PRG - Earnings call transcript Q4 2021

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Operator

Good morning and welcome to PROG Holdings Inc.'s Fourth Quarter and Fiscal Year 2021 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Baugh, Vice President of Investor Relations. Mr. Baugh, please go ahead.

John Baugh

morning good and you everyone. Thank PROG Welcome XXXX quarter year-end fourth call. to the earnings and Holdings

Joining are our investor.progholdings.com. Relations this a morning, Executive Many me which morning you copy Officer; and Holdings' of on release and Chief of President is our Brian issued already available website Garner, have Chief earnings Officer. Steve Financial seen Michaels, this PROG Investor our

into risks including and forward-looking, in for non-GAAP our to can Progressive may we end earnings which per non-GAAP EBITDA measures, other affect financial obligation safe on to to we These and make want for forward-looking today's our such That operational tables are certain flows, performance I provision identifies with that Leasing risks release press help delinquencies provides companies. performance. There turn included this the release. and investors to which provisions forward-looking call, forward-looking and this may company certain priorities revenues, discussed measures prior GMV issued call payment company's During cautioned for including Progressive be the undue comments reconciliation The differ encourage related outlook we in to emphasis the found in its the not them operational to share, items, statements. any that detailed insight that today attention you safe that segments our the earlier be morning. to with Michaels. we I referring expectations with these your company per earnings believes our today, earnings comparisons share. and in certain On non-GAAP Vive are we cash earnings make statements Listeners XXXX, at to periods financial be statements and that performance non-GAAP harbor meaningful be for XXXX, will these its With regarding update our including are statements. measures will to for ongoing call, our we GAAP company, share in measures of and financial of filing undertake to and call cause assist actual payment that, can no including the Steve? understanding results of over comparability potential additional that our and performance to have been materially company's with read. now Leasing's harbor repurchases, to adjusted including statements capital to the XX-K customer Steve from facilitate and found for results expectations place are our the provide which EBITDA trends will adjusted of we levels non-GAAP operating our allocation respect the adjusted write-offs, and

Steve Michaels

PROG and discuss expectations I was thoughts everyone. XXXX, morning, as for joining Thank Holdings. and provide some appreciate you you, for John, good around for results an important our today QX and with our XXXX year-end XXXX. year you us we

a For fintech asset-light morning's a know company. of us following this XXXX those holding that who on our as stand-alone full for while, you been year have first call marks you

allow we also innovative business, we capital stated believe operating and the to e-commerce include our Highlights financial of in from our to accomplished during I'm add growth doubling to substantial XXXX You the scaling for of profitability. proud technologies, Leasing Progressive expected report Vive and capital more and return year. GMV recall, shareholders, all to than our operations of Leasing's GMV beginning will new us profile achieving the XXXX, products at would XX.X% and we segment, that our production, reinvest which Progressive to we generate

in pay fintech Later XXXX. importantly, XXXX. and Pay Four us Now, our result Buy Perhaps Board share develop for products. the shareholders test for and proud to GMV success increase repurchase our the QX with in just an Progressive Four our the a in in space, returned our e-commerce and approximately stock. group Technologies, authorized of new XX.X% repurchase growth in of in GMV Leasing R&D common representing of acquisition GMV revenue while of term. our exceptional XXXX. a to I'm billion in grew XX.X% entered as gross performance QX leased created growth also This business for We XX% resulting XX.X% XX% results compared efforts to in larger extremely We position capital the past program helping should through in outstanding significant improved year, Leasing's of year-over-year continued portfolio in to our in XXX% full Progressive and this our assets both QX we long portfolio. team's the And near GMV as driving year its $X year, delivered and

We e-com partners add expect carts, Leasing's business as plug-and-play integrate new continue, solutions. partners, existing in we with growth our online point-of-sale to strong Progressive through and large

by more their comp in we partners GMV POS in that for GMV to positioned challenging XXXX. and in be and large Our growth sales. year well will expect believe XXXX was sales are our driven a growth what drive likely to we We primarily national continue our

sales embrace encouraged them additional millions alone, QX of of and promotional capture POS we our deployed GMV. that partners traffic the e-mails, initiatives. and recognize bring as our are We In of co-branded and us which to joint stores through tens them POS we partner more generating additional helped marketing drive business can websites,

to grew larger revenues by year-over-year GMV a in portfolio X.X% fueled strong primarily and growth. X.X% due XXXX, lease QX consolidated Our

indicated outlook for QX, period. XX.X% stimulizated the in to in consolidated year As November to the XX.X% we EBITDA declined of annual margins adjusted margin provided the compared ago

pre-pandemic Progressive delinquency XX.X%. Leasing in of in trends with XXXX in at EBITDA to the than adjusted quarter, year XX.X% X.X%, write-offs but We what of continue slightly margin to in the over ended an pre-pandemic adjusted with return and the million, levels. with QX similar XXXX, a fourth to write-off coming EBITDA $XXX.X higher of increase We an third see still and expected line experienced we quarter,

balance senior Turning million QX. We had million $XXX tender. to our notes, November, used $XXX busy of unsecured of allocation a we our very issued the At and successful which sheet priorities. capital fund end were to primarily Dutch

