026 leased merchandise write-offs to remain within our targeted annual range of 6%-8%.

[Brian Garner, CFO at PROG Holdings]

Our revised consolidated outlook for 2026 raises expectations on both revenue and earnings from continuing operations, reflecting the Q1 outperformance and our confidence in executing at a high level through the rest of the year. We are already making progress against the three-year 2028 compound annual growth rate framework we outlined in Investor Day. Q1 was a strong and encouraging start to this journey. Our revised consolidated outlook for continuing operations for 2026 calls for revenues in the range of $3 billion-$3.1 billion, adjusted EBITDA in the range of $343 million-$370 million, and non-GAAP EPS in the range of $4.40-$4.80.

[Brian Garner, CFO at PROG Holdings]

This outlook assumes an operating environment with no change in the current financial pressures and uncertainties for our customer, no material changes in the company's decisioning posture, no meaningful increase in the unemployment rates for our customer base, an effective tax rate for non-GAAP EPS of approximately 26%, and no impact from additional share repurchases. To summarize, Q1 was a great start to the year, with broad-based outperformance across our businesses and disciplined execution in the areas within our control. We delivered improving trends of Progressive Leasing, sustained high growth and expanding profitability of Four, and early progress with Purchasing Power as integration continues. At the same time, we strengthened the balance sheet, bringing net leverage back within our targeted range while maintaining a prudent approach to capital allocation.

[Brian Garner, CFO at PROG Holdings]

As we look ahead, we remain focused on driving profitable growth, managing portfolio performance while executing against our strategic priorities and navigating a still uncertain macro environment. I'll turn the call back over to the operator for questions. Operator?

[Operator]

Thank you. At this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Due to the interest of time, please limit yourself to one question and a follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Kyle Joseph of Stephens. Your line is now open.

[Kyle Joseph, Analyst at Stephens]

Hey, good morning, guys. Congrats on a really strong start to the year. Steve, would love to kind of pick your brain on macro. Obviously, a lot of moving parts throughout the quarter. You know, initially, we're expecting higher tax refunds, and then you get into March and higher gas prices. Just kind of walk us through the moving parts of macro and maybe how those impact your businesses differently. You know, we're no longer just focused on leasing, obviously. Four had a really good quarter, and we're obviously new on the Purchasing Power side of things. Just a little bit of macro kinda evolution through the quarter and differing impacts across the businesses. Thanks.

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. Thanks, Kyle. Good morning. I guess I would start by saying that, you know, we do have the multiple product ecosystem, but they do have connections in that they serve a very similar customer across the product. To the extent that the macro-overlay has an impact, it's not identical, but it's, you know, directionally similar across the products. We have the benefit of being able to see the customer behavior and the, you know, the influence on the customers across those products and can use that to help, you know, as insights into all the products. As the quarter played out and you called out a few of those things, you know, we're always used to preparing for a tax season.

[Steve Michaels, President and CEO at PROG Holdings]

We thought the tax season was gonna be higher. Tax season actually played out about as we expected. It was higher, but not maybe as high as some people were reporting back in, you know, August, September, October timeframe for our customer. Certainly refunds were up across the board, for our customer, they were up, you know, somewhere in the, you know, whatever high singles to low doubles range. That was about what we were planning for. As Brian said in his remarks, we did see in the leasing business less or fewer customers choosing to opt to exercise their 90-day purchase option.

[Steve Michaels, President and CEO at PROG Holdings]

We've seen that in over time in different cycles, when customers might be making different decisions about the liquidity the tax season brings. They're making payments to stay current, but not necessarily accelerating a payoff of an obligation. That played out. Some of the other products don't exactly have that kind of accelerated repayment, you know, during the tax season, so less of an impact outside of leasing. Certainly gas prices during the month of March became a bigger story. The consumer is stressed but resilient. I mean, I think that's the common refrain. We're watching all of our early indicators, you know, intensely. We're seeing basically evidence of that stress but resilient.

[Steve Michaels, President and CEO at PROG Holdings]

So we feel good about where we're positioned. The tightening and leasing that we did in the first quarter of 2025 has, I think, served us well and positioned the portfolio to be able to withstand some of the stress. You know, we saw a really good first quarter and, you know, we're watching the numbers closely and watching the early indicators, but poised for some good momentum to continue.

