PROG Holdings, Inc. Q1 FY2026 earnings call

Good morning, Steve Michaels began by stating a strong first quarter, with results at the high end of the revenue outlook and exceeding earnings and non-GAAP EPS outlooks. Consolidated GMV grew 54% in Q1. Progressive leasing had GMV down year-over-year but improving trends. Four Technologies had triple-digit GMV growth. Purchasing Power had double-digit GMV growth. Strategic pillars: Grow - consolidated GMV up 54%, leasing applications up double digits, four with triple-digit growth, purchasing power with double-digit growth. Enhance - AI-driven lease eligibility engine scaling, marketplace enhancements. Expand - Four scaling, purchasing power growing. Capital allocation: Paid down $210 million in recourse debt, ending Q1 with a net leverage ratio of 2 times

Progressive Leasing: Q1 GMV was 393 million, showing a 2.2% year-over-year decline. Revenue for the segment was $597 million, down 8.4% year-over-year. Gross margin was 31.5% in the quarter, up 210 basis points year over year. Adjusted EBITDA for progressive leasing was $77 million, or 12.9% of revenue. Four Technologies: Q1 GMV reached 280 million, representing growth of 134% year-over-year. Revenue was $35 million, growing 142% year-over-year. Adjusted EBITDA was $12.9 million, with a margin of 37%. Purchasing Power: Q1 GMV was $132.7 million, up 10.3% year-over-year. Revenue was $107.1 million in the first quarter, with adjusted EBITDA of $0.8 million. Consolidated: Continuing operations GMV increased 54% year-over-year to $806 million. Revenue from continuing operations grew 11.1% year-over-year to $742.7 million. Consolidated adjusted EBITDA was $90.3 million, and non-GAAP diluted EPS was $1.24

Revised consolidated outlook for 2026: revenues in the range of 3 to 3.1 billion, adjusted EBITDA in the range of 343 to 370 million, non-GAAP EPS in the range of $4.40 to $4.80. The second quarter is expected to carry consolidated GMV momentum. Leasing portfolio performance is expected to remain healthy. Four is delivering strong growth with improving economics, and purchasing power is just starting to realize its potential

Geopolitical and macroeconomic challenges such as rising gas prices. Uncertainty in consumer behavior and market conditions. Impact of the non-performance of receivables related to acquisitions

Q: Kyle Joseph S. Stevens inquired about the macro impact on businesses.

A: Macro has directional similarity across products. Tax season played out as expected. There was less 90-day purchase option in leasing.

Q: Bobby Griffin asked about customer behavior and GMV trends in progressive leasing.

A: Lower 90-day buyouts in 2023 didn't lead to elevated charge-offs. GMV trends improved in Q1 with applications up double digits.

Q: Hong Gui asked about cross-selling synergies.

A: Early in integration, working on leveraging relationships.

Q: Anthony Chacumba asked about Four's margin.

A: Margin expansion due to scale and efficiency efforts.

Q: Hal Goach asked about income statement items.

A: Gain on sale of aged lease receivables is recurring, and fair value of purchasing power receivables is technical.

Q: Brad Thomas asked about GMV growth and cash flow.

A: GMV trends favorable, cash flow expected to be cash generative in Q2/Q3, with Q4 having a net cash need