Good morning, and welcome to the PROG Holdings, Inc. second quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask questions, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. John Baugh, Vice President of Investor Relations for PROG Holdings. Please go ahead. Thank you, and good morning, everyone. Welcome to the PROG Holdings second quarter 2022 earnings call. Joining me this morning are Steve Michaels, PROG Holdings President and Chief Executive Officer, and Brian Garner, our Chief Financial Officer. Many of you have already seen a copy of our earnings release issued this morning, which is available on our investor relations website, investor.progholdings.com. During this call, certain statements we make will be forward-looking, including comments regarding our expectations related to the impact of our lease decisioning adjustments on write-off levels, Progressive Leasing write-off levels for full year 2022, and the benefits we expect from the adjustments we have made to our SG&A spend. I wanna call your attention to our safe harbor provision for forward-looking statements that can be found at the end of the earnings press release that we issued earlier this morning. That safe harbor provision identifies risks that may cause actual results to differ materially from the expectations discussed in our forward-looking statements. There are additional risks that can be found in our annual report on Form 10-K for the year ended December 31, 2021, which we encourage you to read. Listeners are cautioned not to place undue emphasis on forward-looking statements we make today, and we undertake no obligation to update any such statements. On today's call, we will be referring to certain non-GAAP financial measures, including adjusted EBITDA and non-GAAP earnings per share, which have been adjusted for certain items which may affect the comparability of our performance with other companies. These non-GAAP measures are detailed in the reconciliation tables included with our earnings release. The company believes that these non-GAAP financial measures provide meaningful insight into the company's operational performance and cash flows and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding the company's ongoing operational performance. With that, I would like to turn the call over to Steve Michaels, PROG Holdings President and Chief Executive Officer. Steve? Thank you, John, and good morning, everyone. I appreciate you being with us today as we discuss our second quarter results and update you on our business as we navigate this dynamic macro backdrop while continuing to support key growth initiatives. I'm proud of the team's ability to quickly adapt to conditions that have been especially challenging for our customers and POS partners. We expect these actions will provide future benefits as we aim to increase our share of the largely unserved addressable market. As you may have seen in our press release this morning, we launched a new exclusive partnership with Samsung.com. We are excited to have emerged from this competitive process as the exclusive provider of Samsung.com's lease-to-own payment options and are pleased to have onboarded yet another national e-commerce partner. While the full benefits of this relationship will not be realized in 2022, we believe we will see meaningful benefits in 2023 and beyond as the partnership continues to ramp. During our Q4 earnings call in February and most recent mid-June update, we said we expected headwinds to our 2022 results as we lap stimulus and other government support. Still, we believe our ability to manage the company's portfolio performance and expense structure while growing our customer count and generating significant free cash flow will help us remain in a strong position even with the slowdown. We further tightened lease decisioning during Q2 to address the increase in delinquencies and write-offs we are seeing due to the inflationary pressures our customers are feeling. As we move forward through this difficult environment, we will continue to make the necessary adjustments that we believe will move us back towards our targeted annual write-off levels of 6%-8%. Also in June, we announced adjustments to our SG&A spend levels in response to the headwinds we are experiencing and to align with our revenue outlook. While cost-cutting measures are never easy, these actions demonstrate our ability to quickly adapt our cost structure to changing economic conditions while maintaining investments in revenue-generating initiatives that we anticipate will support our future growth prospects. For our Progressive Leasing segment, second quarter GMV and revenues were in line with our revised expectations. Q2 GMV was down 2.4% year-over-year, while e-commerce GMV increased almost 18%. Representing 15.6% of Progressive Leasing's total GMV for the quarter. We have now added 32 e-commerce partners to our platform in 2022, with more consumer brands in the pipeline for the remainder of this year. Widespread weakness in retailer traffic, along with our tighter decisioning, drove the decline in GMV. However, that weakness was largely offset by share growth within many of our POS partners. Retailers and consumers need us more than ever as inflation remains at unusually high levels. As I've mentioned before, for retailers, we