Q2 2025 PROG Holdings Inc Earnings Call
Good day and thank you for standing by.
Speaker Change: Welcome to the Prague Holdings Q2 2025 earnings conference call.
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Speaker Change: I would now like to hand the conference over to your speaker today.
Speaker Change: John ba vice president and best relations. Please go ahead.
Speaker Change: Second quarter, 2025 earnings call.
Speaker Change: Joining me this morning are Steve Michaels Prague Holdings, president and chief executive officer and Brian Garner. Our Chief Financial Officer
Speaker Change: Many of you have already seen a copy of our earnings release issued this morning, which is available on our investor relations website investor Prague holdings.com.
Speaker Change: during this call certain statements, we make will be forward-looking
Speaker Change: Including comments regarding our revised 2025 full year outlook and our guidance, for the third quarter of 2025 the health of our lease portfolio and our Capital allocation priorities.
Speaker Change: Listeners are cautioned not to place. Undue emphasis on forward-looking statements we make today, all of which are subject to risks and uncertainties which could cause actual results to differ materially from those contained, in the forward-looking statements,
Speaker Change: We undertake no obligation to update any such statements.
Speaker Change: On today's call, we will be referring to certain non-gaap Financial measures, including adjusted ibida and non-gaap eps.
Speaker Change: Which of them in the Jaws did for certain items which may affect the comparability of our performance with other companies.
Speaker Change: These non-gaap measures are detailed in the reconciliation tables included with our earnings release.
Speaker Change: The company believes that these non-gaap Financial measures provide meaningful insight into the company's operational, performance and cash flows.
Speaker Change: 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.
Speaker Change: With that, I would like to turn the call over to Steve Michaels Prague Holdings, president and Chief Executive Officer Steve.
Steve Michaels: Thanks John. Good morning everyone. And thank you for joining us.
Steve Michaels: Today, we will discuss our second quarter performance.
Update you on our business and provide insights on our outlook for the remainder of 2025.
Steve Michaels: We delivered revenue and earnings above the high end of our guidance, driven by effective portfolio management.
Steve Michaels: Continued strength in our pay and for buy. Now pay later platform for Technologies.
Steve Michaels: And discipline cost control.
Steve Michaels: Non-gaap EPS of a dollar and 2 cents significantly exceeded, our Outlook range of 75 to 85 cents per share.
Steve Michaels: We are focused on improving results across the business as we lean into pipeline opportunities, expansion of our online platforms and removing friction from customer touch points.
Progressive leasing's year-over-year gmv performance was impacted in the period by 2 primary factors.
Steve Michaels: The Big Lots bankruptcy from late 2024, which is approximately a 40 million gmv headwind this quarter.
Steve Michaels: And our deliberate tightening actions in the second half of 2024 and early 2025, which impacted gmv to a similar degree year-over-year.
Steve Michaels: In these relatively discreet events. We are executing nicely with expansion of our balance of share within key Retail Partners and ramping new partners. Year-over-year
Steve Michaels: While the tightening actions have weighed on gmv, we've once again, demonstrated our commitment and ability to deliver a consistent portfolio performance. Within our targeted annual write-off range of 6 to 8%. A key guard rail for sustainable and profitable growth.
Steve Michaels: These results, demonstrate the retail Partnerships, the effectiveness of our commercial execution and the durability of our go to market model, despite the ongoing soft demand for leasing categories. We serve
Steve Michaels: Consolidated Revenue came in at 6 0 4. 7,
Steve Michaels: Million, which was low single-digit growth year-over-year.
Steve Michaels: Performance was led by another standout quarter from 4 Technologies which delivered over 200% Revenue growth.
Steve Michaels: Consolidated, Evita was 73.5 million and non-gaap EPS was 1 and 2 cents, both exceeding, the high end of our Outlook.
Our lease portfolio. Once again, exceeded expectations with strong performance.
Steve Michaels: This strength is the result of proactive decisioning adjustments made in late, 24, and early 2025, which continue to drive, favorable early stage indicators.
Steve Michaels: These actions, reflect our discipline data-driven approach to portfolio optimization.
Steve Michaels: With the portfolio performing well and early stage. Indicators trending favorably. Our decision. Science teams are identifying pockets of opportunity to deliver incremental gmv
We are committed to maintaining discipline, decisioning standards and expect write-offs to remain within our targeted, annual range of 6 to 8%.
We generated meaningful momentum in Progressive leasing during the quarter supported by strong execution, across our direct to Consumer initiatives.
These efforts such as personalized. Life cycle campaigns and targeted. Digital outreach are driving engagement across new repeat and reactivated customer segments.
Steve Michaels: Additionally, we are scaling our Prague Marketplace platform, delivering double-digit gmv growth and staying on track to surpass 75 million in gmv for 2025.
Steve Michaels: Reinforcing its role as a complimentary channel. That enhances our retail ecosystem and expands customer engagement opportunities.
Steve Michaels: Efforts to increase our e-commerce business show progress.
Steve Michaels: in Q2 e-commerce as a percentage of progressive leasing gmv was at an all-time high representing approximately 21% of total Leasing gmv
Steve Michaels: These results, demonstrate our momentum under the grow, strategic pillar.
Steve Michaels: We are growing market share with the existing Retail Partners by executing jointly on key initiatives.
Steve Michaels: Our marketing Investments ranging from enhanced SEO to personalized, data-driven campaigns are driving. Measurable gains in both customer acquisition and retention.
Under our enhanced pillar, we are advancing technology initiatives that elevate the customer and retailer experience.
Steve Michaels: We are improving top of the funnel web and mobile functionality for customers.
Streamlining the application process and introducing AI driven tools to improve customer engagement and reduce friction.
Steve Michaels: These investments will help us personalize segment and nurture with more precision.
Steve Michaels: Our Prague Labs team is leveraging generative AI to boost employee productivity and enhance customer tools. Including AI chat Bots that provide real-time support personalized recommendations and faster resolution of common service. Inquiries ultimately improving the overall customer experience.
Steve Michaels: In Q2, we expanded our roll out of our new consumer chat feature to more Progressive leasing customers after the success of our pilot from q1.
Steve Michaels: And now have consumer chat capabilities across Leasing.
Steve Michaels: 4 and money app, our cash advance solution.
Steve Michaels: This digital servicing initiative is already showing promising results, helping us better engage with customers.
