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PROG Internal Prog Holdings, Inc. Investor Presentation 2025
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PROG Internal 2 Safe Harbor Statement Statements in this presentation regarding our business that are not historical facts are "forward-looking statements" that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as "continue", "expectation", "outlook", "assumes" and similar forward-looking terminology. These risks and uncertainties include factors such as g terminology, such as "continuing", “starting”, “target”, “uncertainty”, "believe", “will”, "outlook", “assumes” and similar forward-looking terminology. These risks and uncertainties include factors such as (i) continued volatility and challenges in the macro-economic environment and, in particular, the unfavorable effects on our businesses from the impacts of inflation, a higher cost of living, the imposition of significant tariffs on imported goods and elevated interest rates, and the impact of those headwinds on: (a) consumer confidence and customer demand for the merchandise that our retail partners sell, in particular consumer durables, such as home appliances, electronics and furniture; (b) our customers’ disposable income and their ability to make the lease and loan payments they owe the Company; (c) the availability of consumer credit; and (d) our overall financial performance and outlook; (ii) the impact of the uncertain macro- economic environment on our proprietary algorithms and decisioning tools that we use to approve customers such that they are no longer indicative of our customers’ ability to perform, which in turn may limit the ability of our businesses to manage risk, avoid lease and loan charge-offs and may result in insufficient reserves to cover actual losses; (iii) a large percentage of Progressive Leasing's revenue being concentrated with several key retail partners, and the loss of any of these retail partner relationships materially and adversely affecting several aspects of our performance; (iv) Progressive Leasing being unable to attract additional retail partners and retain and grow its relationships with its existing retail partners, resulting in several aspects of our performance being materially and adversely affected; (v) Progressive Leasing being unable to attract new consumers and retain and grow its relationships with its existing customers materially and adversely affecting several aspects of our performance; (vi) Vive and Four’s business models differing significantly from Progressive Leasing’s lease-to-own business, which means each of these businesses have different risk profiles; (vii) our efforts to modernize and enhance certain enterprise-wide information management systems and technologies adversely impacting our businesses and operations; (viii) our inability to protect confidential, proprietary, or sensitive information, including the confidential information of our customers, being adversely affected by cyber-attacks or similar disruptions, which may result in significant costs, litigation and reputational damage or otherwise have a material adverse impact on several aspects of our performance; (ix) the inability of our businesses to successfully operate in highly and increasingly competitive industries materially and adversely affecting several aspects of our performance; (x) our business, results of operations, financial condition, and prospects being materially and adversely affected due to Progressive Leasing failing to maintain a consistently high level of consumer satisfaction and trust in its brand; (xi) our businesses being subject to extensive federal, state and local laws and regulations, including certain laws and regulations unique to the industries in which our businesses operate, that may subject them to government investigations and significant monetary penalties, remediation expenses and compliance-related burdens that may result in them changing the manner in which they operate, which may be materially adverse to several aspects of our performance; (xii) our performance being materially and adversely affected due to the transactions offered to consumers by our businesses being negatively characterized by federal, state and local government officials, consumer advocacy groups and the media; (xiii) our capital allocation strategy and financial policies, including our current stock repurchase and dividend programs, as well as any potential debt repurchase program not being effective at enhancing shareholder value, or providing other benefits we expect; (xiv) any significant disruption in our vendors' information technology systems, or disruptions in the information our businesses rely on in their lease and loan decisioning, materially and adversely affecting several aspects of our performance; and (xv) the other risks and uncertainties discussed under "Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025. Statements in this presentation that are "forward-looking" include without limitation statements about: (i) the ability of our business model to be self-funding; (ii) our free cash flow generation and profitability; (iii) our portfolio performance; (iv) our expectations regarding the results of, and our ability to execute, our three-tiered strategy; (v) our capital allocation priorities; (vi) the competitive advantages and other benefits we expect from our proprietary data sets and decisioning tools; and (vii) our outlook for 2025. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this presentation.
