PROG Holdings’ third quarter was shaped by resilience in its core leasing business and rapid expansion in its buy now, pay later (BNPL) segment. While overall sales declined year over year, management attributed the results to persistent consumer stress in lower-income segments, the impact of the Big Lots bankruptcy, and deliberate tightening of lease approvals to protect portfolio health. CEO Steve Michaels highlighted, “This quarter’s outperformance reflects the discipline of our team, the strength of our business model, and our ability to execute through macroeconomic volatility.” The company also benefited from operational improvements and continued growth in omnichannel and e-commerce channels, helping partially offset macroeconomic headwinds.
Is now the time to buy PRG? Find out in our full research report (it’s free for active Edge members).
PROG (PRG) Q3 CY2025 Highlights:
- Revenue: $595.1 million vs analyst estimates of $586.1 million (1.8% year-on-year decline, 1.5% beat)
- Adjusted EPS: $0.90 vs analyst estimates of $0.74 (21.6% beat)
- Adjusted EBITDA: $67.03 million vs analyst estimates of $59.99 million (11.3% margin, 11.7% beat)
- Adjusted EPS guidance for the full year is $3.40 at the midpoint, beating analyst estimates by 1.9%
- EBITDA guidance for the full year is $261.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 15.9%, up from 8.1% in the same quarter last year
- Market Capitalization: $1.25 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From PROG’s Q3 Earnings Call
- Kyle Joseph (Stephens): Asked about consumer portfolio health amid macro volatility. CEO Steve Michaels explained that write-offs improved due to earlier tightening, but elevated delinquencies and liquidity pressures in their customer base remain a concern, with ongoing monitoring for further adjustments.
- Bobby Griffin (Raymond James): Queried about potential trade-down effects from higher credit tiers and GMV cadence. Michaels noted no evidence of additional tightening or loosening from suppliers above PROG, and described Q3 as pressured by persistent macro headwinds and lower September activity.
- Anthony Chukumba (Loop Capital Markets): Sought details on new retail partners and capital allocation after the Vive sale. Management declined to name partners but indicated they are recognizable brands, and reiterated a disciplined approach to capital allocation prioritizing growth, strategic M&A, and shareholder returns.
- Hoang Nguyen (TD Cowen): Asked about the rationale for not tightening further amid rising consumer stress. Michaels and Garner said previous actions have strengthened the portfolio, with improved gross margins, and emphasized ongoing vigilance using granular data indicators.
- Vincent Caintic (BTIG): Inquired about underwriting posture and BNPL profitability at scale. Michaels described a flexible, data-driven approach to tightening and said four Technologies’ margins should improve with scale, aiming to match leading public BNPL peers over time.
Catalysts in Upcoming Quarters
In upcoming quarters, key catalysts include (1) the ramp-up of new and recently renewed retail partnerships and their impact on GMV growth, (2) execution on omnichannel and direct-to-consumer initiatives, especially in the BNPL segment, and (3) the redeployment of capital from the Vive divestiture into growth, strategic M&A, or shareholder returns. Monitoring consumer health and macroeconomic trends remains a key priority.
PROG currently trades at $31.49, down from $32.76 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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