PROG Holdings Inc.
10/22/2025 | Press release | Distributed by Public on 10/22/2025 07:27
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Information: Except for historical information contained herein, the matters set forth in this Form 10-Q are forward-looking statements. These statements are based on management's current expectations and plans, which involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "delivering," "driving," "advancing," "expectation," "target," "uncertainty," "outlook," "assumes" and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the filing date of this Quarterly Report and which involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include factors that could cause our actual results and financial condition to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, those discussed in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Annual Report") and in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the filing date of this Quarterly Report.
The following discussion should be read in conjunction with the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2025 and 2024, including the notes to those statements, appearing elsewhere in this report. We also suggest that management's discussion and analysis appearing in this report be read in conjunction with the management's discussion and analysis and consolidated financial statements included in our 2024 Annual Report.
Business Overview
PROG Holdings, Inc. ("we," "our," "us," the "Company," or "PROG Holdings") is a financial technology holding company that provides transparent and competitive payment options to consumers. PROG Holdings has two reportable segments as of September 30, 2025: (i) Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider; and (ii) Vive Financial ("Vive"), an omnichannel provider of second-look revolving credit products.
Our Progressive Leasing segment provides consumers with lease-purchase solutions through its point-of-sale partner locations and e-commerce website partners (collectively, "POS partners"). It does so by purchasing merchandise from the POS partners desired by customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction. Progressive Leasing has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers.
Our Vive segment primarily serves customers that may not qualify for traditional prime lending offers who desire to purchase goods and services from participating merchants. Vive offers customized programs with services that include revolving loans through private label and Vive-branded credit cards. Vive's current network of POS partner locations and e-commerce websites includes furniture, mattresses, home exercise equipment, and home improvement retailers, as well as medical and dental service providers. On October 20, 2025, the Company completed the sale of substantially all of the assets of Vive, consisting primarily of its credit card receivable portfolio, along with related customer and merchant relationships, for an estimated $149.0 millionof cash, subject to customary post-closing adjustments. The credit card portfolio represented the major asset of Vive, and the sale of this portfolio constitutes a strategic shift that will have a significant effect on the Company's operations and financial results. Accordingly, the Vive segment will be presented as discontinued operations in the Company's consolidated financial statements beginning in the quarter ending December 31, 2025.
Four Technologies, Inc. ("Four") is a Buy Now, Pay Later ("BNPL") company that allows shoppers to pay for merchandise through four interest-free installments. Four's proprietary platform capabilities and its base of customers and retailers expand PROG Holdings' ecosystem of financial technology offerings by introducing a payment solution that further diversifies the Company's consumer financial technology offerings. Shoppers use Four to purchase clothing, health and beauty products, footwear, jewelry, and other consumer goods from retailers across the United States. Four is not a reportable segment for the three and nine month periods ended September 30, 2025 as its financial results are not significant to the Company's condensed consolidated financial results. Four's financial results are reported within "Other" for segment reporting purposes.
PROG Holdings also owns Build, a credit building financial management tool. Build is not expected to be a reportable segment in 2025 as its financial results are not expected to be significant to the Company's consolidated financial results in 2025. Build's financial results are reported within "Other" for segment reporting purposes.
Macroeconomic and Business Environment
Progressive Leasing entered 2025 with a larger lease portfolio, as measured by its gross leased asset balance, compared to 2024, which resulted in an increase in lease revenues in the first half of 2025 when compared to the same period in 2024. However, the gross leased asset balance was lower at the beginning of the three months ended September 30, 2025 when compared to the same period in the prior year, resulting in lower lease revenues for the quarter. The Company continues to operate in a challenging macroeconomic environment. For example, Big Lots, Inc. ("Big Lots"), one of Progressive Leasing's major POS partners filed for bankruptcy in late 2024, resulting in the closure of many of its stores. The loss of Big Lots resulted in an unfavorable impact on Progressive Leasing's Gross Merchandise Volume ("GMV"), revenue, and earnings before income tax in 2025.
Progressive Leasing customer payment delinquencies were elevated at the end of 2024 and during the first quarter of 2025, which prompted us to tighten our decisioning posture to maintain a healthy lease portfolio during the quarter ended March 31, 2025. While that action benefited our lease portfolio performance and helped us achieve a provision for lease merchandise write-offs of 7.4% of lease revenues in the third quarter of 2025, it also had an unfavorable impact on Progressive Leasing's GMV during the periods subsequent to the change.
Due to inflationary pressures in recent years, the cost of living remains significantly higher than it was prior to 2020, particularly with respect to housing, food and gas costs. We believe the increased cost of living has had a disproportionate negative effect on the customers we serve and an unfavorable impact on our GMV and financial performance in the first half of 2025. We believe the inflationary pressures, the cost of living and elevated interest rates for extended periods, coupled with uncertainty in the overall macroeconomic environment, including recent changes in tariff-related policies, also unfavorably impacted consumer confidence within our customer base, resulting in a decrease in demand for the types of merchandise offered by many of our key national and regional POS partners.
