PRG Q2 2025: Four Technologies Revenue Surges 200%, Reshaping Growth Mix
Four Technologies, PRG’s buy now pay later (BNPL) business, delivered another quarter of triple-digit growth, signaling a decisive shift in the company’s growth levers and business model mix. Portfolio health and disciplined underwriting continue to anchor the core leasing business, while management’s conservative posture on credit and capital allocation positions PRG to weather ongoing category softness. The company’s guidance raise and ecosystem momentum highlight a pivot toward scalable, technology-driven revenue streams and multi-product engagement.
Summary
- Four Technologies' Profitability Inflection: BNPL segment’s sustained triple-digit growth and profitability mark a step-change in PRG’s earnings composition.
- Portfolio Discipline Anchors Core Leasing: Underwriting tightening and proactive risk controls keep write-offs within targeted bands, despite macro headwinds.
- Ecosystem Strategy Drives Optionality: Cross-sell, digital servicing, and omnichannel initiatives expand customer engagement and future margin leverage.
Performance Analysis
PRG’s consolidated revenue grew modestly, with the standout contribution coming from Four Technologies, which posted over 200% revenue growth and 167% GMV (gross merchandise volume) growth year over year. This BNPL business, acquired in 2021, is now profitable and represents a rapidly scaling share of PRG’s overall platform. By contrast, Progressive Leasing, PRG’s legacy lease-to-own segment, saw GMV contract 8.9% YoY—largely due to the Big Lots bankruptcy and deliberate credit tightening, both of which management sized as roughly equal drags on growth.
Portfolio performance remains a bright spot, with Q2 write-offs at 7.5%, 20 basis points better than last year and inside the targeted 6% to 8% annual range. This reflects the effectiveness of data-driven decisioning and disciplined risk posture, even as consumer demand for large-ticket durable goods remains soft. PRG’s direct-to-consumer marketplace and digital channels are gaining traction, with e-commerce now at a record 21% of Progressive Leasing GMV and the Prague Marketplace platform on track to surpass $75 million GMV for the year.
- BNPL Momentum Outpaces Core: Four’s revenue and GMV growth now materially outstrip the legacy leasing business, reshaping PRG’s earnings profile.
- Credit Tightening Impacts Top Line: Approval rate tightening and the Big Lots exit together masked underlying high-single-digit core growth potential.
- Margin Dynamics Mixed: Higher 90-day buyouts and portfolio runoff pressure leasing gross margin, while Four’s profitability and take rate (10%) offer future margin upside.
Management’s guidance raise for the year reflects confidence in ecosystem execution and portfolio stability, even as category demand and portfolio size remain pressured by macro and competitive factors.
Executive Commentary
"Four delivered its seventh consecutive quarter of triple digit GMV and revenue growth, continuing a positive trajectory that reflects the strength of our strategy and execution... In Q1 of 2025, we achieved profitability in the Four business. And with another profitable performance in Q2, we're now accelerating our momentum."
Steve Michaels, President and Chief Executive Officer
"Our progressive leasing team effectively managed the lease portfolio and delivered a result meaningfully better than expectations. At the same time, our Four technology team delivered another quarter of profitable triple-digit growth. Together these results reflect the power of our diversified platform and our ability to execute across multiple business models while investing in sustainable long-term growth."
Brian Garner, Chief Financial Officer
Strategic Positioning
1. Four Technologies as Growth Engine
Four Technologies, PRG’s BNPL platform, has become the company’s primary source of outsized growth, posting 200%+ revenue gains and achieving sustained profitability. With a trailing 12-month take rate of 10% and active shopper growth above 130%, Four is now a scalable, high-frequency, direct-to-consumer channel. The 4 Plus subscription product, now driving 85% of Four’s GMV, cements recurring engagement and monetization. This segment’s unit economics and cross-sell potential to leasing create a new margin and customer acquisition engine for PRG.
2. Disciplined Portfolio Management in Leasing
Progressive Leasing’s core performance is anchored by tight underwriting and proactive risk controls. Management’s deliberate tightening actions, taken in late 2024 and early 2025, limited GMV but enabled write-offs to remain inside targeted bands. This discipline ensures sustainable profitability but constrains top-line growth until approval rates normalize, which management expects to begin lapping in Q3 2025 and fully by Q1 2026.
3. Ecosystem and Digital Channel Expansion
PRG’s ecosystem strategy is broadening customer touchpoints, with direct-to-consumer marketplace, digital servicing (AI-powered chat and self-service), and omnichannel functionality. E-commerce penetration in leasing hit a record, and Prague Marketplace posted 38% GMV growth. These initiatives are designed to lower servicing costs, boost engagement, and create optionality for future cross-sell and margin expansion.
