Prog Holdings, Inc. ((PRG)) has held its Q1 earnings call. Read on for the main highlights of the call.
Prog Holdings, Inc. recently held its earnings call, presenting a mixed sentiment with both positive and negative elements. The company reported strong revenue growth and exceeded earnings expectations, showcasing significant progress in its Buy Now, Pay Later (BNPL) platform. However, challenges such as a decline in Gross Merchandise Volume (GMV), the impact of a major retail partner’s bankruptcy, and a challenging macroeconomic environment indicate significant headwinds.
Strong Revenue Growth
The company reported consolidated revenue for the first quarter of 2025 at $684.1 million, marking a 6.6% increase year over year. This growth is attributed to a larger lease portfolio and higher ninety-day purchase activity, reflecting the company’s robust financial health despite external challenges.
Exceeded Earnings Expectations
Prog Holdings exceeded its earnings expectations with an adjusted EBITDA of $70.3 million and a non-GAAP EPS of $0.90, both surpassing the high end of the company’s outlook. These results highlight the company’s effective cost management and operational efficiency.
Growth in BNPL Platform
The company’s BNPL platform, Four Technologies, reported triple-digit GMV growth for the sixth consecutive quarter and achieved its first quarter of positive adjusted EBITDA. This milestone underscores the platform’s potential and the company’s strategic focus on expanding its digital offerings.
Healthy Lease Portfolio
Prog Holdings’ lease portfolio balance increased by 6.1% year over year, with write-offs at 7.4%, staying within the company’s targeted annual range of 6% to 8%. This indicates a stable and healthy lease portfolio, contributing to the company’s overall financial stability.
Increase in Active Door Count
The active door count expanded by nearly 5% year over year, excluding the impact of Big Lots. This expansion reflects the company’s efforts to broaden its market reach and enhance its retail partnerships.
Decline in GMV
Despite the positive growth metrics, Progressive Leasing’s GMV for the quarter was down 4% compared to the same period last year. This decline was primarily due to the bankruptcy of a large retail partner and a challenging retail environment.
Challenging Macro Environment
The company is facing ongoing economic volatility, evolving trade policies, and inflation, which are creating additional pressure on both direct-to-consumer and retail partner channels. These macroeconomic challenges are significant headwinds for the company’s operations.
Impact of Retail Partner Bankruptcy
The bankruptcy of a large retail partner resulted in a mid-thirty million dollar GMV headwind in the first quarter alone. This significant impact highlights the risks associated with dependency on major retail partners.
Continued Economic Uncertainty
Due to increased macro uncertainty and a decline in consumer confidence, Prog Holdings revised its full-year 2025 outlook. The company anticipates a full-year revenue range of $2.425 to $2.5 billion, adjusted EBITDA between $245 to $265 million, and non-GAAP EPS from $2.90 to $3.30.
Forward-Looking Guidance
Despite the macroeconomic challenges, Prog Holdings provided a revised full-year revenue outlook in the range of $2.425 to $2.5 billion. The company remains optimistic about its strategic investments in marketing and technology, which are expected to support long-term growth. The guidance reflects the company’s cautious optimism in navigating the current economic landscape.
In conclusion, Prog Holdings’ earnings call highlighted a mix of strong financial performance and significant challenges. While the company reported impressive revenue growth and exceeded earnings expectations, it faces headwinds from a challenging macroeconomic environment and the impact of a major retail partner’s bankruptcy. The forward-looking guidance indicates cautious optimism, with strategic investments aimed at sustaining long-term growth.