Highlights
The following summarizes significant financial highlights from the three months ended September 30, 2025:
•We reported revenues of $595.1 million, which was a 1.8% decrease compared to the $606.1 million we reported for the third quarter of 2024. The decrease in revenue was driven primarily by a smaller gross leased asset balance when compared to the same period in the prior year. This decrease was partially offset by an increase in revenues due to growth in our Other operations.
•GMV decreased by $45.7 million for Progressive Leasing and increased by $7.6 million for Vive in the third quarter of 2025, compared to the same period in the prior year. GMV from our Other operations increased by $101.0 million, due to an increase in Four loan originations in the third quarter of 2025 compared to the third quarter of 2024.The decrease in GMV for Progressive Leasing was due to several factors, including the bankruptcy of Big Lots in late 2024 and tightening of our decisioning posture during the first quarter of 2025. We believe the reduction in GMV was also driven by inflationary pressures, elevated cost of living, and an uncertain macroeconomic outlook, all of which have negatively impacted consumer confidence and demand for our lease-to-own offering. The increase in GMV for Vive was due to the expansion of loan origination programs associated with Vive's national retail merchants.
•Earnings before income taxes increased to $45.6 million compared to $41.8 million in the same period in 2024. The increase was primarily driven by increased revenues in our Other operations, partially offset by increases in the provision for loan losses and certain sales, general and administrative expenses.
Key Operating Metrics
Gross Merchandise Volume. We believe GMV is a key performance indicator of our Progressive Leasing and Vive segments, as it provides the total value of new leases and loans written into our portfolio over a specified time period. GMV does not represent revenues earned by the Company, but rather is a leading indicator we use in forecasting revenues the Company may earn in the short-term. Progressive Leasing's GMV is defined as the retail price of merchandise acquired by Progressive Leasing, which it then expects to lease to its customers. GMV for Vive and Other are defined as gross loan originations.
The following table presents our GMV for the Company for the periods presented:
|
Three Months Ended September 30, |
Change | ||||||||||||||||||||||
|
(Unaudited and In Thousands)
|
2025 | 2024 | $ | % | |||||||||||||||||||
| Progressive Leasing | $ | 410,943 | $ | 456,651 | $ | (45,708) | (10.0) | % | |||||||||||||||
| Vive | 46,308 | 38,755 | 7,553 | 19.5 | |||||||||||||||||||
| Other | 163,086 | 62,058 | 101,028 | 162.8 | |||||||||||||||||||
| Total GMV | $ | 620,337 | $ | 557,464 | $ | 62,873 | 11.3 | % | |||||||||||||||
Progressive Leasing's GMV decreased compared to the third quarter of 2024 due to the bankruptcy of Big Lots in late 2024 and tightening of its decisioning posture during the first quarter of 2025, leading to a lower gross leased asset balance. We believe the reduction in GMV was also driven by inflationary pressures, an elevated cost of living, and an uncertain macroeconomic outlook, all of which have negatively impacted consumer confidence and demand for our lease-to-own offering. E-commerce channels generated 23.0% of Progressive Leasing's GMV in the third quarter of 2025 compared to 16.6% in the third quarter of 2024. The increase in Vive's GMV was due to the expansion of loan origination programs associated with Vive's national retail merchants when compared to the same period in the prior year. GMV from Other increased due to an increase in Four loan originations.
Active Customer Count.Our active customer count represents the total number of customers that have an active lease agreement with Progressive Leasing, or an active loan with Vive or our Other operations. Active customer counts include customers that may have an active lease or loan agreement with more than one segment. The following table presents our active customer count for each segment and Other:
|
As of September 30 (Unaudited and In Thousands)
|
2025 | 2024 | |||||||||
| Active Customer Count: | |||||||||||
| Progressive Leasing | 784 | 848 | |||||||||
| Vive | 96 | 91 | |||||||||
| Other | 338 | 148 | |||||||||
The number of active customers for Progressive Leasing decreased due to the tightening of our decisioning posture and the bankruptcy of Big Lots in late 2024. The number of active customers for Vive increased due to an increase in loan originations when compared to the same period in the prior year. The increase in the number of customers for Other was the result of continued growth in Four and our other strategic businesses.
Key Components of Earnings Before Income Tax
In this MD&A section, we review our condensed consolidated results. For the three and nine months ended September 30, 2025 and the comparable prior year periods, some of the key revenue, cost and expense items that affected earnings before income taxes were as follows:
Revenues. We separate our total revenues into two components: (i) lease revenues and fees and (ii) interest and fees on loans receivable. Lease revenues and fees include all revenues derived from lease agreements from our Progressive Leasing segment. Lease revenues are recorded net of a provision for uncollectible renewal payments. Interest and fees on loans receivable represents merchant fees, finance charges and annual and other fees earned on outstanding loans in our Vive segment and from Four and our other strategic businesses.