drive fast integration with prospective partners and incremental sales with existing partners. For consumers, we offer purchasing power through flexible payment options. While we have not yet seen an impact from credit providers tightening above us, there is increasing evidence that those pressures are beginning to build. Consumer cash reserves, which were inflated by government stimulus programs and reduced spending during COVID, are depleting rapidly as incomes struggle to keep pace with inflation, leading to increased credit utilization. We cannot predict the timing of when we may see a tailwind from tight credit above us, but we expect ultimately that the current economic trends are more conducive to POS partners and consumers benefiting from our offerings. In short, we'll continue to control what we can control, partner with new retailers, complete e-commerce integrations, improve the customer experience, and manage our decisioning in a way that we believe will return us to our targeted financial performance. Our Q2 adjusted EBITDA of $52.2 million was slightly better than our revised outlook as a result of lower than expected SG&A expense. The provision for leased merchandise write-offs for the second quarter was 9.8%. As the quarter progressed, we made additional decisioning changes that have resulted in improvement in our early-stage metrics, and we believe that the adjustments we have made year-to-date are working to drive our write-offs lower from Q2 levels. The average six-to-seven -month duration of our lease portfolio means that our portfolio quickly shifts to the new lease pools originated with tighter decisioning. As I mentioned earlier, the team executed well in the evolving environment. Portfolio performance remains a key focus, and we will continue to manage it through the remainder of the year in a manner that we believe will drive sustainable and profitable GMV with healthy unit economics. Our capital priorities remain unchanged. During the second quarter, we repurchased 3.9 million shares and have reduced our outstanding share count by 26% since the beginning of 2021. We ended the quarter with a leverage ratio of 1.67 x, which is still, in our opinion, within a comfortable range. We ended June with a cash position of $127.3 million, even after $98.4 million in share repurchases during the quarter. The capital we generate for the full year will continue to allow us to reinvest in the business and maintain a strong balance sheet, even with the dynamic economic backdrop. I will close with emphasizing the strength of our business model. Even in a challenging environment with negative GMV growth, we have demonstrated our ability to control unit economics, quickly reduce costs to align with revenue, and generate significant cash flow. Finally, I want to reiterate my appreciation for the resilience and teamwork of all PROG employees as we continue to execute on our strategy. I will now turn the call over to Brian for a more detailed look at the quarter's financials. Brian? Thanks, Steve, and good morning. The second quarter financial results were in line with our June 16th update and reflect continued challenging operating conditions as our customers manage the impact of the current inflationary environment. Our approach to navigating these headwinds is centered on addressing the financial drivers within our control. This includes making changes to our decisioning parameters to drive improved portfolio performance and managing our SG&A costs to appropriate levels for the current revenue outlook. With respect to the changes made in decisioning, over the course of the last few quarters, the company has made a number of iterative changes to Progressive Leasing's decisioning algorithms in response to the deterioration in customer lease payment patterns. We made the most significant of these changes in Q2 of 2022 based upon early indicators of increased delinquencies of the pools originated. As we have stated previously, the six-to-seven-month average duration of our lease portfolio allows the company to influence the delinquency profile of our books relatively quickly through adjustments to our decisioning. While the write-off performance in Q2 is elevated relative to historical levels, I am encouraged by the early data we've gathered on the performance of our recent lease pools, which have benefited from our tightening efforts. We believe we remain on track to close the year near the high end of our 6%-8% targeted annual write-off range. The annual outlook provided in our June update anticipates improvement from the write-off levels we saw in Q2. As mentioned in our June release, the company took material steps to reduce its cost structure to align with our revised expectations for the remainder of the year. While SG&A was elevated in Q2 of 2022, we expect these cost reduction measures will meaningfully reduce in SG&A as a percentage of revenue from current levels. These measures, including an approximately 10% reduction in our workforce, roughly $50 million of annualized costs compared to the plan that was the basis for our full year outlook provided in February of this year. Turning to the financial results for the quarter, starting with Progressive Leasing segment. Progressive Leasing's revenue was $631.3 million for the quarter versus $646 million in