PROG Holdings, Inc.

and thank you for standing by. Welcome to the Brock Holdings Third Quarter Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, John Bump, Vice President of Investor Relations. Please go ahead.

Thank you and good morning, everyone. Welcome to the Prague Holdings Third Quarter 2025 Earnings Call. Joining me this morning are Steve Michaels, Prague Holdings 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, investor.progholdings.com. During this call, certain statements we make will be forward-looking, including comments regarding our revised 2025 full-year outlook and our guidance for the fourth quarter of 2025, the health of our lease portfolio and our capital allocation priorities, and the benefits we expect from our sale of the Vibe financial portfolio to Atlanticus Holdings Corporation, such as improving our capital efficiency and improving our profitability profile. 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. With that, I would like to turn the call over to Steve Michaels, Prague Holdings President and Chief Executive Officer.

Steve? Thanks, John, and good morning, everyone. Thank you for joining us today as we report our third quarter results and share our perspective on how we're positioned heading into the final stretch of 2025. I'll also provide context around the recently announced sale of our VIVE portfolio and how that decision aligns with our long-term strategic priorities. In the third quarter, we surpassed the high end of our outlook for revenue and earnings. These results were driven by continued strength in portfolio performance, and strong momentum within our BNPL business for technologies. Non-GAAP diluted EPS of 90 cents exceeded our outlook range of 70 to 75 cents per share, marking our third consecutive earnings beat this year. This quarter's outperformance reflects the discipline of our team, the strength of our business model, and our ability to execute through macroeconomic volatility. Throughout the quarter, we navigated persistent consumer challenges marked by ongoing inflationary pressures, growing financial stress among lower-income households, and early signs of labor market softening, all of which impact discretionary spend in our leaseable verticals. While the overall unemployment rate is still low, the heightened financial stress and greater caution among lower-income consumers across our leaseable categories is a headwind to GMV. As I shared in July, two primary factors weigh on progressive leasing GMV this year, including in the third quarter. The first is the previously-disclosed Big Lots bankruptcy, which created a significant GMV headwind. The second is our intentional tightening actions of lease approvals, a necessary step to preserve portfolio health in an unpredictable environment. Adjusting for these two discrete items, underlying GMV in Q3 grew in the mid-single digits. reflecting strong operational execution and healthy demand across other areas of the business. We are growing balance of share with key retail partners, strengthening existing relationships, and scaling our omnichannel ecosystem. As Brian noted in July, we expected approval rate comparisons to ease slightly in Q3, and they did. Our progressive leasing two-year GMV stack improved from negative mid to low single digits in the first half of the year to flat in Q3, which had the toughest year-over-year compare given the strong growth in Q3 2024. These trends give us confidence in the durability of our go-to-market strategy and the long-term scalability of our platform. Progressive leasing's portfolio performance remains strong and within our targeted 6% to 8% annual write-off range. Q3 write-offs at 7.4% improved both sequentially and year over year. These results reflect the success of our ongoing refinements to our decisioning posture and risk analytics. We are encouraged by the early stage performance indicators and believe we can deliver consistent portfolio outcomes while driving profitable GMV. Consolidated revenue came in at $595.1 million, which reflects a slight decline compared to the same period last year. This result was driven by the impact of the Big Lots GMV loss and a smaller portfolio entering the quarter for our leasing business, offset by another standout quarter from 4 Technologies, which again delivered triple-digit revenue growth. Consolidated adjusted EBITDA was 67 million, and non-GAAP EPS was 90 cents, both exceeding the high end of our outlook. Before diving deeper into the Q3 business results, I want to take a moment to address today's announcement regarding the sale of our Vibe Financial credit card receivables portfolio to Atlanticus Holdings Corporation. This transaction represents a meaningful step in our long-term strategy to improve our capital efficiency as we focus on opportunities with the greatest economic returns. While Vibe has been part of our ecosystem since 2016, we believe this decision enhances our overall profitability profile and positions us to deploy capital more effectively. We're pleased to be partnering with Fortiva, the second look credit offering of Atlanticus, to ensure continuity for our retail partners and consumers, allowing us to maintain access to a comprehensive set of flexible payment options to underserved consumers while aligning our resources with the future of the Prague platform. The sale of the Vive receivables portfolio strengthens our balance sheet, giving us additional flexibility to invest in strategic priorities. Brian will speak to the capital implications shortly, but I want to underscore that we are committed to deploying capital in ways we believe will drive sustainable shareholder value through investments in growth, strategic M&A, and disciplined return of capital through share repurchases and dividends. I want to take a moment to thank the entire VIVE team for their contributions. Their hard work and commitment played a critical role in helping us serve customers who may not have otherwise had access to credit. and we're proud of the positive impact they've made. We made every effort to support VIVE team members through this transition, including identifying some opportunities within the broader Prague Holdings organization. We wish them all the best as they move into this next chapter. Pivoting back to the business, we made significant progress on our strategic pillars of grow, enhance, and expand in Q3. Under grow, we continue to ramp direct consumer performance saw strong returns from our omnichannel partner marketing initiatives and increasing e-commerce penetration. Our marketplace team also onboarded additional affiliate and e-commerce partners. E-commerce GMV is at 23% of total progressive leasing GMV in Q3 2025, up from 20.9% in Q2 and 16.6% in Q3 2024. Additionally, we launched or signed three recognizable new retail partners since our last earnings call, each representing GMV expansion opportunities. These exclusive partnership wins were all earned through a competitive selection process. Progressive leasing prevailing in each of these competitive processes underscores our leadership position, the strength of our value proposition, and our ability to drive incremental sales. Our