Depreciation of Lease Merchandise. Depreciation of lease merchandise reflects the expense associated with depreciating merchandise leased to customers by Progressive Leasing.
Provision for Lease Merchandise Write-offs.The provision for lease merchandise write-offs represents the estimated merchandise losses incurred but not yet identified by management and adjustments for changes in estimates for the allowance for lease merchandise write-offs.
Operating Expenses. Operating expenses include personnel costs, the provision for loan losses, restructuring expenses, sales acquisition expense, computer software expense, stock-based compensation expense, intangible asset amortization, professional services expense, advertising, bank service charges and processing fees, fixed asset depreciation, occupancy costs, and decisioning expense, among other expenses.
Interest Expense, Net.Interest expense, net consists of interest incurred on the Company's Senior Notes and senior secured revolving credit facility (the "Revolving Facility"). Interest expense is presented net of interest income earned on the Company's deposits in cash and cash equivalents.
Results of Operations - Three months ended September 30, 2025 and 2024
|
Three Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| REVENUES: | |||||||||||||||||||||||
| Lease Revenues and Fees | $ | 556,583 | $ | 582,551 | $ | (25,968) | (4.5) | % | |||||||||||||||
| Interest and Fees on Loans Receivable | 38,525 | 23,594 | 14,931 | 63.3 | |||||||||||||||||||
| 595,108 | 606,145 | (11,037) | (1.8) | ||||||||||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||||||||
| Depreciation of Lease Merchandise | 378,499 | 401,070 | (22,571) | (5.6) | |||||||||||||||||||
| Provision for Lease Merchandise Write-Offs | 41,037 | 44,736 | (3,699) | (8.3) | |||||||||||||||||||
| Operating Expenses | 122,043 | 111,108 | 10,935 | 9.8 | |||||||||||||||||||
| 541,579 | 556,914 | (15,335) | (2.8) | ||||||||||||||||||||
| OPERATING PROFIT | 53,529 | 49,231 | 4,298 | 8.7 | |||||||||||||||||||
| Interest Expense, Net | (7,882) | (7,384) | (498) | 6.7 | |||||||||||||||||||
|
EARNINGS BEFORE INCOME TAX
|
45,647 | 41,847 | 3,800 | 9.1 | |||||||||||||||||||
|
INCOME TAX EXPENSE (BENEFIT)
|
12,526 | (42,115) | 54,641 | nmf | |||||||||||||||||||
|
NET EARNINGS
|
$ | 33,121 | $ | 83,962 | $ | (50,841) | (60.6) | % | |||||||||||||||
nmf- Calculation is not meaningful
Revenues
Information about our revenues by source and reportable segment is as follows:
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | |||||||||||||||||||||||||
| (In Thousands) | Progressive Leasing | Vive | Other | Total | Progressive Leasing | Vive | Other | Total | ||||||||||||||||||
| Lease Revenues and Fees | $ | 556,583 | $ | - | $ | - | $ | 556,583 | $ | 582,551 | $ | - | $ | - | $ | 582,551 | ||||||||||
|
Interest and Fees on Loans Receivable
|
- | 17,402 | 21,123 | 38,525 | - | 16,000 | 7,594 | 23,594 | ||||||||||||||||||
| Total | $ | 556,583 | $ | 17,402 | $ | 21,123 | $ | 595,108 | $ | 582,551 | $ | 16,000 | $ | 7,594 | $ | 606,145 | ||||||||||
The decrease in Progressive Leasing revenues was primarily due to a lower gross leased asset balance as a result of the bankruptcy of Big Lots in late 2024, the tightening of our decision posture during the first quarter of 2025, and inflationary and other macroeconomic factors, which also led to a 10.0% decrease in GMV compared to the same quarter in 2024. Vive revenues increased due primarily to a larger loan portfolio during the third quarter of 2025 as compared to the third quarter of 2024. The increase in Other revenue was primarily driven by an increase in Four's GMV as compared to the same period in 2024, due to increased loan originations.
