PROG Holdings, Inc.

good day and thank you for standing by welcome to the prog holdings q4 earnings conference call at this time all participants are in 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 that your hand is raised to withdraw your question please press star 1 1 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 Ball, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to the Prague Holdings fourth 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 2026 full year outlook and our outlook for the first quarter of 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 that 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 10th at 8.30 a.m. Eastern Time. Please reach out to me at john.baugh at pragholdings.com for details on how to participate. With that, I would like to turn the call over to Steve Michaels, Prague Holdings 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 remained 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 e-commerce penetration, and built momentum at Prague Marketplace, our direct consumer motion. While leasing faced some headwinds, we saw important tailwinds at our buy now, pay later platform, 4 Technologies. 4 delivered triple digit GMV and revenue growth throughout the year. 4 continues to scale organically with strong consumer engagement and improving unit economics, and it is playing an increasingly important role in our ecosystem. We also made meaningful progress in cross-selling our products. MoneyApp, our direct-to-consumer mobile cash advance business, and 4 drove approximately $45 million of incremental leasing GMV in 2025, up from $23 million in 2024, as customers who engaged 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 VIVE portfolio, a decision that aligns with our long-term priorities around capital efficiency. VIVE is reflected 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 complimentary growth platform that 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 Prague for sustainable, profitable growth. Before I address consolidated full-year results, I want to take a step back and 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 Prague 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 Prague across multiple entry points and how that engagement ultimately drives long-term value creation. For the full year of 2025, consolidated GMV, which includes progressive leasing and IV, grew 12.1%, supported by IV'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 tradeoffs. At a consolidated level, adjusted EBITDA from continuing operations for 2025 was $269 million, which beat the high end of the outlook we provided in October, was essentially flat the 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 generated strong free cash flow to reinvest in the business and return capital to shareholders. Moving to strategy, as our business has evolved, so has the way we think about our three strategic pillars. grow, enhance, and expand. While the pillars themselves remain the foundation of our strategy, the way we execute against them is increasingly shaped by our multi-product platform. Rather than viewing leasing for money app and purchasing power as standalone products, we operate the business as a connected platform where growth, customer experience, and 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 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. Prague Marketplace expanded meaningfully in 2025, delivering approximately 82 million in GMV, nearly doubling year-over-year and exceeding our previously communicated target. Additionally, our e-commerce channel scaled, with e-commerce GMV reaching an all-time high of approximately 30% of total progressive leasing GMV in the fourth quarter of 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, and 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 million of leasing GMV generated through marketing to for and money app customers during the year, which on a standalone basis would rank as a top 10 retailer within the Prague leasing platform, underscoring the power of a connected approach. Under the enhanced 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 Prague 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 backend systems through an ERP implementation, optimized our usage of cloud-based resources, and enabled faster product iteration, delivering more consistent experiences, and better use of customer and decisioning data. Additionally, our innovation team at Prague Labs is at the forefront of customer experience through the use of AI. As we look back on 2025, I want to highlight how AI has moved from an area of experimentation to one of real impact across the business. This was the year where AI became embedded into several aspects of how Prague 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, in 2026, we are focused on enabling our people. More than 600 knowledge workers have access to secure AI tools for everyday use and 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, and long-term value creation. Using AI as a lever to make Prague faster, smarter, and more scalable. Enhancing the experience is not just about usability. It's about trust, repeat engagement, and creating 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 out. This allows us to preserve access responsibly by improving overall outcomes. Four scaled rapidly, delivering approximately 132% revenue growth in Q4 and 170% for the year. Q4 was the ninth consecutive quarter of triple-digit GMV in 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 168% year-over-year, representing a healthy leading indicator of platform expansion. Additionally, our 4-plus subscription model is a key driver, staying consistent with over 80% of GMV coming from active subscribers. Four's take rate of approximately 10%, defined as revenue generated as percentage of GMV over the trailing 12-month period, is an indicator of monetization efficiency. From a profitability standpoint, four generated adjusted EBITDA of $9.9 million in 2025, representing a 13.5% margin on revenue. MoneyApp approached breakeven adjusted EBITDA as it exited the year, reflecting improving standalone 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 Prague. 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 Prague 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 deliberate and connected. This is how we are building a more resilient, scalable Prague, 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. Frog Marketplace and our direct-to-consumer channels, including four, continue to scale, expanding customer reach and long-term strategic optionality. Importantly, we begin 2026 with a leaner cost structure following SG&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 will reinvest in the business following our three-pillared strategy to grow, enhance, and expand with an emphasis on our multi-product offering. We believe this approach, spanning leasing, for, money up, and purchasing power, positions Prague 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 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 2 times. Before I close, I'd like to welcome Lee Wright to the Prague 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 Prague. 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 four. 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?