the year ago period, a 2.3% decline. Our larger gross leased asset balance in the period, which ended the quarter up 12% year-over-year, was a tailwind to revenue. However, our accounts receivable provision, which is a direct reduction to revenue, was $97 million in Q2 of 2022 compared to $39.8 million in the same period of 2021, more than offsetting the benefit of the larger portfolio. Progressive Leasing's gross margin was 30.4% versus 31.9% in the year ago period. The decline in gross margin was primarily the result of the higher accounts receivable provision. SG&A for the Progressive Leasing segment, excluding restructuring charges, was $81.9 million or 13% of revenues for Q2. Progressive Leasing provision for leased merchandise write-offs in Q2 was 9.8% or $61.8 million compared to 4.8% and $31.3 million in the same quarter last year. As discussed, we believe this period's write-off results will represent the high point for the year as the lease pools originated under the most recent tightening efforts become a larger percentage of our portfolio. Turning to consolidated results. Q2 revenues for PROG Holdings were $649.4 million versus $660 million in the year ago period, a decline of 1.6%. Adjusted EBITDA was $52.2 million or 8% of revenues in Q2 versus $104.9 million or 15.9% for the prior year period. The reduction in revenue and EBITDA was primarily attributable to decreased portfolio performance in the period relative to the stimulus-aided prior year period. We generated $57.4 million of cash from operations in Q2 and $155.7 million year to date. Our Q2 GAAP diluted EPS was $0.37, and our non-GAAP EPS was $0.52. We have $600 million of gross debt and $127.3 million of cash at the end of Q2, for a net leverage ratio of 1.67x our trailing twelve months adjusted EBITDA. We also entered the third quarter with $350 million of availability under our undrawn revolving credit facility. During Q2, we repurchased 3.9 million shares of stock for a total of $98.4 million at an average price of $25.23 per share. At the quarter end, we had $384.4 million remaining under our $1 billion repurchase program. In summary, our Q2 results were largely driven by the pressures on portfolio performance that negatively impacted near-term results. During the quarter, we adjusted our decisioning and aggressively addressed our SG&A spend levels in response to results caused by the pressures that have impacted our customers. We continue to monitor operational and financial metrics as we manage the business in a disciplined manner. I will now turn the call over to the operator for the Q&A portion of the call. Operator? We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster. Our first question will come from Kyle Joseph of Jefferies. Please go ahead. Hey, good morning, guys. Thanks for having me on, taking my questions. Yeah, obviously a difficult operating environment. Stepping back, I mean, you guys are, you know, one of the biggest, if not the biggest in the space. Can you talk about how the operating environment is impacting the competitive environment and what's happening to some of the smaller players? Hey, Kyle. Good morning. Yeah, I mean, it's a tough environment. As far as competition goes, I mean, it's pretty much more of the same. I mean, we've got a decent amount of competition in the regions. There's a number of players out there trying to win business. There's some turnover and choppiness in the regions, but that's not different than it has been for the last several years. I have not heard anything specific of any smaller players folding up shop or disappearing. The aggressiveness of offers kind of ebbs and flows. As you know, there's been the bigger impact or the bigger trend in the competitive environment has been the larger players becoming part of public companies, you know, certainly with Acima and with AFF. There's more movement in that arena. On the enterprise side, we haven't really seen a big change there either. We're always on the lookout for it so n o, w e have not seen the challenging conditions cause a decrease in competition, let's put it that way. I got it. You know, shifting to credit, I've been getting this question a lot. Folks are interested in auto finance, we talk about frequency and severity of losses. Can you give us a sense for the write-offs in the quarter? How much of that was frequency versus severity versus increase in reserve levels? Yeah, Kyle, I'll take a stab at that. With respect to write-offs, I mean, the 9.8% in the quarter is obviously elevated above where we've been historically, and we're working diligently to bring that metric down. In a challenging macro environment, we started to see the deterioration, as we mentioned on prior calls, kind of late in the year, last year, and into the front half of this quarter. We've made a series of changes along the way, most meaningful here in Q2. While it's still early, we will continue to examine the delinquency trends of these new originated cohorts. What we are seeing is encouraging in terms of their trend moving back towards historical levels from the currently elevated levels. Your question around frequency versus reserve. Really what we're seeing that's pushing us well outside the historical annual 68% with the 9.8%, it's been a reserve build over the course of the last few months. That