PROG Holdings management said 2025 results met or exceeded the outlook it provided in late October, as the company navigated a challenging retail and consumer backdrop, disruption tied to a major partner bankruptcy, and deliberate tightening of underwriting in its Progressive Leasing business to protect portfolio performance.
On the company’s fourth-quarter earnings call, CEO Steve Michaels said leasing gross merchandise volume (GMV) declined 8.6% for the full year, pressured by the bankruptcy of a large retail partner and the company’s intentional tightening of approvals. However, Michaels said that when adjusting for those two factors, underlying leasing GMV grew in the mid-single digits in 2025, supported by share gains with key partners, ramping new partner activity, rising e-commerce penetration, and growth in PROG Marketplace, the company’s direct-to-consumer channel.
Shift toward ecosystem metrics and Four’s growth
Management highlighted increasing cross-sell across products. Michaels said MoneyApp and Four generated about $45 million of incremental leasing GMV in 2025, up from $23 million in 2024, as customers using those products increasingly opted into leasing when it fit their needs.
Four also posted what management described as sustained rapid expansion. Michaels said Four delivered about 170% revenue growth in 2025 and about 132% revenue growth in the fourth quarter, marking the ninth consecutive quarter of triple-digit GMV and revenue growth. He also noted engagement metrics, including average purchase frequency of about five transactions per quarter, active shoppers up more than 164% year-over-year, and new shoppers up about 168%.
Portfolio tightening and segment performance
Michaels said the company’s tightening actions in Progressive Leasing achieved their goal of protecting portfolio performance. He reported full-year write-offs remained within the company’s 6% to 8% targeted range and that gross margin expanded year-over-year as portfolio yield improved.
Chief Financial Officer Brian Garner provided fourth-quarter details, noting that Vive, which PROG sold in October, is reflected as discontinued operations. For continuing operations, Garner said fourth-quarter consolidated revenue was within the company’s October outlook range and that adjusted EBITDA of $61.5 million and non-GAAP EPS of $0.74 exceeded the high end of that outlook.
Within Progressive Leasing, Garner said fourth-quarter GMV declined 10.6% year-over-year, driven primarily by the Big Lots bankruptcy and intentional tightening actions. Excluding about $40 million tied to Big Lots and about $30 million related to decisioning, he said underlying GMV grew 1% year-over-year. Progressive Leasing revenue fell 8.1% year-over-year to $545 million, reflecting a smaller portfolio, while gross margin expanded about 90 basis points due to higher portfolio yield and a higher proportion of customers remaining in leases longer.
Garner said fourth-quarter provision for lease merchandise write-offs was 7.6% of revenue, and full-year write-offs were 7.5%, both within the company’s 6% to 8% target range. He said segment SG&A in the quarter rose year-over-year due primarily to about $5 million of one-time costs related to a partner bankruptcy and incremental investments in technology and infrastructure. Segment adjusted EBITDA was $63.9 million, with an adjusted EBITDA margin of 11.7% in the quarter and 11.4% for the year, within the company’s 11% to 13% annual target.
For Four, Garner said the business posted an adjusted EBITDA loss of $1.2 million in the fourth quarter due to seasonal dynamics and upfront provisioning for holiday originations, but generated about $9.9 million of adjusted EBITDA for full-year 2025, a 13.5% margin on revenue. MoneyApp, he added, reached approximately adjusted EBITDA-neutral performance for the fourth quarter and continued to support cross-sell into leasing.
At the consolidated level, Garner said fourth-quarter revenue from continuing operations declined 5.2% year-over-year to $574.6 million. Consolidated gross margin improved 284 basis points to 36.3%, driven by Progressive Leasing margin expansion and mix shift. Consolidated adjusted EBITDA declined 4% year-over-year to $61.5 million, or 10.7% of revenue.