Operating Expenses
Information about certain significant components of operating expenses for the third quarter of 2025 as compared to the third quarter of 2024 is as follows:
|
Three Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
|
Personnel Costs1
|
$ | 41,513 | $ | 42,260 | $ | (747) | (1.8) | % | |||||||||||||||
| Stock-Based Compensation | 7,097 | 7,851 | (754) | (9.6) | |||||||||||||||||||
| Occupancy Costs | 894 | 959 | (65) | (6.8) | |||||||||||||||||||
| Advertising | 4,853 | 4,165 | 688 | 16.5 | |||||||||||||||||||
| Professional Services | 9,810 | 9,000 | 810 | 9.0 | |||||||||||||||||||
|
Sales Acquisition Expense2
|
7,426 | 7,054 | 372 | 5.3 | |||||||||||||||||||
|
Computer Software Expense3
|
8,688 | 6,715 | 1,973 | 29.4 | |||||||||||||||||||
|
Bank Charges and Processing Fees
|
7,319 | 4,249 | 3,070 | 72.3 | |||||||||||||||||||
| Other Sales, General and Administrative Expense | 7,656 | 7,451 | 205 | 2.8 | |||||||||||||||||||
|
Sales, General and Administrative Expense
|
95,256 | 89,704 | 5,552 | 6.2 | |||||||||||||||||||
| Provision for Loan Losses | 20,645 | 15,133 | 5,512 | 36.4 | |||||||||||||||||||
| Depreciation and Amortization | 6,142 | 6,265 | (123) | (2.0) | |||||||||||||||||||
| Restructuring Expense | - | 6 | (6) | (100.0) | |||||||||||||||||||
| Operating Expenses | $ | 122,043 | $ | 111,108 | $ | 10,935 | 9.8 | % | |||||||||||||||
1 Personnel costs excludes stock-based compensation expense, which is reported separately in the operating expense table.
2 Sales acquisition expense includes vendor incentives and rebates to POS partners (excluding retailer marketing and development initiatives), external sales commissions, amortization of initial direct costs and amounts paid to various POS partners to be their exclusive provider of lease-to-own solutions.
3 Computer software expense consists primarily of software subscription fees, licensing fees and non-capitalizable software implementation costs.
Bank charges and processing fees increased $3.1 million compared to the same period in 2024, primarily due to a $2.8 million increase in processing fees within our Other operations, due to the continued GMV growth at Four and our other strategic operations.
Provision for loan losses increased $5.5 million compared to the same period in 2024. The increase was primarily the result of a $5.9 million increase in the provision for loan losses for our Other operations, due to the continued growth of our Four business and our other strategic operations.
Other Costs and Expenses
Depreciation of lease merchandise.Depreciation of lease merchandise decreased by 5.6% during the three months ended September 30, 2025 compared to the same period in 2024. As a percentage of lease revenues and fees, depreciation of lease merchandise decreased slightly to 68.0% from 68.8% in the prior year quarter, due to a lower level of 90-day early buyouts during the three months ended September 30, 2025 as compared to the same period in 2024.
Provision for lease merchandise write-offs. The provision for lease merchandise write-offs decreased $3.7 million compared to the same period in 2024. The provision for lease merchandise write-offs as a percentage of lease revenues decreased to 7.4% during the third quarter of 2025 from 7.7% in the same period in 2024. The decrease was due to a tighter decisioning posture in 2025 as compared to the same period in 2024. Given the significant economic uncertainty resulting from persistent inflationary pressures, increased interest rates for an extended period, and/or the impact of tariffs, and the potential effects of such developments on Progressive Leasing's POS partners, customers, and business going forward, a high level of estimation was involved in determining the allowance as of September 30, 2025. Actual lease merchandise write-offs could differ materially from the allowance for those write-offs.
Interest expense, net. Information about interest expense and interest income is as follows:
|
Three Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Interest Expense, Net: | |||||||||||||||||||||||
| Interest Expense | $ | 9,790 | $ | 9,660 | $ | 130 | 1.3 | % | |||||||||||||||
| Interest Income | (1,908) | (2,276) | 368 | (16.2) | |||||||||||||||||||
| Total Interest Expense, Net | $ | 7,882 | $ | 7,384 | $ | 498 | 6.7 | % | |||||||||||||||
Earnings Before Income Tax
Information about our earnings before income tax by reportable segment is as follows:
|
Three Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
|
EARNINGS BEFORE INCOME TAX
|
|||||||||||||||||||||||
| Progressive Leasing | $ | 46,738 | $ | 47,177 | $ | (439) | (0.9) | % | |||||||||||||||
|
Vive
|
(74) | (1,441) | 1,367 | 94.9 | |||||||||||||||||||
|
Other
|
(1,017) | (3,889) | 2,872 | 73.8 | |||||||||||||||||||
|
Total Earnings Before Income Tax
|
$ | 45,647 | $ | 41,847 | $ | 3,800 | 9.1 | % | |||||||||||||||
The earnings (loss) before income tax within Other includes income from our Four operations, partially offset by losses related to our other strategic operations. Factors impacting the change in earnings before income taxes for each reporting segment are discussed above.
Income Tax Expense (Benefit)
Income tax expense (benefit) for the three months ended September 30, 2025 was an expense of $12.5 million compared to a benefit of $42.1 million in the prior year comparable period. The effective income tax rate was 27.4% for the three months ended September 30, 2025 compared to (100.6)% for the same period in 2024. The increase in the effective tax rate was primarily due to the $53.6 million non-cash reversal of the uncertain tax position related to Progressive Leasing during 2024.
