PROG Holdings Inc.

10/28/2026 | Press release | Distributed by Public on 10/28/2026 07:28

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Information: Except for historical information contained herein, the matters set forth in this Form 10-Q are forward-looking statements. These statements are based on management's current expectations and plans, which involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "delivering," "driving," "advancing," "expectation," "target," "uncertainty," "outlook," "assumes" and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the filing date of this Quarterly Report and which involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Such risks and uncertainties include, among others, those discussed in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "2025 Annual Report") and in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2026. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the filing date of this Quarterly Report.
The following discussion should be read in conjunction with the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2026 and 2025, including the notes to those statements, appearing elsewhere in this report. We also suggest that management's discussion and analysis appearing in this report be read in conjunction with the management's discussion and analysis and consolidated financial statements included in our 2025 Annual Report.
Business Overview
PROG Holdings, Inc. ("we," "our," "us," the "Company," or "PROG Holdings") is a financial technology holding company that provides transparent and competitive payment options to consumers. PROG Holdings has three reportable segments: (i) Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider; (ii) Purchasing Power, a voluntary employee benefit program provider, allowing employees to purchase brand-name products and services from Purchasing Power and then pay for those purchases through either automatic payroll deductions or allotments; and (iii) Four Technologies, Inc. ("Four"), which offers Buy Now, Pay Later ("BNPL") payment options to consumers through the Four platform.
Vive Financial ("Vive"), an omnichannel provider of second-look revolving credit products, had been an operating segment prior to October 20, 2025. On that date, the Company sold substantially all of Vive's loans receivable portfolio and began the process of discontinuing its remaining operations. Vive is reported as discontinued operations in our condensed consolidated financial statements for all periods presented. All of Vive's revenues and expenses, other than allocated corporate overhead, are excluded from the results of continuing operations.
Our Progressive Leasing segment provides consumers with lease-purchase solutions through its point-of-sale partner locations and e-commerce website partners (collectively, "POS partners"), as well as through its direct-to-consumer app, PROG Marketplace. It does so by purchasing merchandise from the POS partners desired by customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction. Progressive Leasing has no stores of its own, but rather, offers lease-purchase solutions to the customers of traditional and e-commerce retailers.
Our Purchasing Power segment is a voluntary employee benefit program that allows employees of participating employer-clients to purchase brand-name products and services and pay for those purchases over time through payroll deductions or allotments. Products available through the platform include consumer electronics, home goods, furniture, appliances, and other merchandise, as well as certain services. Millions of employees nationwide have access to Purchasing Power's purchasing solutions. We acquired Purchasing Power on January 2, 2026, and its results are included in our condensed consolidated financial statements beginning on the acquisition date.
Four allows shoppers to pay for merchandise through four interest-free installments. Four's proprietary platform capabilities and its base of customers and retailers expand and diversify PROG Holdings' ecosystem of financial technology offerings by introducing another payment solution to its customers. Shoppers use Four to purchase furniture, clothing, electronics, health and beauty products, footwear, jewelry, and other consumer goods from retailers across the United States. The average ticket size of a Four transaction is significantly smaller than a transaction with Progressive Leasing or Purchasing Power.
PROG Holdings also owns MoneyApp, a mobile application that offers customers short-term liquidity solutions through cash advances. MoneyApp is not a reportable segment in 2026 as its financial results are not expected to be significant to the Company's condensed consolidated financial results. MoneyApp's financial results are reported within "Other" for segment reporting purposes.
Acquisition of Purchasing Power
On January 2, 2026, we completed the acquisition of Purchasing Power for $424.2 million in cash. In addition, Purchasing Power had $338.6 million of non-recourse funding debt that remained in place following the closing of the acquisition. The results of Purchasing Power are included in our condensed consolidated financial statements beginning on the acquisition date. Results for periods prior to the acquisition date are not included in this MD&A. See Note 2 of the condensed consolidated financial statements for additional information.
Macroeconomic and Business Environment
We believe the increased cost of living and recent rise in fuel costs have continued to have a disproportionate negative effect on our customers' disposable income, negatively affecting demand for many products offered by our businesses, as well as customer payment performance. The significant increase in inflation resulting from the war in Iran and related geopolitical disruption has further pressured our customers' budgets and unfavorably impacted consumer confidence within our customer base, resulting in a decrease in demand for the types of larger-ticket, durable consumer goods offered by many of our retail partners and by our Purchasing Power business.
Progressive Leasing
GMV increased by $9.5 million for Progressive Leasing in the third quarter of 2026, compared to the same period in the prior year. Despite the increase in GMV in the third quarter of 2026, lease revenue declined for both the three and nine months ended September 30, 2026 compared to the prior-year periods, primarily due to lower average gross leased asset balance resulting from smaller lease portfolios entering those periods. Gross margin as a percentage of revenue was relatively unchanged for the three-month period and increased for the nine-month period ended September 30, 2026 compared to the prior year, primarily due to reduced early purchase option activity during the first half of 2026. Macroeconomic conditions contributed to fewer customers exercising early purchase options and more customers making payments over the full lease term, which generally results in greater margin realization.
The Company continues to operate in a challenging macroeconomic environment due to the factors described above. In addition, American Signature, Inc., one of Progressive Leasing's POS partners, filed for bankruptcy in November 2025, which will result in the permanent closure of many of its stores in 2026. Those closures have had and will continue to have an unfavorable impact on Progressive Leasing's GMV, revenue, and earnings from continuing operations before income tax in 2026.
Progressive Leasing experienced elevated delinquencies in the second and third quarters of 2026, which contributed to a provision for lease merchandise write-offs as a percentage of Progressive Leasing revenue of 8.3% during the three months ended September 30, 2026 compared to 7.4% in the prior year period. As a result, Progressive Leasing further tightened its decisioning posture late in the second quarter and again in the third quarter of 2026, which is expected to continue to pressure GMV in future periods while supporting portfolio performance. The Company will continue to actively manage underwriting and decisioning criteria to support portfolio performance.