were we then, a of these take actions. there As discussed reasons to number

strong attractive represented which value. to environment; believed we flow interest cash and First, we good we cash rate take continue, our the free position, second, had given it low generation; business's was a finally, time a to of expected advantage an our shares net

to Progressive Central, number and and partnership. significant and we base, new in resulting launched reach products, in assist believe to By checkout organic time the our share we a billion reduce products $XX retailer frequent these our team largest business. out $XX will our made and during addressable for management not expect retailers, Leasing's round lasting added can continue which TAM customer many fintech a technological the executives for a and billion PROG We sale. compliance POS valuable larger Last, deepen to to initiatives years for developing platform, which and Leasing consumers bench. investments while we a small manage broaden gives new of deliver the for platforms large a to helping adding capabilities, of designed between best-in-class details, partners a technology, in tool makes launch to operational, several our the for integrations medium-sized key of capturing certainly a the believe basis, LTO XXXX application management more but our also Progressive on online individual come, also e-com increase leasing and lease enhanced business number least, complementary overall benefits market. of plug-ins we We of financial seasoned our and more our

our engagement are whom proud that consumer each of meaningful growth. directors new and experiencing data including independent and we In X to joined expertise, drive digital significant leveraging technology bring addition, Board,

XXXX remains in COVID. turning to a seen the issues, continuing the host labor challenging would in outlook, the supply our decades, I whole not inflation due not to term, in a if to steep did including not increase macroeconomic be effects national Before the disruptions, remiss mention short shortage, environment of say that levels chain to ongoing I of and

uncertain recent expiration for season the impact tax due X monthly of in meaningful refund made and business term. the the an create to of credit child headwinds Additionally, unknown potential payments, government payments will the tax in IRS lack likely refundable delays of early XXXX near stimulus a alongside

is of fact, same our In first negative last compared slightly today, quarter year. the as GMV period to year-to-date

that we will to the now earnings are dividing which, is explained macroeconomic mid-to-high annual to had you despite early year-end EBITDA as may our single headwinds, that seen larger we Progressive Leasing revenue GMV we of our the decline grow by driven to XXXX, segment, segments. outlook, outlook along by in these with our from X%. increasing release, growth X XXXX we adjusted targeted back continue write-offs, portfolio XXXX. In digits, X.X% largely into in in are The in the from range Turning XXXX to X% belief forecasting our at have

consistent we delinquencies. been our from as rates away levels, and communicating are that payments, what normal in in move trend which seeing towards have we expectation is We our further would stimulus payment write-offs

increase impacts expiration annual continue Our in within we to pressures inflationary X%, in the of in more a prime currently near we of and range ability to our X% challenges, the Notwithstanding to confident and manage prime consumers. and are below remain those of stimulus prime that standpoint, performance the year-to-date. customers are range our tracking from feeling write-offs the than

levels across to also technology percentage nation. SG&A of as in higher a resulting as expect as pre-pandemic XXs return market the revenue, well slightly product, we experience to the higher in costs compensation continue as from tight to labor high the and We invest than

on Vive record release the by EBITDA the I'd like EBITDA rate Our primarily provision entire to their in driven XXXX and as Financial and had pre-pandemic the congratulate to team for adjusted performance. XXXX for was GMV levels. dropped adjusted Vive a The credit in reserve revenue great segment losses,

from with the reduction XXXX the shows forecasted same driven don't we adjusted XXXX expected built EBITDA The even XXXX is for GMV. higher range up to in the tailwind. revenue release. by due having strong XXXX's profitability Vive's receivable anticipate year-over-year that the provision However, strong loans was balance growth

to remain We Vive profitable forward. going expect

our areas. Finally, development almost time. as operations new of $XX million the we are split outlook to PROG well for $XX of a million is impact The between Holdings products. Four these X EBITDA of Technologies our from for fintech This business, first loss the evenly other as providing represents adjusted

the last while and product Pay and the infrastructure portfolio partners. up existing purchased building few Four As team, grow core integration and you business, believe know, and performance ecosystem. summer into with our and PROG's prospective leasing to quarters on the BNPL as last complementary Four POS we to we We is spent working look

we a enhance develop As and we to we last an believe R&D offerings. team leader March, to technologies build announced will innovative that hired products our

by is ecosystem of that and our loyalty. One broaden pillars engagement exploring of growth frequent fintech additional to customer and products the our strategy drive technologies

pre-pandemic As EBITDA Holding this success, I investing stimulus operations that delivered standpoint, our earnings a historical type years. an capital adjusted the other is XX% year expect have growth of to long-term in earnings the organic last many government part helped that clear XXXX commitment is are before, to X we our critical which been overall above-average in standpoint, to said to From PROG of means pause have the XX% have growth range, return objective. years. from annual for we innovation a allocation in record and our us our we consistent to through

the of a for return our is forecast result of an and expected normal portfolio Our operating performance our a businesses more natural across to environment.

in to excited XXXX front about continue optimistic be for us we and and beyond. opportunity the However, of

POS partners more our partner to pipeline before new committed our is are ever existing Our than product robust. and

our in have ability R&D believe in We're lead growth they about to the strong and on the excited of number of come. to GMV capturing to addressable total we which more assist team partnerships, we believe growth the is the expect in will and working large the particularly years brick-and-mortar market. We us initiatives new e-commerce

give best-in-class satisfaction and partner scale the in and is which scores. by our retail NPS Our advantage the strength our products marketplace, an evidenced of customer network people, and us

our to Arizona, and people to a moment in over want from We was great CFO, the and busy states entire discuss above you an call our else in and take work happy Leasing now detail. like know QX to the financial PROG largest named I to hard and of places year, work all for our I all to who dedication. X will to Garner, entire Utah from XXXX. both share accomplished team of Finally, best I'd all Brian work employee in Progressive appreciate recognize and your one thank greater what team the results and I standpoint. over the our for the turn Brian? I'm will believe this

Brian Garner

in primary Thanks, Steve. PROG financial quarter results the Holdings' trends reflect fourth X business.