is being driven by the portfolio that was originated prior to these most recent tightening efforts. That's where the bulk of the movement you're seeing. You see that in our Q with respect to the change in the reserve that's disclosed. But that's the most meaningful portion. Again, it's early. There's plenty of runway left for us as we close out the year. Our tightened efforts we've made to date are going to provide some relief as the pools originate after these tightened efforts become a higher concentration of the portfolio overall and start to bring some relief to the current levels. Got it. Very helpful. One last one from me. Congratulations on the new retail partner. Very excited. It feels like it's been a while since we've seen one announced in the space. You know, just regarding your pipeline, can you give us a sense for the conversations you're having with new partners and, you know, are they more receptive given how much the environment has really changed in the last six months? Yeah. Thanks, Kyle. We are excited about partnering with Samsung. We're pleased to have come out of that competitive process as the exclusive provider of one of the top global brands. You know, we continue to believe and have said that these conditions that we're in, while challenging, are where this business model should shine, both for consumers and for retail partners. I think from a GMV standpoint, not exactly that was your question, but our, you know, our - 2.4% GMV, while below where we wanted it to be, is a testament to the fact that we're actually outperforming the underlying performance of you know mixed basket of our retailers as it relates to headline comps. That's another kind of feather in the cap of the business model that we can gain share in these difficult times. All of that to be said that it should be a more attractive solution for retailers that don't have a fully developed finance stack. We've been consistent in that, and we continue to believe that these are, as you've observed over the years, long sales cycles. We're doing everything we can to compress that time. We're fast approaching code freeze season for most retailers as we prepare for the holiday season. Yeah, I mean, the conversations that we're having from a pipeline standpoint are positive and we look to you know to have conversion over the you know the next couple years. Great. Thanks so much for answering my questions. Thank you, Kyle. The next question comes from Anthony Chukumba of Loop Capital. Please go ahead. Good morning. Thank you so much for taking my questions. You know, allow me to ask a question that's a bit psychoanalytic. You put out a press release about signing up Samsung. If I recall correctly, typically, you don't put out press releases when you sign up new retail partners. Like, I don't recall a Best Buy one or a Lowe's one. I guess I'm just trying to figure out, like, why a press release about this particular one? Is it just a difference in sort of philosophy? Is it that you're super excited about this? Should we expect press releases on other partners? Like, how should we sort of think about that? I'm probably overanalyzing, but, you know, that's what we do on the sell side. No, I appreciate that, Anthony. It's a good question, I mean, because it has not been this company's DNA to put out the information like that. I would say that partially, you know, that was when Progressive was under the Aaron's umbrella, and now that we're a standalone public, maybe we do have a different philosophy. I would also say that in the instance of Lowe's and Best Buy, you know, folks like yourself and specifically you would break the news about an exciting partner that we'd have and then we would be forced to respond to it. I think we decided to kind of own our own news cycle and put it out there. And we are excited about Samsung. We think a top five global brand endorsing the program and endorsing our leading position and capabilities is a thing to talk about. So we decided to partner with them and put the release out. Got it. Fair enough. Okay, just one follow-up question. It's more on the credit tightening. How should we think about credit tightening from the perspective of like, I guess acceptance rate, credit acceptance rates, right? Like, in other words, like when you tightened, did the acceptance rate go down from 70% to 60%, 60% to 55%? Like, how should we think about order of magnitude? Yeah. Certainly. Approval rates are kind of how we measure that. It's the same thing as acceptance rates in your words. You know, we took a series of tightenings, and as you know, during the pandemic, after the first kind of shock wore off, we looked for opportunities to actually increase approval rates because of the payment conditions and the liquidity that was in the market. You got to look at it a couple different ways. If you were to look at Q2 approval rates versus Q2 of 2021, we're probably down about 400 basis points. If you were to look at Q2 of 2022 versus Q2 of 2019, kind of undisturbed pre-pandemic, it's more like 100 basis points. Now, as Brian said, we tightened during the quarter, so April approval rates were higher than June approval rates. To give you another more, you know, useful data point, if you look at kind of as we sit here today, last week, if you will, it's a little bit more