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PROG Holdings, Inc. (PRG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 consolidated revenue rose 8.0% year-over-year to $623.3M; adjusted EBITDA was $65.7M (10.5% margin) and non-GAAP diluted EPS was $0.80, approximating the high end of prior outlook; GAAP diluted EPS was $1.34, aided by a $27.6M deferred tax benefit that drove a negative effective tax rate in the quarter .
  • Progressive Leasing GMV grew 9.1% YoY to $597.5M; PL revenue increased 6.3% YoY, while write-offs were 7.9% in Q4 (FY 2024 at 7.5%), within the targeted 6–8% range but modestly above expectations due to higher delinquencies among new customers .
  • Management issued FY 2025 guidance: revenue $2.515–$2.590B, adjusted EBITDA $260–$280M, non-GAAP diluted EPS $3.10–$3.50; Q1 2025 revenue $665–$685M, non-GAAP diluted EPS $0.80–$0.85; outlook embeds GMV headwinds from Big Lots’ liquidation, tougher macro and lower approval rates YoY .
  • Capital allocation remained active: Q4 buybacks of $40.5M at ~$47/share (authorization remaining $361.3M); quarterly dividend of $0.12/share; year-end cash $95.7M, gross debt $650M, net leverage ~2.0x TTM adjusted EBITDA .

What Went Well and What Went Wrong

  • What Went Well
    • Third consecutive quarter of strong GMV growth; Q4 PL GMV +9.1% YoY, driven by sales/marketing/technology execution and tighter credit supply above PRG improving application funnel quality. “We finished 2024 with an excellent fourth quarter…high end of our outlook ranges” — Steve Michaels .
    • Cost actions drove SG&A leverage at Progressive Leasing: SG&A fell ~111 bps YoY to 13.9% of PL revenue in Q4; consolidated adjusted EBITDA +7.7% YoY to $65.7M, buoyed by improvements in “Other” operations .
    • Ecosystem expansion: Four Technologies (BNPL) tripled GMV to just over $300M in 2024 and plans to more than double again in 2025; PROG Marketplace nearly tripled GMV with a 2025 goal >$75M .
  • What Went Wrong
    • Margin headwinds from elevated 90-day early purchases and higher delinquencies among new customers compressed PL gross margin by ~100 bps YoY to 31.9% and adjusted EBITDA margin by ~70 bps YoY to 11.1% in Q4 .
    • Big Lots bankruptcy/ liquidation is a material GMV and margin headwind in 2025 (Big Lots mix skewed to higher-margin furniture, with more repeat customers). Management expects Q1 PL GMV to be roughly flat YoY; ex-Big Lots high-single-digit growth, but near-term deleverage on SG&A .
    • Approval rates tightened by ~350–400 bps vs. last year due to targeted decisioning changes, channel mix shifts (more online), and lower app quality; expected to pressure GMV in the near term despite long-term customer acquisition benefits .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$592.2 $606.1 $623.3
Net Earnings ($USD Millions)$33.8 $84.0 $57.5
Diluted EPS ($USD)$0.77 $1.94 $1.34
Non-GAAP Diluted EPS ($USD)$0.92 $0.77 $0.80
Adjusted EBITDA ($USD Millions)$72.3 $63.5 $65.7
Adjusted EBITDA Margin (%)12.2% 10.5% 10.5%

Segment revenue (quarterly):

Segment Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
Progressive Leasing – Lease Revenues & Fees$570.5 $582.6 $592.9
Vive – Interest & Fees on Loans Receivable$15.4 $16.0 $16.9
Other – Interest & Fees on Loans Receivable$6.2 $7.6 $13.5
Consolidated Total Revenues$592.2 $606.1 $623.3

Gross Merchandise Volume (GMV):

GMV ($USD Millions)Q2 2024Q3 2024Q4 2024
Progressive Leasing$454.5 $456.7 $597.5
Vive$35.8 $38.8 $35.0
Other$56.1 $62.1 $134.6
Total GMV$546.4 $557.5 $767.1

Progressive Leasing KPIs:

Progressive Leasing KPIQ2 2024Q3 2024Q4 2024
GMV ($USD Millions)$454.5 $456.7 $597.5
Revenue ($USD Millions)$570.5 $582.6 $592.9
Gross Margin %32.6% 31.2% 31.9%
SG&A %13.0% 13.1% 13.9%
Write-Off % (Provision/Revenue)7.7% 7.7% 7.9%
Adjusted EBITDA ($USD Millions)$73.8 $66.5 $65.8
Adjusted EBITDA %12.9% 11.4% 11.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ActualChange
Total Revenues ($M)Q4 2024$599.8–$619.8 $623.3 Raised vs high end (beat)
Adjusted EBITDA ($M)Q4 2024$61.7–$66.7 $65.7 Near high end
Non-GAAP Diluted EPS ($)Q4 2024$0.70–$0.80 $0.80 At high end
GAAP Diluted EPS ($)Q4 2024$0.62–$0.73 $1.34 Above guidance (deferred tax benefit)
Total Revenues ($B)FY 2025N/A$2.515–$2.590 New
Adjusted EBITDA ($M)FY 2025N/A$260–$280 New
Non-GAAP Diluted EPS ($)FY 2025N/A$3.10–$3.50 New
Total Revenues ($M)Q1 2025N/A$665–$685 New
Non-GAAP Diluted EPS ($)Q1 2025N/A$0.80–$0.85 New
Dividend per share ($)Q4 2024N/A$0.12 paid Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
GMV momentum“GMV +7.9% YoY; exceeded outlook on all key metrics” “GMV +11.6% YoY; return to revenue growth” “GMV +9.1% YoY; portfolio up 6.1% exiting year” Improving through 2H24; flattish Q1 ex Big Lots up HSD
Credit supply above PRGTighter supply aided application funnel; momentum seen Continued tightening; benefits to share/balance Tightness drove new customer inflow; apps up but lower average quality Supportive but normalization possible in 2H25
Approval rates & decisioningNoted disciplined spend/portfolio mgmt Portfolio normalizing; higher 90-day purchases Approval rates ~350–400 bps lower YoY; targeted tightening in Q4/early 2025 Tighter near-term to manage delinquencies
Margin dynamicsAdjusted EBITDA margin near high end (11–13% target) Consolidated adj. EBITDA margin 10.5%; PL margin impacted PL gross margin -100 bps YoY; PL adj. EBITDA margin 11.1%; FY 2025 PL margin implied ~10.9–11.2% Near-term pressure; long-term 11–13% target intact
Big Lots impactN/AN/ABankruptcy/liquidation drives GMV/margin headwind; Q1 GMV ~flat; ex Big Lots HSD growth Temporary headwind; replacement over time
Ecosystem expansion (Four BNPL)Strategy to invest; outlook raised Strategy execution; “raises full-year outlook” Four tripled GMV in 2024; plan to more than double in 2025 Strong growth
PROG MarketplaceN/AN/ANearly tripled GMV in 2024; 2025 target >$75M Strong growth
AI/technology initiativesInvesting in technology; benefits starting Enhancing experiences; initiatives for conversion/productivity Expanded generative AI across operations; ChatGPT Enterprise; customer/chatbot pilots Expanding deployments
Retail partnerships/pipelineImproved share at national/regional accounts New initiatives to grow active doors/productivity American Signature ramping; multi-year exclusives covering ~70% of PL GMV; pipeline strong Positive traction

Management Commentary

  • “We finished 2024 with an excellent fourth quarter…approximating the high end of our outlook ranges for both our revenues and earnings” — Steve Michaels .
  • “Q4 write-offs came in at 7.9%, slightly above expectations…we implemented targeted tightening measures in Q4 2024 and again since the beginning of this year” — Steve Michaels .
  • “Big Lots…commenced liquidation…we accounted for this impact…Q1 GMV approximately flat…Excluding Big Lots, we anticipate GMV growth in the high single digits” — Steve Michaels .
  • “Four Technologies tripled its GMV in 2024…we expect to more than double again in 2025…PROG Marketplace nearly tripled GMV…goal of surpassing $75M” — Steve Michaels .
  • “We ended Q4 with $95.7M of cash and $650M gross debt; net leverage ratio of 2x TTM adjusted EBITDA; buybacks of ~860K shares…authorization remaining $361.4M” — Brian Garner .

Q&A Highlights

  • Sector backdrop: Furniture store bankruptcies and omni-channel evolution—management expects demand to spread among remaining players; stores remain critical for VLTO alongside online .
  • Big Lots headwind quantification: Implied ~$135–$150M quarterly GMV to replace; minimal Q4 impact; plan to retain repeat customers via marketing, redirecting to other partners over ~18-month cadence .
  • Approval rates/decisioning: Approval rates ~350–400 bps lower YoY due to tightening, channel mix, and lower app quality; focus on refining thresholds and algorithms .
  • Margin framework: PL margin implied 10.9–11.2% for 2025; long-term 11–13% target unchanged despite Big Lots winding down; continued investment in tech/integrations to drive GMV .
  • Pipeline: American Signature expected to replace prior provider’s volume in 2025 and then grow; multi-year exclusivity renewals cover ~70% of PL GMV, with ~half under contract into the 2030s .

Estimates Context

  • Wall Street consensus estimates from S&P Global were unavailable at the time of analysis due to data access limits; therefore, beat/miss versus Street consensus is not shown. We benchmarked Q4 results against company-provided Q4 outlook ranges (issued October 23, 2024) and FY/Q1 2025 guidance (issued February 19, 2025) for directional assessment .

Key Takeaways for Investors

  • Revenue and non-GAAP EPS landed at the high end of prior Q4 outlook, while GAAP EPS surprised positively on a one-time tax benefit; underlying margins saw headwinds from elevated 90-day buyouts and higher delinquencies among new customers .
  • 2025 setup: Expect GMV headwinds from Big Lots liquidation and tighter approval posture; ex Big Lots, PL GMV growth targeted high single digits; FY 2025 non-GAAP EPS guided to $3.10–$3.50 .
  • Long-term profitability guardrails intact: PL adjusted EBITDA margin target remains 11–13%; implied 2025 PL margin ~10.9–11.2% reflects near-term pressure and continued investment in growth .
  • Ecosystem growth engines: Four BNPL and PROG Marketplace are scaling rapidly and should contribute incrementally to consolidated revenue and profitability over time .
  • Capital returns remain robust: $361.3M buyback authorization remaining and continued quarterly dividend support total shareholder yield; net leverage ~2.0x provides flexibility .
  • Operational focus: Continued AI-driven efficiency, retailer integrations, and targeted marketing to retain Big Lots customers should mitigate GMV/margin impact over time .
  • Trading lens: Near-term narrative likely centers on margin trajectory and Big Lots replacement pace; watch Q1 GMV (flat expected) and delinquency trends as catalysts for estimate revisions and sentiment .