[Kyle Joseph, Analyst at Stephens]

Got it. That was broad-based, but appreciate you covering it all. Just one follow-up from me. You know, obviously a tough retail environment, even going into the year and then layering in gas prices. Just kinda wanna talk, get an update on your discussions with retail partners, kinda given now you have a bigger suite of products and given, call it some more incremental headwinds for retailers. Thanks.

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. I mean, that's kinda more of the same on the retail, especially in consumer durables that the leasing business addresses. Our biz dev teams are doing a good job. They've had some wins in the back half of 2025 and have a very good pipeline of retailers of all sizes that we think we're making progress with from a sales stage progression standpoint. We continue to believe that our suite of products with leasing at the retail level being the largest one are things that can help retailers.

[Steve Michaels, President and CEO at PROG Holdings]

We are having increased conversations about a multiple product solution with various retailers, bringing Four into the mix or on the Purchasing Power side, bringing other products to employers to be able to offer additional value to their employees on that voluntary benefit platform. We look forward to continuing to, you know, really dive into that ecosystem strategy and business development in our B2B2C businesses, in specifically Leasing and Purchasing Power is a big part of it.

[Kyle Joseph, Analyst at Stephens]

Great. Thanks very much for taking my questions.

[Operator]

Thank you. One moment for our next question. Our next question comes to the line of Bobby Griffin of Raymond James. Your line is now open.

[Bobby Griffin, Analyst at Raymond James]

Good morning, guys. Thanks for taking the question and congrats on a good start to the year. I guess, Steve, I wanted to first ask, like when you've seen that customer behavior before with like lower expected 90-day buyout, has that historically given you kind of any insights into what the customer does for the back half of the year? Is there anything to like learn or kind of how that plays out and what the health of that customer is when you see that?

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. I'll start and Brian can certainly fill in the gaps. There's no, you know, no perfect kinda corollary. We have seen in the past, specifically in 2023, coming off of a really tough 2022 from a inflation standpoint, but also a pretty material tightening that we did in the leasing business. We saw a very low 90-day buyout take rate on our customers. What we saw was those customers kind of just they stayed in their leases longer, which is a theme that we've talked about for a couple quarters here on the leasing business.

[Steve Michaels, President and CEO at PROG Holdings]

Not doing a 90-day, you know, in that time period, 2023, did not indicate or necessarily mean that the customer was gonna do a straight roll or through the buckets and end up having elevated charge-offs. They end up paying deeper into their lease and maybe doing an early buyout, you know, later in the lease or going to full term. Certainly, some do end up in charge-offs, but we saw from a margin standpoint that this was a margin positive kinda trade-off because as you know, 90 days are a very low margin outcome for us, and the deeper they go in the lease is better. We're watching that closely to see what the kinda the next action is.

[Steve Michaels, President and CEO at PROG Holdings]

If the 90-day window expires, which a lot of it did in March because of the holiday uptick in leasing activity, and it expires unexercised, what happens and how do those customers continue to pay us? You know, so far we're pleased with the roll rates and other indicators in the portfolio health. We're not expecting a mirror of 2023, but we are looking to that period to help with our forecasting.

[Brian Garner, CFO at PROG Holdings]

Yeah. I would just add, I mean, it is the right question as you just kind of evaluate consumer health overall. We talked about 210 basis point improvement in gross margins at leasing in the quarter, primarily driven by this dynamic. I think what's reflected in our outlook is a view that this is gonna be a net positive for us, that the tailwinds from lower 90 days, you might see some pressure and maybe some potentially some delinquency trends that you watch, but I'm not anticipating that they're anything significant. We saw write-offs come down 10 basis points year-over-year.

[Brian Garner, CFO at PROG Holdings]

As you see us increase our outlook and at leasing specifically, we expect this kinda disposition dynamic and a shift towards lower 90 days to be a net positive for the P&L over the course of the year.

[Bobby Griffin, Analyst at Raymond James]

Okay. That's helpful. I appreciate the details. Maybe lastly from me, just on the actual GMV trends within Progressive Leasing side, you know, flip back positive in the quarter. Can you unpack a little? Is that just a function of the comparisons or is that, you know, actually a sign of kind of inflections in consumer trends or whatnot? I guess I'm just asking it in context. I believe you did call out double-digit growth in apps, which would probably reflect some of the, you know, comparisons dynamic too with Big Lots. Just trying to understand what is more comparison-driven or if it's, you know, an inflection on that consumer engaging with the product and maybe start to see a little trend improvement.

