PROG Q1 Earnings Call Highlights

Key Points

• Q1 outperformance: PROG reported consolidated GMV of $806 million (up 54% YoY), revenue of $742.7 million (+11%), adjusted EBITDA of $90.3 million and non‑GAAP EPS of $1.24, driven by contributions from Four and Purchasing Power and improved margin in Progressive Leasing from lower-than-expected 90‑day buyouts.
• Four’s rapid scale and profitability: Four posted GMV of $280 million (+134% YoY) and revenue of $35 million (+142%) with adjusted EBITDA of $12.9 million (37% margin), as management cited scale, AI-driven efficiencies and strong shopper engagement, though margins may moderate later in the year.
• Raised 2026 outlook and stronger balance sheet: Management raised guidance to revenue of $3.0–$3.1 billion, adjusted EBITDA of $343–$370 million and non‑GAAP EPS of $4.40–$4.80, while paying down $210 million of recourse debt to reach ~2x leverage and increasing the quarterly dividend to $0.14.

PROG NYSE: PRG executives said the company delivered a “strong first quarter” to start 2026, with results landing at the high end of the company’s revenue outlook and above its earnings expectations. Management pointed to better-than-expected gross merchandise volume (GMV) at buy now, pay later platform Four, and improved portfolio yield at Progressive Leasing, driven primarily by 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,” President and CEO Steve Michaels said. CFO Brian Garner added that performance was “broad-based” and also reflected “some margin favorability from consumer behavior in the Leasing segment.”

First-quarter results and business mix

Michaels said PROG has begun emphasizing consolidated GMV as it expands its “ecosystem” across Progressive Leasing, Four and newly acquired Purchasing Power. Consolidated GMV grew 54% year-over-year in Q1, which management attributed to the addition of Purchasing Power and triple-digit growth at Four.

On a consolidated basis, revenue came in at $742.7 million to $743 million, up about 11% year-over-year. Adjusted EBITDA was $90.3 million and non-GAAP diluted EPS was $1.24, both exceeding the company’s prior outlook, according to management.

• Consolidated GMV: $806 million, up 54% year-over-year
• Revenue (continuing operations): $742.7 million, up 11.1%
• Adjusted EBITDA: $90.3 million (12.2% of revenue)
• Non-GAAP diluted EPS: $1.24

Progressive Leasing trends improved into March

Progressive Leasing GMV declined 2.2% year-over-year to $393 million, which Garner said was in line with expectations and reflected headwinds earlier in the quarter from “tightening actions” implemented in 2025 and the impact of Big Lots’ bankruptcy. Michaels said GMV trends improved as the quarter progressed, with January down high single digits, February down low single digits and March up low single digits.

Revenue in the segment was $597 million, down 8.4% year-over-year, which Garner attributed primarily to a smaller average lease portfolio. The company ended Q1 with portfolio size down 5.4% year-over-year, improving from being down 9.4% entering the quarter, he said.

A key driver of margin performance in Q1 was consumer behavior around early buyouts. Garner said utilization of the 90-day early purchase option, which is typically seasonally elevated in Q1 due to tax refund season, came in lower than expected and below 2025 levels. Gross margin at Progressive Leasing rose 210 basis points year-over-year to 31.5% due to “improved portfolio yield and a higher proportion of customers choosing to remain in their lease agreements longer,” he said.

Leased merchandise write-offs were 7.3% of lease revenue, within PROG’s targeted annual range of 6% to 8%, and slightly better than 7.4% in Q1 2025. Progressive Leasing adjusted EBITDA was $77 million, or 12.9% of revenue, at the high end of the company’s long-term target range of 11% to 13%, according to Garner.

In response to analyst questions about whether lower 90-day buyouts could signal future consumer stress, Michaels referenced 2023 as a period with low 90-day activity and said it did not necessarily translate into elevated charge-offs. “They end up paying deeper into their lease,” he said, adding that 90-day buyouts are “a very low margin outcome” for the company.

Four posts triple-digit growth and higher profitability

Four again delivered triple-digit growth, which Michaels called the platform’s 10th consecutive quarter with triple-digit GMV and revenue growth. Q1 GMV reached $280 million, up 134% year-over-year, while revenue climbed 142% to $35 million. March GMV was $108 million, the “second-highest month in company history,” management said.