First, Leasing and portfolio both period for overall revenues. benefit size, Vive Progressive increased strong the which GMV period in should Financial future our

Second, from the we the portfolio we first the our normalization of now the technology, And rate year in including we sales increased pandemic. have experience key marketing of customer pre-pandemic of reached investment during as reduced payments, continue levels. levels metrics, finally, and to

we drove contraction in and our stimulus. by benefited customers higher investment levels expected, from liquidity, year when the we levels period driven ago As of government elevated increased impact from saw the runoffs the of margin higher

mentioned, our We to tender in the sheet, notes. issuance quarter of Steve we outstanding currently the million of fourth during fourth billion the tender optimize million offer, $XXX funded As of expiration XXXX. approximately months of a we our $XXX our of repurchased million X share $X took better of $XXX the first the have of which $XX offer, of of including After program. stock unsecured remaining meaningful the steps repurchase and our we during common repurchase million under shares the outstanding stock senior through quarter shares balance common

to for balance execute generation priorities. look allocation our our to sheet to strong opportunities utilize capital continue cash will and We against

that QX continued the delinquencies basis decline SG&A of of to some is ago fourth reserve This our third the million within less in XX.X% contributed our trends in levels partially X% driven grew period. the for in for continued in was the and important the reached for delinquencies year within $XX in QX segment. portfolio, GMV to provision was line mentioned to portfolio, and Leasing and payment provide our revenues in by grew $XXX point which retailers $XX.X quarter for growth spending, on versus We XXX for write-offs an increase Leasing offset target. the XX-day driven ago technology previously was stage assets, in year-over-year. the million with that lease higher, of or to Progressive Progressive to driving X.X% and enhance by and year-over-year XXXX. Leasing customers XX.X% expenses. Leasing's saw and marketing norms compared pre-pandemic higher lease-to-own is buyout note This revenue revenue the Now grown, has Leasing's pre-pandemic decline margins by compared color our our by customers' the XX.X% revenues XX.X% It or The GMV driven by quarter partially leased portfolio the Progressive to gross lease QX, levels X% provision activity. the million year merchandise higher was XX.X% period, QX growth in annual in sales levels. customer XX-day in fourth XXXX. segment the the XX.X% and to in in X% corporate experience, and consecutive well continued offset performance. is quarter year. for QX. XX.X% growth buyout Progressive sets historical to write-offs This the investments increasing gross Progressive company public in was write-offs

fourth within for XXXX. of was payment $XX.X period Progressive XXXX for our the that decisioning portfolio of for reflection Leasing purposes, provision to million quarter inform X% We customer to comparison EBITDA our in annual and deliver compared trends investments. monitor same the of segment the was Adjusted X% the to payment $XXX.X performance expect in X.X%. write-offs in normalized quarter to and posture, range SG&A closely trends million customer a fourth For for XXXX,

for we revenues operations As $XX.X consolidated year. for or enter XX% of Progressive cash was XX% working the EBITDA to XX.X% a our is segment full year to million Holdings $XX.X generated of $XXX.X the for XX.X% last fall We revenues to PROG for to period, ago QX $XXX the which Leasing X.X% within annual Adjusted XXXX, historic XXXX, portfolio. increase. QX margins million to million EBITDA target. $XXX.X revenue of in million expect compared for was of or from capital the we year required million results. our Pivoting adjusted compared of to lease net grow

and non-GAAP GAAP diluted our was at Our QX came $X.XX. EPS in $X.XX, EPS

was XXXX, and trailing $X.XX, had million the $X.XX. of our EPS diluted full of X.Xx our approximately our in as came XX GAAP EBITDA. $XXX year cash and $XXX at debt EPS adjusted of We For months gross year-end or the non-GAAP XXXX, million

revolving availability fourth quarter repayment $XX also have of balance million quarter. We of at $XXX credit the undrawn outstanding of the the under million our beginning was that the facility after

for to outlook Turning consolidated XXXX.