Results of Operations - Nine Months Ended September 30, 2025 and 2024
|
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| REVENUES: | |||||||||||||||||||||||
| Lease Revenues and Fees | $ | 1,777,814 | $ | 1,773,617 | $ | 4,197 | 0.2 | % | |||||||||||||||
| Interest and Fees on Loans Receivable | 106,045 | 66,559 | 39,486 | 59.3 | |||||||||||||||||||
| 1,883,859 | 1,840,176 | 43,683 | 2.4 | ||||||||||||||||||||
| COSTS AND EXPENSES: | |||||||||||||||||||||||
| Depreciation of Lease Merchandise | 1,224,049 | 1,217,440 | 6,609 | 0.5 | |||||||||||||||||||
| Provision for Lease Merchandise Write-Offs | 131,688 | 131,660 | 28 | - | |||||||||||||||||||
| Operating Expenses | 357,548 | 346,350 | 11,198 | 3.2 | |||||||||||||||||||
| 1,713,285 | 1,695,450 | 17,835 | 1.1 | ||||||||||||||||||||
| OPERATING PROFIT | 170,574 | 144,726 | 25,848 | 17.9 | |||||||||||||||||||
| Interest Expense, Net | (25,121) | (22,973) | (2,148) | 9.4 | |||||||||||||||||||
|
EARNINGS BEFORE INCOME TAX
|
145,453 | 121,753 | 23,700 | 19.5 | |||||||||||||||||||
|
INCOME TAX EXPENSE (BENEFIT)
|
39,131 | (17,949) | 57,080 | nmf | |||||||||||||||||||
| NET EARNINGS | $ | 106,322 | $ | 139,702 | $ | (33,380) | (23.9) | % | |||||||||||||||
nmf- Calculation is not meaningful
Revenues
Information about our revenues by source and reportable segment is as follows:
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||
| (In Thousands) | Progressive Leasing | Vive | Other | Total | Progressive Leasing | Vive | Other | Total | ||||||||||||||||||
| Lease Revenues and Fees | $ | 1,777,814 | $ | - | $ | - | $ | 1,777,814 | $ | 1,773,617 | $ | - | $ | - | $ | 1,773,617 | ||||||||||
|
Interest and Fees on Loans Receivable
|
- | 49,221 | 56,824 | 106,045 | - | 47,471 | 19,088 | 66,559 | ||||||||||||||||||
| Total Revenues | $ | 1,777,814 | $ | 49,221 | $ | 56,824 | $ | 1,883,859 | $ | 1,773,617 | $ | 47,471 | $ | 19,088 | $ | 1,840,176 | ||||||||||
The increase in Progressive Leasing revenues was primarily due to a larger lease portfolio entering the period, as measured by its gross leased asset balance, resulting from the 9.1% increase in GMV for the fourth quarter of 2024 as compared to the fourth quarter of 2023. The increase in revenues was partially offset by the decrease in GMV at Progressive Leasing for the nine months ended September 30, 2025, as compared to the same period in the prior year. Vive revenues increased due to a larger loan portfolio for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Theincrease in Other revenue was primarily driven by a 159.0% increase in Four's GMV as compared to the nine months ended September 30, 2024.
Operating Expenses
Information about certain significant components of operating expenses for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 is as follows:
|
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
|
Personnel Costs1
|
$ | 126,444 | $ | 128,689 | $ | (2,245) | (1.7) | % | |||||||||||||||
| Stock-Based Compensation | 21,633 | 21,588 | 45 | 0.2 | |||||||||||||||||||
| Occupancy Costs | 2,623 | 3,248 | (625) | (19.2) | |||||||||||||||||||
| Advertising | 13,333 | 12,462 | 871 | 7.0 | |||||||||||||||||||
| Professional Services | 31,238 | 23,694 | 7,544 | 31.8 | |||||||||||||||||||
|
Sales Acquisition Expense2
|
23,483 | 21,719 | 1,764 | 8.1 | |||||||||||||||||||
|
Computer Software Expense3
|
24,664 | 20,938 | 3,726 | 17.8 | |||||||||||||||||||
|
Bank Charges and Processing Fees
|
20,070 | 12,501 | 7,569 | 60.5 | |||||||||||||||||||
| Other Sales, General and Administrative Expense | 23,385 | 21,608 | 1,777 | 8.2 | |||||||||||||||||||
|
Sales, General and Administrative Expense
|
286,873 | 266,447 | 20,426 | 7.7 | |||||||||||||||||||
| Provision for Loan losses | 52,422 | 38,217 | 14,205 | 37.2 | |||||||||||||||||||
| Depreciation and Amortization | 18,253 | 20,780 | (2,527) | (12.2) | |||||||||||||||||||
| Restructuring Expense | - | 20,906 | (20,906) | (100.0) | |||||||||||||||||||
| Operating Expenses | $ | 357,548 | $ | 346,350 | $ | 11,198 | 3.2 | % | |||||||||||||||
1 Personnel costs excludes stock-based compensation expense, which is reported separately in the operating expense table.