We've seen a list in application starts and completions through AI, assisted interactions.
Steve Michaels: Along with a reduction in call center volumes indicators that these new AI tools have the potential to create value for both our customers and our business.
Steve Michaels: Looking ahead. We're preparing to expand the chat platform to include several self-service capabilities.
These enhancements are designed to further improve the experience. Reduce friction in our servicing model, and ultimately shift more volume into lower cost digital channels.
Our expand pillar is building real momentum and I'm particularly excited about the progress. We're seeing from 4 Technologies.
4 delivered at seventh consecutive quarter of triple digit gmv and revenue growth.
Steve Michaels: Continuing a positive trajectory that reflects the strength of our strategy and execution.
Steve Michaels: We acquired 4 Technologies in 2021, during a period of Rapid expansion in the bnpl sector.
Steve Michaels: The much of that industry growth lacked the clear path to profitability.
Steve Michaels: From the outset, our vision was to scale the business differently.
Steve Michaels: By integrating it into our broader ecosystem.
Steve Michaels: And aligning it with our mission to deliver flexible empowering Financial Solutions for consumers. In a profitable manner.
Steve Michaels: Over the past several years. We remain focused on building 4 deliberately prioritizing sustainable unit economics and responsible growth.
Steve Michaels: We're now accelerating our momentum.
Steve Michaels: In the second quarter, 4 deliverer 167%, gmv growth year-over-year.
Steve Michaels: For our pay and for bnpl product and increasing relevance with both consumers and Merchants.
Steve Michaels: Revenue, grew over 200% supported by a trailing 12-month. Take rate of approximately 10%,
Steve Michaels: Defined as revenue generated as a percentage of gmv over the 12-month period, which is a strong indicator of monetization efficiency as we scale the platform.
Steve Michaels: From a customer lens. 4 is engagement. Trends are strong.
Steve Michaels: Average purchase frequency is steady year-over-year and for the last 4 quarters. It was approximately 5 times per quarter coupled with over 130% growth in active shoppers year-over-year.
Steve Michaels: We're seeing growth in active Shoppers and unique retailers, which is expanding the adjustable opportunity and contributing to gmv.
Our 4 Plus subscription service launched in early, 2024 has seen robust adoption.
Steve Michaels: With more than 85% of gmv. Now driven by active subscribers.
Steve Michaels: These results reinforce 4's growing role in our ecosystem, not just as a standalone growth engine. But as a compelling customer acquisition Channel and Catalyst for cross-sell into Progressive leasing driving deeper engagement and increasing customer lifetime value across the Prague platform.
Steve Michaels: I want to thank our team for their focused execution and disciplined approach, which advances our growth strategy while supporting margin expansion.
Steve Michaels: As we look ahead, we are committed to enhancing user experience on the 4th and sustaining momentum through both direct initiatives and its strategic role within the broader. PG ecosystem.
Also, within our expand pillar, I'm pleased to share that money app. Our cash advance solution is gaining traction.
Steve Michaels: The product is now, delivering consistent unit, level profitability and important Milestone. As we scale, this offering thoughtfully,
Steve Michaels: We are focused on executing our strategy with discipline and intention.
Steve Michaels: while the macro environment presents headwinds
Steve Michaels: Particularly as consumers, remain cautious around large discretionary purchases.
Steve Michaels: We factored these Dynamics into our outlook for the balance of the year which Brian will speak to in more detail.
Steve Michaels: Our guidance assumes ongoing softness and demand across key leasable categories.
Steve Michaels: Along with no changes to our current decisioning posture, that is shaped much of the first half.
Steve Michaels: We've also accounted for higher 90-day purchase activity compared to 2024 and stable portfolio performance within our 6 to 8%. Write off range.
Steve Michaels: Despite the unpredictable environment. We are confident in our ability to continue gaining share and driving sustainable profitable. Growth powered by our multi-product ecosystem, discipline portfolio, performance and scaled Omni Channel, leasing platform.
Steve Michaels: Our ability to consistently execute through, volatility is a competitive strength and a driver of long-term shareholder value.
Steve Michaels: Our Capital allocation priorities are unchanged.
Steve Michaels: We are reinvesting in high impact growth initiatives.
Steve Michaels: Exploring strategic m&a opportunities.
Steve Michaels: And returning excess Capital to shareholders, through a balanced approach of dividends and share repurchases.
Steve Michaels: Our businesses generate meaningful free cash flow, providing us with the flexibility to meet our priorities.
Steve Michaels: With that, I'll turn it over to Brian for a deeper. Look at our Q2 results and updated 2025 Outlook.
Brian Garner: Thanks, Steve and good morning everyone.
Brian Garner: Our second quarter performance, highlights a strength of our business and the growing impact of our ecosystem strategy. Particularly in a challenging operating environment marked by macro volatility,
Brian Garner: I'm pleased to report the Consolidated revenue and earnings exceeded the high end of our Outlook with non-gaap EPS coming in at $1 and 2 cents per share.
Brian Garner: This outperformance was driven by strong execution across the organization.
Brian Garner: Our Progressive leasing team effectively managed the lease portfolio and delivered a result meaningfully better than expectations.
Brian Garner: At the same time, our 4 technology team delivered another quarter of profitable triple digit growth.
Brian Garner: 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.
Let me begin with an overview of progressive. Leasing segments performance. In the second quarter.
Brian Garner: Gmv came in at 413.9% year-over-year, largely due to 2 primary factors.
Fighting of approval rates to manage portfolio performance. Underscored by ongoing soft consumer demand in our key leasable categories.
Brian Garner: When adjusting for the impact of Big, Lots gmv was up approximately 1%.
Brian Garner: In addition, the tightening efforts deployed late last year and in q1 of 2025, further impacted the growth rate by an estimated 800 and 900 basis points.
Brian Garner: We expect the approval rate comparison to begin easing in Q3 of 2025, and will completely last. Those tightening actions in q1 of 2026.
Brian Garner: Importantly, Prague Marketplace are direct consumer Channel, remains a meaningful contributor to growth.
Brian Garner: With Q2 gmv up 38% year-over-year.
Brian Garner: As we look ahead, we are focused on improving conversion within the marketplace funnel by enhancing the consumer experience from browse to application of checkout. Ensuring we are capitalizing on this Demand with greater efficiency and customer satisfaction.