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. We're pleased with the trends as we exited the quarter. Specifically as the quarter progressed, like we talked about, it was kinda down high singles in January when we had both of those two discrete headwinds still in force, and then improved to down low singles in February as we lapped those things during the month, and then up low singles in March. If you remember kind of through most of 2025, we called out what the GMV trends would have been were it not for those two headwinds. We were in kind of the low to mid singles as air quotes, "the rest of the business." That did actually decline in Q4 down to only up 1%, absent those headwinds.

[Steve Michaels, President and CEO at PROG Holdings]

Much of it is kind of what the business has been performing absent those headwinds over the last several quarters. But we're also seeing some strength in our digital channels. We talked about marketplace being up again 169%. E-commerce as a percentage of total leasing GMV up at 25.7% and the highest first quarter mix to date. And also some various projects that we got over the goal line with existing retailers to help improve that integration and improve balance of sale. There's a mix of freeing up from the lapping. There's also some things that are positively trending in our execution. The apps are a strong point.

[Steve Michaels, President and CEO at PROG Holdings]

Apps have to turn into approvals that have to turn into conversions, and that those things vary by channel. We're pleased with how we exited the quarter and how it sets us up for the rest of the year.

[Bobby Griffin, Analyst at Raymond James]

Thank you, guys. Best of luck here in 2Q.

[Steve Michaels, President and CEO at PROG Holdings]

Thanks, Bobby.

[Operator]

Thank you. One moment for our next question. Our next question comes on the line of Hoang Nguyen of TD Cowen. Your line is now open.

[Hoang Nguyen, Analyst at TD Cowen]

Thank you, guys. Congrats on the quarter. Just a quick one from me. You mentioned about, you know, some of the cost-saving synergies between Leasing and Purchasing Power. I think it's still in the early days, but can you give us some of the flavor of the conversation that you are having? Are you seeing, you know, a lot of inbound engagement from both sides of the enterprises? And I have a follow-up.

[Steve Michaels, President and CEO at PROG Holdings]

Sure. Yeah, I mean, that's definitely part of our plan. It was identified during diligence, and we plan to execute on it. We talked a little bit about it during Investor Day. We believe that the deep and long relationships that we have with retailers on the leasing side are you know, fertile ground for us on the business side for Purchasing Power and those efforts are underway. Purchasing Power has several employer clients that happen to be retailers that we believe could benefit from offering leasing to their customers, and those discussions are happening. As well as augmenting the Purchasing Power offering with additional products that our intelligence says their employees are already consuming in the broader market.

[Steve Michaels, President and CEO at PROG Holdings]

If we can deliver that to them, you know, as a voluntary benefit, we think that's a big benefit and differentiator for Purchasing Power to help with the sales, you know, motion in those employer clients. We're pleased and we're excited about the opportunity. As you called out, we're very early in the integration because, you know, we're still just a few months post-closing.

[Hoang Nguyen, Analyst at TD Cowen]

Got it. Maybe one for Brian. You guys have now returned back to your targeted leverage range, although at the high end. I think historically you guys have done, you know, opportunistic buyback. I guess, I mean, when can we expect you guys to kind of get back into the market and buyback shares at these prices? Thank you.

[Brian Garner, CFO at PROG Holdings]

Yeah. You know, we haven't given any, you know, plans specifically to our buyback cadence. I think what I'd offer is you saw here in Q1 with the highly cash generative period, our ability to deploy capital against the deleveraging. As we look forward over the course of the year into Q2 and Q3, I think you continue to see some cash generation during those periods.

[Brian Garner, CFO at PROG Holdings]

What I think is on the horizon in Q4 is now you have these three businesses, Progressive Leasing, Purchasing Power, and Four that, you know, are seasonally heavy in Q4 in terms of their the GMV concentration in the fourth quarter and utilization of cash in that period. I think the calculus is just kinda going through our capital allocation priorities of investing in the business first before we look to those kinda share repurchase type options. We're sizing up that fourth quarter and just kinda, you know, assessing the cash needs during that period. That's really the calculus.

[Brian Garner, CFO at PROG Holdings]

To the extent that we have excess capital, we'll go through that decision-making process. Obviously, we're bullish on you know, where we think this business is going and share repurchase have been a part of our repertoire in the past, and we'll continue to evaluate them.

[Hoang Nguyen, Analyst at TD Cowen]

Got it. Thank you, and congrats on the quarter.

[Brian Garner, CFO at PROG Holdings]

Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Anthony Chukumba of Loop Capital Markets. Your line is now open.