Purchasing Power
We believe customer demand for the larger-ticket products and services sold by Purchasing Power also has been adversely impacted by the macroeconomic headwinds affecting Progressive Leasing's performance. However, we expect that Purchasing Power's recent focus on improving eligible employee-customer penetration, continuing to create new, attractive merchandising choices for its customers, and its addition of several new employer-clients, will help offset the impacts of such decreases in demand.
Customer payment delinquencies and write-offs for Purchasing Power are generally lower than those of Progressive Leasing due to Purchasing Power's payroll deduction and allotment repayment model. Delinquencies on non-federal employee receivables in the third quarter of 2026 were in line with expectations and the same period in the prior year. Delinquencies for federal government employee receivables have generally improved compared to the elevated delinquencies experienced in 2025 resulting from various workforce disruptions, including DOGE workforce reductions and multiple government shutdowns.
Four
Due to the average ticket size of a BNPL transaction with Four being significantly lower than a transaction with Progressive Leasing and Purchasing Power, we believe demand for products purchased through the use of Four is not impacted by the macroeconomic headwinds discussed above to the same degree as demand for larger-ticket products.
Highlights
The following summarizes significant financial highlights from the three months ended September 30, 2026:
•We reported consolidated revenues of $725.8 million, which was a 25.6% increase compared to the $577.7 million we reported for the third quarter of 2025. The increase in consolidated revenues was primarily due to the $131.8 million of revenues contributed by Purchasing Power, which we acquired on January 2, 2026. Additionally, revenues at Four increased by $19.8 million, compared to the prior year period, due to continued growth in its BNPL transactions. These increases were offset by a $3.9 million decrease in total revenues at Progressive Leasing, which was driven primarily by a smaller average gross leased asset balance during the third quarter of 2026 when compared to the same period in the prior year.
•GMV from Four increased by $167.3 million, due to an increase in Four loan originations in the third quarter of 2026 compared to the third quarter of 2025, as a result of the continued growth in that business. GMV increased by $9.5 million for Progressive Leasing in the third quarter of 2026, compared to the same period in the prior year. The increase in GMV for Progressive Leasing was due primarily to $16.7 million in GMV growth from e-commerce channels. This increase was partially offset by pressures on GMV due to the higher cost of living experienced by our customer base, including increased fuel prices, and an uncertain macroeconomic outlook, all of which have negatively impacted consumer confidence and demand for our lease-to-own offering. GMV relating to Purchasing Power was $161.2 million and no GMV was reported in the prior year period, as the acquisition was completed on January 2, 2026.
•Earnings from continuing operations before income taxes increased to $52.3 million compared to $44.7 million in the prior-year period, primarily driven by an $8.7 million increase in earnings from Four due to continued business growth and a $3.0 million increase in earnings from Purchasing Power in 2026. In addition, the Company recognized a $2.9 million gain on the sale of charged-off receivables at Progressive Leasing during the three months ended September 30, 2026, and no comparable gains in the prior year period. These increases in earnings were partially offset by an increase of $4.9 million in provision for lease merchandise write-offs at Progressive Leasing.
Key Operating Metrics
Gross Merchandise Volume. We believe GMV is a key performance indicator of our Progressive Leasing, Purchasing Power and Four segments, as it provides the total value of new leases, transaction orders, and loans written into our portfolio over a specified time period. GMV does not represent revenues earned by the Company, but rather is a leading indicator we use in forecasting revenues the Company may earn. Progressive Leasing's GMV is defined as the retail price of merchandise acquired by Progressive Leasing, which it then expects to lease to its customers. GMV for Purchasing Power is defined as the total value of merchandise and services purchased and delivered to customers through its platform. GMV for Four is defined as gross loan originations.
The following table presents our GMV from continuing operations for the Company for the periods presented:
Three months ended
September 30, 		Change
(unaudited and in thousands)
2026 2025 $ %
Progressive Leasing $ 420,437 $ 410,943 $ 9,494 2.3 %
Purchasing Power
161,174 - 161,174 nmf
Four
330,421 163,086 167,335 102.6
Total
$ 912,032 $ 574,029 $ 338,003 58.9 %
nmf - calculation is not meaningful
Progressive Leasing's GMV increased compared to the third quarter of 2025 due primarily to increases in GMV from e-commerce channels. E-commerce channels generated 26.4% of Progressive Leasing's GMV in the third quarter of 2026 compared to 23.0% in the third quarter of 2025. This increase was partially offset by a reduction in GMV driven by inflationary pressures, an elevated cost of living, and an uncertain macroeconomic outlook, all of which have negatively impacted consumer confidence and demand for our lease-to-own offering. The increase in Four's GMV is primarily attributable to the continued expansion of the Four BNPL platform, reflecting growth through higher transaction volumes and average order value from existing and new customers over the period.
Active Customer Count. Our active customer count represents the total number of customers that have an active lease agreement with Progressive Leasing, an active receivable with Purchasing Power, or an active loan with Four. Active customer counts include customers that may have an active agreement with more than one segment. The following table presents our active customer count from continuing operations for each segment:
As of September 30 (unaudited and in thousands)
2026 2025
Active customer count from continuing operations:
Progressive Leasing 781 784
Purchasing Power
262 -
Four
366 218
The number of active customers for Progressive Leasing was relatively unchanged from the prior year. Increases from growth in our e-commerce channel were offset by decreases due to lower consumer demand for many of the durable leasable goods offered by our retail partners, due to the continued elevated costs of living and inflationary pressures facing our customers. The increase in the number of customers for Four was the result of continued growth in BNPL transactions, which have a significantly smaller transaction size, as compared to our Progressive Leasing business.