Capital actions, balance sheet, and Purchasing Power acquisition
Management also emphasized portfolio repositioning and capital allocation. Michaels said the company sold its Vive portfolio in early fourth quarter 2025 to align capital with priorities and redeploy resources toward higher-return opportunities. In January 2026, PROG completed the acquisition of Purchasing Power, which Michaels said expands the company into a differentiated channel and adds a complementary growth platform.
Garner said PROG ended 2025 with $308.8 million of cash and total available liquidity of about $659 million, including its revolving credit facility. Net leverage at Dec. 31, 2025 was 1.1 times trailing 12-month adjusted EBITDA, and after the Purchasing Power acquisition, net leverage increased to about 2.5 times. He noted these leverage metrics exclude the non-recourse ABS debt used to fund Purchasing Power’s operations.
Garner said PROG repurchased about 1.8 million shares in 2025 at an average price of $28.20 and paid dividends totaling $0.52 per share. He said the company did not repurchase shares in the second half of 2025 due to advanced discussions related to the Vive divestiture and the Purchasing Power acquisition. Near-term priorities include integration and reducing leverage toward a long-term target of 1.5 to 2 times net leverage (excluding non-recourse ABS debt).
2026 outlook and operating assumptions
Looking to 2026, Michaels said the company is planning for a challenging consumer environment, with elevated prices continuing to pressure discretionary income and big-ticket retail categories remaining under pressure. He added that leasing will enter the year with a smaller lease portfolio, down 9.4% year-over-year, which creates revenue headwinds. Management also pointed to potential offsets, including expectations for higher tax refunds that could support near-term demand and repayment behavior.
Garner said Progressive Leasing’s first quarter and full-year 2026 results will be influenced by the lower gross leased asset balance entering the year, particularly pressuring revenue in the first half. He said the company expects modest growth, further gross margin expansion driven by higher yield trends exiting 2025, and another year of write-offs within the 6% to 8% target range. He also said Progressive Leasing’s SG&A is expected to remain flat as a percentage of revenue and that EBITDA margins are expected to expand.
For Purchasing Power, Garner provided full-year expectations of $680 million to $730 million of revenue and $50 million to $60 million of adjusted EBITDA. He said the business has significant seasonality, with the first quarter typically the lowest and expected to be roughly breakeven on an adjusted EBITDA basis, while the fourth quarter contributes the most revenue and earnings.
For 2026 consolidated continuing operations, PROG guided to:
- Revenue: $3.0 billion to $3.1 billion
- Adjusted EBITDA: $320 million to $350 million
- Non-GAAP EPS: $4.00 to $4.45
Garner said the outlook assumes a difficult operating environment with soft demand for consumer durable goods, no material change in decisioning posture, a non-GAAP effective tax rate of about 26%, no material increase in unemployment for its consumer base, and no impact from additional share repurchases.
In Q&A, management said Purchasing Power’s revenue outlook implies low double-digit growth, and that adjusted EBITDA margin is currently around 7% to 8%, with longer-term potential to move toward low double-digit margins as scale increases. Management also discussed Four’s subscription model, noting that more than 80% of GMV comes from active subscribers, and said it expects further margin expansion at Four with scale and underwriting optimization.
The company also reiterated an invitation to its Investor Day at the New York Stock Exchange on March 10.
Editor’s note: The Aaron’s (NYSE:PRG) ticker referenced above reflects the company’s stock symbol as used in the call and related materials.
About Aaron’s (NYSE:PRG)
PROG Holdings, Inc (NYSE: PRG), formerly known as Aaron’s, is a North American provider of lease-to-own and consumer finance solutions. The company operates through two primary segments: Aaron’s Business Solutions and Progressive Financial Services. Through Aaron’s Business Solutions, PROG offers customers access to furniture, electronics, home appliances and technology products via lease ownership arrangements, serving both individual consumers and small businesses.
The Progressive Financial Services segment provides lease-purchase and retail point-of-sale financing programs to customers with limited credit histories.
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