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    PROG Holdings (PRG)

    PRG Q1 2025: GMV guidance pulled, lease approvals down 300–400 bps

    Reported on Jun 9, 2025 (Before Market Open)
    Pre-Earnings Price$26.59Last close (Apr 22, 2025)
    Post-Earnings Price$25.13Open (Apr 23, 2025)
    Price Change
    $-1.46(-5.49%)
    • Resilient Portfolio Management: Management emphasized that the credit portfolio remains healthy with write-offs tracking within the 6% to 8% annual target. Early performance indicators like 4‑week delinquencies suggest the team is effectively controlling credit risk despite macro headwinds.
    • Effective Transition of Lost Big Lots Customers: Executives outlined a strategic plan to re-engage customers from the lost Big Lots partnership, successfully directing these customers to alternative retail partners. This highlights strong cross-selling and customer retention capabilities.
    • Robust Growth in the Four Business: The Four business has delivered triple-digit GMV growth for six consecutive quarters and achieved positive adjusted EBITDA in Q1. This diversification into a different merchandise vertical reinforces the company’s strength and revenue potential.
    • Weaker demand amid economic uncertainty: The transcript highlights a challenging macro environment that has lowered consumer confidence and pressured GMV performance, leading to a revised outlook and uncertainty for the rest of the year.
    • Tighter credit conditions affecting conversions: The call noted a 300 to 400 basis point decline in lease approval rates year-over-year and observed lower post-approval conversion rates, which could impair revenue growth.
    • Ongoing impact from the loss of a major partner: The exit of the Big Lots partner is cited as imposing a recurring $30 million GMV headwind per quarter, potentially continuing to affect overall performance.
    1. GMV Guidance
      Q: GMV outlook for remainder of year?
      A: Management revised guidance due to a Q1 GMV miss and demand uncertainty, and they are not providing a GMV guide for the rest of the year.

    2. Credit Tightening
      Q: How much did lease approvals drop?
      A: They reported that approval rates fell by about 300–400 basis points compared to last year due to tighter credit and lower quality applications.

    3. Business Dynamics
      Q: Differences between Four and Leasing?
      A: The Four business has posted triple-digit GMV growth with its first positive adjusted EBITDA, while the Progressive Leasing segment faced softer demand.

    4. Big Lots Impact
      Q: Is the $30M headwind consistent?
      A: Management confirmed that the loss from Big Lots is roughly around $30 million per quarter, with seasonal consistency in its impact.

    5. Macro Impact
      Q: How do tariffs affect spending?
      A: They emphasized that tariffs and price shocks are concerning, but current consumer softness is driven more by waning confidence than tariffs alone.

    6. Trade Down Trends
      Q: What’s the trade-down trend observed?
      A: Management noted that trade-down behavior persists—albeit a bit more muted now—with no extra tightening from credit providers compared to late 2024.

    7. Retail Softness
      Q: Did retail performance rebound from February?
      A: They observed a slight recovery from February lows, but overall retail softness remains a key challenge amid broader macro uncertainty.

    8. Customer Transition
      Q: Are Big Lots customers transferring effectively?
      A: The team is actively directing legacy Big Lots customers to other partners, and early signs show success in retaining this customer base.

    9. Portfolio Growth
      Q: Clarify lease portfolio growth figures?
      A: They clarified that the lease portfolio was up 6.1% at the start of the quarter, finishing roughly a 2% increase by quarter end due to demand pullbacks.

    10. Credit Performance
      Q: Any significant changes in credit performance?
      A: Despite lower conversion rates, the portfolio remains healthy with write-offs staying within their 6%–8% target range, reflecting disciplined credit management.

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