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PROG Internal Who we are PROG Holdings, Inc. (NYSE:PRG) is a financial technology holding company headquartered in Salt Lake City, UT, that provides transparent, flexible, and inclusive payment options to help consumers create a better today and unlock the possibilities of tomorrow through financial empowerment. PROG Holdings' operating segments include Progressive Leasing, an in-store, app-based, and e-commerce point- of-sale lease-to-own solutions provider , Vive Financial, an omnichannel provider of second -look revolving credit products, Four Technologies, which offers Buy Now, Pay Later ("BNPL") payment options to consumers, and Build, an innovative credit building financial management tool. 3 What we do. ▪ We partner with tens of thousands of national, regional, and local retailers to offer innovative, transparent, and competitive consumer purchase options with flexible payment terms ▪ We offer retailers access to incremental revenue growth from otherwise unconverted sales opportunities ▪ Our virtual technology -based platforms offer immediate decisioning at the point-of-sale, integrating seamlessly with e-commerce, app-based, and brick-and-mortar retail platforms ▪ Our technology and employees provide our retail partners and customers with award-winning customer service and partner support
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PROG Internal 4 Key Investment Highlights Profitable, asset-light, self-funding business model with consistent free cash flow generation Large addressable market, broadly underserved Proprietary AI/ML-based decisioning optimizes approval rates while delivering consistent portfolio performance Scalable technology platforms allow for customizable integrations with retail partners of all sizes Data-driven marketing attracts new customers; Award-winning customer care drives repeat business
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PROG Internal PROG Holdings at a Glance Revenue $2.463 B Adjusted EBITDA $274.0 M 5 Non-GAAP EPS $3.41 Cash Flow from Operations $138.5 M Historical LTO annual write- off range1 6-8% Source: Company SEC filings 1Provision for lease merchandise write-offs as a % of revenue FY 2024 Results
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PROG Internal 6 Addressable market approximates 40% of U.S. population 40% 4.3% 6.8% 7.8% 9.3% 12.5% 16.2% 20.7% 22.3% 300-499 500-549 550-599 600-649 650-699 700-749 750-799 800-850 Sources: FICO.com and Progressive Leasing, Serving the underserved U.S. FICO Score Distribution
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PROG Internal 7 Three-Pillared Strategy Grow our GMV through existing merchant partners, new partners, and direct-to- consumer initiatives Expand our ecosystem to increase access and deliver more value to our customers Enhance our industry-leading consumer experience Grow Expand Enhance
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PROG Internal Capital Allocation Priorities And Expectations ▪ Capital-light and efficient business model allows for self-funding ▪ Strategically reinvest in business and technologies ▪ Ability to self-fund GMV growth rates up to 30% Fuel Growth Return Excess Capital to Shareholders Explore Strategic M&A Opportunities ▪ Return excess cash to shareholders ▪ Repurchased 42.1% of outstanding shares since January 1, 2021 ▪ Increased quarterly cash dividend in Q1 2025 ▪ Explore adjacent products in support of core LTO business ▪ Entertain accretive acquisition opportunities 8
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PROG Internal Progressive Leasing at a Glance 2024 Revenues Attributed to Categories of Merchandise Major Retailer Partners 58% 16% 15% 5% 4%2% Furniture/Appliances/ Electronics Mobile Phones & Accessories Jewelry Mattresses Other Automobile Electronics & Accessories Source: PROG Holdings filings 9 “[Progressive Leasing] has been bringing new customers to [our] stores — as well as some who haven’t been to them in a while.” “Progressive Leasing drives sales and it’s all incremental.” –CEO Leading U.S. electronics retailer –CFO Leading U.S. furniture retailer
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PROG Internal Current VLTO Market Size $7B – $8B VLTO TAM $30-40 Billion Near-term Opportunity $22-$31 Billion untapped potential New customers - New retailers Mid-term & Long-term Opportunity New products to address underserved customer and retailer needs - New markets Source: Management estimates Progressive Leasing $2.4B Estimated Total Addressable Market 10
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PROG Internal 11 $4,000 Source: Company customer data Progressive Leasing’s Core Customer Generational Breakdown 1% 8% 9% 26% 56% Silent Boomer Gen Z Gen X Millenial 0% 10% 20% 30% 40% 50% 60% Key Highlights Median monthly income Average age of 39 years old 51% female; 49% male 76% renters 24% homeowners
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PROG Internal Available online, through Progressive’s mobile app, and in-store with select leading retailers Apply 12 The Progressive Leasing Customer Experience “Simple and fast. It literally took less than 5 minutes for the whole process” Customer Testimonial –Prog Leasing Decisions are issued within seconds of application submission Instant Decision Customers shop for leasable items of their choice - approvals good for up to 90 days Approved An initial payment will be collected when the customer signs the lease Initial Payment Customers take items home same day or arrange for delivery Take items home Optional auto payments managed by the customer via phone, online, or mobile app Simple Payments 1 2 3 4 5 6