[Anthony Chukumba, Analyst at Loop Capital Markets]

Good morning. Thank you for taking my question, and let me add my congrats on a strong start to the year as well. Just had a question on Four. Incredibly impressive performance there. As I look at the revised guidance, if I take kind of the midpoint of the adjusted EBITDA and the revenue, it would imply that the EBITDA margin was in the previous outlook calling about 15.1%, and that goes up now to about 18.2%. You know, given the fact that take rate is consistent, I'm assuming that that's just greater scale in terms of that higher EBITDA margin or is there something else there as well?

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. Thanks, Anthony. Yeah, we're very pleased with Four. You know, it's the start to the year, but also the position it's in and what we think we can accomplish with it. You're right, we did increase our view as to the margin expansion that we could achieve this year versus last year, you know, as we set about executing on that path towards a more mature state that we think is materially north of where we'll be in 2026. It is largely due to scale, but I would say that this team at Four is doing an outstanding job of doing more with the same and in some cases doing more with less.

[Steve Michaels, President and CEO at PROG Holdings]

They have leaned into AI in a very aggressive way and are not only achieving you know customer-facing improvements and innovation but also back-office savings. It is a scale play but it's also an efficiency play. Just the subscription strength and stickiness or said another way you know lack of churn has been a bright spot and that revenue is very high-quality revenue that flows through to earnings in a meaningful way.

[Anthony Chukumba, Analyst at Loop Capital Markets]

Got it. Okay. And then I just have to ask my obligatory question in terms of the retail partner pipeline in Progressive Leasing.

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. Thank you. Yeah, I mean, as I think I was saying to Kyle, the biz dev team is really doing a great job. They're out there, they're talking. They had some wins in the back half of 2025 that will pay us dividends here in 2026. The pipeline is full with retailers of all sizes. You know, we're constantly getting new doors out in the SMB space, and that's kind of a different team than the folks that are hunting the super regionals and the enterprise accounts. We're very pleased. We've got a great offering and a great way to tell the story. The ecosystem strategy reinforces that story.

[Steve Michaels, President and CEO at PROG Holdings]

Even though it might be a leasing conversation, we have, you know, more earned authority around this customer and have more products. Those are all helping us have some successes and, you know, it's our expectation that we'll have some more wins here this year in 2026.

[Anthony Chukumba, Analyst at Loop Capital Markets]

Keep up the good work, guys.

[Steve Michaels, President and CEO at PROG Holdings]

Thanks, Anthony.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Hal Goetsch of B. Riley Securities. Your line is now open.

[Hal Goetsch, Analyst at B. Riley Securities]

Hey, guys. Congratulations on a super quarter. You know, with the acquisition of Purchasing Power, and I think, you know, hitting the asset-backed market for some of their receivables, you've got some new items on your income statement, gain on sale of lease receivables, gain on change of fair value of receivables. I wonder if you could just give us some color on how we should think about, you know, any thumb rules we should use in modeling for those types of line items in your income statement going forward since you've got this new business and need a little bit of fleshing out for us to help us predict the future with it. Thanks.

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. I'll start, and then I'll turn it over to the expert, Brian. But you're right, and we appreciate that. I will call out the difference in the two things that you specifically mentioned.

[Steve Michaels, President and CEO at PROG Holdings]

The gain on sale of aged lease receivables, is not Purchasing Power related. That's on the Leasing side.

[Steve Michaels, President and CEO at PROG Holdings]

We did that in Q4 of last year and again in Q1 of this year. We had not done that historically, but I would point that that is not a one-time thing. That is gonna be a recurring motion that we're in. It's probably not gonna be to the same quantum as Q4 and Q1 moving forward, but we do have an inventory of items that, or not items, but charged-off leases that we have been, you know, working internally that we will then turn to sell into the open market. That would be something that we consider to be a recurring item.

[Steve Michaels, President and CEO at PROG Holdings]

I'm gonna let Brian talk about the Purchasing Power side because there is some purchase price accounting and fair value stuff that we have excluded out of or we've not had it in, you know, adjusted EBITDA for the reasons of, it's not kind of a ongoing thing.

[Brian Garner, CFO at PROG Holdings]

Yeah. Hey, Hal. It's really that line item is related to the acquired receivables from Purchasing Power, and they were fair valued on the date of acquisition. Really what that line represents is just a continued evaluation of the fair value of those receivables. You know, you might see a few million bucks in any given period. Like Steve said, this is really a more of a technical accounting dynamic and bleeding through from the fair value on the acquisition date. We have made the decision to adjust it out of, or add it back to adjusted EBITDA, to, you know, for more of a consistent presentation.

