PRG Q3 Deep Dive: BNPL Momentum and Portfolio Divestiture Shape Outlook

Financial technology company PROG Holdings (NYSE:PRG) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, but sales fell by 1.8% year on year to $595.1 million. On the other hand, the company’s full-year revenue guidance of $2.42 billion at the midpoint came in 2.1% below analysts’ estimates. Its non-GAAP profit of $0.90 per share was 21.6% above analysts’ consensus estimates.

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StockStory’s Take

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.

Looking ahead, PROG Holdings’ guidance is influenced by a challenging consumer environment and the strategic sale of its Vive Financial credit card portfolio. Management emphasized plans to focus capital on high-return growth opportunities, including investments in technology, direct-to-consumer platforms, and further integration of BNPL offerings. CFO Brian Garner noted, “Our revised outlook assumes a difficult operating environment, soft demand for consumer durable goods, and no material changes in the company’s current decisioning posture.” The company is closely monitoring consumer liquidity and spending, while leaning into technology enhancements and new retail partnerships to drive future growth.

Key Insights from Management’s Remarks

Management pointed to several factors impacting results, including external consumer pressures, portfolio adjustments, and the ongoing evolution of their business model and partnerships.

• Consumer headwinds persist: Ongoing inflation and financial stress among lower-income households pressured demand for lease-to-own products, with management noting early signs of labor market softening affecting discretionary spend.
• Portfolio adjustments for risk: The company implemented tighter lease approval standards to maintain portfolio health, resulting in improved write-off rates but constraining gross merchandise volume (GMV) growth in key segments.
• Divestiture of Vive Financial: The sale of Vive Financial’s credit card receivables to Atlantica Holdings was described as a strategic move to improve capital efficiency, enabling redeployment of resources to higher-return opportunities and strengthening the balance sheet.
• Omnichannel and digital growth: E-commerce and direct-to-consumer channels continued to gain share, with e-commerce now representing 23% of Progressive Leasing’s GMV. New retail partnerships and renewals contributed to future growth potential.
• BNPL segment momentum: The four Technologies BNPL platform delivered another quarter of triple-digit revenue growth and increased profitability, with high engagement, strong customer retention, and a growing share of GMV from active subscribers.

Drivers of Future Performance

Management expects macroeconomic uncertainty, evolving consumer behavior, and strategic capital redeployment to shape results in the coming quarters.

• Macro and consumer trends: Ongoing inflation, consumer liquidity constraints, and cautious discretionary spending are expected to impact demand for lease-to-own and BNPL products. Management is monitoring these trends closely and may adjust underwriting as needed to protect portfolio quality.
• Capital redeployment post-divestiture: Proceeds from the Vive sale will be directed toward growth initiatives, including technology upgrades, digital marketing, and potential M&A, with excess capital potentially allocated to share repurchases or dividends if organic and strategic opportunities are limited.
• Retail partnerships and product integration: New retail partnerships and deeper omnichannel integration are expected to drive GMV growth, while cross-selling between the leasing and BNPL customer bases is anticipated to enhance engagement and monetization. Management is focused on improving productivity in newly onboarded retail partners and deepening relationships with existing accounts.

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 $32.58, in line with $32.76 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

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