2 Sales acquisition expense includes vendor incentives and rebates to POS partners (excluding retailer marketing and development initiatives), external sales commissions, amortization of initial direct costs and amounts paid to various POS partners to be their exclusive provider of lease-to-own solutions.
3 Computer software expense consists primarily of software subscription fees, licensing fees and non-capitalizable software implementation costs.
Professional services increased $7.5 million compared to the same period in 2024, primarily due to higher technology-related expenses and an increase in contract labor costs for various technology initiatives and customer service support at Progressive Leasing. Professional services also increased $0.7 million at Vive, primarily due to an increase in contract labor costs.
Computer software expense increased $3.7 million primarily due to an increase in non-capitalizable costs for software implementation projects by Progressive Leasing.
Bank charges and processing fees increased $7.6 million compared to the same period in 2024, primarily due to a $7.1 million increase in processing fees within our Other operations, driven by the continued GMV growth at Four and our other strategic operations.
The provision for loan losses increased $14.2 million compared to the same period in 2024. The increase is primarily the result of a $12.9 million increase in the provision for loan losses for our Other operations, due to the continued growth of Four and our other strategic operations. The provision for loan losses at Vive also increased $1.3 million resulting from an increase in GMV compared to the same period in 2024.
Depreciation and amortization decreased $2.5 million compared to the same period in 2024, primarily due to a decrease of $3.0 million at Progressive Leasing resulting from a decline in depreciable assets compared to 2024, and some intangible assets becoming fully amortized in 2024. The decrease was partially offset by an increase of $0.5 million at Four and our other strategic operations.
Restructuring expense decreased $20.9 million compared to the same period in 2024. In 2025, there were no new restructuring activities. For the nine months ended September 30, 2024, restructuring costs included $7.8 million associated with the early termination of an independent sales agent agreement for Progressive Leasing, $2.0 million associated with the early termination of a third party vendor agreement within other strategic operations, $6.0 million of operating lease right-of-use asset and other fixed asset impairment charges related to the reduction of Progressive Leasing office space, and $5.0 million of employee severance for Progressive Leasing and our other strategic operations.
Other Costs and Expenses
Depreciation of lease merchandise.Depreciation of lease merchandise increased by 0.5% during the nine months ended September 30, 2025 compared to the same period in 2024. The increase was primarily due to a higher balance in the Company's lease portfolio entering 2025. As a percentage of lease revenues and fees, depreciation of lease merchandise increased to 68.9% from 68.6% in the prior year period, primarily due to a higher level of early buyouts during the nine months ended September 30, 2025 as compared to the same period in 2024.
Provision for lease merchandise write-offs. The provision for lease merchandise write-offs was essentially flat when compared to the same period in 2024. The provision for lease merchandise write-offs as a percentage of lease revenues was 7.4% during the nine months ended September 30, 2025 and 2024. Given the significant economic uncertainty resulting from persistent inflationary pressures, increased interest rates for an extended period, and/or the impact of tariffs, and the potential effects of such developments on Progressive Leasing's POS partners, customers, and business going forward, a high level of estimation was involved in determining the allowance as of September 30, 2025. Actual lease merchandise write-offs could differ materially from the allowance for those write-offs.
Interest expense, net.Information about interest expense and interest income is as follows:
|
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
| Interest Expense, Net: | |||||||||||||||||||||||
| Interest Expense | $ | 29,547 | $ | 29,009 | $ | 538 | 1.9 | % | |||||||||||||||
| Interest Income | (4,426) | (6,036) | 1,610 | 26.7 | |||||||||||||||||||
| Total Interest Expense, Net | $ | 25,121 | $ | 22,973 | $ | 2,148 | 9.4 | % | |||||||||||||||
Earnings Before Income Tax
Information about our earnings before income tax by reportable segment is as follows:
|
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||
| (In Thousands) | 2025 | 2024 | $ | % | |||||||||||||||||||
|
EARNINGS BEFORE INCOME TAX
|
|||||||||||||||||||||||
| Progressive Leasing | $ | 146,909 | $ | 136,596 | $ | 10,313 | 7.6 | % | |||||||||||||||
|
Vive
|
(398) | 108 | (506) | nmf | |||||||||||||||||||
|
Other
|
(1,058) | (14,951) | 13,893 | (92.9) | |||||||||||||||||||
|
Total Earnings Before Income Tax
|
$ | 145,453 | $ | 121,753 | $ | 23,700 | 19.5 | % | |||||||||||||||
nmf- Calculation is not meaningful
The earnings (loss) before income tax within Other primarily relates to losses from our other strategic operations. Factors impacting the change in earnings before income tax for each reporting segment are discussed above.
Income Tax Expense (Benefit)
Income tax expense (benefit) for the nine months ended September 30, 2025 was an expense of $39.1 million compared to a benefit of $17.9 million in the prior year comparable period. The effective income tax rate was 26.9% for the nine months ended September 30, 2025 compared to (14.7)% for the same period in 2024. The increase in the effective tax rate was primarily due to the $53.6 million non-cash reversal of the uncertain tax position related to Progressive Leasing during 2024.
