PROG Q2 Earnings Call Highlights

PROG Holdings (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.

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, ...