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Good day, and thank you for standing by. Welcome to the PROG Holdings, Inc. Q4 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, John Baugh, Vice President of Investor Relations. Please go ahead,

Thank you, and good morning, everyone. Welcome to the PROG Holdings, Inc. Fourth Quarter 2025 Earnings Call. Joining me this morning are Steve Michaels, PROG Holdings, Inc. President and Chief Executive Officer and Brian Garner, our Chief Financial Officer. Many of you have already seen a copy of our earnings release issued this morning, which is available on our Investor Relations website investors.progholdings.com. During this call, certain statements we make will be forward looking, including comments regarding our 2026 full year outlook, and our outlook for the 2026. Listeners are cautioned not to place undue emphasis on forward looking statements we make today, all of which are subject to risks and uncertainties which could cause actual results to differ materially from those contained in the forward looking statements. We undertake no obligation to update any such statements. On today's call, we will be referring to certain non-GAAP financial measures, including adjusted EBITDA, and non-GAAP EPS, which have been adjusted for certain items which may affect the comparability of our performance with other companies. These non-GAAP measures are detailed in the reconciliation tables included with our earnings release. The company believes that these non-GAAP financial measures provide meaningful insight into the company's operational performance and cash flows, and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding the company's ongoing operational performance. In addition, I encourage you to participate in our Investor Day meeting being held at the New York Stock Exchange and webcast live on Tuesday morning, March 10, at 8:30 AM Eastern Time. Please reach out to me at [email protected] for details on how to participate. With that, I would like to turn the call over to Steve Michaels, PROG Holdings, Inc. President and Chief Executive Officer. Steve? Thanks, John. Good morning, everyone, and thank you for joining us as we review our fourth quarter and full year 2025 results, which met or exceeded the outlook we provided in late October. I'll start with a high level view of the year, provide some context around the environment we operated in, and then talk about how our strategy and execution position us as we move into 2026. 2025 was a year that required balance, discipline, and focus. The retail and consumer environment remain challenging, particularly in the categories we serve, and we navigated meaningful disruption following the bankruptcy of a large retail partner. At the same time, we took deliberate action to tighten decisioning in our Progressive Leasing business to protect portfolio performance. Those dynamics weighed on leasing GMV, which was down 8.6% year over year. Adjusting for the Big Lots bankruptcy and the intentional tightening, underlying GMV in 2025 grew in the mid single digits, reflecting operational execution and healthy demand across other areas of the business. We gained balance of share with key partners, ramped new partner activity, expanded ecommerce penetration, and built momentum at Prog Marketplace, our direct to consumer motion. While leasing faced some headwinds, we saw important tailwinds at our buy now, pay later platform For Technology. For delivered triple digit GMV and revenue growth throughout the year. For continues to scale organically, with strong consumer engagement, and improving unit economics, and is playing an increasingly important role in our ecosystem. We also made meaningful progress in cross selling our products, Money App, our direct to consumer mobile cash advance business, and For, drove approximately $45,000,000 of incremental leasing GMV in 2025 up from $23,000,000 in 2024, as customers who engage with these products increasingly opted into leasing when it was the right fit. This cross product engagement is a central element of our long term strategy and an important offset to macro pressure in any single product. Alongside this execution, during 2025, we took a strategic step to sharpen our focus by selling our Vibe portfolio. A decision that aligns with our long term priorities around capital efficiency. Vibe is reflected in in discontinued operations at year end, and this transaction allows us to redeploy capital toward opportunities with stronger strategic alignment and return potential. In January 2026, we completed the acquisition of Purchasing Power, expanding our offerings into a differentiated channel and adding a complementary growth platform aligns with our long term strategy. So while 2025 presented real challenges, it was also a year where our diversified platform mattered, we leaned into the areas of the business with momentum, strengthened portfolio health and leasing, accelerated our strategy, and took deliberate actions to position PROG Holdings, Inc. for sustainable profitable growth. Before I address consolidated full year results, I wanna take a step back introduce how we are increasingly thinking about growth through the lens of consolidated GMV, rather than viewing GMV solely through the Progressive Leasing segment. As our ecosystem expands, GMV is being generated across multiple products, most notably leasing and For today, with Purchasing Power becoming part of that picture as we move into 2026. Looking at GMV on a consolidated basis provides a more complete view of customer engagement, transaction volume, and the overall scale of commerce flowing through the product platform. Importantly, as leasing For and Purchasing Power each represent distinct reportable segments for external reporting, we will continue to provide GMV results at the segment level to maintain transparency, and comparability over time. We believe this broader view of GMV will become increasingly relevant in understanding how customers engage with PROG Holdings, Inc., across multiple entry points and how that engagement ultimately drives long term value creation. For the full year 2025, consolidated GMV, which includes Progressive Leasing and For, grew 12.1%, supported by For's triple digit growth at approximately 144%. Turning back to Progressive Leasing for a moment, the intentional tightening to protect portfolio performance achieved the intended benefit. Full year write offs remained within our annual targeted range of 6% to 8%, and gross margin expanded year over year as portfolio yield improved. This reflects the effectiveness of our dynamic decisioning models, and our willingness to make proactive, data driven trade offs. At a consolidated level, adjusted EBITDA from continuing operations for 2025 was $269,000,000 which beat the high end of the outlook we provided in October was essentially flat to last year, and importantly landed within the original adjusted EBITDA range we guided to back in February 2025 despite the volatility and disruption we navigated during the year. Non-GAAP diluted EPS from continuing operations at $3.51 beat both the October outlook and the original guidance we provided in February. Together, these results reflect the year where we balanced near term pressure with long term value creation and generate strong free cash flow to reinvest in the business and return capital to shareholders. Moving to strategy, as our business has evolved, so is the way we think about our three strategic pillars: Grow, Enhance, and Expand. While the pillars themselves remain the foundation of our strategy, way we execute against them is increasingly shaped by our multiproduct platform. Rather than viewing leasing For Money App and Purchasing Power as stand alone products, we operate the business as a connected platform, where growth, customer experience, product innovation reinforce one another. This ecosystem first mindset is becoming a meaningful accelerant across all three pillars. Under our Grow pillar, our focus is on expanding the company by strengthening our industry leading partnerships and scaling our direct to consumer channels, with growth accelerated by customer engagement across our products. In 2025, at Progressive Leasing, we grew balance of share with some existing retail partners by deepening integrations, and executing joint initiatives across marketing, digital, and in store workflows. Even in a soft retail environment, these efforts allowed us to capture incremental GMV within existing doors by improving application flow, waterfall execution, and conversion across channels. Direct to consumer was another key growth driver. Prog Marketplace expanded meaningfully in 2025, delivering approximately $82,000,000 in GMV, nearly doubling year over year and exceeding our previously communicated target. Additionally, our ecommerce channel scaled, with ecommerce GMV reaching an all time high of approximately 30% of total Progressive Leasing GMV the 2025, and 23% for the full year compared to 17% in 2024, reflecting the shift towards digital engagement and the strength of our omnichannel strategy. Marketing is central to this pillar, our approach has evolved. In 2025, we expanded partner marketing programs with retailers, while also scaling cross product marketing using shared customer data and insights to engage customers more intelligently. A clear example of this is the previously mentioned $45,000,000 of leasing GMV generated through marketing to For and Money App customers during the year, which on a stand alone basis would rank as a top 10 retailer within the product leasing platform, underscoring the power of a connected approach. Under the Enhance pillar, our priority is delivering an industry leading consumer experience, one that is simple, efficient, and intuitive across every interaction. In 2025, we made meaningful progress improving how customers interact with PROG Holdings, Inc. through digital channels. We expanded self-service capabilities within our mobile app, allowing customers to manage accounts, make payments, and engage with our products more seamlessly. A critical enabler of these improvements has been our work to eliminate and consolidate technical debt. In 2025, we continued modernizing core platforms. This work is not always visible externally, but it is foundational. For example, we have improved the scalability of our back end systems through an ERP implement implementation, optimize our usage of cloud based resources, and enable faster product generation delivering more consistent experiences and better use of customer and decisioning data. Additionally, our innovation team at Prog Labs is at the forefront of customer experience through the use of AI. As we look back on 2025, I wanna highlight how AI has moved from an area of experimentation to one of real impact across the business. This was a year where AI became embedded into several aspects of how PROG Holdings, Inc. operates, not as a separate initiative, but as a set of capabilities directly supporting growth efficiency, and execution. The focus was simple. Apply AI where it improves speed, decision quality, and outcomes for customers, retailers, and our teams. In 2025, we embedded AI across operations and customer engagement. Piper Plus, our internal AI assistant, resolved over 18,000 inquiries with more than half handled on first interaction, improving efficiency and reducing friction. Our AI enabled flexible lease engine improved decision speed by approximately 75% and lifted marketplace conversion, while AI driven marketing delivered stronger returns and lower acquisition costs, all supported by robust governance and human oversight. Equally important, 2026, we are focused on enabling our people. More than 600 knowledge workers have access to secure AI tools for everyday use the development of digital agent employees. We're not building AI for specialists. We're making it accessible across the organization. Our focus is on scaling these capabilities, including the deployment of more autonomous digital agents to drive productivity quality, and function level efficiency. We view this as a continuation of the same strategy, disciplined execution, practical application, long term value