to be We $XXX $X.X between $XXX of non-GAAP revenues to to the in to and range million $X.XX billion million, adjusted EPS of the to $X.XX grow $X.XX. to EBITDA expect billion, range in

our segments. As X outlook we divided have Steve XXXX mentioned, into

continued For ranges. adjusted EBITDA million, margins range of expect in Leasing pre-pandemic million in of $X.XX the to asset a customer the EBITDA $XXX portfolio and in payment and activity we adjusted should result the of range $X.XX billion growth segment, in revenues normalization billion, in as Progressive to we that leased to expect $XXX decrease

revenues Vive EBITDA of of to million million, $XX For $XX adjusted $XX $XX we and million. expect Financial our segment, to million

customer also $XX to million. XX% our does losses impacts operations, beyond activity shares repurchases to This $XX macroeconomic related It X.X in investments share outlook negative result to expect we for our approximately to rate, other to normalized assumes financial the our incorporate repurchased and million of payment of the potential Finally, tax not approximately further deterioration EBITDA no performance date. factors. million and adjusted

the the the XXXX that over in minute to operator, talk of began first year-over-year and in to about spread continues the the portfolio now half portion want course Q&A the the for in in over comparisons. growth the year. resulting to into anticipate call. stronger to and back will We Before turn rate operator tougher call EBITDA back over I normalization improvement margins year. half will result of the of leading the EBITDA I outlook our in we comps our XXXX and call of take of year, of the a to GMV half the XXXX the turn the back Operator? The the

Operator

[Operator from Kyle Joseph Instructions] question Our first Jefferies. today with comes

Kyle Joseph

last Steve, you I a point about year, were spending of sugar seeing. kind we're high think at talking this that stimulus

more So from they to that hangover last? long recently this expect is think call the months? I Or is XX needed from last, would my you you how the I bought a consumer guess, inflationary of in shift it, of the guess is, kind so this hangover is lot it do impacts? question And that? what

Steve Michaels

you. thank Kyle, There's in that that goes mixing a Yes, bowl. lot

a came the I it a about Jan we so. for XX QX -- been we last outlook X, of we've will an view -- 'XX, what talking would have with XX.X% days different we'd a I if over if or different GMV perspective probably strong you think from talking experienced what out we be and about a than And growth. our on

high all pressures. into inflationary the it's I think with impact January. home goes just Stimulus, said. of But mixing the staying definitely during you Omicron bowl, it and correlated sugar COVID that people as

February because from where the were we're January we their staff in of reduced said, week stores, even had but We As they sick reports versus and the quarantining. negative improved couldn't we that and have trends. operating people month-to-date hours the retailers slightly they year-to-date,

had is expect, e-comm would you on caused channels. mid-teens our increases our kind But e-com in-store of to overall as so, of actually business, in be the And GMV we negative. the since overall

to -- coming as get back then -- coming environment an have come down we'll the more back counts normalized we -- which case uncertain, are expect we're we that environment. from we're -- comping delayed a to about are very because is So what at as way to most is and a heavy aggressively going the that, hope a against tax demand there's several want. positive good year, people wane that, have pull and But -- which increases next entering our comping season because It's as little well uncertain an will increases improvement have not you out as past we've into stimulus it. we be certainly we I bought demand last pretty said, going forward, this in -- get GMV the some there we the still spend I'm our to -- delayed. move and in they in expect this sure think we stimulus of improvement months, not once and chop to through we're growth. and we're as

Kyle Joseph

it. helpful. Very Got

may comps Just we've that like a on the just and more been of And distracted in at BNPL the bit a partner pipeline partner have point, in retailers, understanding, for the be It's yourselves just with me one you a kind couple kind desire Can getting having us to of seen which you're XXXX? to you it with the your understanding financing environment with demand one distracted and retailers pandemic? in give been this the a since can not. challenging so the and what of on point, is update conversations XXXX follow-up retail pipeline. more like years any a And you add. little onboarding seems with big to my

Steve Michaels

Yes.

can we'll of current it. opportunity partners the there waters, prospective as some a coming them. the You're in chop -- and right high positioned need prospective of goes, we're that's shines are retail COVID, the in well. shines. as more because, been. It business as liquidity the off is very there. for options, our because the as ever it And there And advantage of stimulus We're and when large period about be year the payment it flexible to for several customers about they has And when is of shine as and environment setup take well far next our years optimistic for of point-of-sale

balance we whole with, So previous and to seen that may prioritized new a used of been cycles, we've of their partners, said these retail partners question, into factors to them just solution in of host And not you higher have sale. as current can having drive in dialogue be your it important because more that lean have as have and we times kind help a well. businesses lot drive tool of to new of -- a them a

So environment we're we think pipeline encouraged more and last the conducive years. by that of would in this conversion to would be couple

Operator

The Jason of Bank next question America. comes with from Haas

Jason Haas

My first one is credit on overall just environment. the

some think tightening calls, down. we expectation customers I about year an we funnel which in start last see the that would the talked to some may above few credit more

to sort if if of that timeline you've started that I'm see see over And this year happen? what of So you'll you yet? curious think to not, start some

Steve Michaels

our you're And of above of impacting in core supply environment. should macro what Thank to that talked having sense be then payment the a which about forms. you, just reserves couple bigger us of to phases from kind Jason. and and expect because the a of innings I kind through prime lead But beneficiary -- of on of pretty from tightening kind prongs. common -- to that the from kind be or normal of and customer needing of it can -- early were would stimulus. the that's headwind normal to. One customers; standpoint. more a and I performance experiencing customer then do our two, savings a expect or is kind than within are referring options, a burn a and expect the is the credit this normalization in point-of-sale normal believe we return stack, and our more will come has tell now, just more GMV, that's customers any X quickly, X we removal One it ranges. probably they or customer, what right should And Yes. We've two, we would this write-offs, is, that normal or higher it of of cash you, return

of So off gas as us us, and next change them we've and been above a there the on less be -- will kind will above continues there, we credit year we material application we inflation, it about market. the picked to will FICO as several above prices marginal flow expect in will expect that of, in a supply would right not into continues us. But on, phenomenon inflation as to lag do And stack group as not of get seeing our of date that seen part this of pressure have customers kind happen. by they'll but for now, be we're quarters. But talking the goes that funnel