Additionally, we can continue to evaluate and improve the customer experience across all of our platforms with a focus on serving the evolving expectations of our core demographics.
Brian Garner: Millennials and gen Z Now account for approximately 70% of our gmv.
Brian Garner: Many of these customers, begin to release journey in store and then could transition online through either the retailer site or internal platforms such as Prague Marketplace.
Brian Garner: Underscoring, the importance of a seamless Omni Channel experience.
Brian Garner: Q2 revenue for Bessel, leasing was close to Flat to 5 6. 9. 7, 7,
Brian Garner: Revenue benefited from a slightly higher customer utilization of 90-day purchase options.
Brian Garner: These Tailwinds however, were offset by marginally lower pain performance. Primarily tied to Lisa's funded before. The tightening actions, we took in late 2024, and early 2025
Brian Garner: Looking ahead. We expect payment performance to improve year over year in the second half as those pre-title off and higher quality. Leases comprise a greater portion of the portfolio.
Brian Garner: Portfolio performance was strong with Q2 write offs at 7.5%.
20 basis points better than Q2 of 2024 is slightly better than our internal expectations.
Brian Garner: This performance reflects the effectiveness of our Dynamic decisioning models. And the deliberate tightening actions.
Brian Garner: progress, relations, gross, margin for the quarter was 32.4% in line with our expectations and down just 15 basis points year-over-year, primarily driven by increased customer utilization of 90-day purchase option, along with a loss of Big Lots, which had a below average number of customers utilizing, the 90-day purchase option and above average gross margin
The overall estimated impact of the big loss bankruptcy to progressively is gross margin is approximately 20 to 30 basis points in the period.
Progressively to scna expenses, were 78.9 million or 13.8% of Revenue up from 13% in Q2 of 2024.
As previously communicated, this expected de-lever, reflects active investments in technology and sales, enablement. Partially offset by discipline cost management.
Brian Garner: We remain focused on cost efficiencies while prioritizing Investments that we expect to provide a high return.
Adjusted ebit off for Progressive, leasing was within our 11 to 13% annual Target at 69.7 million, or 12.2% of Revenue compared to 73.8 million or 12.9% of Revenue in Q2 of 2024.
Brian Garner: In terms of Consolidated results, Q2 revenues grew 2.1% to 604.7 million from 592.2 million in Q2 of 2024, primarily driven by over 200% Revenue growth at 4 Technologies.
Brian Garner: Consolidated adjust the IBA de with 73.5 million compared to 72.3 million in Q2 of 2024, reflecting materially improved profitability of 4 slightly offset by Progressive. Leasing's margin pressures.
Brian Garner: Non-gaap EPS was 1.2 cents. A seeding. The high-end of our Outlook supported by strong earnings and a lower share count from our repurchase program.
Turning to the balance sheet. We ended the Q2 with 222 million in cash and 600 million in Gross debt resulting in a net leverage ratio of 1.38 times. Trailing 12 months, adjusted via
We are undrawn on our 350 million revolver.
Brian Garner: I also want to highlight a legislative development that we will positively impact our cash tax Outlook.
Of the tax cuts and job act, most notably 100% bonus depreciation on qualified property.
Brian Garner: We expect this change to significantly reduce future cash taxes, by allowing immediate expensing of lease merchandise for tax purposes.
Brian Garner: In Q2, we continue to return meaningful capitalist shareholders through both dividends and share repurchases.
We paid a quarterly dividend of 13 cents per share and repurchased approximately 900,000 shares of our common stock at a weighted average, price of 28.51 cents per share reflecting our ongoing commitment to a balanced Capital return strategy.
As a quarter end, we had 309.6 million remaining authorized under our 500 million. Share repurchase program. Providing ample flexibility to deliver shareholder value.
Brian Garner: To recap.
Brian Garner: Some of the key highlights from the first half of the Year includes strong, portfolio Performance impactful Marketing. This is driven by enhanced SEO and personalization progress on technology enhancements, improving customer experiences and meaningful traction on our ecosystem strategy with the profitable growth at 4,
Brian Garner: We are anchored in the strength and stability of our Leaf portfolio which we believe will remain on solid footing.
Brian Garner: Our discipline operating model combined with the flexibility of our multi-product platform. Positions us to deliver sustainable profitable gmv while creating long-term value for customers partners and shareholders.
Brian Garner: For our 2025 Consolidated Outlook. We are raising the midpoint of the range for revenues and earnings.
Brian Garner: Consolidated revenues in the range of 2.45 to 2.5 billion.
Brian Garner: Adjusted ibid on the range of 2555 to 2655 million and non-gaap EPS in the range of $3.20 to $3.35.
Brian Garner: This Outlook assumes a difficult operating environment with soft demand for Consumer durable goods. No material changes in the company's current decisioning posture.
Brian Garner: An effective tax rate for non-gaap EPS or approximately 27% and no impact from additional share repurchases.
We are focused on driving profitable growth maintaining portfolio of health and returning Capital to shareholders.
Brian Garner: while continuing to invest in initiatives that position us for long-term value creation,
Brian Garner: Our strategy is clear operate with discipline.
Brian Garner: Prioritize high impact opportunities and build value deliberately over time.
Brian Garner: With that, I'll turn the call back over to the operator for questions, operator.
Speaker Change: As a reminder to ask a question. Please press star 1, 1 on your telephone, and wait, for your name to be announced.
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Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Kyle, Joseph with Stevens, your line is open.
Kyle, Joseph: Hey uh, good morning guys. Uh, thanks for uh, thanks for taking my questions. Um, just kind of want to get to the kind of an underlying growth recognizing, there's a lot of, a lot of moving parts right now and and appreciate the the color you provided on on Big Lots, uh, in the appendix of your slides. But, you know, I I calculate kind of X Big Lots gmv being flattish. And then I think you, you talked about kind of some incremental, headwinds from, um, from underwriting. So kind of X those 2 headwinds. Do you think about the business is kind of like, it made the
Speaker Change: Uh hi. Hi single digit growth right now and then kind of remind us, you know, exactly when we lap both the underwriting and the and the Big Lots comps
Speaker Change: Yeah, thanks Kyle. Um,
Speaker Change: I mean you you got it. I mean I think we said in the prepared remarks, that X Big Lots uh gmv would have been plus 1 for the quarter. Um and then the the new data point that we gave was related to the decisioning tightening and historically, we've talked about that in terms of uh year of year approval rates. But there's a lot of a lot of stuff that goes into approval rates. So we we changed our uh,
Speaker Change: Our approach this quarter and actually represented it as, uh, a drag on gmv. And that was another kind of 8 to 900 basis points. So yeah. You would it it besides those 2, uh,
Speaker Change: Events. If you will, um, you would get to kind of a high singles to, you know, basically 10% gmv, uh, growth rate, obviously, we can't uh
Speaker Change: Is, um, largely lapped in Q4 of this year, we did have about 7 million dollars of gmv in q1 of of of 25. Um, because of going out of business sales and the various closing dates, uh, that that that were different for different stores.
