PROG Q3 Earnings Call Highlights

Key Points

• Third-quarter results showed solid consolidated growth: GMV rose 59% year over year to $912 million, revenue increased 26% to $725.8 million, and non-GAAP EPS climbed 21.8% to $1.06. Growth was led by Four Technologies and Purchasing Power, while Progressive Leasing faced consumer-pressure headwinds.
• Progressive Leasing remains under pressure: Tighter approval criteria reduced approval rates by nearly 300 basis points, while inflation and higher fuel costs hurt portfolio yields and liquidity. PROG expects leasing revenue to return to year-over-year growth in the fourth quarter but forecasts write-offs near the high end of its target range.
• PROG reduced its full-year outlook but expanded capital returns: The company now expects revenue of $3.015 billion–$3.05 billion, adjusted EBITDA of $345 million–$355 million, and non-GAAP EPS of $4.70–$4.85. It also announced a planned $100 million accelerated share repurchase program and replenished its buyback authorization to $500 million.

PROG NYSE: PRG reported third-quarter results that included strong consolidated growth from its Four Technologies and Purchasing Power businesses, while its Progressive Leasing segment faced pressure from consumer inflation and higher fuel costs.

Consolidated gross merchandise volume, or GMV, rose 59% year over year to $912 million, while revenue from continuing operations increased about 26% to $725.8 million. Adjusted EBITDA was $80 million, representing an 11% margin, and non-GAAP diluted earnings per share rose 21.8% from a year earlier to $1.06.

Chairman, President and CEO Steve Michaels said results fell within the company’s third-quarter outlook range, with revenue and non-GAAP EPS near the midpoint. Adjusted EBITDA was toward the lower end of the range, primarily because of portfolio-yield headwinds in the leasing business.

Leasing portfolio faces consumer pressure

Progressive Leasing GMV increased 2.3% year over year to $420.4 million, with September representing the strongest month of the quarter. Segment revenue declined 0.7% to $552.7 million, an improvement from the 3.4% year-over-year decline reported in the prior quarter.

The company said its gross lease asset balance increased year over year at quarter-end for the first time since April 2025. CFO Brian Garner said the asset balance is a key indicator for future leasing revenue, and PROG expects segment revenue to return to year-over-year growth in the fourth quarter as the portfolio rebuilds.

However, the company tightened its leasing decisioning criteria late in the second quarter and again during the third quarter as consumer pressures persisted. Approval rates were down nearly 300 basis points from a year earlier during both the quarter and year-to-date period, according to Michaels.

Progressive Leasing’s gross margin was 31.8%, down 20 basis points from the prior year. Lease merchandise write-offs were 8.3% of leasing revenue, compared with 8.4% in the second quarter and 7.4% a year earlier. The company expects full-year leasing write-offs to land near the high end of its 6% to 8% targeted range.

Michaels said the pressure reflected two separate factors: stronger-than-expected 90-day purchase-option activity among newer, post-tightening lease pools, which reduced near-term yield, and ongoing liquidity stress among older lease pools. He attributed the latter in part to elevated inflation and higher gas prices since March.

During the question-and-answer session, Michaels said the recent tightening actions were more iterative than the significant decisioning adjustment the company made in early 2025. He said pre-tightening lease pools should be largely through the portfolio by year-end, with some remaining impact extending into the first quarter.

Four continues rapid, profitable expansion

Four Technologies recorded its 12th consecutive quarter of triple-digit GMV growth. GMV rose nearly 103% to $330.4 million, while revenue more than doubled to $37.2 million. Adjusted EBITDA was $11.4 million, producing a 30.6% margin that improved sequentially.

Michaels said active shoppers grew roughly 68% year over year and average purchase frequency held at about five transactions per quarter. Four+ subscribers accounted for approximately 80% of Four’s total GMV. Average order value rose more than 10% as shoppers purchased products in newly added categories.

Four’s trailing 12-month take rate was 10.8%, compared with 10.7% a year earlier. Its provision as a percentage of GMV declined by about 100 basis points from the prior-year quarter. The company deployed an enhanced underwriting model during the quarter that Michaels said identified more potential credit loss in testing without declining additional business.

Garner said Four recognizes expected losses when transactions originate and that actual charge-offs have remained closely aligned with the company’s reserve estimates. He added that the business is benefiting from a growing mix of repeat customers while continuing to acquire new customers through organic and paid channels.

Purchasing Power adds growth and seasonal opportunity

Purchasing Power, which PROG acquired in January 2026, generated GMV of $161.2 million, up 12.3% year over year. Revenue was $131.8 million, and adjusted EBITDA totaled $12.9 million, or 9.8% of revenue, up from an 8.1% margin in the second quarter.

The company said the margin improvement reflected operating efficiencies, favorable product mix and lower interest expense on securitized debt after debt repayment. Purchasing Power enters its seasonally strongest period in the fourth quarter.

Subsequent to quarter-end, Purchasing Power signed a new client with more than 50,000 eligible users that is expected to launch in the first quarter. The business also expects to launch an employer client with 80,000 eligible users during the fourth quarter.

Outlook reduced; capital returns expand

PROG lowered its full-year outlook to reflect consumer pressures expected to continue through the remainder of 2026. The company now expects revenue of $3.015 billion to $3.05 billion, adjusted EBITDA of $345 million to $355 million, and non-GAAP EPS of $4.70 to $4.85.

The outlook assumes current consumer conditions continue, no material change in decisioning posture, no meaningful increase in unemployment among its customer base and an approximately 26% effective tax rate for non-GAAP EPS.

PROG ended the quarter with $108.9 million in unrestricted cash and $458.9 million in total available liquidity. Recourse debt was $600 million, while net leverage stood at 1.5 times trailing-12-month adjusted EBITDA. Since completing the Purchasing Power acquisition, the company has repaid $260 million of recourse debt.

During the quarter, PROG repurchased 885,000 shares for $36.7 million at an average price of $41.47 and paid a quarterly dividend of $0.14 per share. The company also announced plans for a $100 million accelerated share repurchase program, subject to entering into the agreement, and said its board replenished repurchase authorization to $500 million.

Michaels said the company remains confident in its longer-term growth and earnings outlook despite the near-term consumer environment, citing the short duration of its portfolios, the growth of Four, the integration of Purchasing Power and continued investment in its broader product ecosystem.

About PROG (NYSE:PRG)

PROG Holdings, Inc is a financial technology company that provides consumer payment and lease-to-own solutions through its operating businesses. Its services are designed to help consumers acquire household goods and other merchandise through retail stores, e-commerce websites and other merchant channels.

The company's primary business is Progressive Leasing, a lease-to-own provider that gives consumers an alternative to traditional credit when purchasing products such as furniture, appliances, electronics, mattresses and other household merchandise.

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