Overview of Financial Position
The major changes in the condensed consolidated balance sheet from December 31, 2024 to September 30, 2025 include:
•Cash and cash equivalents increased $196.9 million to $292.6 million during the nine months ended September 30, 2025. For additional information, refer to the "Liquidity and Capital Resources" section below.
•Accounts receivable, net of allowances, decreased $16.5 million primarily due to a decrease in Progressive Leasing's GMV for the third quarter of 2025 as compared to the fourth quarter of 2024.
•Lease merchandise, net of accumulated depreciation and allowances, decreased $179.1 million due primarily to a decrease in Progressive Leasing's GMV for the third quarter of 2025 as compared to the fourth quarter of 2024. Higher exercises of early buyouts during the nine months ended September 30, 2025 also contributed to the decrease.
•Deferred income taxliabilities increased $31.4 million and income tax receivables increased $38.0 million primarily due to the passing of the OBBBA, which permanently extends 100% federal bonus depreciation.
•Debt, net decreased $49.0 million primarily due to repayment in January 2025 of the $50.0 million balance that was outstanding on the Revolving Facility as of December 31, 2024.
Liquidity and Capital Resources
General
We expect that our primary capital requirements will consist of:
•Reinvesting in our business, including buying merchandise for the operations of Progressive Leasing. Because we believe Progressive Leasing will continue to grow over the long-term, we expect that the need for additional lease merchandise will remain a major capital requirement;
•Making merger and acquisition investment(s) to further broaden our product offerings; and
•Returning excess cash to shareholders through periodically repurchasing stock and/or paying dividends.
Other capital requirements include (i) expenditures related to software development; (ii) expenditures related to our corporate operating activities; (iii) personnel expenditures; (iv) income tax payments; (v) funding of loans receivable for Vive and Four; and (vi) servicing our outstanding debt obligations.
Our capital requirements have been financed through:
•cash flows from operations;
•private debt offerings;
•bank debt; and
•stock offerings.
As of September 30, 2025, the Company had $292.6 million of cash, $350.0 million of availability under the Revolving Facility, and $600.0 million of gross indebtedness.
Cash Provided by Operating Activities
Cash provided by operating activities was $389.9 million and $223.0 million during the nine months ended September 30, 2025 and 2024, respectively. The $166.9 million increase in operating cash flows was primarily due to a $93.3 million decrease in cash paid for lease merchandise. Other changes in cash provided by operating activities are discussed above in our discussion of results for the nine months ended September 30, 2025.
Cash Used in Investing Activities
Cash used in investing activities was $69.0 million and $35.6 million during the nine months ended September 30, 2025 and 2024, respectively. The $33.4 million increase in investing cash outflows was primarily the result of a $314.5 million increase in cash investments in loans receivable, due mainly to growth in loan originations at Four and Vive. This increase in loan originations was partially offset by a $282.6 million increase in proceeds from loans receivable, primarily due to an increase in Four loan repayments.
Cash Used in Financing Activities
Cash used in financing activities was $123.9 million during the nine months ended September 30, 2025 compared to $121.1 million during the same period in 2024. Cash used in financing activities during the nine months ended September 30, 2025 was primarily for the repayment of $50.0 million that was drawn on our revolving credit facility during the fourth quarter of 2024, $51.8 million for share repurchases and $15.6 million paid for cash dividends. Cash used in financing activities during the nine months ended September 30, 2024 was primarily for the Company's repurchase of $98.2 million of its common stock and $15.4 million paid for cash dividends.
Share Repurchases
We purchase our stock in the market from time to time as authorized by our Board of Directors. Effective February 21, 2024, the Company's Board of Directors reauthorized the repurchase of Company common stock at an aggregate purchase price of up to $500 million under the Company's existing share repurchase program, with such reauthorized share repurchase program to be extended for a period of three years from February 21, 2024, or until the $500 million aggregate purchase price of Company common stock purchased pursuant to the reauthorized share repurchase program has been met, whichever occurs first.
The Company repurchased 1,835,792 shares for $51.8 million during the nine months ended September 30, 2025. That amount does not include any excise tax that may be assessed on those repurchases. As of September 30, 2025, we had the authority to purchase additional shares up to our remaining authorization limit of $309.6 million.
Dividends
On August 6, 2025, our Board of Directors declared a quarterly cash dividend in the amount of $0.13 per share of outstanding common stock, which was paid on September 9, 2025. Aggregate dividend payments during the nine months ended September 30, 2025 were $15.6 million. While we expect to continue paying quarterly cash dividends in future periods, the future payment of dividends, if permitted, will be at the sole discretion of our Board of Directors and will depend on our capital allocation strategy at that time as well as other factors, including our earnings, financial condition, and other considerations that our Board of Directors deems relevant.