Um, on the decisioning, we talked a lot over the last year about, um, the various, uh, tightening actions. We took some in the back half of 2024, um, and as Brian said in his remarks, those will start to uh lap here as we enter the back half of 25. Uh, but the Lion Share of the decisioning was really in kind of the first half of q1 of this year. So um, still got a little bit to go to to lapse the the majority of the tightening. Um, I would, I would say that uh, portfolio is in a great spot. Um,
Speaker Change: We we're I'm very, very pleased with the results of the decision science teams and their, uh, continue to demonstrate their ability to control a large portfolio with Precision, um, but that also allows us the opportunity to look for pockets of opportunity to um to approve more. Um but I want to be careful to not set expectations too high. We're talking about small pockets of opportunity versus some of the more larger uh tightening actions that we took earlier. So we'll continue to look for those pockets of opportunity.
Speaker Change: And uh and hope that it can be a uh an incremental positive for for gmv um in in the next, in the coming quarters. Um, so that's kind of how how it went out. We've also got a lot of cool, you know, marketing and, and initiative, things that we're working jointly with our Retail Partners on in the back half. And so, um, you know, we're not, um, just standing still. We, we, we're trying to drive this this business, but we do have these 2 headwinds with Big Lots. And, uh, and, uh, and the decisioning posture. Um, nice eagle eyes on the, uh, on the uh, additional slide in the appendix. Um, and I'll, I'll let Brian provide a little bit of an explanation to that slide and some additional color.
Brian Garner: Yeah. No, um Kyle and and thanks for thanks for pointing that out the intent. There is uh as Steve mentioned, showing first gmv and how that's going to represent a difficult compared for the remainder of the year and into q1 and also
Brian Garner: Attempting to, to size up, the direct portfolio impact. So think, gross margins and and write offs. And and what pressure? We're going to continue to fill their. As as we've talked about Big, Lots, previously, 1 of the 1 of the things that, um, you know, presents itself is the fact that they, they had a better performing customer that our average, uh, customer. And so, that's a dynamic that is that is uh working its way through margins and and will continue to as uh, throughout the comparison period.
Brian Garner: So we highlighted that, the only other thing I'd I'd offer is, that's a, that's a sizing of the portfolio impact. Not necessarily the the sgna or the direct sgna, uh, costs that, uh, are tied to to Big. Lots is there's a lot of assumptions there, um, and we we've not attempted to to size that or provide color on it, uh, within that slide, but just just be cognizant, that, that is, that would be additive to the, to the impact that is shown there. So hopefully, it's helpful and, and we'll continue to, uh, reference it, you know, throughout the year and, and try to get some color on the actual performance relative to kind of maybe a Sans Big Lots View.
Speaker Change: Ah, got it. Uh, really helpful. And then just 1 1 1 follow up for me. Uh, going to ask a a pipeline question, you know, obviously, uh, you can only say what you can say. But just, you know, uh, where where we stand now, kind of, I mean, obviously there's still some uncertainty around terrorists but kind of through, uh, the bankruptcies we saw at the end of last year and furniture and whatnot. But just give us a sense for your your conversations with retailers and their willingness, uh, to consider, uh, adding uh, the, the leasing product, uh, to their, you know, to their finance options.
Yeah. Um as you as you said um we can only say what we can say. And and we've learned I've learned over over the years, not to commit uh to certain logos because they uh I'm always always wrong from a timing standpoint but um
Speaker Change: For the Enterprise size, uh, Retail Partners. So, um, nothing to report on that. But, uh, it is certainly, um, a main focus of ours. And uh, and and we're pleased with with uh,
Where the pipeline is and and the progression.
Speaker Change: Got it. Thanks a lot for taking my questions.
Thank you.
Bobby Griffin: Our next question comes from Bobby Griffin. With Raymond James, your line is open.
Hey guys, thanks for taking my questions this morning.
Speaker Change: Thanks Bobby. I guess, first, for me, I want to maybe go back on just the core under underlying, uh, Progressive GMD and ask you a little bit different way, but if if I gave you credit for the Big Lots, add backs, which, you know, their bankruptcy was, that was out of your control, it still looks like you factor in the the prior year comparisons in 1 Q versus 22, The Core Business, even with the decision Titans is accelerating, I guess the math I'm looking at is like, you know, 1 Q X big loss is Up, 3 or 4 and gmv. 2 Q is up 1 but the prior year comparison was roughly 800 basis points harder. So do 1 do disagree with that type of analysis on it and 2. If that's the case, what's driving? That is that better trade down market, share gains, you know, kind of anything there to unpack that.