4. Capital Allocation and Shareholder Returns
PRG continues to balance reinvestment with shareholder returns, deploying free cash flow to fund growth initiatives, pursue strategic M&A, and return capital via dividends and share repurchases. The company ended Q2 with $222 million in cash, net leverage at 1.38x, and $309.6 million of buyback authorization remaining. Legislative tax changes will reduce future cash taxes, further enhancing capital flexibility.
5. Multi-Segment Optionality and Risk Diversification
The pivot to a multi-product, multi-channel model (leasing, BNPL, cash advance) diversifies PRG’s risk and revenue sources, reducing reliance on any single category or channel. The company’s ability to cross-sell, leverage data across products, and adapt underwriting dynamically positions it for resilience amid ongoing macro and competitive volatility.
Key Considerations
PRG’s Q2 reveals a business in transition, with legacy leasing stabilized by risk discipline and Four Technologies’ BNPL platform emerging as a credible, high-growth profit engine. The company’s ecosystem investments and digital expansion are offsetting macro softness, but the path to normalized growth in the core leasing segment remains dependent on consumer health and category demand.
Key Considerations:
- BNPL Profitability and Scale: Four’s profitability and take rate outpace many pure-play peers, but sustaining 100%+ growth rates will become harder as the base scales.
- Risk-Reward Balance in Leasing: Tight underwriting protects margins but caps near-term growth; management signals only incremental loosening ahead, contingent on data.
- Category Weakness Persists: Furniture, mattress, and appliance demand remains soft, with no near-term replenishment cycle expected to boost leasing GMV.
- Cross-Product Ecosystem Synergy: Early signs of value from cross-sell and data sharing between Four, leasing, and cash advance are positive, but require continued execution.
- Capital Allocation Flexibility: Enhanced by lower cash taxes and a healthy balance sheet, PRG can fund growth while returning capital to shareholders.
Risks
PRG faces persistent category headwinds in core leasing, with no imminent recovery in large-ticket durable goods. Competitive intensity in BNPL and regional leasing remains high, and aggressive growth in Four brings credit risk and potential margin volatility, especially as CECL reserving impacts reported earnings during peak periods. The company’s guidance assumes no material loosening of credit or macro improvement, and any adverse shifts in consumer health or partner stability could pressure results.
Forward Outlook
For Q3 2025, PRG guided to:
- Continued softness in leasing GMV due to macro demand and lapping of credit tightening actions
- Ongoing profitability and triple-digit growth at Four
For full-year 2025, management raised the midpoint of guidance:
- Consolidated revenue of $2.45 to $2.5 billion
- Adjusted EBITDA of $255 to $265 million
- Non-GAAP EPS of $3.20 to $3.35
Management highlighted several factors that will shape the outlook:
- Big Lots portfolio runoff will pressure leasing revenue and margins in the back half
- Four’s seasonality and CECL accounting will create Q4 margin headwinds, but underlying earnings power remains strong
Takeaways
PRG’s business model is evolving, with Four Technologies’ profitability and scale shifting the growth mix and margin profile. Core leasing remains disciplined, but category demand and portfolio size will remain pressured until macro trends improve.
- BNPL Emergence: Four Technologies is now a core growth and profit driver, with recurring subscription adoption and high transaction frequency supporting sustainable scale.
- Leasing Stability: Underwriting discipline and portfolio management protect margins, but top-line recovery will be gradual and data-driven.
- Digital and Ecosystem Leverage: Cross-sell and channel expansion are beginning to yield engagement and margin benefits, but require continued execution and partner traction.
Conclusion
PRG’s Q2 marks a turning point, as Four Technologies’ BNPL platform becomes a material, profitable growth engine and the company’s ecosystem strategy gains traction. While leasing faces persistent demand headwinds, disciplined execution and capital flexibility position PRG to capitalize on digital and multi-product opportunities as the macro cycle evolves.
Industry Read-Through
PRG’s results underscore a broader shift in non-prime consumer finance, where BNPL and subscription-based models are achieving scale and profitability, challenging traditional leasing and credit providers. The company’s ability to cross-sell and leverage digital servicing points to the increasing importance of ecosystem strategies in financial services. For peers in BNPL, leasing, and specialty finance, PRG’s disciplined approach to risk, capital allocation, and technology investment offers a roadmap for navigating cyclical volatility and scaling new business lines. Expect continued consolidation and cross-pollination between BNPL, leasing, and direct-to-consumer fintech models as the sector matures.