[Brian Garner, CFO at PROG Holdings]

It's hard to give you any guidance on exactly how that's going to move. A lot of that has to do with collection activity and what actually occurs relative to what we thought was going to be the value at acquisition date. I don't expect it to be, you know, material in any given period. It should be speed slight adjustments each quarter.

[Hal Goetsch, Analyst at B. Riley Securities]

Okay. Terrific. The first point that Steve mentioned, are these more like, you know, monies received on basically a recovery basis from selling past due accounts? Is that basically what it is? Did I hear that correctly, or is it? Sorry. Did I take that differently?

[Steve Michaels, President and CEO at PROG Holdings]

You know, aged lease receivables. So receivables, that we charged off, you know, in some cases years ago, we sell them to a third party, you know, it's not the. The dollars are sizable, but the percent, the pennies on the dollar are not that big. But they go out, and they attempt collection efforts. It's not a consignment. It's an actual sale where we get our money up front, and then they go out and do their, you know, attempt to collect.

[Hal Goetsch, Analyst at B. Riley Securities]

Understood. Okay. You know, if I could ask you. I now understand, like, you know, on the Buy Now, Pay Later, Q1 is a very big quarter because a lot of the payments from a very heavy holiday season come in the first quarter. You have the subscriptions, so your take rate's, you know, good. But your margins in the first quarter were better than most people in the industry already. I'm just wondering if there's like a, are margins reflective of maybe not being fully burdened with the corporate overhead? Does that make sense?

[Hal Goetsch, Analyst at B. Riley Securities]

If the margins are quite high, and I'm just trying to figure out if like, you know, if this was a standalone comp, it may be lower because there'd be more corporate overhead associated with it.

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. I mean, I think that's fair. You know, the margins are high. I mean, at 37% EBITDA margin, you know, is impressive. As you pointed out, Q1 is the seasonally high quarter, and as Anthony pointed out, like, our guide implies you know, something in the range of half of that for the full year.

[Hal Goetsch, Analyst at B. Riley Securities]

Understood.

[Steve Michaels, President and CEO at PROG Holdings]

You know, so that, you know, that shows that we're still in the scaling phase and haven't reached the maturity of some of the pure play competitors that are out there. We believe that the progression from loss-making in 2024 to low teens in 2025 with margin expansion in 2026 paints a nice picture of our ability to get up to those margin levels of the pure play competitors.

[Hal Goetsch, Analyst at B. Riley Securities]

All right. Excellent. Thank you very much, guys.

[Steve Michaels, President and CEO at PROG Holdings]

Thanks, Hal.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Brad Thomas of KeyBanc Capital Markets. Your line is now open.

[Brad Thomas, Analyst at KeyBanc Capital Markets]

Hey, good morning, and congrats on the nice quarter here, guys. I wanted to just follow up on the GMV growth that you're seeing at the end of the quarter within Progressive Leasing. Just curious if you could speak to perhaps, you know, your confidence level that we may be at an inflection point here and may be able to continue to drive growth in that GMV in 2Q and through the balance of the year. And then just how we should think about the timing potentially of the portfolio flipping to growth again and when Progressive Leasing revenues could then flip to growth again.

[Steve Michaels, President and CEO at PROG Holdings]

Yeah. Thanks, Brad. I'll start, and Brian can talk about the gross leased assets portfolio. Actually the GLA is part of my answer. We don't guide specifically to GMV on a quarter-by-quarter basis. I think that in order to achieve the revenue guide that we did put out for the leasing business, it would need to imply that we, you know, followed similar trends coming out of Q1 into the balance of the year. On the revenue side, a lot of that will be exactly what you called out, the portfolio size. We made some good progress here this quarter, but I'll let Brian kinda chime in on that.

[Brian Garner, CFO at PROG Holdings]

Yeah. I think what I'd highlight there is starting the quarter, Brad, our portfolio size, which is, you know, the key driver of revenue, was down 9.4% start. We made progress as Steve has articulated, kinda step functioning up our GMV trajectory. We ended the quarter down 5.4%. Sorry, 9.4% to 5.4%. The net impact of revenue in the period was down 8.4%. There's a pretty good corollary between kind of the average portfolio size year over year and where revenue is trending. You kinda extend that trend line into Q2 and Q3.