Speaker Change: Yeah. Uh, it's interesting. Uh, you're right last last year. In 24. We did start to see the acceleration in Q2 and, uh, Q3. And that was um, we believe, uh, largely driven by the trade down. Um, it does not appear to us that the trade down is much of a factor this year. Um, it I'm not saying it doesn't exist, I don't think that the primes have have have loosened necessarily, um, but as far as we've laped it, fully we've, uh, we believe and from the, the data we're seeing in the top of the funnel
Speaker Change: We're we're not, it's certainly not intensifying and so from a year-over-year standpoint it's it's probably you know uh flat to slightly negative because um there is some some some change in our thin file. No file. Uh and uh some potential impact from from immigration actions. Um,
Speaker Change: That are that are affecting the top of the funnel. So I I, I wouldn't think it. I wouldn't call it trade down. Um,
Speaker Change: We do, you know, we we do continue to have a discreet wins, I would say with existing Retail Partners um and we've talked about that for several you know, multiple quarters. Now even in a couple years and uh and they do continue to to uh get deployed and work jointly with
Speaker Change: Our, with our Retail Partners and are having, uh, success. In fact, um, we called out the fact that Ecom was at an all-time high, um, and you wouldn't expect 22 to be an all-time high for Ecom before that the 2 2 best quarters from a composition standpoint were both q4's. And that's more intuitive. But that is because of a particular initiative that we got across, the goal line with a fairly long-term partner, and it allowed us to get productivity and gain balance of share. And, and really, uh, drive a nice comp, uh, with that partner. Well, north of of, their of their business Trends. So those are the, those are the things. I mean, we, we clearly are are, uh, ramping, um, ASI. Our, our great partner that we, that we launched last year. Um, and uh, and we're continuing to try and add to the, to the merchant partner list and this the roster. Um, you know, there's certainly some challenges
Speaker Change: here and we don't, we don't love the minus 8.9 but we're doing everything we can to to fight against fight against the comps uh with Big Lots and and the necessary tightening actions that we took um and we feel we feel good where the where the business is positioned and and um can uh, can dig out of this, uh, out of this negative gmv or, you know, over time
Speaker Change: Understood, that's helpful and I guess Brian my my second question is just kind of on the guidance. Um, the update now you guys b2q. It looks like the midpoint went up a little slightly less than the 2 QB. And I, I appreciate just the environment and the fact that, you know, having some conservatism in there, but what took place in 2q that that isn't really assumed to continue that you would say you know was upside in the quarter that you guys didn't assume and the the go forward to kind of just have the guy move up with the 2qb Versa actually moving up more.
Speaker Change: Yeah. Uh, appreciate the question, Bobby. Maybe the easiest way to answer that is just just give him some color on on what I think are.
Speaker Change: Some margin Dynamics in, in the, in the back half that I think, will will present themselves a little bit more than what they did there in Q2. And I think, you know, starting with starting with the, you know, the positive and, and what I think will be a bit of a Tailwind in the back half, uh, the write-off picture of Steve mentioned is, is on track and we're encouraged by what we're seeing there. We actually ended up lower right off here in Q2 than we anticipated, uh, as we reported out in April. And so, um, that's a, that's a very favorable Dynamic that, um, that we expect based upon everything that we're seeing to continue to, uh, to, uh, you know, work through the back half of the year. And so, write offs and and portfolio performance overall, I think are are, are, are are a, uh, Tailwind the headwinds, which I think, um, a bit more than offset that and why you're seeing, uh, the margin that you are in the, in the back half.
Speaker Change: Um, I mean, in order of magnitude, I think I'll just start at the top. The, the, the, the Big Lots piece is, um, meaningful. And, and while we've talked a lot about the gmv comparison, 1 thing. I I, I don't want to have get lost is the fact that. Yeah, we turned off the gmv faucet for for big loss. A couple quarters ago. But what has remained and what has continued to present itself in the p&l for the first half, is those customers that were originated and we continue to service and and their performance continues to flow through in the first half. And so we've benefited from the revenue and ibida and those favorable uh, margin
Speaker Change: Profiles for the front half even though Big Lots has has not been generating gmv uh meaningfully this year. And so that's that's something that that won't be. Uh, there the same degree in the back half. So that's going to start working its way out.
Speaker Change: Um, the second thing I I point out is, uh, portfolio size. So we entered, we entered this quarter with the portfolio, just slightly up and we, uh, ended the quarter down. 3% on on Gross lease assets. And so um part of that uh, you know, a seasonal Dynamic is you as you uh work your way through, but but there's no doubt the higher 90-day buyouts. Um, and just the gmv challenge is overall, has have put some pressure on the, on the portfolio size. And so as you as you as that's your starting point for the back half, you're going to see, um, you know, a feed through into the revenue numbers that are that are uh, implied in the well and applied, but, but explicitly, uh, provided there, in the guidance.
Speaker Change: so that's the I think the the second item I might point out and then finally
Speaker Change: On a Consolidated basis. Um, and this is, you know, quite frankly, a welcome Dynamic. Uh, even though it's a margin margin headwind. Uh, particularly in Q4, is the fact that we're seeing so much? Uh, so much momentum of 4 and 4, unlike the leasing business has uh, a requirement around ceil and and Cecil accounting. And and it it brings forward in in a in a more meaningful way.
Speaker Change: The requirement to to reserve Upfront for uh for these loans. And we're going to we're going to experience that in Q4. Uh and that'll put some pressure on the on the margin profile of the business on a Consolidated basis.
Speaker Change: Um, but that's something to quickly given the very short duration of those those instruments. That'll, that'll flip back pretty quickly and so, we'll, we'll take that. Um, we love to see those, uh, that that g of the momentum up for and uh, we'll, uh, we'll, uh, have that kind of flow through into margins, um, towards the end of the year. So I think in a nutshell, there's a lot to unpack, I know. I've said a lot there, but lower margins in the in the back half.
Speaker Change: Its Big Lots. It's the portfolio size and that you leveraging of sdna that that represents to a degree. And then the 4 uh, 4 4 ceiling that are that are incorporated into this guide.
Speaker Change: Understood that's helpful. I appreciate the details and I'll add my thanks to you and John for the additional slide on on Big Lots. Very helpful uh best of luck to your guys finishing up the the back half of the year.
Bobby Griffin: Thanks Bobby.
Brad Thomas: Thank you. Our next question comes from Brad Thomas with keybanc capital markets. Your line is open.
Brad Thomas: Hi, good morning. Uh, Steve. I was wondering if you could talk a little bit about what you're seeing from a category and channel perspective, and then, perhaps, if you could talk about, uh, efforts and initiatives to grow with the smaller and more medium-sized business, rather than just the Enterprise,
Brad Thomas: Thanks.
Brad Thomas: Sure. Yeah. Um,
Brad Thomas: You know the the the ones that you get you guys you specifically write about a lot with Mattress and Furniture and and large Appliance the replacement cycle has not kicked in there yet. Um, but we can see a very variations and and outperformance within a particular retailer. Um,
Brad Thomas: You know, looking back to the comment I had on an earlier question about that specific retailer and how um, you know, just a, a kind of an initiative getting over the goal line can can drive strength there. So, um, we're, you know, we're we certainly impacted by the underlying demand for the categories, which is undeniably soft in most categories. Um,
Brad Thomas: but, uh, but the the, the results that we deliver are a lot of times, uh,
Brad Thomas: More impactful in the gains of balance of sale. Um, are results of the things that we work on jointly with our, with our Retail Partners. So that's a, um, that's a good good. Uh,
Brad Thomas: Data point, the, uh, that kind of can allow us to not be a victim to the, to the comp. But, uh, um, on the regions versus the, the Enterprise, you know, we've talked a lot about the regions, the regions are, um,
Are.