Jason Haas

Or position this stable? worse compared of you is want more what guidance guess, some customer back need sort what things to get the a rooting going you Or were kind then the of and way independent sort financial to so your to forward, of we the of to you are environment you customer as I it a does? pandemic? drives to is the Do of customer that levels? of prior still to that guess, extra think money? has do And the sort of right guess where economic I think take do we question think usage do pre-pandemic I the for health see do macro you, year? sort maybe sort follow-up into -- to question to I financial ask Or guess, of now lease-to-own? stay you another like, of that. Where we're

Brian Garner

Yes.

into has is pandemic. assume was and get that just I or in has the been is to but as we're we better, say employment Employment like if then it decades. food, There experiencing good So some And think you haven't off, now. the seen wage I customer, inflation, burned relates coming great right. Employment would spent very more pre-pandemic, to of apples-to-apples. the energy housing kind inflation mean been I that stimulus you

probably they're they they're years, under a But been period our their XX little for make of very is to this customer And will adjustments so, -- resilient. overnight, a of normal customer environment. And dealing going time, nearly with over customer I've but and the to back adjust get stress. bit and not

to they're just even they So inflationary has because I'd is were pre-pandemic inflation. some the at of there employment though par more good wage kind pressures, than been slightly stress of and say

-- several our out growing, -- we lease based but in sequentially outlook we that our outlook excited there do on is conversations just -- our other -- As for macro margins But the not right? all far for clearly we're anticipate, having this year with we'll the year well want not for we're to flow based and were the or happen of even environment environment as boats would improvement, know market employment, That and historical we little the on we're this days, as together. last of put applications of XX and is the now. a we earnings good. things working next retailers. macro the haven't and set for little credit less a we're some what business, standpoint. environment, bit and macro on ships, And The about normally money all history the we because Goldilocks the that's Those But have up us a great like supply the we employment But come a from pause the though things immune be raises think that through. don't progresses, outlook in the only years.

Operator

next The James. from with comes Raymond Bobby Griffin question

Bobby Griffin

we generation this to just multiple touch and of report flow I wanted on business, companies first had cash one. the

remarks. in if great you this rate and decent as apologies conversion a same if is guess free that to year's year prepared kind and going assume part cash leverage -- And strong of is this is my really the roughly really guide next second cash I in you take a another flow, then, conversion business. this Or is, conversion that year use addressed if low year of forward? the free XX%, the implied flow But look EBITDA, of at was some there this that that's So abnormal? something at of

want already debt more hold couldn't cash, lot than and buyback don't to the You business more stock shouldn't build a has? like it --

Steve Michaels

flow. of it would of free Yes. Thanks, about our cash can And that in about parts guide 'XX. fall very flow And great self-fund, flow as or about with expect growth and I as tender the nothing was -- -- Like strategy. assume at in high the as abnormal the growth about say in the we 'XX when you cash I execute. free desire timing it shrink was caveat capital is we expect -- we would the meant far to And bring We've 'XX another talked would a generation. I this related even wasn't ability GMV one mean free EBITDA of be but end timing is generative flow, into not -- I it matters. don't rates, the -- if matters. business normal, our generate and convert free would would generation. as year. cash say, the expect one at And business's of strong flow least It this I thought talking is to cap, way year cash to campaign cash and you're there lot return kind that to to shares still Bobby. the when to we

look check M&A, then to our for we fortunate we some -- cash And in changed. priorities haven't allocation would We're which got and shareholders. so box. to growth, We've return that continue that can kind excess organic capital of regard,

cash I So, future, continue potential return that M&A we'll would into shareholders some the and opportunity. to this absent year to expect

X balance We strategic that stay using leverage, to related a turns reasons like of as generation. for for of X.X that's be and that and said to for lot in the got sheet that we have But we us to room position we've strength concerned can't not anybody that fund potential retail as growth. cash partners have well able to to there to

Bobby Griffin

guess question I me. the And Okay. second for

to new today are return a ROI business? see bigger called in pre-pandemic But back in things include of remarks, with maybe out. in getting going from the a and of growth these can pre-pandemic level normal some more other has to either this to mean, the structurally where investments wages SG&A But this operate where that out just have the acquisitions the in Or SG&A is you levels, that wages bit prepared called is just be level it just business that expensive and little start drag I type line there's but the like through going today? above SG&A the some back business to we Four and besides that. You a the future better or levels? --

Steve Michaels

pandemic start Yes. more I structurally and during But, Thanks for expensive. would start saying, in. Brian that. that it's the jump by changed has can I'll there's nothing yes, that just

cost the that the developer for talent With us levels engineers has the customer-centric premier all impacted and from compensation a filling center. professional really war really and exception even across to fact and of contact