pronounced, the change. We're more like, you know, 600 or 700 basis points lower than last year and about 200-ish basis points lower than Q2 of 2019. I'm sorry, July 2019. I'm so lost right now. Sorry. What was the change in the year-over-year and then what was the change over 2019? I'm sort of confused. Okay. Sorry. The average approval rate in Q2 of 2022, right? The quarter we're reporting on now was about 400 basis points lower than last year in 2021. Okay. It was about 100 basis points lower than the second quarter of 2019 before the pandemic. Got it. Okay, that's helpful. Thank you. Those numbers are a little bit wider if you look at mid-July versus the average of the quarter. That's what I was trying to communicate. Okay, got it. Thanks for clarifying. Got it. The next question comes from Jason Haas of Bank of America. Please go ahead. Hey, good morning, and thanks for taking my questions. The first is just on the write-off expectations for the rest of the year. I think I heard high end of 6%-8%. Was that, is that the annual number? Is that what's expected for the second half? And then what sort of GMV growth are you expecting for the second half to get there? Yeah. I think our commentary was near the high end of the 6%-8%, and that's on an annual basis. As we get to the end of the year and look back over the trailing 12, Jason, we expect to be near that 8%. We haven't given. You know, on the GMV, you know, we haven't specifically guided the GMV, but I will tell you that, based on what we're seeing now and what informed our pre-announcement in mid-June, we're anticipating having the back half GMV be weaker than the front half. That's built into the outlook, the revenue outlook. I know it may be difficult to kind of triangulate that because of moving in various disposition types, but we're expecting weaker GMV, negative, for the year and the back half being weaker than the front half. Got it. That's helpful. Then I wanted to ask about how the Vive segment's performing. It looks like it's been pretty strong. I'm curious if you're tightening credit there or maybe if you're seeing a different dynamic for that customer because I know it's a little more higher income than the Progressive Leasing business. Yeah. Vive's has been strong over the last couple years. It is also seeing some headwinds from a GMV production standpoint. It has a much different revenue recognition model and GMV trends don't impact revenue quite as quickly as it does on the leasing model. It has been strong and resilient through this cycle. It's a longer average duration of the portfolio, so we managed it differently during the pandemic. We have tightened a little bit, although we did not loosen during the pandemic when the liquidity conditions were so favorable. I don't have the same kind of approval metrics that I just gave Anthony on the leasing side, but we're tighter than we were pre-pandemic. We continue to look for evidence of primaries or competitive secondaries tightening in different retail environments because as you all know, that's our standing assumption is going to happen, although we haven't seen much evidence of it, and it's too early to tell. Vive is managing its portfolio very well, and looking for opportunities to tighten and to react to what the credit supply around it and above it is doing so that we can manage the reserve rates within a tight tolerance, but also try and achieve growth and partner well with our POS partners. Got it. That's helpful color. Thank you. The next question comes from Bobby Griffin of Raymond James. Please go ahead. Good morning. This is Alessandra Jimenez on for Bobby Griffin. Thank you for taking our questions. First, I kind of just wanted to dive a little bit more into the more recent demand and payment activity trends. Have you seen kind of a somewhat stabilization versus the mid-June business update, or are trends still kind of continuing to deteriorate and remain volatile? Well, it certainly continues to be a dynamic market. I can't say that things have changed materially in the last month, you know, since June. We're kind of looking at an origination pool, kind of static pool analysis. We always do this no matter what the environment is, but we're looking at the composition of the portfolio that was originated before the Q2 decisioning changes and then the ones that were originated after. We're seeing, you know, impact to payment behavior and pool performance based on those decisioning changes. As far as kind of some macro shock or shift function up and improvement or deterioration in overall payment performance, we haven't seen a change, a material change since the mid-June update. Okay. That is helpful. Can we maybe talk a little bit more about the steps you've taken to align the cost structure? What part of the workforce was that 10% decline in? Are you continuing to cut costs, or do you feel good about where you are today based on the current portfolio performance? Yeah, I'll take that. Just with respect to the cost measures. First and foremost, these actions are difficult, especially when they involve our employees. We absolutely took these steps knowing that they were going to be difficult, but by understanding the top-line projections that we were putting out there. We aligned quickly as we saw the deterioration in the portfolio