Brad Thomas: very uh,
Aggressive. They're a lot of, uh, um, a lot of churn, a lot of players out there, but it's a big, a big business that that we're going after. Um, it's been, it's a tough segment. We got a great team and we're picking our spots there of of where we're going to concentrate and what, what retailers appreciate the unique set of assets, that that we bring to the partnership. Um, we are giving our sales team more tools than they've ever had, um, to go to market and, and to win. Um, and we expect to compete hard there. Um,
Brad Thomas: We're not going to compete on every front, um, but we, but we'll pick our spots and, and we believe that we'll, we'll have we'll have success. So, um, hopefully more uh, more positive trajectory to come, uh, in the regions.
Speaker Change: That's helpful, Steve. Uh, and if I could ask you a question about the outlook for 4, I'd be interested in, uh, in for 1 session. Uh, the customer database, you have of of progressive customers, are you using them to help advertise to to help support the growth rate? And then, as you see, incremental customers, you know, taking on, you know, bnpl transactions. Um, how do they compare to, to, to the rent to own customers? And does it give you any more insights into?
Speaker Change: Into, uh, what kind of risk uh or or lack of risk, the growth of the bnpl category may be for rent to own thanks.
Speaker Change: Yeah, well I'll just start with, we're we're very excited about, uh, where for is um, and what it's accomplishing, the growth rates are are, uh, you know, very healthy as you can see. Um, and um, from a from an overlap standpoint, for for, for serves the whole Spectrum From Below Prime to Super Prime. Um, and so as you can imagine, um, there is overlap with with at least owned customer but not complete overlap. Um,
Speaker Change: We we do have initiatives in place for um our ecosystem strategy um and their synergies going in, both directions between 4 and the leasing business. Um,
Speaker Change: Currently I would say the synergies are more uh, from 4 to leasing than the other way around. Uh because 4 is such a uh robust.
Speaker Change: Customer acquisition channel. That and we do have internal targets and, uh, um, okrs for, uh, for gmv driven to the leasing business from 4, and our money app product. Um, and we're, and we're executing well across across those goals. Um,
Speaker Change: Good portfolio sizes around 11, to 1,200 dollars, not portfolio size, but average. Ticket Le uh, 4 is more $120, average order value. And so, um, they're, they're not, you know, they're not the same thing and they, and, uh, They don't serve the same purpose. So we believe that we can, um, have more frequency of Engagement and transactions with our customers for various use cases, um, but we can and we can also learn about the, uh, uh, you know, the profile of the consumer and uh, and uh, hopefully have de-risked, uh, originations on both sides of the Ledger, um, by having the businesses work together. That's really helpful to see these for certainly on a really nice trajectory here. Uh, thanks again.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from. Hang none with TD Cowen. Your line is open.
Hang: Hi team. Uh, thanks for taking my questions. It's my first 1 is um
You guys are looking for a pocket of opportunities to kind of, you know um reverse some of the um tightening that you guys did.
Speaker Change: Throughout last year. Um, if I have to think about it I mean what would it take for you guys to kind of, you know, fully unwind? You know, these measures, I mean, um, I think credit is getting better for you guys, but I mean, uh, what would it take? I guess, I mean, for a micro perspective for for you to confidently, I guess come go back to the level that
Speaker Change: The kind of title right under writing that you guys had maybe in the first half of 24.
Speaker Change: Follow up.
Speaker Change: Yeah. Um well I mean I think those are that's kind of like a self-filling prophecy credit is you know decisioning and and portfolio performance is getting better because of the actions we took. Um so like absent, those actions we would not be in this position from a portfolio performance standpoint. And as we've said many many times over the last 10 years, um, you know, delivering the portfolio uh in a healthy spot and consistently is Job 1 for us. And so we're not going to uh uh we're not going to deviate from that. Um having said that we're always evaluating the data. We learn every every month and every quarter, and the data science teams are uh the best in the business. And so they're they they can find pockets of opportunity but I don't want to set the expectation that we would be reverting back to where we were, you know, in the first half of 24 because based on the consumer and what we're observing in the data that would not be the appropriate action. So um it would be incremental.
Speaker Change: Small adjustments, um, that can add up to being meaningful but not a an unwind of of the great work that was done. To get us in the spot. We're in
Speaker Change: Oh, and and what what would have to happen for us to do that? I mean, we'd have to see it in the data. We'd have to we'd have to see the consumer um, health and the application profile and the quality of the, of the profile. Uh,
Speaker Change: Uh, change to give us the confidence um in their early indicators in the portfolio to change and uh you know that I'm not saying that couldn't happen. Um, but we but we won't preemptively make that choice before the data. Uh,
Speaker Change: Prove to us. It's the right choice.
Speaker Change: I um,
Speaker Change: What the?
How long your line is open?
Speaker Change: Hi, can you hear me?
Speaker Change: Yes, we have you.
Speaker Change: Oh, hey, yeah. I I just have a follow-up so maybe I mean your 4 business is growing very strongly, I think you cited uh that 85% of the gmv is by active subscribers. So it looks like it's predominantly subscriber. Only business, can you talk a little bit about maybe the competitive landscape, you know, um, in that kind of subscription product for buy now pay later, I mean, it's a competitive space. But I mean, when we think about subscription, I mean, uh, how do you think about, uh, the competitions?
Thank you.
Description the value. That's being delivered to those to those customers. Um, and the and our direct consumer model. So the the 4 business is almost exclusively direct to Consumer. So we we don't have we're not even really uh with with some exceptions, uh, exploring or or going after integrated retail Partnerships. Um, so the the traffic comes to the 4 app and then gets uh, directed to the retailer based on the customer's, uh, needs. And certain of those retailers are behind the pay wall. And and as you said, as, as we said in our prepared remarks 85% of the gmv, uh, comes from subscribers, which is a, which is a, a good metric for us. Um, and but the, you know, there's a lot of competition out there. There's some some really valuable companies out there and and we believe, um, and 1 of the reasons that we're talking more about for is because it's it's gotten to the scale where its profitable and growing quickly and, um, and has a lot of
has a lot of value, but we believe that
Speaker Change: our offering is not being recognized from a value standpoint, like, uh, like some of the other, uh, Pure Play bmpl providers out there. So we look forward to, uh, to getting for that attention within the Prague ecosystem. And, uh, um, continuing to to grow, we've got big plans for 4
Speaker Change: Thank you very much and, uh, congratulations on the quarter.
