Yahoo Finance PROG Holdings Inc (PRG) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges ...
Revenue: Q1 2024 revenue exceeded expectations, reaching $641.9 million, a 2% decline from $655.1 million in Q1 2023.
Net Income: Earnings exceeded the high end of the outlook, with non-GAAP EPS at $0.91.
Gross Margin: Q1 2024 gross margin was 30.5%, down 120 basis points from Q1 2023.
Adjusted EBITDA: $72.6 million in Q1 2024, compared to $89.7 million in the year-ago period.
GMV: Ended flat year-over-year for Q1, exceeding low single-digit decline expectations.
Free Cash Flow: Generated $136 million in cash flow from operations in Q1 2024.
Dividends: Paid a quarterly cash dividend of $0.12 per share on March 28.
Share Repurchases: Repurchased approximately 781,000 shares at an average price of $31.31 per share.
Portfolio Performance: Q1 portfolio yield for Progressive Leasing was better than expected.
Lease Merchandise Write-offs: Provision for Q1 was 7%, within the annual targeted range of 6% to 8%.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide insights into the GMV trends through the first quarter and your outlook for the second quarter? A: Steven Michaels, President and CEO, explained that the GMV trends saw some ebbs and flows, starting sluggish in January but rebounding in the latter half of February. The quarter ended with GMV flat year-over-year, which was a positive outcome compared to the initial low single-digit decline expectation. For the second quarter, the company is confident about achieving low single-digit GMV growth, influenced by positive performance and the shift of the Easter holiday.
Q: What impact do you anticipate from the CFPB's year late fee proposal on POS financing? A: Steven Michaels noted that the proposal's impact is still uncertain. However, he believes it could lead to a reduction in credit supply above PROG Holdings in the stack, which might be positive for the leasing business due to a potential increase in customers seeking alternative financing options.
Q: Could you discuss the competitive landscape, particularly in terms of share gains or pressures from other lease-to-own and financial services providers? A: Steven Michaels described the market as bifurcated between enterprise accounts and the SMB or regional space. While the regional space remains highly competitive, PROG Holdings is focused on gaining share both there and in the enterprise segment. He also noted neutral to tightening trends in subprime supply, which could be favorable for PROG Holdings.
Q: How are technical integrations and marketing initiatives with retail partners contributing to GMV growth? A: Steven Michaels highlighted successful deeper integrations with retail partners, including credit stack waterfalls and e-commerce card integrations, which have helped gain balance of share and make partnerships stickier. Marketing efforts, particularly in direct-to-consumer campaigns, have also driven significant growth by increasing customer acquisition and retention.
Q: What drove the GMV growth observed in the quarter, and how do you see the mix affecting future growth? A: According to Steven Michaels, the growth was not driven by ticket size but rather by an increased need for flexible payment options among the traffic that did occur. Key factors included better prioritization within existing retail doors and new technical integrations that facilitated transactions, especially in e-commerce.
Q: Can you provide more details on the marketing successes that helped you gain GMV balance of sales with key retail partners? A: Steven Michaels elaborated that the company's partner marketing department has been effectively embedded within retailers' marketing teams, leading to joint promotional campaigns that benefit both parties. These efforts are complemented by sophisticated direct-to-consumer marketing strategies that drive both new and repeat customers to partner locations, enhancing GMV growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
