Prog Holdings, Inc. (PRG)

Prog Holdings, Inc. – Q1 2025 Financial Report

Report Date: 2025-04-30
Period Covered: Quarter ended March 31, 2025

1. Executive Summary

• Total Revenue: $684.1 million (+6.6% YoY)
• Net Earnings: $34.7 million (+58.1% YoY)
• Lease Portfolio (GMV): $401.96 million (–3.9% YoY)
• Net Debt: $593.9 million (–7.7% vs Dec 2024)

Prog Holdings delivered strong Q1 2025 profitability, driven by a growing lease portfolio and higher early buy-out activity in Progressive Leasing, partially offset by a modest GMV decline from a major partner bankruptcy and tightened credit decisioning. VIVE’s originations continued to expand, supporting higher fee income, while operating expenses and credit loss provisions remained well-controlled.

2. Profit and Loss Analysis

Drivers of Performance:

• Progressive Leasing saw its largest lease portfolio ever entering Q1 2025, boosting revenue and early buy-outs.
• Provision for write-offs rose modestly as delinquency seasonally upticked, but remained within targeted ranges.
• VIVE expanded its revolving credit and BNPL activities, doubling its promotional fee income, though credit losses increased in line with portfolio growth.
• A one-time major partner bankruptcy late 2024 caused a GMV drop of $16.6 million in Q1 2025.
• Operating expenses declined YoY as cost‐control measures offset higher technology and processing costs.

3. Balance Sheet and Cash Flow

• Net Debt: $593.9 million (down 7.7% vs Dec 2024) after repaying $500 million revolver.
• Cash & Equivalents: $213.3 million vs $95.7 million at Dec 2024.
• Operating Cash Flow: $209.9 million (vs $135.7 million YoY) driven by higher early buy-outs and improved collections.
• Investing Cash Flow: –$40.9 million, primarily for new loan originations.
• Financing Cash Flow: –$88.2 million, reflecting revolver repayment, dividends ($5.3 million) and share repurchases ($26.1 million).

4. Pros and Cons

Pros:

• Scalability of lease-to-own and revolving credit platforms.
• Strong free cash flow generation supports debt reduction and shareholder returns.
• Diversified product suite (Progressive Leasing, VIVE, Four, Build) hedges macroeconomic cycles.

Cons:

• Exposure to consumer credit risk and macro headwinds (inflation, unemployment).
• Concentration risk: single large partner bankruptcy impacted GMV.
• High fixed depreciation cost for leased merchandise limits EBITDA leverage.

Detailed revenue and loss breakdown by segment and stream for Q1 2025:

• Progressive Leasing: • GMV: $401.96 M (–3.9% YoY) • Lease Revenue: $651.6 M (+5.0% YoY) • Depreciation: $460.4 M • Merchandise Write-off Provision: $48.0 M • Operating Profit: $48.6 M

• VIVE Financial (incl. Four BNPL): • GMV (Gross Originations): $36.3 M (+14.8% YoY) • Interest & Fee Income: $32.5 M (+52.6% YoY) • Provision for Loan Losses: $14.4 M • Operating Loss: $0.83 M

• Revenue Streams: • Lease Revenue: 95.2% of total • Interest & Fee Income: 4.8% of total

• Cost Drivers: • Depreciation on Lease Merchandise: 67.3% of revenue • Operating Expense: 17.4% of revenue • Credit Loss Provisions: 9.0% of revenue

Prog Holdings is on a solid growth trajectory, leveraging its tech-driven lease-to-own and revolving credit platforms to generate strong cash flow. Continued debt reduction and positive free cash flow provide balance-sheet flexibility for strategic investments, share repurchases, and dividend growth. Key challenges include managing credit quality amid uncertain consumer macro-environment and diversifying partner concentration risk. Opportunities lie in expanding the BNPL (‘Four’) and credit-building (‘Build’) segments, cross-selling between platforms, and international roll-outs. Maintaining disciplined credit underwriting and cost controls will be critical to sustaining profitability and margin expansion going forward.