Key Components of Earnings from Continuing Operations Before Income Tax Expense
In this MD&A section, we discuss the key components of our condensed consolidated results. For the three and nine months ended September 30, 2026 and the comparable prior year periods, some of the key revenue, cost and expense items that affected earnings before income taxes were as follows:
Revenues. We separate our total revenues into three components: (i) lease revenues and fees, (ii) product and service revenues and (iii) other revenues. Lease revenues and fees include all revenues derived from lease agreements from our Progressive Leasing segment. Lease revenues are recorded net of a provision for uncollectible renewal payments. Product and service revenues represent Purchasing Power's sales of products and the revenue earned relating to arranging for services that customers purchase from Purchasing Power, net of estimated returns. Other revenues represent transaction income, subscription revenues, late and other fees earned relating to loans in our Four segment and our other strategic businesses, as well as Progressive Leasing affiliate commissions and imputed interest income recognized on a portion of Purchasing Power's receivables portfolio.
Depreciation of lease merchandise. Depreciation of lease merchandise reflects the expense associated with depreciating merchandise leased to customers by Progressive Leasing.
Cost of product sales. Cost of product sales represents the cost of merchandise purchased by Purchasing Power from third-party vendors for resale, along with associated fulfillment and distribution costs.
Provision for lease merchandise write-offs. The provision for lease merchandise write-offs represents the estimated merchandise losses incurred and adjustments for changes in estimates for the allowance for lease merchandise write-offs.
Operating expenses. Operating expenses include primarily personnel costs, stock-based compensation, occupancy costs, advertising, decisioning expense, professional services expense, sales acquisition costs, computer software expense, bank charges and processing fees, fixed asset depreciation expense, intangible amortization expense, legal settlement expense and restructuring expenses, among other expenses.
Provision for credit losses. The provision for credit losses reflects the expected lifetime credit losses on Purchasing Power's, Four's and other strategic operations receivables, determined using the Current Expected Credit Losses ("CECL") framework and incorporating historical loss experience, current conditions, and reasonable and supportable forecasts. The provision for credit losses on Purchasing Power's receivables is net of estimated recoveries from its program of selling portfolios of charged-off receivables to third-parties.
Gain on sale of lease receivables. Gain on sale of lease receivables reflects income recognized by Progressive Leasing from its program of selling portfolios of charged-off lease receivables to third-parties.
Gain on change in fair value of receivables. Receivables associated with the Purchasing Power acquired portfolio are measured at fair value on a recurring basis pursuant to the Company's election of the fair value option under ASC 825. Changes in fair value attributable to the passage of time, credit performance, discount rates, and other assumptions, are recognized as a gain or loss on changes in fair value of the receivables.
Interest expense. Interest expense consists of interest incurred on the Company's debt.
Interest income. Interest income consists of interest earned on the Company's deposits in cash and cash equivalents.
Results of Operations - Three months ended September 30, 2026 and 2025
Three months ended
September 30, 		Change
(in thousands)
2026 2025 $ %
Revenues
Lease revenues and fees
$ 552,266 $ 556,583 $ (4,317) (0.8) %
Product and service revenues
128,941 - 128,941 nmf
Other revenues
44,572 21,123 23,449 111.0
725,779 577,706 148,073 25.6
Costs and expenses
Depreciation of lease merchandise
376,821 378,499 (1,678) (0.4)
Cost of product sales
75,826 - 75,826 nmf
Provision for lease merchandise write-offs
45,977 41,037 4,940 12.0
Operating expenses
135,007 95,588 39,419 41.2
Provision for credit losses
30,526 9,991 20,535 nmf
664,157 525,115 139,042 26.5
Gain on sale of lease receivables 2,881 - 2,881 nmf
Gain on change in fair value of receivables
1,478 - 1,478 nmf
Operating profit
65,981 52,591 13,390 25.5
Interest expense (14,172) (9,790) (4,382) 44.8
Interest income 501 1,899 (1,398) 73.6
Earnings from continuing operations before income tax expense
52,310 44,700 7,610 17.0
Income tax expense
14,832 12,433 2,399 19.3
Net earnings from continuing operations
37,478 32,267 5,211 16.1
(Loss) earnings from discontinued operations, net of tax
(236) 854 (1,090) nmf
Net earnings
$ 37,242 $ 33,121 $ 4,121 12.4 %
nmf - Calculation is not meaningful
Results of Operations - Nine months ended September 30, 2026 and 2025
Nine months ended September 30, Change
(in thousands)
2026 2025 $ %
Revenues
Lease revenues and fees
$ 1,698,960 $ 1,777,814 $ (78,854) (4.4) %
Product and service revenues
363,854 - 363,854 nmf
Other revenues
125,354 56,823 68,531 120.6
2,188,168 1,834,637 353,531 19.3
Costs and expenses
Depreciation of lease merchandise
1,150,142 1,224,049 (73,907) (6.0)
Cost of product sales
214,034 - 214,034 nmf
Provision for lease merchandise write-offs
136,127 131,688 4,439 3.4
Operating expenses
428,624 287,121 141,503 49.3
Provision for credit losses
85,360 23,535 61,825 nmf
2,014,287 1,666,393 347,894 20.9
Gain on sale of lease receivables 14,039 - 14,039 nmf
Gain on change in fair value of receivables
9,000 - 9,000 nmf
Operating profit
196,920 168,244 28,676 17.0
Interest expense (47,778) (29,547) (18,231) 61.7
Interest income 1,538 4,417 (2,879) 65.2
