PROG Q2 Earnings Call Highlights

PROG NYSE: PRG reported second-quarter results that exceeded its outlook, supported by growth across its Progressive Leasing, Four Technologies and Purchasing Power businesses. The company also raised its full-year 2026 financial outlook, while noting that its core consumer remains pressured by inflation and higher gas prices.

Consolidated gross merchandise volume, or GMV, rose 60% year over year to $902 million, accelerating from 54% growth in the first quarter. Revenue from continuing operations increased 22.3% to $719.7 million. Adjusted EBITDA totaled $88.4 million, or a 12.3% margin, while non-GAAP diluted earnings per share reached $1.19. Both adjusted EBITDA and non-GAAP EPS exceeded the high end of the company’s April outlook.

“This is a strong quarter for PROG Holdings,” Chairman, President and CEO Steven Michaels said. “Revenue came in toward the higher end of our outlook, while adjusted EBITDA and non-GAAP EPS exceeded the top of our range.”

Progressive Leasing Returns to GMV Growth

Progressive Leasing generated second-quarter GMV of $428.1 million, up 3.4% from a year earlier, compared with a 2.2% decline in the first quarter. Michaels said the improvement reflected the company moving past the effects of prior tightening actions and the Big Lots bankruptcy, as well as growth initiatives in marketing, digital channels and retailer relationships.

Applications at Progressive Leasing increased by double digits year over year, though the company said it maintained discipline in its approval decisions. Approval rates were down from the prior year, according to management.

Segment revenue declined 3.4% to $550.3 million, but the decline narrowed from an 8.4% decrease in the first quarter. Chief Financial Officer Brian Garner said the company began the year with its gross leased asset balance down 9.4% year over year, but that balance was roughly flat by the end of the second quarter. Management expects Progressive Leasing revenue comparisons to turn positive in the second half as the portfolio rebuilds.

Progressive Leasing’s gross margin increased 143 basis points to 33.8%. Its adjusted EBITDA was $69.9 million, representing a 12.7% margin and its highest second-quarter margin since the company exited the COVID period.

Lease merchandise write-offs were 8.4% of Progressive Leasing revenue, above the company’s long-term 6% to 8% annual target range. Executives said the second and third quarters are seasonally higher write-off periods, and that consumer cost pressures contributed to higher delinquencies. However, management characterized the outcome as a deliberate portfolio-management decision, saying improved portfolio yield from customers keeping leases active longer more than offset the higher write-offs.

PROG continues to expect full-year Progressive Leasing write-offs to be within its 6% to 8% target range, though near the high end. Garner said the company’s second-half outlook assumes moderation in the tailwind from customers remaining in leases longer.

Four Extends Profitable Growth Run

Four Technologies, the company’s buy now, pay later business, reported GMV growth of 111% to $315 million and revenue growth of 118% to $35.1 million. Adjusted EBITDA was $8.7 million, or 24.8% of revenue.

Four has now posted triple-digit GMV growth for 11 consecutive quarters, Michaels said. Active shoppers rose nearly 80% year over year, while quarterly average monthly active users nearly doubled. Four+ subscribers generated approximately 80% of Four’s total GMV, and average purchase frequency held at roughly five transactions per quarter.

Management attributed the growth to customer engagement, repeat purchasing, efficient marketing and AI-driven product improvements. Four’s average order value also increased year over year. Its trailing-12-month take rate held at approximately 10%.

Four’s margin moderated from a seasonally elevated 37% in the first quarter, but management said the second-quarter result was consistent with its full-year expectations. The company said it expects operating leverage from Four’s lean operating model, though it also plans to continue investing in marketing and revenue-generating activities.

MoneyApp, PROG’s cash advance product, recorded revenue growth of 34% year over year, driven by new revenue streams, Garner said. Management described MoneyApp as an engagement and cross-sell driver that also contributes to Progressive Leasing GMV.

Purchasing Power Integration Continues

Purchasing Power reported GMV of $158.8 million, representing double-digit growth against its pre-acquisition base. Revenue was $130.4 million, while adjusted EBITDA increased to $10.6 million, or 8.1% of revenue, from $800,000 in the first quarter.

Garner attributed the sequential improvement to operating leverage on seasonally higher volume, favorable product mix, better pricing and lower interest expense on securitized debt after the company paid down warehouse facilities in the first quarter.

The company said Purchasing Power signed several new employer clients during the quarter and added a new client after quarter-end with more than 80,000 eligible employees. Michaels said employer-client adoption typically takes two to three years to ramp as companies build awareness among eligible workers, although PROG intends to support promotion ahead of the holiday season.

PROG also introduced a faster mobile interface, an AI shopping assistant called Vita, a bundling feature and additional merchandise categories at Purchasing Power. Management said an AI-powered search tool approximately doubled site conversion among logged-in users who chose to use it.

Outlook Raised; Leverage Declines

For full-year 2026, PROG raised its outlook for continuing operations. The company now expects:

• Revenue of $3.025 billion to $3.1 billion;
• Adjusted EBITDA of $355 million to $375 million; and
• Adjusted non-GAAP EPS of $4.75 to $5.00.

The outlook assumes no material change in the financial pressures affecting customers, no material changes in the company’s decisioning posture and no meaningful increase in unemployment among its consumer base.

PROG ended the quarter with $85.2 million in unrestricted cash and $435.2 million in total available liquidity. Recourse debt fell by $50 million from the end of the first quarter to $600 million. Since completing the Purchasing Power acquisition, the company has repaid $260 million of recourse debt, reducing net leverage to 1.7 times trailing-12-month adjusted EBITDA from roughly 2.5 times immediately after the acquisition.

With leverage within its 1.5 to 2 times target range, PROG resumed share repurchases during the quarter, buying back 280,000 shares at an average price of $36.34. The company also paid its quarterly dividend of $0.14 per share.

Separately, Michaels announced the death of board member Doug Curling, who had served as a director since 2016 and was chair of the Compensation & Human Capital Committee.

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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