and the consumer trends shifting as a result of the current environment. Like I said, these were meaningful. You mentioned roughly 10% of our headcount. They were focused primarily on driving increased efficiencies throughout the organization with focus on right-sizing the variable costs for the revenue picture that we were staring at or we are staring at. A meaningful portion of those cost measures came from just getting more out of the business and driving efficiencies. We saw that in our sales functions. We saw that in our operational functions. We really wanted to emphasize the importance of maintaining our investment layer of future growth. We are not at a point where we want to wind those back meaningfully. We believe there's very meaningful traction we have, and we've maintained that in technology and elsewhere. We've continued to include those as part of our cost structure. Like you mentioned, we expect these to become more evident in the P&L as we exit the year and start to trend more towards pre-pandemic posture as a percentage of revenue. That sets us up well, I think, going into 2023 from a run rate perspective. That's, I mean, it's probably worth mentioning. I mean, that's an outcome even after, you know, absorbing some of the inflationary pressures that we've seen on wages, et cetera, throughout the course of the year. Thank you so much, and best of luck on the back half of the year. Thank you. The next question comes from Brad Thomas of KeyBanc Capital Markets. Please go ahead. Hi. Good morning. Thanks for taking my questions. I apologize if I missed this, but did you talk about what the customer growth was in the quarter? I know that had been trending pretty favorably the last few quarters. How is the customer count trending for you? It is trending higher. It's in our Q. I don't have that number right in front of me. We do have that disclosed in our Q. Okay. No problem. You know, maybe another question for you. You know, Steve, as you and the team are talking to retailers where we know that sales are challenged and getting a bit softer of late, what are you hearing from them in terms of you know, trying to use more tools from the Progressive toolkit, and you know, the likelihood that they may take on more and lean more into Progressive in the quarters ahead here? Yeah. Thanks, Brad. I mean, we're having great conversations there, and I think that's one of the reasons why we've been able to gain share within a number of our retail partners, is because we've been able to become, you know, more important to the retailers that we currently have and save more sales. Things like marketing that we've talked about before, both direct consumer marketing from Progressive, co-branded marketing with retailers and Progressive, and then even cross-marketing with multiple retailers within our preferred partner network, sending out kinda joint offers. Those things are becoming. We're having great conversations and our marketing teams are partnering well with their counterparts at our retail partners. As I think I mentioned in a previous quarter, we have had some conversations about potentially accelerating certain initiatives that were already on the roadmap, but maybe not slotted until 2023. Those things are difficult, right? Everybody has a good idea that says, "Let's do this, and let's get it done before holiday 2023 or 2022." Then, the real world comes in and there's competing priorities. We're constantly fighting through that slog and trying to prove or demonstrate with data why our initiative has a bigger size of the prize than something else they may be working on. We're having some success there. There's tons of examples of ways that we can become more productive, ways that we can continue to integrate into our retail partners and become a bigger part of their business. These are the types of conditions where those conversations are fruitful. We look forward to continuing to prove the value of our partnership. Hey, Brad, just to follow up, just what was brought up in front of me here. The total active customers, just under 1.1 billion as of June 30 versus just about 990,000 for the same period, 2021, and that's a total customer count across the organization. That's a 9.2% increase. Progressive Leasing was 965,000 versus 905,000 same period last year, and that's a 6.6% increase. It's really helpful. Thank you. I think that certainly, you know, gives us some optimism about the continued growth prospects for the business. Just as it relates to, you know, revenues, I know you're lapping some of the, you know, tightening and early buyout trends are normalizing here, I think a bit. How are you all thinking about, you know, revenues in 3Q? I mean, I think it's implied that maybe they get a little bit better even than what you just had in 2Q. You know, any more color about how you're thinking about, you know, overall revenues in the back half would be helpful. Yeah. I think your intuition is right, and you can kinda do the math on where we're at to date and where our guide is. I think you're right. It starts to imply some improvement as we enter the back half. I mean, really the challenge that we've been facing so far this year, you know, you've heard me say before, as the portfolio grows, that's a tailwind for revenue. You know, you highlight customer count, and