Earnings from continuing operations before income tax expense
150,680 143,114 7,566 5.3
Income tax expense
39,606 38,676 930 2.4
Net earnings from continuing operations
111,074 104,438 6,636 6.4
(Loss) earnings from discontinued operations, net of tax
(749) 1,884 (2,633) nmf
Net earnings
$ 110,325 $ 106,322 $ 4,003 3.8 %
nmf - Calculation is not meaningful
Earnings (Loss) from Continuing Operations Before Income Tax Expense
Information about our earnings (loss) from continuing operations before income tax expense by reportable segment is as follows:
(in thousands)
Three months ended
September 30, 		Change
2026 2025 $ %
Earnings (loss) from continuing operations before income tax expense
Progressive Leasing $ 40,824 $ 46,738 $ (5,914) (12.7) %
Purchasing Power 2,963 - 2,963 nmf
Four 9,983 1,274 8,709 683.6
Other (1,460) (3,312) 1,852 55.9
Total earnings (loss) from continuing operations before income tax expense $ 52,310 $ 44,700 $ 7,610 17.0 %
nmf - Calculation is not meaningful
(in thousands)
Nine months ended
September 30, 		Change
2026 2025 $ %
Earnings (loss) from continuing operations before income tax expense
Progressive Leasing $ 138,214 $ 146,909 $ (8,695) (5.9) %
Purchasing Power (4,828) - (4,828) nmf
Four 28,432 6,187 22,245 359.5
Other (11,138) (9,982) (1,156) (11.6)
Total earnings (loss) from continuing operations before income tax expense $ 150,680 $ 143,114 $ 7,566 5.3 %
nmf - Calculation is not meaningful
Progressive Leasing
Progressive Leasing results of operations - Three months ended September 30, 2026 and 2025
Three months ended
September 30, 		Change
(in thousands)
2026
% of revenue
2025 % of revenue $ %
Gross merchandise volume
$ 420,437 $ 410,943 $ 9,494 2.3 %
Total revenues 552,730 556,583 (3,853) (0.7)
Depreciation of lease merchandise 376,821 378,499 (1,678) (0.4)
Gross margin
175,909 31.8 % 178,084 32.0 % (2,175) (1.2)
Provision for lease merchandise write-offs 45,977 8.3 41,037 7.4 4,940 12.0
Selling, general and administrative 83,763 15.2 79,272 14.2 4,491 5.7
Depreciation and amortization 1,600 0.3 5,116 0.9 (3,516) (68.7)
Restructuring and other expenses (1,628) (0.3) - - (1,628) nmf
129,712 23.5 125,425 22.5 4,287 3.4
Gain on sale of lease receivables 2,881 0.5 - - 2,881 nmf
Operating profit
49,078 8.9 52,659 9.5 (3,581) (6.8)
Interest expense, net
8,254 1.5 5,921 1.1 2,333 39.4
Earnings from continuing operations before income tax expense $ 40,824 7.4% $ 46,738 8.4% $ (5,914) (12.7) %
nmf - Calculation is not meaningful
The decrease in revenues was primarily due to a lower gross leased asset balance as a result of the tightening of our decisioning posture during early 2025 and again in 2026, and a decrease in demand for the durable leasable products offered by many of our retail partners. We believe the inflationary and other macroeconomic factors had a disproportionate negative effect on our customers' disposable income, negatively affecting demand for many products offered by our retail partners.
Gross margin is a key performance measure for our Progressive Leasing segment, which generates lease revenue from transactions that include associated depreciation of the merchandise on lease, making gross margin a meaningful indicator of profit. Gross margin percentage was essentially unchanged from the same period in the prior year.
The provision for lease merchandise write-offs increased $4.9 million compared to the same period in 2025. The provision for lease merchandise write-offs as a percentage of revenues increased to 8.3% during the third quarter of 2026 from 7.4% in the same period in 2025, primarily reflecting higher period-end delinquency levels, as well as continued pressure on customer payment performance in a challenging macroeconomic environment. Given the significant uncertainty regarding the impacts of geopolitical disruptions, inflation, tariffs, increased fuel prices, elevated interest rates, and unemployment rates on our business, and the potential effects of such developments on Progressive Leasing's POS partners, customers, and business going forward, a high level of estimation was involved in determining the allowance as of September 30, 2026. Actual lease merchandise write-offs could differ materially from the allowance for those write-offs.
Selling, general and administrative expense increased resulting from the following:
•Professional fees increased by $3.1 million driven primarily by various technology modernization initiatives compared to 2025; and
•Stock-based compensation increased $0.8 million, primarily due to (i) a higher aggregated fair value of restricted stock units granted during 2026 and (ii) higher expense recognized on performance share units due to increased expected award achievement levels compared to the prior-year period.
The decrease in depreciation and amortization expense was primarily attributable to a $3.5 million decrease in intangible amortization expense when compared to the prior year resulting from a significant intangible asset becoming fully amortized in April 2026.
Progressive Leasing recorded a $1.6 million gain on partial termination of leased space in the Company's corporate offices during the three months ended September 30, 2026.
In August 2026, Progressive Leasing sold a portfolio of charged-off lease receivables to a third-party for $2.9 million in cash and recognized a gain of $2.9 million as the carrying amount of the charged-off receivables had been reduced to zero. There were no similar sales during the three months ended September 30, 2025.
Interest expense, net for the three months ended September 30, 2026 was higher than the same period in 2025 primarily as a result of lower interest income resulting from lower average cash balances compared to the prior year, while interest expense remained relatively stable.
