PROG Holdings Q1 2025 slides: Revenue grows 6.6% despite retail partner bankruptcy

Introduction & Market Context

PROG Holdings , Inc. (NYSE:PRG) released its Q1 2025 earnings presentation on April 23, 2025, revealing a 6.6% year-over-year revenue increase despite challenges from a major retail partner’s bankruptcy. The company’s stock reacted negatively in premarket trading, down 6.02% to $24.99, following the release of these results.

The lease-to-own provider reported consolidated revenues of $684.1 million and net earnings of $34.7 million for the quarter, demonstrating resilience in a challenging retail environment. While the company’s Progressive Leasing segment faced headwinds from a large national partner’s bankruptcy, its Four Technologies segment achieved significant growth and reached quarterly positive Adjusted EBITDA for the first time.

Quarterly Performance Highlights

PROG Holdings reported several key financial metrics for Q1 2025, with mixed results across different performance indicators.

As shown in the following consolidated results summary:

Revenue increased 6.6% year-over-year to $684.1 million, while GAAP net earnings rose significantly by 57.7% to $34.7 million. Diluted earnings per share showed strong growth of 69.4% to $0.83. However, adjusted metrics showed some pressure, with adjusted net earnings declining 7.1% to $37.7 million and adjusted EBITDA falling 3.2% to $70.3 million. The adjusted EBITDA margin contracted by 100 basis points to 10.3%.

The company’s quarterly consolidated results over the past five quarters show the revenue trajectory and earnings performance:

PROG Holdings maintained strong cash flow generation and continued its capital return program. The company’s balance sheet remains solid with significant liquidity.

As illustrated in the following cash flow and capital allocation summary:

The company generated $209.9 million in operating cash flow for the quarter ending March 31, 2025, while maintaining $213.3 million in cash and cash equivalents. PROG Holdings continued its share repurchase program, buying back 0.9 million shares for $26.1 million during Q1 2025. The company’s gross debt stood at $600 million with a net leverage ratio of 1.42x.

Detailed Financial Analysis

The Progressive (NYSE:PGR) Leasing segment, which represents the core of PROG Holdings’ business, faced challenges in Q1 2025. Gross Merchandise Volume (GMV) declined 4.0% year-over-year to $402.0 million, primarily due to the bankruptcy of a large national retail partner. Despite this setback, the segment’s revenue increased 5.0% to $651.6 million.

The segment’s performance metrics over the past five quarters are illustrated below:

A more detailed breakdown of Progressive Leasing’s Q1 performance shows pressure on profitability metrics:

Progressive Leasing’s gross margin declined 112 basis points to 29.3%, while SG&A as a percentage of revenue increased 30 basis points to 12.6%. Write-offs as a percentage of revenue rose 40 basis points to 7.4%. These factors contributed to a 9.3% decline in adjusted EBITDA to $67.2 million, with the adjusted EBITDA margin contracting 160 basis points to 10.3%.

This performance contrasts with the company’s Q3 2024 results, when Progressive Leasing’s GMV grew by 11.6% year-over-year, indicating a significant shift in momentum.

Meanwhile, the Four Technologies segment emerged as a bright spot, achieving 145.7% GMV growth and reaching quarterly positive Adjusted EBITDA for the first time, marking an important milestone for this growing business unit.

Strategic Initiatives

CEO Steve Michaels provided commentary on the company’s performance and strategic direction, highlighting the impact of external challenges while emphasizing the company’s resilience.

"Despite macroeconomic uncertainty, we are generating strong profitability and cash flows, which allows us to navigate the period stronger and better equipped to support retail partners and customers," Michaels stated in the presentation.

The company emphasized its disciplined execution and progress on its ecosystem strategy. While acknowledging the impact of a major retail partner’s bankruptcy on Progressive Leasing’s GMV, management highlighted growth in other areas due to strategic and operational initiatives. The company also noted its proactive portfolio management approach in response to macro headwinds.

This strategy appears to be a continuation of the approach outlined in the company’s Q3 2024 earnings call, where Michaels discussed the underpenetrated market and growth potential, emphasizing customer experience optimization and retailer expansion.

Forward-Looking Statements

PROG Holdings provided guidance for both Q2 2025 and the full year, maintaining a cautious outlook while projecting continued growth.

The company’s full-year 2025 outlook is detailed below:

For full-year 2025, PROG Holdings expects total revenues between $2.67 billion and $2.79 billion, with net earnings projected between $125 million and $145 million. Adjusted EBITDA is forecast to be between $270 million and $300 million, while diluted EPS is expected to range from $3.00 to $3.45 per share.

The Q2 2025 outlook reflects similar caution:

For Q2 2025, the company projects total revenues of $640 million to $660 million and net earnings between $27 million and $32 million. Adjusted EBITDA is expected to be $65 million to $70 million, with diluted EPS ranging from $0.65 to $0.75 per share.

Both outlooks assume "a difficult operating environment with soft demand and no recession," indicating management’s conservative approach to forecasting in the current economic climate.

Conclusion

PROG Holdings’ Q1 2025 results demonstrate the company’s ability to generate revenue growth despite significant challenges, particularly the bankruptcy of a major retail partner affecting its Progressive Leasing segment. While GMV declined and profitability metrics showed some pressure, the company maintained strong cash flow generation and continued returning capital to shareholders.

The Four Technologies segment’s impressive growth and achievement of positive Adjusted EBITDA provides a promising growth avenue for the company. However, management’s cautious outlook for the remainder of 2025 suggests continued challenges in the retail environment.

Investors will likely focus on the company’s ability to offset the impact of the retail partner bankruptcy, improve profitability metrics, and capitalize on the momentum in the Four Technologies segment as key factors in evaluating PROG Holdings’ performance through the remainder of 2025.

Full presentation:

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