Debt Financing
On November 24, 2020, the Company entered into a credit agreement with a consortium of lenders providing for a $350.0 million senior revolving credit facility (the "Revolving Facility"). On November 15, 2024, the Company entered into an amendment to the Revolving Facility, the primary purpose of which was to extend the maturity date of the Revolving Facility from November 24, 2025 to November 15, 2029.
The Revolving Facility includes an uncommitted incremental facility increase option ("Incremental Facilities") which, subject to certain terms and conditions, permits the Company at any time prior to the maturity date to request an increase in extensions of credit available thereunder by an aggregate additional principal amount of up to $300.0 million. As of September 30, 2025, the Company had no outstanding balance and $350.0 million remaining available for borrowings on the Revolving Facility.
The Revolving Facility is fully secured and contains certain financial covenants, which include requirements that the Company maintain ratios of (i) total net debt to EBITDA of no more than 2.50:1.00 and (ii) consolidated interest coverage of no less than 3.00:1.00. The Company will be in default under the Revolving Facility if it fails to comply with these covenants, and all borrowings outstanding may become due immediately. As of September 30, 2025, the Company was in compliance with the financial covenants set forth in the Revolving Facility and believes it will continue to be in compliance in the future.
On November 26, 2021, the Company entered into an indenture in connection with its offering of $600 million aggregate principal amount of its senior unsecured notes due 2029 (the "Senior Notes"). The Senior Notes were issued at 100.0% of their par value with a stated fixed annual interest rate of 6.00%. Interest accrues on the outstanding balance and is payable semi-annually. The Senior Notes are general unsecured obligations of the Company and are guaranteed by certain of the Company's existing and future domestic subsidiaries.
The indenture discussed above contains various other covenants and obligations to which the Company and its subsidiaries are subject while the Senior Notes are outstanding. The covenants in the indenture may limit the extent to which, or the ability of the Company and its subsidiaries to, among other things: (i) incur additional debt and guarantee debt; (ii) pay dividends or make other distributions or repurchase or redeem capital stock; (iii) prepay, redeem or repurchase certain debt; (iv) issue certain preferred stock or similar equity securities; (v) make loans and investments; (vi) sell assets; (vii) incur liens; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the ability of the Company's subsidiaries to pay dividends; and (x) consolidate, merge or sell all or substantially all of the Company's assets. The indenture also contains customary events of default for transactions of this type and amount. The Company was in compliance with these covenants at September 30, 2025 and believes that it will continue to be in compliance in the future.
Commitments
Income Taxes
During the nine months ended September 30, 2025, we made net tax payments of $46.1 million. Within the next three months, we anticipate making an immaterial amount of estimated net tax payments for United States federal income taxes and state income taxes. That expectation includes anticipated favorable impacts on the Company's cash taxes resulting from the OBBBA, which was signed into law on July 4, 2025.
Deferred income tax liabilities as of September 30, 2025 were $105.7 million. Deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis, which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts. The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods.
Leases
We lease management and information technology space for corporate functions under operating leases expiring at various times through 2028. Our corporate and segment management office leases contain renewal options for additional periods ranging from three to five years.
Contractual Obligations and Commitments
Future interest payments on the Company's variable-rate debt are based on a rate per annum equal to, at our option, (i) the Secured Overnight Financing Rate ("SOFR") plus a margin within the range of 1.5% to 2.5% for revolving loans, based on total leverage, or (ii) the administrative agent's base rate plus a margin ranging from 0.5% to 1.5%, as specified in the agreement. Future interest payments related to our Revolving Facility are based on the borrowings outstanding at that time and may be different depending on future borrowing activity and interest rates. The Company had no outstanding borrowings under the Revolving Facility as of September 30, 2025.
On November 26, 2021, the Company issued $600 million aggregate principal amount of Senior Notes that bear a fixed annual interest rate of 6.0%. Interest accrues on the outstanding balance and is payable semi-annually. The Senior Notes will mature on November 15, 2029.
The Company has no long-term commitments to purchase merchandise nor does it have significant purchase agreements that specify minimum quantities or set prices that exceed our expected requirements for three months.
Unfunded Lending Commitments
The Company, through its Vive business, had unconditionally cancellable unfunded lending commitments totaling approximately $466.9 million and $461.1 million as of September 30, 2025 and December 31, 2024, respectively, that do not give rise to revenues and cash flows. These unfunded commitments arise in the ordinary course of business from credit card agreements with individual cardholders that give them the ability to borrow, against unused amounts, up to the maximum credit limit assigned to their account. While these unfunded amounts represented the total available unused lines of credit, the Company does not anticipate that all cardholders will utilize their entire available line at any given point in time. Commitments to extend unsecured credit are agreements to lend to a cardholder so long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Critical Accounting Policies
Refer to the 2024 Annual Report.
Recent Accounting Pronouncements
Refer to Note 1 to the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements.
PROG Holdings Inc. published this content on October 22, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 22, 2025 at 13:27 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]