Prog Holdings, Inc. ((PRG)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Prog Holdings, Inc. recently held its earnings call, presenting a mixed sentiment. While the company exceeded expectations in revenue and earnings, and its Buy Now, Pay Later (BNPL) business showed robust growth, there were challenges such as a decline in Progressive Leasing GMV and consumer pressures. The strategic sale of the Vive portfolio was highlighted as a positive move towards enhancing capital efficiency.
Surpassing Revenue and Earnings Expectations
Prog Holdings exceeded the high end of their revenue and earnings outlook, with non-GAAP diluted EPS reaching $0.90, surpassing the projected range of $0.70 to $0.75 per share. This performance underscores the company’s ability to navigate market challenges effectively.
Strong BNPL Business Performance
The BNPL business continued its strong momentum, with four Technologies achieving its eighth consecutive quarter of triple-digit GMV and revenue growth. Engagement trends were particularly strong, with active shoppers growing by over 160% year-over-year.
Improvement in Write-Offs
Progressive Leasing’s portfolio performance showed improvement, with write-offs at 7.4%, better both sequentially and year-over-year. This indicates a positive trend in managing credit risk and portfolio health.
Strategic Sale of Vive Financial Portfolio
The sale of the Vive Financial credit card receivables portfolio to Atlantica Holdings Corporation is expected to enhance capital efficiency and strengthen the balance sheet, with proceeds of approximately $150 million.
Expansion of Retail Partnerships
Prog Holdings launched or signed three new retail partners since the last earnings call, representing opportunities for GMV expansion and increased market presence.
Decline in Progressive Leasing GMV
Progressive Leasing GMV was reported at $410.9 million, marking a year-over-year decline of 10%. This was largely attributed to the Big Lots bankruptcy and a tightening of approval rates.
Continued Consumer Challenges
The company noted ongoing consumer challenges, including inflationary pressures and early signs of labor market softening, which are impacting discretionary spending.
Consolidated Revenue Decline
Consolidated revenue came in at $590.1 million, reflecting a slight decline compared to the same period last year, influenced by external market factors.
Seasonal EBITDA Loss Expected for Four Technologies
Despite strong performance, four Technologies is expected to report an adjusted EBITDA loss in Q4 due to seasonal dynamics and upfront provisions for credit losses.
Forward-Looking Guidance
Looking ahead, Prog Holdings updated its 2025 outlook, forecasting consolidated revenues between $2.41 billion and $2.435 billion, with adjusted EBITDA ranging from $258 million to $265 million. The company remains optimistic about its portfolio performance and BNPL business momentum, despite external challenges.
In summary, Prog Holdings’ earnings call reflected a mixed sentiment, with notable achievements in revenue and earnings surpassing expectations, alongside challenges in consumer spending and leasing GMV. The strategic initiatives, including the sale of the Vive portfolio, are expected to bolster capital efficiency and future growth prospects.