you can also look at gross leased assets, and those are moving in the right direction. What's been, you know, more than offsetting the momentum that we've had there as we start to see kinda consumer dispositions come back, you know, 90 days starting to trend back down to Earth, et cetera, it's being offset by the AR provision and the buildup there, including the reserves, as the portfolio has felt pressure. I think the path to a better place and a path to revenue growth, I mean, it starts with GMV. We've gotta get that on the upward trajectory. I would say the GLA and seeing this AR provision because of the decisioning changes that we've made start to come back down to a reasonable level. That's the recipe for revenue growth moving forward. I think we've taken meaningful steps like we talked about getting the portfolio in the right place, and I think that's a big step in the right direction. Great. Thanks so much, and good luck. Thanks, Brad. The next question comes from Vincent Caintic of Stephens. Please go ahead. Thanks. Good morning, and congratulations on winning Samsung. I was looking forward to hearing more of those merchant wins. Wanted to follow up with the discussions you're having with your potential merchant partners and a bit of a two-part question. First, how's their focus and prioritization when they think about adding lease to own? I remember, I think, during the pandemic, there wasn't as much focus, but sort of wondering what their thinking is now. Second part, now I know some of these merchants, like Samsung, have other finance providers in categories like buy now, pay later as an example. I know you're still looking for evidence that primary lenders are tightening, but from your discussions with your potential merchant partners, are you hearing them, you know, maybe getting frustrated with their current lenders or seeing tightening and, you know, trying to increase sales conversion, by adding Progressive and looking outside their existing partnerships? Thank you. Yeah. Thank you, Vincent. Yeah, I mean, those two questions go together, and I think the short answer would be yes. You know, a more robust answer would be clearly during the pandemic, it was tough to get an audience because things were going so great. You know, we've all talked about that. Now comps are challenged and, you know, depending on what your view is on what the macro looks like from a recession standpoint, is that gonna happen? Is it not gonna happen? Is it gonna happen in 2023? Retailers are looking for solutions to, you know, to have a more full suite of options and lease-to-own for those that don't have it. Seems like a no-brainer to us. That's our job to communicate that with retailers. We are having productive conversations about that, and having conversations about how do we get a pilot? How do we prove this? How do we get put into the priority stack for development resources? As it relates to other credit supply, I mean, we haven't seen evidence of primaries tighten, but there's undeniable evidence about BNPL players tightening. I mean, they've ratcheted down out of necessity massively. When I'm talking about BNPL in that instance, I'm being more specific to the pay in full providers. As we've said many times, those aren't really a competitor for a lease-to-own kind of $1,000+ average ticket. It does go into the psyche and the overall kind of posture of the retailer, both the merchant merchandising department as well as the finance department. Those things, while you know the shiny new object of paying for during the pandemic probably took away some mind share from us, now those things are not maybe living up to the expectations. There can be a follow-up conversation with us that we think can be very fruitful and or have massive positive ROI for the retailer. I think the Samsung thing is a nice data point for that, and we look forward to. We have a roadmap with partnering with Samsung that will, you know, kind of crawl, walk, run, just like we have previously. Those are the types of things that can really provide good evidence and give good data for our biz dev team to go out and talk to future retailers. We're optimistic, but we're also realistic about the sales cycle and the time it takes to get the large kind of enterprise clients that we're trying to convert across the goal line. Okay, perfect. That's very helpful. Thank you. I guess speaking about a recession and kind of going back to underwriting, I guess if you could give us a sense. It sounds like you feel comfortable with that underwriting perhaps has stabilized here. From the write-offs, it seems like, you know, the reserving is from losses that maybe haven't happened yet, so maybe reserves for future losses. Sort of wondering what are your assumptions and expectations that have been baked in when you think about the macro and, you know, and a potential upcoming recession. Thank you. Yeah, I mean, so I kind of, without being too cute, like, I feel our customer is in a recession right now. Like, we may not be in a recession, but the bottom 40%. You see the Walmart news. I mean, there's just so many data points that, you know, our customer is in a recession. There's strong employment, right? That's a good thing. That's why it's kind of a unique set of economic circumstances right now. But our customer is facing, you