PRG Q1 2025: BNPL Revenue Up Triple Digits, Offsetting Big Lots $30M GMV Hit
PRG’s first quarter outperformed on earnings, driven by robust BNPL growth and disciplined portfolio management, despite a $30 million GMV headwind from a major retail partner’s bankruptcy. Management revised its outlook downward to reflect persistent consumer demand softness, but continues to focus on cross-sell, digital, and cost discipline levers. The company’s ecosystem strategy and stable lease portfolio position PRG to weather ongoing macro volatility.
Summary
- BNPL Surge Powers Diversification: Four Technologies posted triple-digit revenue growth and its first positive EBITDA, cushioning retail softness.
- Retail Partner Loss Drives Mix Shift: The Big Lots bankruptcy removed $30M in GMV, but PRG gained share with other partners.
- Portfolio Health Remains Central: Write-offs stayed below expectations, and management kept risk controls tight amid macro uncertainty.
Performance Analysis
PRG delivered consolidated revenue growth of 6.6% year-over-year to $684.1 million, exceeding the high end of guidance, with non-GAAP EPS and adjusted EBITDA also beating expectations. This outperformance was underpinned by Four Technologies, PRG’s Buy Now Pay Later (BNPL) business, which grew revenues at a triple-digit pace and turned its first quarter of positive adjusted EBITDA. Progressive Leasing, the core lease-to-own segment, saw GMV fall 4% due to the Big Lots bankruptcy and tighter lease approvals, but excluding Big Lots, GMV grew low to mid-single digits, highlighting execution with existing partners.
Gross leased asset balances entering the year were up 6.1% YoY, supporting higher lease revenue and 90-day purchase activity. Write-offs were 7.4% of lease revenue, slightly better than expected, as risk controls from late 2024 and early 2025 took effect. Gross margin at Progressive Leasing compressed by 112 basis points to 29.3%, reflecting both the competitive environment and a shift in mix. SG&A as a percentage of revenue rose modestly as PRG continued to invest in marketing, technology, and sales enablement to support long-term growth.
- BNPL Outperformance: Four Technologies delivered its sixth straight quarter of triple-digit GMV growth, reaching profitability and diversifying PRG’s revenue base.
- Retail Partner Churn: The loss of Big Lots represented a $30 million GMV headwind in Q1, and will continue as a $130-$150 million annual drag.
- Portfolio Resilience: Lease approval rates fell 300-400bps YoY, but write-offs and early delinquencies tracked within targeted ranges, underscoring disciplined credit management.
Despite a challenging consumer environment, PRG’s focus on cross-sell, digital channels, and cost discipline helped offset macro and partner-specific headwinds. The company’s multi-product strategy and healthy portfolio provide a buffer as demand for big-ticket durable goods remains soft.
Executive Commentary
"Our BNPL business Four Technologies continue to grow revenues at a healthy triple digit rate while achieving its first quarter of positive adjusted EBITDA. And I'm optimistic about our broader ecosystem strategy. We're focused on meeting consumer needs through both leasing and BNPL products, driving more cross-sell opportunities and strengthening the Prague brand across every touch point."
Steve Michaels, President and Chief Executive Officer
"Portfolio performance in Q1 for progressive leasing was better than expected, and that helped push earnings to above the high end of our outlook. The provision for lease merchandise write-offs was 7.4%, and gross margin was 29.3%, down about 112 basis points from last year. We have a track record of delivering consistent portfolio performance and remain confident in our ability to stay within this range for 2025."
Brian Garner, Chief Financial Officer
Strategic Positioning
1. BNPL Expansion and Ecosystem Leverage
Four Technologies, PRG’s BNPL platform, is now a material growth engine, with six consecutive quarters of triple-digit GMV growth and its first quarter of positive EBITDA. This business serves both new and overlapping customers with Progressive Leasing, enabling PRG to cross-sell and deepen customer engagement. The average order value in BNPL is $120, focused on apparel, cosmetics, and consumables, providing resilience against big-ticket demand softness.
2. Retail Partner Diversification and Share Gain
The bankruptcy of Big Lots, a major partner, created a $30 million GMV hole in Q1, but PRG successfully redirected former Big Lots customers to other retail partners. Active door count grew nearly 5% YoY (excluding Big Lots), and PRG gained balance of share with existing partners. New partnerships, such as the ramp with American Signature, and deeper e-commerce integrations are expanding the addressable market.
3. Portfolio and Risk Discipline
Write-offs and early delinquencies remain tightly controlled, with iterative tightening of lease approval rates (down 300-400bps YoY) and dynamic credit models. PRG’s short-duration portfolio enables rapid risk adjustment, a core strength as macro conditions remain volatile. Early stage performance metrics indicate that recent vintages are performing as intended, and management expects to stay within the targeted 6-8% annual write-off range.
