Prog Holdings, Inc. ((PRG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Prog Holdings, Inc. presented a mixed sentiment within the company, reflecting both positive growth metrics and ongoing challenges. The call highlighted strong performances in certain segments, such as GMV and asset balances, while acknowledging hurdles like increased delinquencies and the impact from Big Lots’ bankruptcy. These factors together paint a balanced outlook for the company’s immediate future.
Growth in Progressive Leasing GMV
Progressive Leasing’s GMV exhibited a robust growth of 7.3% to reach $1.93 billion in 2024. The company also reported a 9.1% year-over-year increase in GMV for the fourth quarter, a growth driven by strategic sales, marketing, and technology initiatives. This growth is a testament to the company’s ability to effectively leverage its resources to enhance market presence.
Increase in Gross Leased Asset Balance
The gross leased asset balance experienced a significant increase of 6.1% in 2024, marking a notable recovery from a previous decline of 5.2% earlier in the year. This turnaround suggests improved operational efficiency and successful asset management strategies.
PROG Marketplace Growth
The PROG Marketplace platform achieved remarkable growth, nearly tripling its GMV in 2024. The platform exceeded its initial goal of doubling year-over-year growth and is now targeting $75 million in GMV for 2025, reflecting strong momentum and a clear trajectory for future expansion.
Forre Technologies GMV Growth
Forre Technologies saw its GMV triple in 2024, reaching over $300 million, with expectations to double again in 2025. This growth highlights the company’s successful strategies in expanding its technology offerings and market reach.
Adjusted EBITDA and Non-GAAP EPS
The fourth quarter saw an encouraging increase in adjusted EBITDA by 7.7% to $65.7 million, while the non-GAAP diluted EPS grew by 11.1% to $0.80 per share. These financial results underline the company’s successful cost management and revenue generation efforts.
Higher Delinquencies and Write-Offs
The company faced higher than expected write-offs at 7.9% in Q4 2024 due to increased delinquencies, especially among new customer acquisitions. This trend highlights the ongoing challenge of managing credit risk and customer repayment capabilities.
Impact of Big Lots Bankruptcy
The bankruptcy of Big Lots, a major retail partner, presents a significant challenge, leading to a projected flat GMV for Q1 2025 and creating potential margin pressures. This development underscores the risks associated with dependency on key partners.
Decreased Gross Margin
Progressive Leasing’s gross margin declined in 2024, influenced by higher delinquencies and a greater incidence of 90-day purchase options. This margin contraction points to challenges in maintaining profitability amidst changing consumer behaviors.
SG&A Deleverage Expected
The company anticipates slight SG&A deleverage in 2025, attributed to reduced revenue from Big Lots’ bankruptcy and continued investments in marketing and technology. This expectation indicates a strategic focus on long-term growth at the expense of short-term profitability.
Forward-Looking Guidance
Looking ahead to 2025, Prog Holdings provided comprehensive guidance, anticipating high single-digit GMV growth, excluding the impact of Big Lots’ bankruptcy. The company projects consolidated revenue growth in the low to mid-single digits, driven by the expected doubling of GMV in Forre Technologies. They aim to maintain portfolio write-offs within a 6% to 8% range, with adjusted EBITDA anticipated between $260 million and $280 million. The focus remains on expanding retail partnerships, enhancing customer experiences, and leveraging AI for operational efficiencies.
In summary, Prog Holdings, Inc.’s earnings call revealed a balanced sentiment, with optimistic growth in several business areas, countered by challenges such as delinquencies and partner-related impacts. The company’s forward guidance reflects confidence in strategic initiatives and growth potential, despite the headwinds faced. Investors and market watchers will be keenly observing how Prog Holdings navigates these dynamics in the coming quarters.
