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PROG Holdings, Inc. (PRG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat vs company outlook and a modest beat vs Wall Street: revenue $684.1M (+6.6% YoY), GAAP EPS $0.83, and non-GAAP EPS $0.90; earnings exceeded the high end of guidance driven by stronger-than-expected Progressive Leasing portfolio performance and positive adjusted EBITDA at Four Technologies .
  • Progressive Leasing GMV fell 4% to $402.0M due to the Big Lots bankruptcy, partially offset by growth across other partners; portfolio write-offs were 7.4%, within the 6–8% target range .
  • Management cut FY 2025 guidance (revenue, EPS, Adjusted EBITDA) on a deteriorating macro backdrop and lower GMV trajectory; also issued Q2 guidance (revenues $575–$595M; non-GAAP EPS $0.75–$0.85) .
  • Capital allocation remains active: $26.1M repurchases in Q1 at ~$27.90/share, dividend maintained at $0.13/share; cash $213.3M, gross debt $600.0M; net leverage 1.42x TTM adjusted EBITDA .

What Went Well and What Went Wrong

What Went Well

  • Earnings beat and non-GAAP EPS above the high end of outlook; Four Technologies achieved first quarter of positive adjusted EBITDA and triple-digit GMV growth for the sixth consecutive quarter .
  • Progressive Leasing revenue +5% YoY to $651.6M, driven by a larger lease portfolio and higher 90-day purchase activity; portfolio write-offs better than expected at 7.4% .
  • Management is gaining “balance of share” with key partners and executing cross-sell initiatives; quote: “our cross-sell initiatives are starting to show real traction and are contributing to Progressive Leasing's GMV.” — Steve Michaels .

What Went Wrong

  • GMV declined 4% YoY due to the loss of Big Lots (mid-$30M quarterly GMV headwind); conversion post-approval softened amid weaker consumer sentiment and tariffs uncertainty .
  • Progressive Leasing gross margin down ~112 bps YoY to 29.3% and adjusted EBITDA down to $67.2M (–9.3% YoY) on mix (less Big Lots) and higher 90-day buyouts; SG&A % ticked up to 12.6% .
  • FY25 guidance lowered on macro deterioration and slower GMV trajectory; management expects Q2 write-offs % to approximate the high end of the 6–8% range (mostly denominator effect as revenue seasonally dips) .

Financial Results

Multi-period trends (actuals)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$606.1 $623.3 $684.1
GAAP Diluted EPS ($)$1.94 $1.34 $0.83
Non-GAAP Diluted EPS ($)$0.77 $0.80 $0.90
Adjusted EBITDA ($USD Millions)$63.5 $65.7 $70.3
Adjusted EBITDA Margin (%)10.5% 10.5% 10.3%

Actual vs Wall Street Consensus (Q1 2025)

MetricActualConsensus
Revenue ($USD Millions)$684.1 $678.2*
Primary EPS ($)$0.90 (non-GAAP) $0.826*

Values retrieved from S&P Global.*

Segment breakdown (revenues; interest & fees in segments reported separately)

SegmentQ1 2024 ($USD Millions)Q1 2025 ($USD Millions)
Progressive Leasing – Lease Revenues & Fees$620.6 $651.6
Vive – Interest & Fees on Loans Receivable$16.1 $15.7
Other – Interest & Fees on Loans Receivable$5.3 $16.9
Total Revenues$641.9 $684.1

KPIs and credit metrics

KPIQ1 2024Q4 2024Q1 2025
Progressive Leasing GMV ($USD Millions)$418.5 $597.5 $402.0
Progressive Leasing Gross Margin (%)30.5% 31.9% 29.3%
Provision for Lease Merchandise Write-offs (% of PL revenue)7.0% 7.9% 7.4%
Progressive Leasing Adjusted EBITDA ($USD Millions)$74.1 $65.8 $67.2
Cash and Cash Equivalents ($USD Millions)$252.8 $95.7 $213.3
Gross Debt ($USD Millions)$—$650.0 $600.0
Shares Repurchased (QTD; $USD Millions)$24.4 $40.5 $26.1