creation, using AI as a lever to make PROG Holdings, Inc. faster, smarter, and more scalable. Enhancing the experience is not just about usability. It's about trust, repeat engagement, and creating late relationships that extend beyond a single transaction. Under our Expand pillar, we are focused on growing our offerings through new product innovation and added capabilities. In 2025, refinement of our decisioning posture was a clear example of this approach. We tightened approvals where necessary to protect portfolio health, while simultaneously progressing on capabilities with improved data and analytics to match customers with the right product, whether that was leasing For or Money App. This allows us to preserve access responsibly by improving overall outcomes. For scaled rapidly, delivering approximately 132% revenue growth in Q4 and 170% for the year. Q4 was the ninth consecutive quarter of triple digit GMV and revenue growth, and engagement trends remained strong throughout the year, with average purchase frequency of approximately five transactions per quarter and more than 164% growth in active shoppers year over year. New shoppers grew approximately a 168% year over year, representing a healthy leading indicator of platform expansion. Additionally, our For Plus subscription model is a key driver, staying consistent with over 80% of GMV coming from active subscribers. For’s take rate of approximately 10% defined as revenue generated as percentage of GMV over the trailing twelve month period, is an indicator of monetization efficiency. From a profitability standpoint, For generated adjusted EBITDA of $9,900,000 in 2025, representing a 13.5% margin on revenue. Money App approached breakeven adjusted EBITDA as it exited the year, reflecting improving stand alone economics, while also driving incremental leasing volume through cross sell. With profitability improving, we can increasingly focus on scaling the product responsibly to drive greater customer engagement, and generate incremental value for PROG Holdings, Inc. Finally, the sale of the Vibe portfolio in early Q4 2025 was a strategic realignment of capital and not an exit from serving our customers. We freed up resources to reinvest in products with better strategic fit and return potential. Looking ahead, Purchasing Power, further extends this pillar, expanding reach into a differentiated channel and customer base. The business aligns with our long term vision of delivering flexible, inclusive financial solutions while improving customer lifetime value across the platform. As Purchasing Power integrates into the PROG ecosystem, we see opportunities to drive cross product engagement, leverage shared data and decisioning capabilities, and enhance partner value. What ties Grow, Enhance, and Expand together is the ecosystem. Growth is enhanced because products feed one another. Experience is better because systems and data are being unified. Innovation is more impactful because access is is deliberate and connected. Is how we are building a more resilient, scalable PROG Holdings, Inc. One that we believe can perform across cycles to create long term value for customers, partners, and shareholders. While Brian will provide more detail on our 2026 outlook, I'd like to share our perspective on the macroeconomic backdrop as we enter the year. As we look ahead to 2026, we plan for an operating environment that remains challenging, particularly for the consumer segments that our products serve. While the rate of inflation has moderated, elevated prices for essential goods and services continue to pressure discretionary income. Big ticket retail categories such as furniture and appliances remain under pressure. And in our leasing segment, we begin the year with a smaller lease portfolio, down 9.4% year over year which creates revenue headwinds. That said, we also see offsets. Higher expected tax refunds in 2026 should provide incremental liquidity and near term support for demand and repayment behavior. Our pipeline with large retail brands and employers remains active. Broad Marketplace and our direct to consumer channels, including For, continue to scale, expanding customer reach and long term strategic optionality. Importantly, we begin 2026 with a leaner cost structure following S&A reductions in the leasing business, preserving our ability to invest in high ROI initiatives while improving downside protection and operating leverage. The realities of this operating environment are reflected in our 2026 planning assumptions. However, our strategy is clear. We'll reinvest in the business following our three pillared strategy to Grow, Enhance, and Expand with an emphasis on our multiproduct offering. We believe this approach spanning leasing For Money App and Purchasing Power positions PROG Holdings, Inc. to serve customers more holistically improve lifetime value, and deliver sustainable, profitable growth over time. From a capital allocation perspective, our priorities remain consistent with what we've previously outlined, which is investing in the business, pursuing targeted M&A opportunities, and returning capital to shareholders through share repurchases and dividends. In the near term, we will focus on prioritizing debt reduction as we work toward our long term net leverage ratio of 1.5 to two times. Before I close, I'd like to welcome Lee Wright, to the PROG Holdings, Inc. leadership team as President of Purchasing Power. Lee brings more than three decades of leadership experience across retail and consumer finance including his most recent position as CEO of The Vitamin Shoppe. He has deep expertise in credit, collections, and capital markets. Lee's operating discipline and experience scaling consumer finance platforms make him well suited to lead Purchasing Power's next phase of growth for PROG Holdings, Inc. We're excited to have him on the team as we integrate the business and unlock its long term potential. In summary, 2025 was a year of discipline and progress. We navigated disruption, made deliberate trade offs to protect portfolio health, delivered strong margin performance, executed a strategic divestiture, announced an acquisition and delivered exceptional growth in For. We entered 2026 with a resilient foundation, clear focus, and growing momentum across our ecosystem. I'm proud of our team's execution as we strive to create long term value for our customers, partners and shareholders. With that, I'll turn the call over to Brian for more detail on the Q4 financial results and 2026 outlook. Brian? Thanks, Steve, and good morning, everyone. Before I get into the financial details, I want to echo Steve's comments and acknowledge the team's execution in 2025. Delivering essentially flat adjusted EBITDA for the year and within the original outlook range of $260,000,000 to $280,000,000 provided in February, reflects disciplined management of the factors within our control alongside ongoing investment in the long term earnings power of the business. I'll start with a summary of the fourth quarter results, then cover consolidated performance for the year, discuss the balance sheet and capital allocation and finish with a few comments on our 2026 outlook. As a reminder, Vibe, which we sold in October, is reflected as operations of both the fourth quarter and full year results. We are pleased to highlight that for continuing operations, Q4 consolidated revenues were within our outlook range provided in October, our adjusted EBITDA of $61,500,000 along with a non-GAAP EPS of $0.74 exceeded the high end of this outlook. Our fourth quarter results were consistent with the trends we saw throughout 2025, disciplined portfolio management leasing and execution across our diversified platform, with triple digit growth of For Technologies. Despite GMV and revenue headwinds in our leasing segment, we delivered margin expansion through healthy portfolio performance, partially offset by investment in growth in strategic growth initiatives. Beginning with the Progressive Leasing segment, fourth quarter GMV declined 10.6% year over year, driven primarily by two factors. The impact of the Big Lots bankruptcy and our intentional tightening actions. Excluding approximately $40,000,000 associated with Big Lots, and $30,000,000 related to decisioning, underlying GMV grew 1% year over year, despite ongoing pressure on our consumer. Digital channels continue to be a bright spot, with Prod Marketplace GMV increasing 187% year over year reinforcing the value of our investments in direct to consumer and omnichannel capabilities. Progressive Lations Q4 revenue of $545,000,000 declined 8% year over year, reflecting the smaller portfolio throughout the quarter. Despite this headwind, gross margin expanded approximately 90 basis points driven by higher portfolio yield, and a greater proportion of customers remaining in their leases longer. Provision for lease merchandise write offs was 7.6% of revenue in the fourth quarter, an improvement from last year and within our targeted annual range of 6% to 8%. For the full year, write offs were 7.5%, reflecting our visibility and expertise that informed our tightening actions and disciplined portfolio management. For Resolutions, SG&A was $91,400,000 or 16.8% of revenue in the quarter. The year over year increase was primarily driven by approximately $5,000,000 of onetime costs related to a partner bankruptcy and incremental investments in technology and infrastructure to support future growth. Adjusted EBITDA for the Progressive Leases segment at $63,900,000 declined modestly reflecting the impact of a smaller portfolio partially offset by margin expansion of 90 basis points driven by higher portfolio yield and the sale of aged receivables. Q4 adjusted EBITDA margin for Progressive Lacing came in at 11.7%, and 11.4% for the year, which is within our 11% to 13% annual margin target. Turning to our other businesses. For delivered another quarter of triple digit GMV and revenue growth. While For reported an expected adjusted EBITDA loss of $1,200,000 in the quarter due to seasonal dynamics and upfront provisioning, for holiday originations. Performance for the full year was strong. In 2025, For generated approximately $730,000,000 of GMV, representing a 144% growth year over year, and delivered approximately $10,000,000 of adjusted EBITDA a meaningful improvement from a loss in 2024. These results reflect improved unit economics, disciplined underwriting, and increased sale scale across the platform. Money App also performed in line with expectations, reaching approximately EBITDA neutral performance for the quarter and playing an increasingly important role as an engagement and cross sell engine. Money App drove significant incremental lease in GMV in 2025 reinforcing the value of our ecosystem approach. At the consolidated level, fourth quarter revenues from continuing operations declined 5.2% year over year to $574,600,000 reflecting the smaller leasing portfolio partially offset by triple digit growth at For. Consolidated gross margins improved 284 basis points to 36.3%, driven by margin expansion of Progressive Leasing, and a shift towards higher margin For revenue. Consolidated SG&A from continuing operations for the quarter increased 19% of revenue, reflecting investments in technology, and the previously mentioned onetime partner related costs. Consolidated adjusted EBITDA declined 4% year over year to $61,500,000 or 10.7% of revenue as lower leasing profitability weighed on consolidated results. For the full year, consolidated adjusted EBITDA from continuing operations totaled approximately $269,000,000 or 11.2% of revenue and non-GAAP diluted EPS was $3.51. Both exceeding the high end of our outlook we provided in October. Turning to the balance sheet. We ended 2025 with $308,800,000 of cash and total available liquidity of approximately $659,000,000 including our revolving credit facility. Net leverage at 12/31/2025 was 1.1 times trailing twelve months adjusted EBITDA. As previously disclosed, following the acquisition of Purchasing Power on 01/02/2026, net leverage increased to approximately 2.5 times. Importantly, these leverage metrics exclude the nonrecourse ABS debt, used to fund Purchasing Power's operations.