-- there. seen pressure we some have there So upward has

XX.X%. end If XX%, you XXXX back at the at and we SG&A of from grew we revenue go XXXX, like grew to

look reflects in investment Now little a of XXXX, than SG&A, headwinds we've GMV because growth expect in the that bit expected revenue if you of experienced at the what where and it for first gates. year later we came the we more And -- has revenue here few continued the you the we a early kind know than just from and GMV on guys as are bigger out that's calendar impact GMV, of we our as of months. recognition, muted

a geared layer, believe, wouldn't we and an acknowledged investment what do have to positive we you for making continue didn't And We're think We ROI. they -- we're for had if we optimized growth. to investments we profit, as not that. refer be these a

as ROI help 'XX as we're of direct-to-consumer plug-ins positive even provide into things to and growth launching that a the products have and and that our e-com 'XX 'XX. We expect retailers -- well and motion, and new developing in even our some will later other in and

to for it is, that long are next the term, has running more prudent So, X. invest We're We're nothing the expensive. those not it for investments. or there's short made quarter and structurally running it the continuing answer think and we

Operator

with is The Loop next Chukumba Anthony from question Capital.

Anthony Chukumba

Rent-A-Center over FirstCash what the are First. then I question we guess buying, guess, XX first CIMA, industry, some consolidation I XX right, and last months, buying to the in seen American have my -- small a even and national that seen that's you that from for kind consolidation partners changed the competitive large XX-XX seeing we've door of with perspective the you've of seen? chains? sort Anything more

Steve Michaels

the feel those before, From fair to They you But It's a little investments volumes it's having Yes. from network and about we well-funded win remains infrastructure industry competitive, a less very multiple balance the more I having, talking actually Catapult, similar believe about an for the that of haven't from I that The believe positive competitive. expect kind as standpoint. a be it's small a record would and perspective I as the drive and don't and optics regulatory and chains. the that consolidation. bit, -- that expect the ability Thank being you, XX got a our that it thing and and said -- you more helps folks reporting we we're for business conversations standpoint, partner I competitors think to positioned XX, for parties, and industry, AFF mean, before, the our this of for have in accounts field a national CIMA we track or talked -- they're But Anthony. levels then like door of and I've -- enterprise about compliance the multiple but we're It our competitive may the always continue. just would that to to standpoint. seen mentioned, and and generally, we the as not well we've speaks and continue to share solution think competitors. we've -- public now accounts, the mentioned, be processes. -- mean because playing pipeline healthy new conversion. is our us sheet it's than I we

Operator

KeyBanc. from question Thomas Next comes with Brad

Brad Thomas

and sales. income and to you been Obviously, a still it on the kind between I wanted metric getting you a its dots all GMV we're it disclosing and back here. became since of statement to connecting the but have stand-alone with circle company, used just relationship

GMV it seems So is growth higher. growth and probably the reported going me that headwind the between revenue to what's biggest the write-offs the

to think as more the the increase perhaps connecting between and any is think And about question GMV. seem seeing to year-over-year, reported so, write-offs not line And get to should it we you're would with it? items? the normalized the in revenue thoughts an I starts on of track guess would right more be, way that that X in those more start those the how dots growth

Steve Michaels

chime revenue I'm but there's here. not -- be a on growth, impact not let say that I'll correlation, or as would write-offs not there's Yes. growth that. -- would not probably reported as in Brian suggesting But revenue have I far an

The receivable the AR -- revenue which contra other accounts I an chat. allowance, revenue, account. is of because on But would allowance, impact side the a Brian I'll it's should the let have allowance or

Brian Garner

Yes.

you're portfolio the will over correlation suit the asset we've then, There's look leased you kind sheet, of as the that of of consumer. the would there little the going feeds couple of never watching we time, of seen more the revenue, XX-day with to balance last have into over the liquidity been metrics asset. because of GMV leased I the fall that think and years asset I balance, have particular, course growth is, between our elevated is a the really buyouts business, bit in revenue. that noise have history given The watch the that leased the analyzing -- that a revenue to on portfolio trends. rates and of levels in

happening, a of getting buyout. as what's the happening revenue lot have we're of so is, in buyouts those that been period recorded And

so, lifted And XXXX that's revenue, revenue. XXXX lifted

starting seeing. are And to days so normalization trail that XX that's that expected. dynamic as part off, you're of

bit of of revenue comps. have impact on the couple last downward to a a So that's your going relative to

see all normalized that you're keep just with things would over revenue line going normal, mind. an [indiscernible]. I to So a in But annual state, return trend in of period, to the in course the as portfolio,

Brad Thomas

you. Got

more buyouts than the the rather write-offs? it's So of normalizing function Brian, XX-day a

Brian Garner

Yes.

operating in expenses. are write-offs the got down -- You've

in the of getting revenue matter fall is AR that back course Steve portfolio. what's think order level, see time at to is in As offset a then But AR with I to to XX certainly and change going reserve, reserve mentioned, over of the the you'll kind days normalized line to start the revenue. in the -- of an magnitude, the and

Brad Thomas

as think we you. GMV the And Got what's the growth, revenue about X% X% about for guidance year? for forecast to the