Speaker Change: Thank you.
Anthony Chukumba: Thank you. Our next question comes from Anthony chukumba, with lead Capital markets, your line is open.
Anthony Chukumba: Good morning, and thank you for taking my question. Um,
Anthony Chukumba: So I heard a brief mention of of ASI American Signature. I guess, my question was, how, how is American Signature ramping relative to your uh, original expectations?
Speaker Change: Uh, yeah. Hi Anthony. We're, we're very pleased with the partnership with ASI. Um, they they've been great Partners. Uh, it's been a. It's been a great, uh, launched and, uh, we continue to get better, uh, the the teams are adopting, you know, our approach and our support, uh, support approach. Um, we're based on the underlying business, we are ramping as, as expected. I mean, it's difficult to, to, to track against an actual dollar amount, you have to track against the, the actual, uh, the business that you're supporting and from a balance of sales standpoint. Um, you know, we're we're aware, we expected to be and we have, uh, um, expectations. That we'll continue to to improve that and uh, and and, and partner, well, with, with ASI, you know, for for many years to come, but certainly, uh, for the balance of this year, in the holiday
Got it. And then just a quick follow-up. Um, you know, 1 of the things that you had talked about, you know, when, when big locks went out of business was, you know, some initiatives to try to retain, uh, as much as many of those customers as possible, not just in terms of like, obviously, servicing existing leases. But, you know, trying to get them to, you know, uh, do like Prague Marketplace or or or convert them to another 1 of your Retail Partners. We just love any update, um, in terms of those efforts, thank you.
Anthony Chukumba: Yeah, you're right. Anthony and that and certainly that is a a, a a
Speaker Change: You know, an effort of ours or an initiative of ours, not just with Big Lots, but with all of our customers to keep them in the preferred partner network of progressive, um, but certainly with Big Lots because they don't have the option to go back to the to those stores. And so we've got marketing, um, nurture campaigns and, uh, we are seeing some success. Um, I mean, some of those big lots of customers. Um, even in even if Big Lots continue to exist, would have naturally through our normal marketing campaigns and through their normal, purchasing habits would have, would have kind of organically shown up in Best Buy or in 1 of our other partners. And so we're we're tracking that as well as tracking, um, the uh, you know, the direct, uh, response from our marketing efforts to, to, to Target them with a promotional campaign or something to get them into 1 of our other partners. And, uh, and, and we're pleased with the results there. Um, it it's something that we're way better at now than we would have been.
Speaker Change: 5 or 6 years ago or even 3 years ago so um uh continue to to track that and it'll be it'll be ongoing effort. Um so that we can keep as many of those customers in the in the family as possible.
Anthony Chukumba: Got it? Good luck with the back half of the Year. Thank you Anthony.
Thank you. Our next question.
Speaker Change: Jeff, your line is open.
Hey guys. Uh, thanks very much and congratulations and a good quarter. Um,
Speaker Change: And and it's more. Like are you? We've been waiting for this replenishment cycle. Um,
Speaker Change: You know, it feels like we're, you know, deeper into a more stable, although the the the, you know, forget the news headlines and more stable economic climate. Um, you know, are you seeing any green shoots in terms of whether it's frequency of of, uh, interaction with customers or just general spend Trends? Is there anything that you would lean on that would say, you know, that you're getting more optimistic. That maybe the, you know, the discretionary expense cycle, or replenishment cycle is is, you know, yeah, on the horizon.
Speaker Change: Yeah John um thanks. I you know the replacement cycle is, you know, it has been proved to be elusive. Um and uh we don't, we are not making a prediction that it's going to that it's going to kick in especially not for Furniture mattress and large appliances, you could you could make an argument that on home compute, uh, personal compute, uh, maybe even electronics and certainly smartphones that we're probably within it or in it uh, from a replacement cycle standpoint. But uh, we're not calling for, uh,
Speaker Change: For a robust recovery in in Furniture and Mattress and large Appliance. Uh, yeah. We're, we're certainly, uh, braced for it and, and, and, and rooting for it. Um, you know, it's difficult when you listen to the headlines and, you know, depends on if you're, if you're geared to be negative or positive. Um, you have to filter through as you, well, know, for our Customer because it's a tale of 2 tapes, and, and our customer, no matter what the, um, the, the macro headlines, say, it's usually a different story for our customer and, and we continue to believe that our more conservative, uh, posture from a decisioning standpoint, is the appropriate 1. Um, and we're always looking for green shoots, uh, and, uh, we we can have some good results from various, uh, retailers here or there, and adding a new retailer to the platform is, is always helpful, but just a macro wise. Um, you know, I don't think, uh, we're, we're
Speaker Change: We're not calling for, uh, for for green shoots, uh, or for, you know, robust recovery, uh, in the near term. But we're trying to execute as well as we can, uh, while we're waiting for that.
Speaker Change: Okay, that's that makes sense. And then a second question, more on the finance financial side. Um, and it's it's a very hopefully, quick question, but 2, quick questions. Um, 1 is, uh, kind of appetite for ongoing repurchases and capital returns and you know your near-term leverage Target and second is on that uh the tax change and you mentioned lower cash taxes. Is there any point that that would is this just a timing difference or would that affect potentially your cruel tax rate over time?
Speaker Change: Yeah, I'll start and Brian can correct me for whatever I say that's wrong. Um, you know, we don't, we don't guide the repurchases. Um, we do, as you said in your question, you look at it through the lens of our, our net leverage ratio, um, over a 12-month period and, and that's in a healthy spot now. Um, uh, but we've been in, uh, you know, a fairly aggressive acquirer of our stock, uh, since uh, 5, you know, the spin transaction and, uh, continue to believe that it doesn't, uh, reflect the true value of the underlying business. So I'll I'll just kind of leave that there as our, uh, as our Capital, allocation priorities. Um, the, the impact of the cash taxes, um, on from the immediate expensing is is I think, pretty impactful this. The, the 1 change in in this bill is that it's made permanent and we're not having to, um, plan for a sun setting or
Speaker Change: Reversal of it like we did in the 2017 uh Tax Act. Um, and so it is a deferment, it is not an is not an additional tax break. It is a defer, uh, a deferment, uh, of taxes, which means that, you know, you kind of push them out into the future, but to in the in a flat to Growing gmv environment, it does, um, get pushed out quite quite a ways. So it's, it is a benefit to us, um, but it will not impact the Gap financials or the, um, the the gaap income statement tax rate. Um, it's uh, we have various periods where cash taxes are higher than Gap taxes and um in in this in for the next several years I would say that they'll be lower than the than the than the Gap tax expense.