In 2025, we generated healthy operating cash flow and returned capital to shareholders through dividends and share repurchases. We repurchased approximately 1,800,000 shares at an average price of $28.20 and pay dividends totaling $0.52 per share for the year. We did not repurchase shares in the 2025 due to advanced discussions related to the divestiture of the Vibe portfolio and Purchasing Power acquisition. Our capital allocation priorities remain unchanged. Investing in a high return growth initiatives pursuing strategic M&A opportunities and returning excess capital to shareholders. Near term, our focus is on integration and execution following the Purchasing Power acquisition, alongside meaningful progress towards bringing net leverage back into our long term target range of 1.5 to two times. This target excludes nonrecourse ABS that used to fund Purchasing Power Let me now touch on some key aspects of our 2026 outlook as outlined in this morning's earnings press release. For Progressive Leasing, both first quarter and full year 2020 results will be influenced by the 9.4% lower gross leased asset balance entering the year which will pressure revenue particularly in the 2026. As the year progresses, we expect revenue trends to improve as portfolio growth resumes and the benefits of our strategic initiatives compound. The Resolution's portfolio performance is expected to remain within targeted yields as we actively manage decisioning dynamics. We anticipate modest growth gross margin expansion driven by higher yield trends exiting the 2025. And we expect lease merchandise write offs to deliver another year of consistent performance within our targeted annual range of 6% to 8%. We expect Progressive Leasing SG&A to remain flat to 2025 as a percentage of revenue and EBITDA margins to expand, reflecting our deliberate effort to align expenses with the revenue trajectory while continuing to prioritize high return initiatives. Our approach remains disciplined, eliminating unnecessary cost, and managing spend through a portfolio lens to optimize return on investment. Turning to our other segments, Purchasing Power is expected to contribute $680,000,000 to $730,000,000 of revenue and $50,000,000 to $60,000,000 of adjusted EBITDA for the full year. While we typically do not provide quarterly outlook for our operating segments, Purchasing Power is new to our portfolio, and we think it's important to highlight the seasonal dynamics of this ecommerce business. Historically, Q1 is the lowest revenue earnings quarter of the year. And as such, we expect Pershing Power's first quarter to be roughly breakeven on an adjusted EBITDA basis. For the balance of the year, it follows similar trends as holiday centric retailers with fourth quarter contributing the most revenue and earnings. We expect FORWARD Technologies to deliver another year of significant revenue growth alongside expanding adjusted EBITDA margin as the platform continues to scale. Turning to 2026 consolidated outlook for continuing operations. We expect revenues to be in the range of $3,000,000,000 to $3,100,000,000 adjusted EBITDA in the range of $320,000,000 to $350,000,000 and non-GAAP EPS in the range of $4.00 and $4.45. This outlook assumes a difficult operating environment with soft demand for consumer durable goods, no material changes in the company's decisioning posture, an effective tax rate for non-GAAP EPS of approximately 26%, no material increases in the unemployment rate for our consumer, and no impact from additional share repurchases. In closing, 2025 demonstrated the resilience of our model and the benefits of disciplined execution. Despite meaningful headwinds, we protected portfolio performance, invested for the future, strengthened our ecosystem, and improved the long term earnings power of the company. As we enter 2026, we remain confident in our ability to navigate challenging environment while continuing to build long term shareholder value. I'll now turn the call back over to the operator for questions. Operator?