4. Digital and Direct-to-Consumer Investments
Marketplace, PRG’s direct-to-consumer digital channel, delivered double-digit GMV growth and is on track for $75 million in GMV this year. Investments in digital personalization, app experience, and lifecycle marketing are driving application growth and higher repeat and reactivated customer metrics. These initiatives support both incremental GMV and partner sales, reinforcing PRG’s ecosystem approach.
5. Capital Allocation and Shareholder Returns
PRG remains committed to a balanced capital allocation strategy: funding organic growth, pursuing selective M&A, and returning excess capital via dividends and buybacks. In Q1, PRG repurchased 936,000 shares and paid a $0.13 dividend, with $335.2 million remaining under its buyback authorization. The company’s net leverage sits at 1.42x EBITDA, providing flexibility for future investments.
Key Considerations
PRG’s Q1 underscores a shift from pure top-line growth to a more defensive, diversified, and risk-managed model, as macro and retail channel volatility intensify. Investors should note:
Key Considerations:
- BNPL’s Role as a Growth Buffer: Four Technologies’ profitability and rapid scaling provide a counterweight to lease-to-own cyclicality.
- Retail Churn Risk Remains: The Big Lots bankruptcy’s $30M quarterly GMV impact will persist, but PRG’s ability to redirect customers and grow share with other partners is critical.
- Credit Quality Outperformance: Write-offs and delinquencies remain inside guidance, validating PRG’s dynamic risk management and short-duration portfolio structure.
- Digital Channel Scaling: Marketplace and direct-to-consumer investments are delivering incremental GMV and higher engagement, supporting long-term ecosystem ambitions.
- Cost and SG&A Discipline: SG&A rose modestly as a percent of revenue due to targeted investments, but management remains focused on aligning spend with revenue and maintaining flexibility.
Risks
Persistent macro uncertainty, inflation, and tariff volatility threaten both consumer demand and retail partner stability, especially in big-ticket categories. The loss of another major partner or further consumer pullback would pressure GMV and revenue. While credit performance is currently strong, any sharp deterioration in employment or consumer liquidity could drive higher write-offs. The company’s guidance does not assume a recession, so downside risk exists if macro conditions worsen materially.
Forward Outlook
For Q2, PRG guided to:
- Seasonally lower revenue as tax season buyouts subside
- Write-offs as a percentage of lease revenue at the high end of the 6-8% annual range, due mainly to denominator effects
For full-year 2025, management lowered guidance:
- Revenue: $2.425 to $2.5 billion
- Adjusted EBITDA: $245 to $265 million
- Non-GAAP EPS: $2.90 to $3.30
Management cited a “difficult operating environment with soft demand for consumer durable goods” and no material change in credit posture as drivers of the revision. No GMV guidance was provided for the remainder of the year due to visibility challenges.
- Continued focus on cross-sell, digital, and cost management
- Expectation to remain within targeted write-off range for the year
Takeaways
PRG’s Q1 demonstrates its ability to manage through disruption by leveraging BNPL growth, risk controls, and digital investments, even as retail channel volatility and consumer demand headwinds persist.
- BNPL and Digital Cushion Lease Weakness: Four Technologies’ profitability and Marketplace expansion are offsetting GMV headwinds from retail partner loss and demand softness.
- Risk Controls Anchor Portfolio Health: Write-offs and delinquencies remain inside guidance, validating PRG’s dynamic risk management and short-duration portfolio structure.
- Visibility Remains Low, Execution Discipline Paramount: Investors should monitor retail partner churn, macro shocks, and the ability of digital and BNPL channels to sustain growth and cash flow in a volatile environment.
Conclusion
PRG’s Q1 2025 results showcase the company’s operational discipline and strategic diversification, with BNPL growth and portfolio resilience offsetting significant retail partner loss and macro headwinds. The lowered outlook reflects a realistic assessment of persistent demand risk, but PRG’s ecosystem strategy and risk controls position it to navigate ongoing volatility.
Industry Read-Through
PRG’s quarter highlights key trends for the broader lease-to-own and BNPL sectors: The ability to flex risk controls and rapidly scale digital channels is increasingly vital as consumer demand for big-ticket items softens and retail partner churn risk rises. BNPL’s outperformance signals that lower-ticket, flexible payment models are gaining share, even as traditional lease-to-own faces cyclical pressures. Retailers and fintechs exposed to durable goods should expect continued volatility, while those with strong digital and cross-sell capabilities are better positioned to offset macro shocks. Capital discipline and short-duration portfolios will be critical for navigating further economic uncertainty in this sector.