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PROG Internal 13 Progressive Leasing’s Decisioning Process Our large data set and proprietary decisioning tool are expected to provide a competitive advantage Proprietary, cutting-edge Artificial Intelligence and Machine Learning algorithms Decisions happen within seconds Largest virtual LTO provider in the country with extensive database of customers Over 15MM leases with detailed credit history and mature lease performance data Industry-leading data science team designing custom decisioning algorithms with latest AI/ML technology Sophisticated gradient boosting, ensembling, and distributed computing capability 95% of decisions are completely automated Median decision time of 3.6 seconds Pricing Personalization Approval Amount models ML risk models Machine learning (ML) fraud filters Continuous optimization in decisioning flow Application Customer history Credit reports Known fraud attributes Retailer/vertical performance Rapid experimentation ensures we constantly have empirical data to calibrate and improve our algorithms Regular review cycles of business logic, models, thresholds, etc. ensure we stay abreast of the retail marketplace, competiton, and the macroeconomy Decisioning logic and algorithms are tailored to the needs of our retailers
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PROG Internal Links to Additional Information 14 Homepage News Management Events and Presentations AdditionalMaterials Additional Materials
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PROG Internal 15 PROG Holdings Board of Directors Ray Robinson Chairman of the Board Former President of the Southern Region, AT&T Steven A. Michaels President and Chief Executive Officer, PROG Holdings Daniela Mielke Managing Partner, Commerce Technology Advisors, LLC Douglas Curling Managing Principal, New Kent Capital LLC, Former President COO and CFO of Choicepoint, Inc. Cynthia Day President and Chief Executive Officer of Citizens Bancshares Corporation and Citizens Trust Bank Curtis Doman Co-Founder, Progressive Leasing Ray Martinez Co-Founder and President of Financial Services, EVERFI Caroline Sheu Former Global Director of Digital and Direct to Consumer Marketing for the Google Store, Alphabet Jim Smith Former Executive Vice President and Head of Digital and Direct Virtual Channels, Wells Fargo and Company Robert Julian Former Chief Financial Officer of TheRealReal , Inc. and Sportsman’s Warehouse
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PROG Internal 16 PROG Holdings Executive Management Steven A. Michaels President and Chief Executive Officer Curtis Doman Co-Founder and Special Advisor to the CEO Brian Garner Chief Financial Officer Todd King Chief Legal and Compliance Officer Sridhar Nallani Chief Technology Officer Nate Roe Chief Commercial Officer Trevor Thatcher Chief Operations Officer Debra Fiori Chief People Officer Paul Hamilos President, PRG Ventures
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PROG Internal Financials Do we need both section breaks?
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PROG Internal Financials $2,485 $2,678 $2,598 $2,408 $2,463 $ $500 $1,000 $1,500 $2,000 $2,500 $3,000 2020 2021 2022 2023 2024 Revenue1 (Millions) Adj. EBITDA1 (Millions) $341 $389 $256 $297 $274 $ $50 $100 $150 $200 $250 $300 $350 $400 2020 2021 2022 2023 2024 Margins 12.0% 13.7% 14.5% 11.1% Source: PROG Holdings, Inc. SEC filings 1Represents the continuing operations of consolidated PROG Holdings, Inc. 18 9.9%
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PROG Internal Financials Gross Merchandise Volume1 (Millions) Lease Portfolio Turnover2 Source: PROG Holdings, Inc. SEC filings 1Includes the Progressive Leasing segment only. 2Total lease depreciation, plus provision for lease merchandise write-off, divided by average gross leased assets. 1.74X 1.77X 1.7X 1.59X 1.65X .7X 1.X 1.3X 1.6X 1.9X 2020 2021 2022 2023 2024 19 $1,851 $2,144 $1,977 $1,798 $1,927 $ $500 $1,000 $1,500 $2,000 $2,500 2020 2021 2022 2023 2024
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PROG Internal 20 PROG Holdings Full-Year 2025 Outlook* The updated outlook below assumes a difficult operating environment with soft demand for consumer durable goods, no material changes in the Company's current decisioning posture, an effective tax rate for Non-GAAP EPS of approximately 28%, and no impact from additional share repurchases. Additionally, the company has not assumed a recession which, among other factors, would likely be accompanied by a rise in the unemployment rate. *As provided in PROG Holdings’ Q1 2025 Earnings Press Release issued on 04/23/25
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PROG Internal Links to Q1 2025 Results 21 Transcript Webcast Webcast Supplemental Presentation Form 10-K Form 10-K Press Release Press Release
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PROG Internal Appendix