Certainly. Star one one on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. And our first question will be coming from Kyle Joseph of Stephens. Your line is open.

Hey, good morning, guys. Thanks for taking my questions. A lot of positive things going on. And yes, welcome back or welcome, Lee.

But, yeah, I wanted to

dig in on Purchasing Power a little bit. Obviously,

that's one of the businesses we're we're least familiar with, but just give us a sense for how you expect that segment to perform maybe versus 25%? Appreciate the color you gave on seasonality, but kinda how you're thinking about that business in terms of growth versus 25 and then, you know, what sort of levels synergies you expect in '26? And if there's any incremental juice to squeeze beyond that. Thanks.

Yeah. Good morning, Kyle. Thank you. Yeah. We're excited about Purchasing Power. Obviously, we closed it here forty five days or so ago. The outlook that we provided this morning was consistent with what we gave when we did the announcement back on December 1, I think. It that that was the date. That that revenue outlook implies a low double digit revenue growth for the for the business.

And so we'll continue to push on that and hope that

combination in in in the PROG Holdings, Inc. ecosystem can can help to to drive growth that growth and and hopefully beyond. On the on the earnings front, on the adjusted EBITDA front, you know, we're we're looking at a kinda seven ish, seven and half seven to 8% adjusted EBITDA margin. Just a reminder that adjusted EBITDA is burdened by the the interest expense from the from the ABS transactions. Or the ABS facilities And, you know, we we we look for opportunities to expand that EBITDA margin over time. We believe that we can get it into kind of the low double digit range similar to leasing, but that's not a 26 commentary Probably not even a 27. It depends on how how successful we are at the growing the business because scale is is really the way that we're gonna drive the the EBITDA margin. There's also some efficiencies and some opportunities from a synergy standpoint. That by being part of PROG Holdings, Inc. from from a data and and and tech and and other shared services type stuff. But we we really are looking to grow the business and take advantage of the revenue synergies, which we didn't really include in 2026's outlook because, you know, they're you you have to capture them first. And so but there's, we believe, tons of of opportunity across the the retail partners that we serve, the employer clients that happen to be retailers that Purchasing Power serves as well as cross marketing different products. Within the the Purchasing Power system. So we're excited about the opportunity. The we're hitting the ground running. And moving as fast as we can. It's not gonna be straight up into the right as it as it never is with with integrating an acquisition, but we're excited about what we can accomplish there.