[Brian Garner, CFO at PROG Holdings]

What we've got kind of implied in our revenue for Progressive Leasing for the rest of the year. I think what you said would really have to play out, which is we'd have to see a continued improvement in that trajectory, the gross leased asset balance continuing to make progress towards growing year over year as the year moves on, in order for us to hit that revenue target. I like the trends there. I think we're taking it month by month and continue to make progress.

[Brian Garner, CFO at PROG Holdings]

I think as we now pass these difficult comps that you know I feel like we've been talking about for forever with Big Lots and the tightening action I think we can now you know have an easier conversation just about the apples-to-apples periods year over year and I think they're trending favorably. I don't think it's too far down the road before we're seeing that portfolio size larger year over year.

[Brad Thomas, Analyst at KeyBanc Capital Markets]

That's very helpful. If I could ask a follow-up around the cash flow generation. Brian, I apologize if I missed it in your prepared remarks, but what does the guidance imply for free cash flow this year? Can you remind us if there's anything that's sorta maybe one-timey that wouldn't repeat as we look to cash flow next year? It seems like you could, you know, boost margins nicely if you paid off some of this funding debt. Are you considering paying that off? Thanks.

[Brian Garner, CFO at PROG Holdings]

Yeah, it's a good question. Just a couple of things. We haven't provided free cash flow guidance. What I will say is if you just kinda take it quarter by quarter here. Here in the first quarter, post-acquisition on January 2nd, we were able to pay down total debt of $254 million. Very heavy cash generative quarter. It gives us a lot of optionality. As we've stated, you know, out the gate here, our prioritization is deleveraging back to our targets. As we look forward to Q2 and Q3, I think both of those quarters will be slightly cash generative and give us additional optionality around either further deleveraging or you know, evaluating putting the cash elsewhere.

[Brian Garner, CFO at PROG Holdings]

Q4 is, and I mentioned this to Hoang, is, you know, where there's gonna be, you know, a net cash need, I anticipate, just with the growth that really these three businesses are demonstrating right now, and that's not talking about Money App, which is also showing some encouraging trends. I think we've kinda got that lens that we're looking through in the cash decisions that we're making. Net-net, you know, highly cash generative, even in a growth heavy growth anticipation for Four, and then Purchasing Power double digits and Progressive Leasing turning the corner on growth.

[Brian Garner, CFO at PROG Holdings]

The one-time aspect that I would just highlight, and we've spoken about it on prior calls, and that's with respect to the OBBA. You know, I wouldn't even call that necessarily one time because given that that is permanent in the law, that's gonna continue to benefit us. We did have a $20 million tax refund that just under $20 million that we ended up getting here in Q1 early into 2025. That was additive. The OBBA is gonna continue to benefit the rest of the year just as it reduces our overall tax liability. We sized that rough benefit of about $100 million for the 2026 period.

[Brian Garner, CFO at PROG Holdings]

That's I think a tailwind obviously from a cash perspective. Going forward, you know, I think we've got a lot of optionality. You asked about the funding debt, the ABS debt that's tied to Purchasing Power. You know, our view is that that is you know important tool for Purchasing Power right now. I think it's an efficient model for them to be able to borrow against the receivables that they're generating and help us from a just you know a capital efficiency standpoint. Obviously as long as the ABS market is you know favorable to us and the rates that we've disclosed here in our 10-Q, you can see them by tranche.

[Brian Garner, CFO at PROG Holdings]

They're relatively favorable for us. I think we, you know, continue marching down that path. No plans to pull those back meaningfully in the near term at least.

[Brad Thomas, Analyst at KeyBanc Capital Markets]

That's very helpful. Thank you so much.

[Operator]

Thank you. This concludes the question-and-answer session. I'll now turn it back to Steve Michaels, President and CEO, for closing remarks.

[Steve Michaels, President and CEO at PROG Holdings]

Thank you very much for joining us today. We delivered a strong first quarter with improving trends across the businesses, and we're entering the balance of the year with real momentum. I wanna thank all of the team members across PROG nation for the execution we've seen, as well as our retail partners and employer clients and our customers for trusting us. I firmly believe the best chapters of PROG story are still ahead of us.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Brian Garner, CFO
• John Baugh, VP of Investor Relations
• Steve Michaels, President and CEO

Analysts

• Anthony Chukumba, Analyst at Loop Capital Markets
• Bobby Griffin, Analyst at Raymond James
• Brad Thomas, Analyst at KeyBanc Capital Markets
• Hal Goetsch, Analyst at B. Riley Securities
• Hoang Nguyen, Analyst at TD Cowen
• Kyle Joseph, Analyst at Stephens