know, double-digit inflation in the things that matter, in energy and housing and food. They're feeling it already. We're not anticipating things getting materially worse, but we're not anticipating them getting better. We're firmly, as we always are, firmly watching our pool performance. Other than our customer service hub activity and our call center activity, there's not a ton that we can do on a pool that was originated in, you know, December of 2021 or January of 2022. The pools that, as Brian said, that were originated post a couple of our decisioning changes, we're watching them and seeing how they're performing. We feel, you know, we feel good about the early indicators on those pools, and we're doing everything we can to not have the pools originated before those changes deteriorate further. We're not anticipating massive improvements in those, you know, or any improvements, quite frankly, in those pools' performance, but you know, we're doing everything we can to make sure they don't deteriorate further from here. Okay. Okay, that's perfect. Thanks very much. The next question comes from Anthony Chukumba of Loop Capital. Please go ahead. Hey. Thank you, guys. My question is on approval rates. I think you mentioned that maybe right now your approval rates are 200 basis points lower than 2019 levels. I think in Q2 you mentioned they were 100 basis points lower than 2019. Those are much tighter conditions there, but also your funnel of potential customers is a lot bigger. You have a lot more merchants on the platform, and I think you mentioned you have 30 new e-commerce merchants added in, the first half of the year. My question is like, what is happening to just overall applications? Before you can approve them, someone has to apply. Give us your thoughts on what you're seeing, coming to you before you approve it. Is that growing? Is that down because of the economy? My follow-up is, because we do have a job market, a strong job market, you know, is there a chance for better recovery later on down the road when people adjust to their new cost structures, but they still have their jobs and they start reengaging on payments if they've lapsed? Thank you. Yeah. On the first part of the question, you're right. There's, you know. The top of the funnel is applications are higher because we have a broader base of retailers, and we're adding new e-com players all the time. I do wanna drill into approval rates quickly as it relates to being compared to pre-pandemic 2019 levels. There has been channel shifts, right? And we talk about 32 new e-com retailers just this year. So the source of your applications will impact approval rates as well. By their very nature, e-com or digital applications would have a lower approval rate than in-store, you know, sales-assisted applications. When we're comparing July of 2022 approval rates to July of 2019 approval rates, channel shift is a sizable component of those changes besides our view on the health of the consumer in this period versus that period. Back to your question about the app volume. I mean, app volume is up nicely. And conversion is hanging in there. We're just not approving as many as we were back then for various reasons, because we're managing the portfolio to our targeted levels. What we expect and what we hope is we can continue to diversify the base and broaden the base of retailers and new consumers, to Brad's point about our customer base going up, such that when things do turn or when we see the tightened credit supply above us, which is still our base case assumption, the top of the funnel opens up even wider, and we have a bigger pool of applicants to approve and to convert and to grow GMV with. There's work being done during this time of maybe more caution, to help us grow when we come out of the other side of this. Your question about employment. I mean, incomes matter, right? Our customer is resilient and lives through various recessions or cycles a lot. They'll get a second job, they'll pick up a part-time job, they'll do something. I do expect that they can adjust to the new normal. As long as things don't continue to get progressively worse, they just kinda stay the same, strong employment and helps. Now, so far, wage inflation hasn't caught up or hasn't kept up with cost inflation for our consumers, so they're in a deficit. You know, over time, they will make the necessary adjustments and hopefully that'll show through in our portfolio performance and customer payments. Great. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Steve Michaels for any closing remarks. Yes, thank you, and we appreciate you joining us this morning, as we update you on Q2. I know I said this in my prepared remarks, but I'd certainly like to thank all the PROG people. It's a tough environment, and they're doing a great job taking care of our customers and partnering with our retailers to continue to prove the value of the partnership every day. I really appreciate everybody's efforts. It's a tough environment that we're navigating through. Who would have thought that it would be harder to exit the pandemic than to manage into the pandemic? That's where we find ourselves. We appreciate y'all's interest, and we look forward to updating you in the coming quarters. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.