Great. Really helpful. And then shifting to the credit for the outlook. I know you guys talked talked about at least on leasing remaining within your kind of your goalpost in terms of loss expectations. But, you know, just walk us through some of the puts and takes. Obviously, macro isn't perfect by any means. You know, you guys tightened underwriting there. Lot of headlines about, you know, elevated tax refunds. And and I think, you know, historically, we focused on lease I think if you could give us kinda your sense for credit outlook by product given some of the contra the other contributions part particularly for and and Purchasing Power, I think that'd be be helpful. Thank you.

Yeah. I could I can I can start and Steve, anything you wanna you wanna add? Good morning, Kyle. I think just starting with Progressive Leasing and what's what's baked into our our view for '26 from a from a a credit perspective, So we're we're we're encouraged by what we're seeing thus far in terms of the the the outcome of our tightening efforts. A year ago. And we have not had the need or or seen the data reason to to tighten substantially or or or make a make you know, more more significant moves. So I so I like where we're sitting. I like what what we saw here in in Q4 with a with a 7.6% write off for for leasing, you know, that's improved a year over year perspective about 30 basis points And I think as we as we're watching these these early indicators, you know, whether it's you know, news on the on on the student loan, front or pressure on the subprime consumer more broadly, We're watching, you know, as you see in auto delinquencies and elsewhere. Those are all data inputs that were actively managing and we're we're feeling comfortable about our current decisioning posture and and and but we will continue to watch it. I think just kinda stepping through to to to four, You know, the the you have you have observed kinda you know, I just wanna draw your draw your attention to and maybe everyone's attention to some additional details on four that are provided here as we've reported out as a a separate lease, a segment for four for all of 2025. And you can you know, there's additional details in the K that will be forthcoming here this morning. But here in the in the the the earnings release as well, you're able to see kind of the the provision that is attributed directly to Ford, and you can see their performance there. Know, the biggest the biggest driver for for four under under CECL accounting and the and the short term duration of their of their instruments, really what's gonna be, you know, driving that is is growth to to a large degree, particularly in Q4 as they they accelerate. And that's what you see in in the tables that we've provided. There's kind of a Q4 buildup of the other provision. I think what what is implied in our guidance, and this is this is very directly tied to the credit picture. Is we're expecting improvement in overall EBITDA margins for the midpoint of of our guidance is right just over 15% for four. And that's up from about 13 and a half percent in in 2025. And so that that's gonna come with scale. Scale is gonna drive that Efficiency is gonna drive that. But the credit performance side is as we get smarter with the CSNI, smarter with with underwriting. So I don't wanna I don't wanna commit to, you know, you know, a a specific number with four. We haven't given guidance on that. I would just say that that team has been finding ways to drive margin expansion and and we'll maintain credit discipline along the way with Ford in order to in order to hit our targets here. And so we're we're we're moving EBITDA margin the right way for and the credit picture is obviously part of that formula. And then Purchasing Power, there there is not you know, we have not provided any details on on the low mass provision around Purchasing Power. I I that's that's kind of a short term situation here next middle middle of next month, you're gonna see some required disclosures that we need to make around the historical financials of of Purchasing Power. And you'll you'll see kinda 2024 out of the financials, pro pro form a year to date as of 09/30, you're gonna see some some information. So you'll be able to get a a better picture of kinda, how their their P and L is is built up, but obviously, we're reported on Q4, so we don't have any of their financials rolled up to here. But I would just say that that's that's a controllable dynamic for us We and we are from at a starting point, we feel there is a tremendous amount of opportunity for us to overlay our expertise. We we we feel that we've developed over the years. To that business and and leverage leverage our knowledge around this consumer and and how best to serve them. And so I'm I think there's plenty upside on on that front is is what I would say.

I don't know if you have any excuse.

Thanks, Brian. Real really helpful. Last one for me. And I can get back in the queue. I was gonna you know, given where we are in the air, gonna ask the obligatory, pipeline question. And I'm still curious to hear your perspective there. But I also wanna ask about kind of the evolution of the the sales process now that you guys have so many different products available.

Yeah. Kyle, maybe I'll I'll I'll let somebody else ask the pipeline question. But I mean, you mean you're talking about the you're talking about the biz dev the pipeline with the different products? Yeah. I mean, we're we're incorporating

four and and

and Money App into our discussions as it relates to our existing, relationships. And we expect as we move forward, Purchasing Power will will have additional products on its voluntary benefits platform that will help with with landing new employer clients as well. So that it's it it continues to evolve as our overall ecosystem strategy and we'll certainly talk more about that at the Investor Day.

Great. Thanks for taking all my questions. And our next question will

be from Harold Groch of B. Riley Securities. Harold, your line is open.

Hey, guys. Thanks for the all the information and and detail. Wanted to ask about you know, Purchasing Power and the ABS transactions they do that are embedded in the cost of sales. How long is Purchasing Power by the ABS issuer and what kind of interest rates are are they charged I mean, are they basic what's their cost of capital?

And you know, for those transactions historically, Ben, and what do think you can do embedded in you in a large a larger company.

They've been they've been in the market for I'll say, many years. I don't know the exact number of years, but they're a seasoned issuer.

Okay. We are actually in the market right now to replace an an expiring facility. The 2024 A facility, And you know, we expect that

we can improve on those economics, but we can't commit to

anything until until the deal's closed. Oh, okay. And and then and then the the b BNPL segment, the growth is just best in class. Maybe you could just give us qualitatively, you know, what you know, you're basically growing two x even the next type the next closest

peer, maybe from a smaller base. But

maybe you could share with us your thoughts on qualitatively, quantitatively how this growth has has been so outstanding and

and any commentary on on losses and merchants that you're having success with.

Thanks.