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PROG Internal 23 Use of Non-GAAP Financial Measures Non-GAAP net earnings, non-GAAP diluted earnings per share, and adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"). Non-GAAP diluted earnings per share for the full year 2025 outlook excludes intangible amortization expense. Non-GAAP diluted earnings per share for the year ended December 31, 2024 exclude intangible amortization expense, restructuring expenses, costs related to the cybersecurity incident, net of insurance recoveries, reversal of the uncertain tax position related to Progressive Leasing’s $175 million settlement with the FTC in 2020, and the tax benefit associated with the deemed liquidation of a partnership for tax purposes. The amount for the after-tax non-GAAP adjustment, which is tax effected using our statutory tax rate, can be found in the reconciliation of net earnings and earnings per share assuming dilution to non- GAAP net earnings and earnings per share assuming dilution table in this presentation. The Adjusted EBITDA figures presented in this presentation are calculated as the Company’s earnings before interest expense, net, depreciation on property and equipment, amortization of intangible assets and income taxes. Adjusted EBITDA for the full year 2025 outlook excludes stock-based compensation expense. Adjusted EBITDA for the year ended December 31, 2024 excludes stock-based compensation expense, restructuring expenses, and costs related to the cybersecurity incident, net of insurance recoveries. Adjusted EBITDA for the year ended December 31, 2023 excludes stock-based compensation expense, restructuring expenses, costs related to the cybersecurity incident and regulatory insurance recoveries. Adjusted EBITDA for the year ended December 31, 2022, excludes stock-based compensation expense, restructuring expenses and impairment of goodwill. Adjusted EBITDA for the year ended December 31, 2021, excludes stock-based compensation expense and acquisition related transaction costs. Adjusted EBITDA for the year ended December 31, 2020, excludes stock-based compensation expense, insurance recoveries for legal and regulatory fees incurred related to Progressive Leasing’s 2020 FTC settlement, restructuring expenses and separation costs from our spin-off of the Aaron’s Business. The amounts for these pre-tax non-GAAP adjustments can be found in the segment EBITDA tables in this presentation. Management believes that non-GAAP net earnings, non-GAAP diluted earnings per share, and adjusted EBITDA provide relevant and useful information, and are widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business unit performance. Non-GAAP net earnings, non-GAAP diluted earnings, and adjusted EBITDA provide management and investors with an understanding of the results from the primary operations of our business by excluding the effects of certain items that generally arose from larger, one-time transactions that are not reflective of the ordinary earnings activity of our operations or transactions that have variability and volatility of the amount. We believe the exclusion of stock-based compensation expense provides for a better comparison of our operating results with our peer companies as the calculations of stock-based compensation vary from period to period and company to company due to different valuation methodologies, subjective assumptions and the variety of award types. This measure may be useful to an investor in evaluating the underlying operating performance of our business. Adjusted EBITDA also provides management and investors with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes. These measures may be useful to an investor in evaluating our operating performance because the measures: • Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending upon accounting methods, book value of assets, capital structure and the method by which assets were acquired, among other factors. • Are used by rating agencies, lenders and other parties to evaluate our creditworthiness. • Are used by our management for various purposes, including as a measure of performance of our operating entities and as a basis for strategic planning and forecasting. Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company’s GAAP basis net earnings and diluted earnings per share and the GAAP revenues and earnings before income taxes of the Company’s segments, which are also included in the presentation. Further, we caution investors that amounts presented in accordance with our definitions of non-GAAP net earnings, non-GAAP diluted earnings per share, and adjusted EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate these measures in the same manner.
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PROG Internal Reconciliation of 2024 Non -GAAP Earnings Per Share Assuming Dilution 24 (1) Adjustments are tax-effected using an assumed statutory tax rate of 26%. (2) In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.
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PROG Internal Reconciliation of 2024 Non-GAAP Adjusted EBITDA 25 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
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PROG Internal Reconciliation of 2023 Non-GAAP Adjusted EBITDA 26 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
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PROG Internal Reconciliation of 2022 Non-GAAP Adjusted EBITDA 27 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
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PROG Internal Reconciliation of 2021 Non-GAAP Adjusted EBITDA 28 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
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PROG Internal Reconciliation of 2020 Non-GAAP Adjusted EBITDA 29 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
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PROG Internal Reconciliation of Non-GAAP 2025 Outlook for Adjusted EBITDA 30 (1) Taxes are calculated on a consolidated basis and are not identifiable by Company segments.
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PROG Internal Reconciliation of Non-GAAP 2025 Outlook for Diluted Earnings Per Share 31 (1) Adjustments are tax-effected using an assumed statutory tax rate of 26%. (2) In some cases, the sum of individual EPS amounts may not equal total non-GAAP EPS calculations due to rounding.
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PROG Internal