Progressive Leasing results of operations - Nine months ended September 30, 2026 and 2025
Nine months ended
September 30, 		Change
(in thousands)
2026
% of revenue
2025 % of revenue $ %
Gross merchandise volume
$ 1,241,523 $ 1,226,777 $ 14,746 1.2 %
Total revenues 1,700,148 1,777,814 (77,666) (4.4)
Depreciation of lease merchandise 1,150,142 1,224,049 (73,907) (6.0)
Gross margin
550,006 32.4 % 553,765 31.1 % (3,759) (0.7)
Provision for lease merchandise write-offs 136,127 8.0 131,688 7.4 4,439 3.4
Selling, general and administrative 247,852 14.6 240,344 13.5 7,508 3.1
Depreciation and amortization 9,109 0.5 15,316 0.9 (6,207) (40.5)
Restructuring and other expenses 3,648 0.2 - - 3,648 nmf
396,736 23.3 387,348 21.8 9,388 2.4
Gain on sale of lease receivables 14,039 0.8 - - 14,039 nmf
Operating profit
167,309 9.8 166,417 9.4 892 0.5
Interest expense, net
29,095 1.7 19,508 1.1 9,587 49.1
Earnings from continuing operations before income tax expense $ 138,214 8.1 % $ 146,909 8.3 % $ (8,695) (5.9) %
nmf - Calculation is not meaningful
The decrease in revenues was primarily due to a lower gross leased asset balance as a result of the tightening of our decisioning posture during 2025 and 2026, and a decrease in demand for the durable leasable products offered by many of our retail partners. We believe the inflationary and other macroeconomic factors had a disproportionate negative effect on our customers' disposable income, negatively affecting demand for many products offered by our retail partners.
The increase in Progressive Leasing's gross margin percentage reflects a decline in customers' electing early purchase options during the first half of 2026, as macroeconomic conditions contributed to customers choosing to make payments over the full contractual lease term rather than exercising early purchase options, which generally result in lower margin realization.
The provision for lease merchandise write-offs increased $4.4 million compared to the same period in 2025. The provision for lease merchandise write-offs as a percentage of total revenues increased to 8.0% during the nine months ended September 30, 2026 from 7.4% in the same period in 2025. The increase was due to continued pressure on customer payment performance in a challenging macroeconomic environment. Given the significant uncertainty regarding the impacts of geopolitical disruptions, inflation, tariffs, higher fuel costs, elevated interest rates, and unemployment rates on our business, and the potential effects of such developments on Progressive Leasing's POS partners, customers, and business going forward, a high level of estimation was involved in determining the allowance as of September 30, 2026. Actual lease merchandise write-offs could differ materially from the allowance for those write-offs.
Selling, general and administrative expense increased due to the following:
•Professional fees increased $3.7 million driven primarily from various technology modernization initiatives; and
•Stock-based compensation increased $3.6 million primarily due to (i) a higher aggregated fair value associated with restricted stock units granted during 2026 and (ii) higher expense recognized on performance share units due to increased expected award achievement levels compared to the prior-year period.
The decrease in depreciation and amortization expenses was primarily attributable to a $6.2 million decrease in intangible amortization expense when compared to the prior year resulting from a significant intangible asset becoming fully amortized in April 2026.
Restructuring and other expenses during the nine months ended September 30, 2026 primarily represent a $4.8 million expense to settle a legal dispute, which was partially offset by a $1.6 million gain on partial termination of leased space in the Company's corporate offices.
During the nine months ended September 30, 2026, Progressive Leasing sold portfolios of charged-off lease receivables to third-parties for a total of $14.0 million in cash and recognized total gains of $14.0 million, as the carrying amount of the charged-off receivables had been reduced to zero. There were no similar sales during the same period in the prior year.
Interest expense, net for the nine months ended September 30, 2026 was higher than the same period in 2025 due to an increase in debt used for the acquisition of Purchasing Power on January 2, 2026, and a decrease in interest income due to lower average cash balances in 2026 compared to the prior year.
Purchasing Power
Purchasing Power results of operations - Three months ended September 30, 2026 and 2025
Three months ended
September 30, 		Change
(in thousands)
2026
% of revenue
2025 % of revenue $ %
Gross merchandise volume
$ 161,174 $ - $ 161,174 nmf
Total revenues
131,796 - 131,796 nmf
Cost of product sales
75,826 - 75,826 nmf
Gross margin
55,970 42.5 % - 55,970 nmf
Provision for credit losses 16,011 12.1 - 16,011 nmf
Selling, general and administrative 25,366 19.2 - 25,366 nmf
Depreciation and amortization 8,087 6.1 - 8,087 nmf
Restructuring and other expenses 830 0.6 - 830 nmf
50,294 38.2 - 50,294 nmf
Gain on change in fair value of receivables 1,478 1.1 - 1,478 nmf
Operating profit 7,154 5.4 - 7,154 nmf
Interest expense, net
4,191 3.2 - 4,191 nmf
Earnings from continuing operations before income tax expense $ 2,963 2.2% $ - $ 2,963 nmf
nmf - Calculation is not meaningful
Selling, general and administrative expenses include $0.4 million of transaction and transition costs incurred related to the acquisition of Purchasing Power.
The gain on change in fair value of receivables of $1.5 million reflects changes in the estimated fair value of Purchasing Power's receivables under the fair value option, including the impact of the passage of time, changes in credit performance, discount rates and other valuation inputs.
Purchasing Power results of operations - Nine months ended September 30, 2026 and 2025
Nine months ended
September 30, 		Change
(in thousands)
2026
% of revenue
2025 % of revenue $ %
Gross merchandise volume
$ 452,646 $ - $ 452,646 nmf
Total revenues
369,315 - 369,315 nmf
Cost of product sales
214,034 - 214,034 nmf
Gross margin
155,281 42.0 % - 155,281 nmf
Provision for credit losses 43,920 11.9 - 43,920 nmf
Selling, general and administrative 83,133 22.5 - 83,133 nmf
Depreciation and amortization 24,210 6.6 - 24,210 nmf
Restructuring and other expenses 4,217 1.1 - 4,217 nmf
155,480 42.1 - 155,480 nmf
Gain on change in fair value of receivables 9,000 2.4 - 9,000 nmf
Operating profit 8,801 2.4 - 8,801 nmf
Interest expense, net
13,629 3.7 - 13,629 nmf
Loss from continuing operations before income tax expense
$ (4,828) (1.3)% $ - $ (4,828) nmf
nmf - Calculation is not meaningful
Selling, general and administrative expenses include $4.0 million of transaction and transition costs incurred related to the acquisition of Purchasing Power.