Four generated adjusted EBITDA of $12.9 million in Q1, with an adjusted EBITDA margin of 37%. Michaels said the business is demonstrating operating leverage, while Garner cautioned that Q1 is the seasonally strongest margin quarter for Four and that margins should moderate through the year “to the range implied in the revised outlook.”

Management also highlighted engagement metrics: Michaels said active shoppers grew more than 130% year-over-year, average purchase frequency was approximately five transactions per quarter, and Four+ subscribers continued to contribute about 80% of total GMV. Four’s take rate over the trailing 12 months remained about 10%, he said.

Asked about the improved margin outlook for Four, Michaels said it is “largely due to scale,” but also pointed to efficiency initiatives. He said the Four team has leaned “into AI in a very aggressive way,” driving both customer-facing product enhancements and “back-office savings.”

Michaels also discussed Money App, the company’s cash advance product, saying revenue grew over 50% in the quarter due to higher average advance sizes and early traction from “Top-Ups,” a feature launched in December that allows qualifying customers to access additional funds on an existing advance.

Purchasing Power grows GMV; integration and leverage in focus

Purchasing Power, acquired in early 2026, posted Q1 GMV of $132.7 million, up 10.3% year-over-year. Revenue was $107.1 million and adjusted EBITDA was $0.8 million, “consistent with the near breakeven results we expected,” Garner said. He also noted the business is seasonal, with a greater share of revenue and earnings typically occurring in the back half of the year, especially Q4.

Executives said integration is progressing and synergies are part of the strategy. In Q&A, Michaels said PROG sees opportunities to bring Purchasing Power to existing retail partner employee bases and to leverage employer relationships to expand leasing distribution. He added that Purchasing Power has employer clients that are retailers, creating potential cross-channel opportunities.

On the balance sheet, PROG ended Q1 with $69.4 million of unrestricted cash and $419.4 million in total available liquidity, including its revolving credit facility. Recourse debt was $650 million at quarter-end. Michaels and Garner said the company paid down $210 million in recourse debt during the quarter, bringing net leverage to 2x trailing 12-month adjusted EBITDA—within the long-term target range of 1.5x to 2x.

The company also paid a quarterly dividend of $0.14 per share, a 7.7% increase from the prior-year quarter, according to Garner. Asked about share repurchases, Garner said the company has not provided a specific buyback cadence and is weighing capital needs, including seasonal cash requirements in Q4, while prioritizing investment in the business and balance sheet flexibility.

Outlook raised for 2026 amid a pressured consumer backdrop

Management said the consumer PROG serves remains “stressed but resilient,” with elevated gas prices and macro uncertainty affecting budgets. Michaels said the macro impact is “directionally similar” across the company’s products because they serve a similar customer base, though not identical given differences like leasing’s 90-day purchase option.

Garner said PROG’s revised 2026 guidance raises expectations for both revenue and earnings from continuing operations, reflecting Q1 outperformance and confidence in execution. The updated outlook calls for:

• Revenue (continuing operations): $3.0 billion to $3.1 billion
• Adjusted EBITDA: $343 million to $370 million
• Non-GAAP EPS: $4.40 to $4.80

Garner said the outlook assumes no change in current financial pressures on customers, no material change in decisioning posture, no meaningful increase in unemployment rates for PROG’s customer base, an effective tax rate of about 26% for non-GAAP EPS, and no impact from additional share repurchases.

In closing remarks, Michaels said the company is entering the rest of the year with “real momentum” and reiterated management’s focus on “driving profitable growth” while managing portfolio performance in an uncertain environment.

About PROG NYSE: PRG

PROG Holdings, Inc, formerly known as Aaron’s, is a North American provider of lease-to-own and consumer finance solutions. The company operates through two primary segments: Aaron’s Business Solutions and Progressive Financial Services. Through Aaron’s Business Solutions, PROG offers customers access to furniture, electronics, home appliances and technology products via lease ownership arrangements, serving both individual consumers and small businesses.

The Progressive Financial Services segment provides lease-purchase and retail point-of-sale financing programs to customers with limited credit histories.

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