Brian Garner

And would to or a specifically if guide to we're that to going relationship as back another obviously, the starting didn't of negative we're sizable April, in be GMV, math that here have March GMV stimulus the we're half revenue soft, then We -- you those Brad. last against and order comping little the ranges. be year-to-date the the just within comfortably double-digit months to X slightly you of a and kind there. be X Yes, of there's a and but can in kind imply growth in of year in the year

this is applications if expected before retail impacted months robustness, just roughly Kyle, and which this chat expectation get we a as have several strong our we mentioned to and -- XXXX, we So level. get -- I we were If would that's where Omicron were in GMV and -- through to -- next we that were those levels. is back having really

Brad Thomas

quarters pretty conditions of anybody guess, the was, housekeeping mean, range? -- as being X% been of more XX% get on, quick XQ Or you at how we to to the to getting normal still EBITDA we I last back in write-offs where probably the we're more as items, -- think might quarters, kind a have write-offs know other middle about normal just quarter I margin to that expected. normal I look been we I'm X% would of quarter issues first of the Is of the of have X that of of the couple kind A a to you than were still helpful. to as third this normalize we a just I you that think faster of a having normal think or of and kind XQ of, few off normal even if and return we need at I quarter? to Really we've if comping of curious part narrative and the there's getting here. and would Yes. bit could. earnings margins trend got think that normalization? be

Steve Michaels

Yes.

et That's flows think XX-day, in the yield was before. overall duration of portfolio. lease the our and that throughout seeing And have think levels, function and control like on feel and -- we've important pre-pandemic and over high we it's certainly we any are respect remarks, variability and it prepared life portfolio the the portfolio some But the of I we think dynamics, a of my some Average targets, are through. over -- about And a cetera. that it's X outcomes, is certainly, think remember annual year a the I step months. these mentioned I annual right. to seasonality given just I you're when hit see that's this the direction. things. -- to we I as And short talk to of you important delinquency We of trends in couple degree But basically reach the targets. a note, with

make to decisioning the direction. a We changes a winds different make We sense economics. we able with so, And things. our sure those blowing to line start we stay start got to are see desired bit of in little really to posture. We're in

to a And XXXX, normal focused XX%, start to of maintaining and portfolio. saw we very as return a we in trends we start back always as get place watching real that indicators XX% that towards have are to path those and bonds delinquency to on the those we so, to we'll be see

Brian Garner

also upside potential gross about that's buyout from level. of there's on of and some puts talked margin there's to that, just normal. the is a dynamic, what -- some right of SG&A, kind that Brad, would takes. that, consider near I There'll add, XX-day QX kind be write-off due We we but and that middle standpoint range, in that

on low We're things that's margin So and to thinking the guide the segment, high standpoint. around are about XX% those to EBITDA somewhere an low have high, Progressive range consideration. for even -- annual into you take the from still Leasing the for to range -- that

Operator

question Young comes next The with Michael Truist. from

Michael Young

just your whether with be share with the buyback on any limit -- start or repurchase, kind in terms of to Are of it ability limiters you other revolver that the like Board touched kind to float wanted can capacity. additional be leverage aggressive there anything levels, Are the you've would cash be that on aggressive how any there share here? I considerations of and availability under ratio.

Steve Michaels

Thanks the Michael. for question, Yes.

range, in thing analysis. point stated would our X.X it's -- of not that our time, think obviously, driving leverage but that that I be to kind is the turns of most the a lens really and would the the comfort and X that's into level that in would be go

some have We way they're but covenants, financial higher our comfort than level.

business not would to levels, think do the expiration part So continue bring Float the reflected. are you value be into the the properly saw, that of we and since being bought of that we -- of that at not believe is as would something analysis. these we always shares the stock that tender, back the and the of consideration. But

it's good So a investment.

the the out that powder going and have to generative that sheet revolver. there. do have far we're unserved keep do dry continue have on do as to we we cash, So, as aggressiveness, balance because opportunity TAM of we cash that's But abilities, to grab

Michael Young

to even you Okay. levels? still be just these M&A the clear, mean, at pursue you with stock And would

Steve Michaels

would stock put -- that we would our would be the I view and against. a up hurdle mean, that on Well, M&A its ROI some

wouldn't part higher. the with these the be I but So it everything -- of be It -- be it it's hurdle would levels, would M&A not makes analysis. M&A, And wouldn't foreclose blind.

Michael Young

enough. growth in quarter the seems Fair down, first pushing if lot in things things are there's last It one either of here about the snap as for the since the we And or range we positive the What to think whole the are result of so obviously, me, just could the far? about upside Omicron. or back. end Okay. could the kind we've that of of negatives kind with that a talked upside drivers the move range, like high year, throughout of sort the potential