Yeah. And

kudos to the team. They're they're doing an awesome job. And I don't wanna take anything away from the team, but I would I would point to what you said, which is kind of it's from a smaller base. But but we do Yeah. We're very, very, very excited about the about the ability to acquire customers both organically and then through a paid

a paid marketing motion

And we saw very strong acceptance, if you will, of of the product in the back half and and expect that to continue in 2026. Our For Plus subscription service is is why is getting wide acceptance and actually exceeding our expectations as it relates to active subscribers. You know, the it does have churn like all subs all subscription providers do, but we're we're but it's below our you know, below what we had forecast. And we basically executed through the the holiday season with a higher base which helped for us to

outperform our internal forecast for the quarter.

We're having it's a direct to consumer model, right? So it's not really based on merchant traffic at their in their checkout card. It's it's flowing through the For app, which has great user reviews, you know, star ratings, The it's it's highly ranked in the App Store depending on, you know, where we are in the market. From a paid marketing standpoint. And we're really seeing a nice a nice balance of customer acquisition repeat usage, and broadening that platform. So know, when the law of big numbers kicks in, I do expect that the growth rate will decelerate, but it'll decelerate from a very high level to your point. And we put out some guidance this year that implies a growth rate, and it's

that team is

highly motivated to even beat those growth rates and we'll do it in a disciplined way. We we are continuing to tweak and optimize the the underwriting And but there's some seasonal dynamics to that where you where you do take on some more risk in four quarter, but that is a is still a high ROI action because you you turn many of those new customers into derisked repeat customers, and it helps to drive GMV as the rest of the year goes on. So we look forward to continuing to update you on on the on the progress. We expect the progress to be impressive throughout twenty six and and beyond.

Excellent. Thank you.

And our next question will be coming from Brad Thomas of KeyBanc Capital Markets. Your line is open, Brad.

Good morning. Thanks for taking the question. A lot of

exciting things happening over there.

To ask about. But I maybe wanted to start with GMV, if I could. And I think if I've tracked the numbers right, you said the underlying business ex the tightening and big lots was up about 1%. That was a little softer than where you had been tracking

recent quarters. Just curious if there was any color on how things were trending by category or with partners or anything else that you've seen here in the quarter?

Yeah, Brad. Thanks. And, yeah,

it relates to leasing GMV for the quarter, would say that we

it was a little softer than our internal expectations. And, you know, it's always difficult to to forecast GMV on the October before the holiday season kicks in. But

but what what we saw is really

weakness in in kind of late October, and and the first three weeks of November. And it's difficult to pinpoint it exactly, but the the one kind of data point that was out there was this government shutdown, and it just seemed like there was maybe a little bit of hesitation on behalf of the consumers to to enter into the new deals and and take on new originations. And that's not a commentary on on us having much exposure in the leasing business to government employees because we don't. And the extent we do, it's mostly military, and we're not even aware that they were impacted from a pay standpoint. It just seemed to have kind of, like, a a negative headline effect on on trading. Because what we saw is the Black Friday to Cyber Monday period was actually okay. And we and we had a decent actually, a nice rebound in December. And had, you know, had the best performance of

of the quarter. And actually,

best performance for a month in in quite a while for 2025. So there was the the quarter came in a little bit below where we expected. And that was the cadence of it. It was a a week October a a week ish October, a week ish first three weeks in November, and then a slight a rebound in the the the holidays and in the through Christmas. That's really helpful, Steve.

And as we think about GMV for 2026, a bright spot will be that big LUTs headwinds start to get out of the system as we go through the first half.

But I know you've had

at least one of their retail partner that's gone bankrupt. Can you help us maybe size how much of a headwind that will be

Yeah. Thanks. Yeah. We

so as we sit here, you know, in this first quarter,

we're we expect by the February, we'll we will have kind of lapped both the Big Lots GMV headwind as well as the the decisioning tightening that we kinda reported on all last year. And so it's our expectation that as as we get into a clean quarter, kind of in Q2, we'll see improving GMV trends We're not we're not gonna be talking about the other we're not gonna have a repeat of '25 where we're or every quarter we're talking about the headwind related to the bankruptcy of that other partner because we're just gonna execute against it and and and cut and and cover it up with with, hopefully, growth elsewhere. So you know, we're we look forward to getting into some calm waters lapping those two discrete items that we talked about all of '25, and and and delivering some improving results certainly in the first half. And then you know, better than that in the second half. I I appreciate that color.

Maybe moving on to cash flow. I apologize if I missed it. I know you guys are usually very capital light business.

But any color on where CapEx may be now that you own Purchasing Power? And particularly as we consider the impact of the one big beautiful bill, how are you thinking about free cash flow for this year, considering the EBITDA guidance?

Yeah. I I'll I can start. Yeah. I think we're feeling I think we're feeling good about the cash flow dynamic. You mentioned the one big beautiful bill. That's the impact of that that bill had about, call it, $25,000,000 impact in terms of incremental cash impact in 'twenty five, and we expect you know, we talked about $9.09 figures. So so right around, call it, $100,100,000,000 dollars, in in '26. And so the the cash generation there is is certainly positive. As I as I just kinda think about the you know, what I expect in in '26, just kinda work down the cash flow statement. I I think Progressive Leasing segment is gonna do what what it's really always done, which is generate a lot of cash that gives a lot of optionality. And growth rates will will impact that, but I think as you kinda you know, look at what historical cash flow from operations has been, largely that's generated by the Progressive Leasing segment. And I think you know, those are those are you know, we'll stay within reasonable range of what we've we've generated historically, kinda at these projected growth levels. And I think you know? So so the questions are what what do you do with that cash flow? Like Steve mentioned, we're we're gonna emphasize delevering our balance sheet. So we came out of the purchase power acquisition with about 2.5x excluding nonrecourse debt. We've got a we we've got an emphasis on on paying down that debt. And I think, you know, it's it's not a stretch to say we'll be kind of approaching that two times turn pretty pretty quickly. So here this year. So I think there's there's an emphasis on on that. And then you you look at, you know, what we're doing with cash flow from from from investing, you see the you see the channel of cash flow into new loans at four And, you know, that's we we we are pleased to send as much their way as as we're able to originate with discipline. And so you know, if we were to use up a meaningful portion of cash flow from Progressive Leasing, two and and channel it to four. I think that means we're doing we're we're doing the right things over there. And so there could be some cash usage there at four. And that Purchasing Power, is is largely going to to you know, they have they have optionality around their ABS facilities. And I think we'll we'll kinda you know, reassess and and look to optimize where it makes sense, how we're utilizing cash versus leaning on leaning on the the ABS. But the ABS picture will be will continue to be a a meaningful part of how they're how they're financing their business. And they they they have a you know, a strong cash flow profile as well. So that's that's why I'd say it's kinda you're thinking through the gives and takes in cash. But the net net is we're gonna have more than than we need here this year to to run the business invest in new businesses and also make

make other decisions.