pipeline is healthy, with a focus on converting near-term opportunities and deepening engagement with existing accounts as we expand our footprint across both national and regional segments. We strengthened our position within existing retail relationships by extending long-term exclusive agreements with several of our major national partners, reinforcing our role as their exclusive lease-to-own provider. We have successfully renewed nearly 70% of our Progressive Leasing GMV to exclusive contracts reaching to 2030 and beyond. With these additional renewals in place, we can focus on integrations and accelerating our initiative roadmap with these partners to drive future growth. As I've mentioned previously, Millennials and Gen Z make up a growing share of our customer base, and we're evolving our marketing, product design, and engagement strategies to meet the expectations of these digitally savvy consumers. Their strong preference for mobile and self-service is driving increased adoption of our digital application flows and mobile platform, emphasizing our omnichannel strategy and validating the investments we've made in personalization and seamless user experiences. Prague Marketplace, our direct consumer platform, remains a meaningful growth engine. delivering another quarter of strong double-digit GMV expansion. This channel not only broadens our reach beyond traditional retail partnerships, but also plays an increasingly important role in building relationships with consumers and enabling us to direct consumers to our POS partners through a new channel. We're investing in brand building, personalization, and lifecycle marketing to increase customer engagement, we're seeing encouraging trends in repeat usage and retention as a result frog marketplace is helping us create a more durable and self-sustaining customer ecosystem one that supports growth across our leasing bnpl and cash advance offerings alike under our enhanced pillar we made strategic investments in technology that improve both customer and employee experiences across the progressive ecosystem our innovation team at Prague Labs is at the forefront of these efforts. Our AI-powered transactional consumer chat platform has now handled over 100,000 customer interactions, supporting customers from the approval stage through conversion and into the servicing of their lease agreements. We're proud of how this tool is already enhancing our ability to deliver timely, personalized support, and it's reducing friction in our service model. With new capabilities introduced in Q3, Customers can now make payments, request approval amount increases, and inquire about the account status directly within this chat platform. These initiatives are already proving valuable, but we believe we're still in the early innings of what's possible. We expect these AI-driven capabilities to be a key differentiator as we scale customer personalization, drive efficiencies, and set the bar for digital innovation in lease to own. Under our expand pillar, our multi-product ecosystem is maturing with growing connectivity between offerings. Our cross-marketing campaigns between four and progressive leasing have proven effective in increasing repeat usage and driving incremental GMV. Turning to our BNPL platform, Four Technologies has exceeded expectations once again, delivering its eighth consecutive quarter of triple-digit GMV and revenue growth. As we first shared last quarter, engagement trends are strong, with average purchase frequency of approximately five transactions per quarter for the last year and more than 160% growth in active shoppers year over year. We are seeing strong momentum in unique shoppers and merchant relationships driving high engagement across the platform, contributing to overall GMV. Additionally, our four plus subscription model continues to be a key driver with over 80% of GMV coming from active subscribers. Importantly, 4's take rate of approximately 10%, defined as revenue generated as a percentage of GMV over the trailing 12-month period, is a strong indicator of monetization efficiency. 4 has operated profitably year-to-date, and its role in our broader ecosystem is expanding meaningfully, not just as a standalone business, but as a cross-sell driver for progressive leasing and as a catalyst for customer acquisition. From a profitability standpoint, 4 generated year-to-date adjusted EBITDA of $11.1 million through Q3 2025, representing a 23% margin on revenue. As we look ahead to Q4, we are forecasting an adjusted EBITDA loss driven by seasonal dynamics that require an upfront provision for credit losses for new originations. Despite this anticipated Q4 loss, we believe 4 will have positive adjusted EBITDA for the year. Given that the peak holiday season will account for more than 20% of Ford's full-year GMV, this provision creates a timing impact on profitability. This pattern is well understood and consistent with our operating model. As these holiday originations generate the majority of their revenue in Q1, we expect to see a meaningful rebound, positioning Ford to deliver its highest quarterly adjusted EBITDA margin of the year in Q1 of 2026. Looking ahead, we're closely monitoring the macro environment, especially as consumers face ongoing liquidity constraints and shifting spending behavior. The demand environment remains soft across many durable goods categories, which will likely continue in Q4. That said, we're not waiting for the environment to improve. We're leaning into the areas we can control, portfolio health, discipline spending, deepening partner engagement, and driving sustainable, profitable revenue through our multi-product ecosystem. Our capital allocation priorities are unchanged. We're investing to drive long-term growth through sales initiatives, marketing investments, AI and other innovation, digital infrastructure, exploring strategic M&A opportunities that strengthen our ecosystem, and returning excess cash to shareholders through share repurchases and dividends. We did not repurchase shares during the quarter due to ongoing discussions with Atlanticus regarding the sale of the Vibe portfolio. Those discussions, which began in January, progressed to a stage in Q3 that restricted our ability to be in the market until the transaction was publicly announced. As Brian will outline, we ended Q3 with a strong cash position and generated meaningful free cash flow, reinforcing our capability to fund growth while maintaining financial flexibility. To close, we are confident about how we're executing across the business. We delivered strong earnings, improved portfolio performance, and successfully executed the strategic divestiture of a portfolio business, allowing us to reallocate capital towards our highest conviction opportunities. At the same time, we are building momentum in our fastest growing segment for technologies. I'm proud of what we've accomplished this quarter and confident in our ability to sustain this momentum into the future, which we expect will create long-term value for our customers, partners, and shareholders. With that, I'll turn the call over to Brian for more details on Q3 results and our 2025 outlook. Brian?