Steve Michaels

really too, about because Yes. even that. positives, like the I'd business, for we're Thanks notwithstanding on the focus this bullish start. to

the branding ways to being I e-com promotional, lot use our remarks it or We talking hope I embraced as legs, make think the have by we fix quicker But our it touched the supply -- that somewhat. also customer, I our will They're on will is as is to partners products figure Retail, said, flow retailers. great co-marketing, marketing, in internally to customer and experience at our in technology, point-of-sale, really has my of better the retailer's -- and and our remarks. chain some and going out. heal on resilient. -- as that will about, a to our things or and enhancements be of far they -- our great we're

for and big us, opportunities only for that we've the does value got And I -- ecosystem and drives our we've bring of about think a our value number to really database it the it our GMV bear not we there. as but partnership that of talked retailers. cements things, of

that that we to them. serves valuable. more that more make retail enterprise continue and incremental We customer But we provide partner more into much channel to durable with really these to more driving believe is these how the can large environment we're powerful. and Showing data partnerships acquisition the partnership their accounts, very

our slip being things We're So, term, sometimes. we like, a -- certain in got those are of marketing of tech calendar quarters. the calendar things think lack certain a for Those We've with that realists. types better a we've things got partners. prioritization slotted for a in, --

and the we'll business and good certainly ways being us, to drive drive of it a be how managing macro, both can the but beyond. where But executing, on for we're are business and little to back happen So in sitting looking and feel we're and us. subject We're for 'XX back for much our half conservative GMV. to that we about to certainly not retailers waiting

Operator

The Stephens. comes next Vincent with question Caintic from

Vincent Caintic

Just some kind of follow-ups. quick

of GMV, of we first quarter be because people seems the And I and tougher, expecting talked initiatives on you've in grow far. the remarks of know you're partners, I And trend first that's half -- appreciate some you to confirm year. integrating second in and perhaps for sort you're given a of could Maybe but for year, it, of on half online as to discuss that you I the of -- about should So, the the down GMV it then -- sort basis sort the then of taking, just developing so sort sort things, complementary like fintech your that. color the the the are the and so kind platforms, to XXXX, of with wanted sensitive impact well? products. year-year example, just expect of if prepared you

Steve Michaels

which tough. negative. guiding Vincent. slightly mean here Yes, I risk sitting Definitely, the is quarterly at -- Yes. GMV, Yes, -- QX Thanks, we're of is

and seen the also would an dealing negative expect on. from sequential year, going stimulus against improvement be in have GMV the last but with first that we for to uncertain of We tax as we're some the but move expect years. season half improvement, not I comping quarters

of bought and drive help we excited forward GMV. fintech these back about I as -- complementary we We're that and drive it comments investments to months. over development several as slash can think, testing, talking relates believe about them lease other the specifically they're so -- my We to kind last in to and shakes and year, out as where that more then about well you next products. our look to business them. -- Brad stages other of math the to various They're And in-store

cards. XXXX, for the in As there years, in not will have But far as meaningful leasing strong over believe the the -- in several do our -- that's a probably they GMV segment. the in next growth participation impact we

Vincent Caintic

sort are of, then, about you drive investment? -- now? the the you're making GMV. talk are extent maybe that of then is you're think to XX% margins investments for And maybe, Should how Okay. of can prone GMV. EBITDA investments but to some guardrails putting you're at spent looking any well that the sort could of above there you sort XX% investments as the get particular And if the And around you you're to bogey about

Steve Michaels

business -- term. those within the We're not range. for XX% both embedded integrations on within run e-com the outlook. running other we Well, I the also believe only they then They're XX% have captured We're mean, to SG&A, in the manage PROG that's complementary happened of and understand customized the outlook. prudent. outlook. to to kind in we're But that And as Holdings the and But bucket are the a our control. guideposts. have from the basis. also have the the really go innovation that things PROG do something quarter-to-quarter into consumer platforms, plug-ins, motion, be some these and of it not in business, that embedded direct we we We standpoint, control running investments long it investments on other about, be those these as LTO products over our leasing the we are but the of in talking are to the look certainly of SG&A the an we'll marketing, the at back outlook to far better the investments, whether product, leaning some we're that fintech just

Operator

follow-up Anthony The Loop with Capital. is a next question from

Anthony Chukumba

quick answers with partners? your any and some just big e-commerce kind Just retail of this one, your of a previous a addressed you've in questions. to your integrations But update of bit real terms little in the

Steve Michaels

this already in we'll XXXX. there, our in the and as the and with a they plans key XXXX, aren't about continue The make better. is XXXX, to in being I that good we tech in, got But earlier, quarter, -- transactional right. in spot. process we've don't progress kind were basically stop XXXX. bright made We've We ones enhanced launched E-comm try retailers got Anthony. slotted of as mentioned priority, that Yes, and in

grew was QX. GMV in It the As XX% XXXX. it it in in mentioned, we quarter was of -- XXX%

they than we'll because faster grow don't in to interact choose We GMV. past, overall what to customer that as channel I've the the target, expect continue a We the have want said, we expectation in that's from my it what basically with because for. that But us 'XX and will customers that on. that, XXXX, retailers higher came it's XX.X% of GMV be asking are e-comm, for

Operator

question-and-answer concludes Michaels session. remarks. conference would for back the to I This our turn any over now like closing Steve to

Steve Michaels

our with thank customers, continuing to look family having today. for to couple and We of our taking as communicate and joining forward on. a care to again Thanks the We you about guys XXXX ramp, year for of there all you talk XXXX to PROG the months. plans we'll us in you out goes

Operator

now has for conference concluded. presentation. attending today's you This Thank

disconnect. now may You

PROG (PRG) 23 Feb 222021 Q4 Earnings call transcript