And our next question will be coming from Bobby Griffin of Raymond James. Your line is open, Bobby. Good morning. This is Alessandra Jimenez on for Bobby. Thank you for taking our questions. I first wanted to follow-up on Kyle's earlier question. What do you think is the largest synergy opportunity within the Purchasing Power segment?

And what do you expect to benefit the P and L over kind of the early integration period versus a multiyear opportunity?

Yeah. I mean, the the largest opportunity is to accelerate the growth rate of the business. We've got a great even before we before we bought them, they have a great installed base of client partners. But we believe we can help get better penetration into the existing eligibles which are, you know, basically, they are the employer partners employees. As well as add new new partners to the to the platform. And and also help with the direct to consumer channel, the what they call the PPC Select or or the PPC Direct. So there's lots of scale opportunities. That's the largest opportunity, and that's what we're gonna be driving. At the same time, just like we always do, we're gonna look for opportunities on the on the cost side and improvements in the data side and on the collection side. And you know, we certainly underwrote some of that in our in our diligence process. But the the the growth side is where the most exciting synergies are.

Okay. That's helpful. And I understand it's still early in kind of the tax return season, but are there any reads on how the tax returns are progressing so far this year?

No. It's it's really early. I mean, there was one report from the IRS last week that many people warned to just kind of ignore, but we expect next week and potentially that March to be when all the all the action happens. So we're we're standing by as well.

Okay. Perfect. Thank you so much, and best of luck here in 2026. Thank you.

And our next question will be coming from Anthony Chukumba of Loop Capital Markets. Your line is open.

Good morning. Thanks for taking my question. So my first question,

this $5,000,000,000 write off of assets due to retail bankruptcy, what exactly did that consist of? Is that, like, like, money that they owed you, or is that, like, yeah. If you can just give a little color on that.

Yeah. I mean, sometimes,

in every case, but in some cases, when you when you initiate a new retail partnership that is a multiyear exclusivity. There's either an upfront payment or a prepayment of some type of rebate or something, and then obviously, if that chain goes into liquidation, then you're not gonna be able to generate any any business from that chain anymore, and you have to you have to take the unamortized portion of that those economics through the P and L.

Got it. Okay. And and then just in terms of the, you know, higher income tax refunds, my assumption would be that that you know, or your expectation would be that would lead to a higher degree of early lease buyouts, ninety day buyouts. Is that a reasonable assumption terms of what your expectation is?

Yeah. I mean, history would say that that is what what could happen and has happened in previous tax seasons.

So

early but also outside of early buyouts, it also helps with just regular repayment behavior and kind of some healing of the portfolio and some demand signals, hopefully, But increased liquidity in the customer's hands generally turn into into some some payoffs. Is healthy for the portfolio also. We have observed in previous years when when the the payments were delayed that actually had a behavioral impact on the consumer, and there weren't quite as many buyouts as we might have expected. But we'll have to see what happens over the next three weeks or so.

And our next question will be coming from Hong Dwyn. Of TD Cowen. Your line is open.

Thank you, and good morning. Thanks for taking my questions.

So I want to ask about the EPS guide like it's very, very strong. So you're guiding almost to almost 20% growth in EPS. But I understand that the prop leasing business is kind of shrinking in '26. So can you talk about that mix of improvement in profitability between, you know, Purchasing Power coming in and maybe, you know, the improvement that you are seeing in '4 So I guess that's where the the improvement in profitability comes from. Thank you.

I think, I mean, you could look at the segment the segment outlook that we gave. And the the leasing business. Is pretty flat on on an adjusted EBITDA basis. I mean, depending on what point you pick in the guide, And then four is up. And a a smaller adjusted EBITDA loss and and other And then Purchasing Power, we've said we believe it's a double digit accretive acquisition for 2026. So think those are kind of the the building blocks to the to the EPS guide. Got it. And maybe I want to ask again on the tax refund season because I think over over the past

maybe three or four years, there were years when, you know, you guys kinda saw the Goldilocks environment, right, where people have the money, but they kind of stay in the lease for longer. And when they are very flushed with cash and then, you know, they kind of pay down, then that kind of crush the gross margin. So, I mean, I guess I mean, how how should we think about it this year? Because we're seeing average refinancing up 10%. Based on the earliest data. So how should we think about which direction it's it's going?

Thank you.

Yeah. I mean, that's you know,

we have

don't know. Right? We're we'll see how the how the customer behaves. Like I mentioned earlier, we have observed in the past that when when refunds are delayed several weeks, that we see less ninety day buyout activity. We're not predicting, you know, 2023 maybe where people stayed in the leases longer. We are seeing people stay in leases longer, but we don't think tax refunds are necessarily gonna be a driver of that. And it really depends on how the there's a lot of reports on what the average size or or the size of the average refund is. And how that slices and dices between kind of someone making 40 to 100,000 versus someone over a 100,000 which generally isn't our customer, not always, but generally isn't. So we'll see if that 10% if it's if it stays at 10% higher, I don't think it'll change behavior all that much. If it comes in at 30% higher, then I think it could potentially

cause

some more

ninety day buyouts, which would have an impact on gross margin. And our next question

will be coming from Eunice Sun of Jefferies. Your line is open.

Hello. Thank you for taking my questions. You mentioned a switch to or switch in how you view the business to consolidate a GMV in addition to colors around the segment GMV. Could you expand a little more on that And how would that change how you or we should think about the drivers at the business, seasonality, momentum, segment contribution, anything will be helpful.