Restructuring and other expenses represent employee severance of $4.2 million resulting from cost reduction initiatives that occurred shortly after the Company's acquisition of Purchasing Power.
The gain on change in fair value of receivables of $9.0 million reflects changes in the estimated fair value of Purchasing Power's receivables under the fair value option, including the impact of the passage of time, changes in credit performance, discount rates and other valuation inputs.
Four
Four results of operations - Three months ended September 30, 2026 and 2025
Three months ended
September 30, 		Change
(in thousands) 2026 % of revenue 2025 % of revenue $ %
Gross merchandise volume
$ 330,421 $ 163,086 $ 167,335 102.6 %
Total revenue 37,239 17,414 19,825 113.8
Provision for credit losses 12,042 32.3% 7,609 43.7% 4,433 58.3
Selling, general and administrative 14,023 37.7 7,275 41.8 6,748 92.8
Depreciation and amortization 4 - 243 1.4 (239) (98.4)
26,069 70.0 15,127 86.9 10,942 72.3
Operating profit
11,170 30.0 2,287 13.1 8,883 388.4
Interest expense, net 1,187 3.2 1,013 5.8 174 17.2
Earnings from continuing operations before income tax expense $ 9,983 26.8% $ 1,274 7.3% $ 8,709 683.6 %
Revenues at Four increased due to the continued significant growth in BNPL transactions, including growth in the number of Four+ subscription customers.
Provision for credit losses increased due to the growth in new BNPL transactions. The provision as a percentage of revenues has improved for the three months ended September 30, 2026 when compared to the same period in the prior year due to management's continued refinement of its credit risk models, as well as continued growth in Four+ subscription revenues, which does not result in outstanding receivables or provision for credit losses.
Selling, general and administrative costs increased due to the following:
•Bank charges and processing fees increased $4.1 million related to higher customer payment transaction volumes; and
•Advertising expense increased $1.3 million resulting from additional marketing efforts to drive continued growth of Four.
Four results of operations - Nine months ended September 30, 2026 and 2025
Nine months ended
September 30, 		Change
(in thousands) 2026 % of revenue 2025 % of revenue $ %
Gross merchandise volume
$ 925,518 $ 432,581 $ 492,937 114.0 %
Total revenue 107,291 47,919 59,372 123.9 %
Provision for credit losses 35,327 32.9% 18,017 37.6% 17,310 96.1
Selling, general and administrative 39,619 36.9 19,641 41.0 19,978 101.7
Depreciation and amortization 513 0.5 883 1.8 (370) (41.9)
75,459 70.3 38,541 80.4 36,918 95.8
Operating profit
31,832 29.7 9,378 19.6 22,454 239.4
Interest expense, net 3,400 3.2 3,191 6.7 209 6.5
Earnings from continuing operations before income tax expense $ 28,432 26.5% $ 6,187 12.9% $ 22,245 359.5 %
Revenues at Four increased due to the continued significant growth in the number of BNPL transactions, growth in the number of Four+ subscription customers and, to a lesser extent, an increase in the average order value for Four transactions.
Provision for credit losses increased due to the growth in new BNPL transactions. The provision as a percentage of revenues has improved for the nine months ended September 30, 2026 when compared to the same period in the prior year due to management's continued refinement of its credit risk models, as well as continued growth in Four+ subscription revenues, which does not result in outstanding receivables or provision for credit losses.
Selling, general and administrative costs increased due to the following:
•Bank charges and processing fees increased $13.4 million related to higher customer payment transaction volumes; and
•Advertising expense increased $4.3 million resulting from additional marketing efforts to drive continued growth of Four.
Other Operations
Other operations incurred $1.5 million of losses before income tax expense for the three months ended September 30, 2026, which is primarily related to losses associated with our other strategic operations.
Other operations incurred $11.1 million of losses before income tax expense for the nine months ended September 30, 2026, which was primarily related to costs incurred in connection with the acquisition of Purchasing Power on January 2, 2026.
Income Tax Expense
Income tax expense increased to $14.8 million for the three months ended September 30, 2026 from $12.4 million in the prior year comparable period. The effective income tax rate was 28.4% for the three months ended September 30, 2026 compared to 27.8% for the same period in 2025 and was generally consistent with the prior year period.
Income tax expense increased to $39.6 million for the nine months ended September 30, 2026 compared to $38.7 million in the prior year comparable period. The effective income tax rate was 26.3% for the nine months ended September 30, 2026 compared to 27.0% for the same period in 2025. The decrease in the effective tax rate was primarily due to the discrete tax benefit related to stock-based compensation vestings in March 2026.
Overview of Financial Position
The significant changes in the condensed consolidated balance sheet from December 31, 2025 to September 30, 2026 were driven by the acquisition of Purchasing Power on January 2, 2026, as discussed below:
•Cash and cash equivalents decreased $199.9 million from $308.8 million to $108.9 million during the nine months ended September 30, 2026, due primarily to the cash consideration paid in connection with the acquisition of Purchasing Power. For additional information, refer to the "Liquidity and Capital Resources" section below.
•Accounts receivable, net of allowances and unearned interest income, increased $300.4 million compared to December 31, 2025 primarily due to the addition of Purchasing Power's receivable portfolio acquired on January 2, 2026.
•Lease merchandise, net of accumulated depreciation and allowances, decreased $97.7 million, reflecting the seasonal nature of the lease-to-own business. Lease merchandise balances typically peak during the fourth quarter due to higher holiday-season originations and subsequently decline in the first half of the year as leased merchandise depreciates and existing agreements mature.