Guidance Changes

MetricPeriodPrevious Guidance (Low–High)Current Guidance (Low–High)Change
Total Revenues ($USD Millions)FY 2025$2,515–$2,590 $2,425–$2,500 Lowered
Net Earnings ($USD Millions)FY 2025$115.5–$133.5 $109–$125 Lowered
Adjusted EBITDA ($USD Millions)FY 2025$260–$280 $245–$265 Lowered
Diluted EPS ($)FY 2025$2.82–$3.22 $2.62–$3.01 Lowered
Diluted Non-GAAP EPS ($)FY 2025$3.10–$3.50 $2.90–$3.30 Lowered
Progressive Leasing – Total Revenues ($USD Millions)FY 2025$2,385–$2,445 $2,300–$2,360 Lowered
Progressive Leasing – EBT ($USD Millions)FY 2025$181–$195 $168–$185 Lowered
Progressive Leasing – Adjusted EBITDA ($USD Millions)FY 2025$260–$275 $245–$261 Lowered
Vive – Total Revenues ($USD Millions)FY 2025$65–$70 $60–$65 Lowered
Other – Total Revenues ($USD Millions)FY 2025$65–$75 $65–$75 Maintained
Total Revenues ($USD Millions)Q2 2025—$575–$595 New
Adjusted EBITDA ($USD Millions)Q2 2025—$61–$66 New
GAAP Diluted EPS ($)Q2 2025—$0.68–$0.77 New
Non-GAAP Diluted EPS ($)Q2 2025—$0.75–$0.85 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3/Q4 2024)Current Period (Q1 2025)Trend
Macro environment & tariffsTight credit supply above PRG supported share gains; cautious macro; expecting “normal” tax season; began targeted tightening in late 2024 Deteriorated macro; consumer hesitancy on big-ticket categories; tariffs uncertainty affecting sentiment; guidance cut accordingly Deteriorating
GMV trajectory & Big Lots impactQ4 GMV +9.1% YoY; Big Lots bankruptcy creates 2025 headwind (~$135–$150M GMV annual) Q1 GMV –4% YoY; excluding Big Lots, GMV grew low-to-mid single digits; ~mid-$30M GMV headwind in Q1 Mixed (ex-Big Lots improving)
Portfolio health & write-offsFull-year 2024 write-offs 7.5% (within target) Q1 write-offs 7.4% (better than expected); Q2 write-off % to approximate high end of 6–8% range due to revenue seasonality Stable to slightly higher in Q2
Four Technologies (BNPL)Tripled GMV in 2024; planning to more than double in 2025 Sixth consecutive quarter of triple-digit GMV growth; first quarter of positive adjusted EBITDA Improving
Partner pipeline & integrationsRenewed ~70% of PL GMV into multiyear exclusives; American Signature ramp beginning Deeper e-commerce integration with a national partner outperforming; active pipeline conversations; cross-sell aiding GMV Improving
AI/technology initiatives (PROG Labs)Deployed Enterprise ChatGPT; AI assistants for employee self-service and customer chatbot pilots Continued investments in marketing/technology to reduce friction and improve conversion (AI not explicitly updated Q1) Continuing

Management Commentary

  • “We’re pleased to report first quarter results with both earnings and non-GAAP diluted EPS coming in above the high end of our outlook” — Steve Michaels .
  • “Regarding Progressive Leasing’s GMV, we felt the impact of the loss of a major retail partner due to its bankruptcy in late 2024… Even with that headwind, we delivered application and GMV growth across the rest of the business” — Steve Michaels .
  • “The macro backdrop deteriorated as the quarter progressed… Even with the current macroeconomic uncertainty resulting in a downward revision to our full year outlook, we’re generating strong profitability and cash flows” — Steve Michaels .
  • CFO on Q2 credit metrics: “We expect write-offs as a percentage of lease revenue for the second quarter to approximate the high end of our targeted annual write-off range… largely a denominator effect” — Brian Garner .

Q&A Highlights

  • GMV headwinds quantified: Big Lots bankruptcy headwind ~mid-$30M GMV in Q1; roughly consistent quarterly cadence, with liquidation-related GMV in Q1 ending thereafter .
  • Approval rate dynamics: Approval rates ~300–400 bps lower YoY due to intentional tightening, channel mix (more online), and lower application quality; conversion post-approval weaker amid softer intent .
  • Pipeline and partner stability: American Signature ramp progressing; no distress seen among top partners beyond Big Lots; multiyear exclusivities provide GMV stability .
  • Tariffs and consumer behavior: Higher prices could increase need for payment options, but price shocks risk demand destruction; management monitoring vertical differences and consumer sentiment closely .
  • Four Technologies resiliency: BNPL seeing strong demand in lower-ticket categories (AOV ~$120); less impacted than big-ticket durables; positive adjusted EBITDA achieved .

Estimates Context

  • Q1 2025 beat vs consensus: revenue $684.1M vs $678.2M*; non-GAAP EPS $0.90 vs $0.826* .
  • Directionally, adjusted EBITDA of $70.3M exceeded consensus EBITDA estimate $67.3M*, though definitional differences (GAAP vs adjusted) may apply*.
  • Given the FY25 guidance reduction and softer GMV outlook, Street models likely need to lower revenue/EPS trajectory for FY25 while maintaining portfolio loss assumptions within 6–8% write-off bounds .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q1 print de-risked near-term credit concerns: write-offs at 7.4% and earnings beat indicate portfolio health is intact despite lower GMV; near-term write-off % uptick in Q2 is seasonal math, not deterioration .
  • Guidance reset reflects macro and Big Lots loss rather than operational mis-execution; ex-Big Lots GMV growth and share gains support medium-term recovery as consumer demand normalizes .
  • Four Technologies is becoming a meaningful profit contributor with structural tailwinds in lower-ticket categories; continued triple-digit GMV growth and positive adjusted EBITDA diversify earnings .
  • Expect Street to trim FY25 revenue/EPS and margin assumptions; watch Q2 conversion and GMV trends, and write-off %, which management guides to the high end of the target range .
  • Capital returns remain a support: $335.2M remaining repurchase authorization and a stable dividend ($0.13/quarter) provide downside cushion amidst macro uncertainty .
  • Key catalysts: incremental partner wins/integrations, BNPL scaling, stabilization in big-ticket categories, and evidence that cross-sell/Marketplace continue to drive GMV and share gains .

Appendix: Additional Disclosures and Documents

  • Dividend declaration: $0.13/share payable June 3, 2025 (record date May 20, 2025) .
  • Q1 2025 8-K and press release with full financial statements and reconciliations .
  • Prior quarters for trend analysis: Q4 2024 press release (GMV +9.1%, non-GAAP EPS $0.80) ; Q3 2024 press release (GMV +11.6%, non-GAAP EPS $0.77) .