Yeah. I mean, I think the the statement that we believe that with with four and leasing and now Purchasing Power, kind of all having the equivalent of GMV we believe that a consolidated GMV is a more holistic way to measure the the amount of commerce going through the PROG platform. It doesn't change the fact that we're gonna be tracking leasing GMV and tracking For GMV. Because all GMV is not created equal. And they and they have different paths They have different conversion into revenue and different paths through the P and L. And so it it while we think it's a a a useful metric that we will be talking about, You shouldn't and we will not get away from tracking the individual segment GMV results. And I think that you know, the the fact when we give revenue guide for each individual, segment, implied in that is an expectation around GMV. So it's not a it's it's not a departure. It's just a click up on the on the kind of global view, and we think it's helpful.

Thank you. And my next question is on expense cadence throughout 2026. Is there any cadence or investment throughout the year that we should think about? And how would that impact segment margin dynamics? Especially for for where it is where the margin is right now versus where the guide is. Thank you.

Yeah. So if I just go go segment by segment, on the Progressive Leasing side, I think we indicated that our expense cadence or our expense overall will be will be consistent with last year in terms of percentage of revenue. There's not there's not much in the way of, lumpiness along those lines, and there's there's variable cost tied to revenue. And so as as revenue is you know, seasonal, so will those some of those some of those costs. But but there's not, you know, a significant bullet at any point in time to to put on your radar. Think the the same case with with four. There's there's always always continued investment, but nothing that that jumps out as as significant. I think the biggest margin drivers there, again, are gonna be obviously, optimization and and growing growing EBITDA margin over the course of the year just as they get more efficient and and better able to manage the portfolio. And then nothing nothing really to to point out at Purchasing Power. Obviously, there's you know, anytime you you you acquire private company and you're you're going through getting them ready to to be public, there might be some some front end costs That's so maybe there's a little bit more of front weighted slightly, but nothing that I would I would say materially you should factor in.

And our next question will be coming from Vincent Caintic of BTIG. Your line is open, Vincent.

Hey, good morning. Thanks for taking my question. I wanted to follow-up

sort of on the seasonality discussion again in terms of the guidance. Strong full year 2026 guidance

first quarter guidance is a little bit more mixed.

So I'm sort of wondering, so you just gave the expenses, that's really helpful.

How should we think about the revenue side and the inflection through the year?

I think you've already provided Purchasing Power has that seasonality, which you discussed in terms of revenues.

For four, should we kind of be expecting this continued acceleration as you've been experiencing?

And then for the leasing business,

so you talked about you're lapping both the loss of the partner as well as tightening underwriting in February Is there sort of any way to

kind of get a sense of what underlying GMV would have been without that? I know you said without Big Lots, it would have been 1% higher. I'm sort of thinking, like, how does the cadence look like them?

Second quarter onwards?

Thank you. Yes. I mean, I'll try and help you there. I mean, you you talked about Purchasing Power. It being new to the platform, we wanna give that quarterly color. And and so it it's it's roughly kinda breakeven in in Q1. And then obviously, we're we're guiding to 50 to 60. So in Q4, we'll it's a holiday retailer. So Q4 will be the the strongest quarter from a revenue and earnings standpoint. '4 has seasonal dynamics as well. Q1 will be a strong profitability quarter because of the revenue and fees generated off of the really high GMV from December got provisioned in December and hasn't had a chance to to generate the revenue as much yet. We'll continue to at our growth rates that we're projecting, you know, we'll we'll have another big fourth quarter next year or this year, sorry, And we'll see if if it like, last year, it caused us to swing to a loss, although a small loss, but a loss in Q4 from an adjusted EBITDA standpoint, We'll see what happens this year based on scale and other factors. But Q1 is a strong earnings quarter for that business. Mean, leasing is starting, I would I would say, more so from versus the the GMV front. It's starting at a 9.4% smaller portfolio than it had at the beginning of the year due to the GMV from 2025. So from a revenue standpoint and a earnings standpoint, there's a kind of an uphill climb there that you know, in the first half that hopefully gets better in the second half. From a GMV perspective, we you know, we are lapping those two discrete items, and, hopefully, those are behind us. Well, those will be behind us here. At the February.

And so we'll see some improvements in in GMV performance as we get out of the first quarter, into the second quarter, into the back half. But so that's

guess, that's the color we can provide on the quarterly

version of the annual guides. Okay. That's helpful. Thank you. And last one for me. So we talked tax refunds a little bit already, but maybe if you could talk about just broadly what your expectations are for tax and what's built into

guidance? Thank you.

Yes. Similar to what I said, I mean,

you know, there's lots of reports that they're gonna be 30% higher this year. Not positive that that that our customer base is going to see that type of a percentage increase. Because of some of the things that are available in that tax bill are not available to our customer at their income level. However, I we do expect it to be higher.

And so

somewhere between probably 10 30%. And if that's the case, we'll see an inflow of cash, which is always good. Hopefully, we'll see some some demand signals on the GMV front. And it remains to be seen just what the GMV I'm sorry. The ninety day buyout activity will be So we have some you know, we have some estimates that it's a you know, a little more active tax season than the past, which I think is reasonable based on the fact that we think the liquidity position will be higher

And I would now like to turn the conference back to Steve for closing remarks.

Thank you, everyone. I appreciate you bearing with us here as we went a little long, but know, we're proud of the year, the 2025 that we delivered and excited about our plans for '26. Want to take an opportunity to, again, welcome the Purchasing Power team to PROG Holdings, Inc. We're excited to be working with you and to to unlock the potential of that great business. But also to thank all of our team members for their continued hard work and commitment to serving our customers and and retail and employer partners. I'd like to reiterate John's invitation for you to participate in our upcoming Investor Day on March 10. We have a great presentation lined up and look forward to laying out the PROG Holdings, Inc. story in more detail. And I look forward to y'all hearing from a broader part of the leadership team as opposed to just Brian and I. So please reach out to John on how to participate. In that Investor Day. We appreciate your time, and we look forward to updating you on our progress at the Investor Day and after Q1 in April. Thank you.

And this concludes today's program. Thank you for participating. You may now disconnect.