•Goodwill and other intangible assets, net increased $401.5 million, reflecting preliminary purchase accounting associated with the Purchasing Power acquisition, including the recognition of goodwill and identifiable intangible assets.
•Accounts payable and accrued expenses increased $63.3 million, primarily due to the Purchasing Power acquisition. Purchasing Power had $63.9 million of accounts payable and accrued liabilities as of September 30, 2026.
•Deferred income tax liabilities increased $46.4 million resulting primarily from the recognition of deferred income tax liabilities with the acquisition of Purchasing Power.
•Income tax receivables decreased $25.1 million primarily due to federal tax refunds received during 2026, resulting from enactment of tax legislation permitting 100% federal bonus depreciation.
•Debt, net increased $271.0 million primarily driven by (i) the asset-backed funding debt that remained in place following the acquisition of Purchasing Power, and (ii) the issuance of new securitization debt, partially offset by repayments of asset-backed borrowings subsequent to the acquisition.
Overall, the changes in the Company's financial position during the period were primarily driven by the acquisition of Purchasing Power, which resulted in significant increases in assets, liabilities, and debt, partially offset by the use of cash to fund the transaction.
Liquidity and Capital Resources
General
We expect that our primary capital requirements will consist of:
•Reinvesting in our business, including acquiring merchandise to lease to our Progressive Leasing customers, purchasing products and services for resale through installment sales agreements with our Purchasing Power customers, and originating new BNPL transactions with our Four customers. Because we believe these businesses will continue to grow over the long-term, we expect that the need for additional merchandise will remain a major capital requirement;
•Making merger and acquisition investment(s) to further broaden our product offerings; and
•Returning excess cash to shareholders through periodically repurchasing stock and/or paying dividends.
Other capital requirements include (i) expenditures related to software development; (ii) expenditures related to our corporate operating activities; (iii) personnel expenditures; (iv) income tax payments; and (v) servicing our outstanding debt obligations.
Our capital requirements historically have been financed through:
•cash flows from operations;
•private debt offerings;
•bank debt; and
•stock offerings.
As of September 30, 2026, the Company had $108.9 million of cash, $350.0 million of availability under the Revolving Facility, and $872.0 million of gross indebtedness, which includes $272.0 million of funding debt associated with the Purchasing Power business which is non-recourse with respect to the Company and its assets.
Cash Provided by Operating Activities
Cash provided by operating activities decreased modestly to $386.2 million for the nine months ended September 30, 2026, compared to $389.9 million in the prior year, a decline of $3.7 million. Higher cash interest payments and additions of lease merchandise were largely offset by a favorable change in cash paid for income taxes of $60.7 million, reflecting income tax refunds received during the current period compared to net tax payments in the prior year period. Other changes in cash provided by operating activities are discussed above in our discussion of results for the nine months ended September 30, 2026.
Cash Used in Investing Activities
Cash used in investing activities was $432.2 million and $69.0 million during the nine months ended September 30, 2026 and 2025, respectively. The $363.2 million increase in investing cash outflows was primarily the result of the $391.8 million of cash paid for the acquisition of Purchasing Power, net of cash acquired.
Cash Used in Financing Activities
Cash used in financing activities was $144.1 million during the nine months ended September 30, 2026 compared to $123.9 million during the same period in 2025. Cash used in financing activities during the nine months ended September 30, 2026 was primarily $546.2 million of proceeds from borrowings, offset by $612.8 million of repayments on debt and $16.7 million paid for cash dividends. Cash used in financing activities during the prior year was primarily the repayment of $50.0 million that was drawn on our revolving credit facility during the fourth quarter of 2024, the Company's repurchase of $51.8 million of its common stock and $15.6 million paid for cash dividends.
Share Repurchases
We repurchase our stock in the market from time to time as authorized by our Board of Directors. Effective February 21, 2024, the Board of Directors reauthorized the program at an aggregate purchase price of up to $500.0 million, for a term ending on the earlier of February 21, 2027, or the date on which the full $500.0 million has been used.
The Company repurchased 1,165,000 shares for $46.9 million during the nine months ended September 30, 2026. That amount does not include any excise tax that may be assessed on those repurchases. As of September 30, 2026, we had the authority to purchase additional shares up to our remaining authorization limit of $262.7 million.
On October 26, 2026, the Board of Directors replenished the share repurchase program, adding $237.3 million to bring the total amount available for future repurchases to $500.0 million, and extended its term, which was set to expire on February 21, 2027, to the earlier of October 26, 2029 or the date on which the full $500.0 million has been used.
On October 28, 2026, the Company announced its intention to enter into an accelerated share repurchase program to repurchase $100.0 million of its common stock. The transactions under that program are expected to be completed during the fourth quarter of 2026 and the first quarter of 2027. The Company intends to fund this accelerated share repurchase program using cash on hand and borrowings under the Revolving Facility.
Dividends
On August 5, 2026, our Board of Directors declared a quarterly cash dividend in the amount of $0.14 per share of outstanding common stock, which was paid on September 3, 2026. Aggregate dividend payments during the nine months ended September 30, 2026 were $16.7 million. While we expect to continue paying quarterly cash dividends in future periods, the future payment of dividends, if permitted, will be at the sole discretion of our Board of Directors and will depend on our capital allocation strategy at that time as well as other factors, including our earnings, financial condition, and other considerations that our Board of Directors deems relevant.
Debt Financing
The Company's debt structure includes a combination of corporate-level borrowings and asset-backed financing arrangements of non-recourse funding debt. Our corporate-level borrowings increased to fund part of the purchase price we paid for the acquisition of Purchasing Power. Purchasing Power's asset-backed financing arrangements remained in place following our acquisition of Purchasing Power on January 2, 2026.
Corporate Debt
The Company maintains a $350.0 million senior revolving credit facility (the "Revolving Facility") that matures on November 15, 2029. Borrowings under the Revolving Facility bear interest, at the Company's election, at either a base rate or term SOFR plus an applicable margin based on the Company's leverage ratio, and the facility includes a commitment fee on unused capacity. As of September 30, 2026, there were no outstanding borrowings under the Revolving Facility and $350.0 million remained available for borrowing. During the nine months ended September 30, 2026, borrowings under the Revolving Facility, which were repaid prior to September 30, 2026, were primarily utilized to support short-term liquidity needs in connection with the Purchasing Power acquisition and related transactions.
In connection with the acquisition of Purchasing Power, the Company entered into a Fourth Amendment to its existing credit agreement, which among other changes provided for a new $125.0 million term loan ("Term Loan A") maturing November 15, 2029. Term Loan A bears interest at a variable rate based on SOFR plus an applicable margin determined by the Company's leverage ratio and amortizes through quarterly principal payments, with the remaining balance due at maturity. During the nine months ended September 30, 2026, the Company voluntarily repaid the full $125.0 million of the term loan, resulting in no outstanding balance as of September 30, 2026.
The Company also has $600.0 million aggregate principal amount of senior unsecured notes due November 2029, which bear interest at a fixed rate of 6.0%. The remaining principal amount of those notes remained unchanged during the period.
Asset-Backed Financing
The securitization and warehouse funding arrangements utilized by Purchasing Power remained in place following the Company's acquisition of Purchasing Power. Those arrangements are structured as non-recourse, asset-backed financings secured by underlying receivables and related cash flows. These arrangements are accounted for as secured borrowings, as the related receivables remain on the Company's balance sheet.
Following its acquisition of Purchasing Power, the Company repaid and terminated certain of those securitization and warehouse facilities, while continuing to utilize asset-backed financing as a key funding source. On February 26, 2026, a
wholly-owned securitization entity issued $220.0 million aggregate principal amount of asset-backed notes in a private placement transaction. These notes are secured by receivables held by the securitization entity, with collections applied through a customary priority of payments structure.
As of September 30, 2026, total asset-backed debt was $270.0 million, net of unamortized debt issuance costs. These arrangements include various financial and performance covenants. If certain thresholds are not met, this may result in rapid amortization of the outstanding debt, and if other covenants or requirements are breached, the lender may terminate the Company's ability to draw on the facilities, accelerate outstanding amounts, and exercise remedies against pledged collateral, including liquidation. As of September 30, 2026, no such events had occurred and we do not expect any such event to occur in future periods.
Debt Activity and Liquidity
Total debt, net increased to $865.8 million as of September 30, 2026 from $594.9 million as of December 31, 2025, primarily driven by (i) the asset-backed non-recourse funding debt that remained in place following the acquisition, and (ii) the issuance of new securitization debt, partially offset by repayments of asset-backed borrowings during the period.
The Company's asset-backed financing arrangements are non-recourse to the general credit of the Company and are secured solely by the underlying receivables and related assets held within the securitization entities. Accordingly, these assets are restricted and not available to satisfy the claims of the Company's general creditors.
Covenants
The Company's debt agreements contain customary financial and operating covenants, including leverage and interest coverage requirements. As of September 30, 2026, the Company was in compliance with all such covenants and believes it will continue to be in compliance in the future.
Commitments
Income Taxes
During the nine months ended September 30, 2026, we received net income tax refunds of $14.6 million. Within the next twelve months, we anticipate making estimated net tax payments of $3.2 million for United States federal income taxes and state income taxes. That expectation includes anticipated favorable impacts on the Company's cash taxes resulting from the One Big Beautiful Bill Act, which was signed into law on July 4, 2025.
Deferred income tax liabilities as of September 30, 2026 were $167.6 million. Deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis, which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts. The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods.
Leases
We lease management and information technology space for corporate functions under operating leases expiring at various times through 2034. Our corporate and segment management office leases contain renewal options for additional periods ranging from two to five years.
Contractual Obligations and Commitments
Future interest payments on the Company's variable-rate debt are primarily based on the Secured Overnight Financing Rate ("SOFR") plus an applicable margin determined by the Company's leverage ratio. Following the Fourth Amendment to the Company's credit agreement, borrowings under the Revolving Facility and Term Loan A bear interest, at the Company's option, at either (i) SOFR plus a margin generally ranging from 1.5% to 2.8%, or (ii) a base rate plus a margin that is lower than the applicable SOFR-based margin. In addition, the Company is subject to commitment fees on unused revolving commitments, which range from 0.25% to 0.50% based on the Company's total net leverage ratio. The Revolving Facility and Term Loan A mature in November 2029.
As of September 30, 2026, the Company had fully paid off the Term Loan A and had no outstanding borrowings under the Revolving Facility. Accordingly, future interest obligations under the Revolving Facility will depend on future borrowing activity and prevailing interest rates.
The Company's $600.0 million aggregate principal amount of Senior Notes bear a fixed annual interest rate of 6.0%, payable semi-annually, and mature in November 2029.
In addition, the Company has asset-backed financing arrangements associated with its securitization activities, which are secured by underlying receivables and related cash flows. These arrangements include contractual obligations for interest and principal payments based on the performance and collections of the underlying receivables originated by Purchasing Power and are generally non-recourse to the Company's other assets.
The Company has no long-term contractual obligations to purchase merchandise or other commitments requiring minimum purchases beyond its normal course of business.
Critical Accounting Policies
Our critical accounting policies are described in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to those policies during the nine months ended September 30, 2026, except as described below.
In connection with our acquisition of Purchasing Power on January 2, 2026, we adopted new accounting policies related to Purchasing Power's operations, including revenue recognition, receivables, and debt-related policies. A detailed description of these policies is included in Note 1 in the accompanying condensed consolidated financial statements.
Recent Accounting Pronouncements
Refer to Note 1 to the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements.
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