Speaker Change: Great, appreciate the color.
Speaker Change: Thanks John.
Speaker Change: Btig, your line is open.
Speaker Change: Hi, good morning, thanks for uh taking my questions. Um I wanted to go back to uh talking about for Technologies. I mean
Speaker Change: the the growth uh, with that business team is really impressive and by my math, um, it looks like 4 is gmbb, is now 1 third, the size of the leasing business and I guess if it's a growing by over 100% year-over-year,
Speaker Change: That business can be and if it could be even bigger than the leasing business. So just wondering maybe if you could talk about
Speaker Change: how that, you know, where you think the business could go, um, what would sustain that level of growth? And then, if you could help us with the economics, now that it's, um, you know, 4 is becoming very, uh, you know, becoming a core part of the overall Progressive uh, business. Like how we should be thinking about, um, revenues off of the gmv, the right off rates and and margins on on that business. Thank you.
Speaker Change: Yeah, thanks Vincent. Yeah, we're very excited about 4, as I've said, um it's it's in a great spot. The team has executed uh, very well over the last several years and we've we've kind of kept it. Um kept it quiet while we're refining the model and and and working on the unit economics. And and now that we're confident about the profitability profile of each individual transaction and having it scale up and its flipped the profitability. Um,
Speaker Change: And and has an opportunity for scale and margin expansion. You know, we're we're certainly, uh, going to be going to be leaning into that. Um, yeah. I mean, the, the the gmv, you know, it's it's not exactly well, it's not Apples to Apples to compare 4gv to, uh, to leasing gmv because the ticket size is so much different in the economics are so much different, um, on a, on an individual transaction, but having said that, like it is a uh um, it is a very profitable and and has an opportunity to expand to margins that that far exceed even on margins that far exceed the leasing business. Um, and so
We we've guided to more than doubling gmv for 2025 versus 2024 and as a reference point, 2024 was about 300 million of gmv. We're well on our way to to do that and then some in 2025 um, you know, the growth rate's naturally. When you get to the law of big numbers, we'll probably subside. Um, and we, you know, I'm not calling for, you know, 150% growth rates in in 2026. We'll, we'll give more color on 4 in 2020, in February of 2026. Um, but you can see the Pure Play comps that are out there and and what they're, how they're doing and how they're being valued and how they're being rewarded by the, by the capital markets. And we're very excited about that opportunity within the prog Holdings ecosystem. Um, and that's as a standalone business, then you kind of overlay.
The ability, um, to have, uh, uh, value creation within our ecosystem strategy, and within the leasing business, and that, um, gets us even more excited. So, um, when you're talking about a customer acquisition channel, that you know, has, you know, hundreds of thousands of users, you know, period, um, and as importantly, high frequency of transactions. Um, so you get to engage with that customer more frequently, um, within a, within a month, quarter and year, and you give more opportunities to serve up, um, offers for affiliate products. Uh, it, uh, it can get, you know, it can get pretty exciting pretty fast. So, uh, appreciate the question and, and we'll, we'll continue to, to provide more color on 4. We've given some more details this quarter than we ever gave before. Uh, take rate is a, is a metric in the industry. That is kind of a um a uh an efficiency.
Speaker Change: You know or or or monetization take uh, kpi that basically says, you know, for a given period or and we've we've given it for a 12-month period, what um, percentage of gmv translates into revenue. And so we've said that for the trailing 12-month period, it's approximately 10%.
Speaker Change: Size. Um, and so, you know, the loss rates on those new customers are higher. It's still profitable on a, on a, an origination basis, but, but higher, and as the, the platform gets bigger and more of those news, uh, that perform well become repeats and Longs those loss rates will come down. Um, and that will also help, uh, serve for for margin expansion. So, a lot of a lot of good Trends and, uh, and, uh, opportunities within the 4 business as a standalone business, as well. As within the ecosystem,
Speaker Change: Great, that's helpful. And yeah, that that take rate on frequency. Your transactions is uh, higher than a couple of the buy now pay later companies that covers the TOEFL, just 1, quick follow-up. Again, on 4, I mean,
Speaker Change: I guess is the business actually under earning in in the in this uh, you know, as it's growing because to your point earlier um, with the Cecil credit reserving um, having put all those reserves up front and then the business growing by over 100%.
Um I guess with the underlying earnings power actually be higher than what's being reported. Um now thank you.
Speaker Change: I mean yeah you you as yes I mean the short answer is yes. As um as
Growth rates moderate.
Speaker Change: Then that change in provision isn't going to be as impactful and margins can and will expand. I mean, to go back to what Brian said, earlier, I mean, Q4 is going, it's such a seasonal business, um, Q4 will be, you know, by a wide margin. The largest, uh, gmv quarter for the business for 2025, um, and December specifically will be larger than any month by a wide margin. So it will actually swing the business to an adjusted e but the loss in Q4, um, and that's baked into our our Outlook but that as you as you know from Cecil that's not a bad thing. It just is a is a function of the growth. So yeah as as the business scales and as you know as we have you know healthy growth rates but not like uber charged kind of plus triple digit growth rates um that margin uh the margin will expand and we and we expect that uh the the margins that some of the
Speaker Change: Public uh competitors are achieving are not out of the realm of possibility for us over time.
Okay, great, that's uh, super helpful. Uh, thanks very much.
Thanks man.
Speaker Change: Thank you.
Speaker Change: Includes the question and answer site.
Steve Michaels: I would now like to turn it back to Steve Michaels for closing remarks.
Steve Michaels: Yeah, thank you all for joining us this morning and uh, as always for your interest in Prague Holdings, we delivered another good quarter. Um, as we discussed, we continue to deal with some leasing gmv headwinds but that's nothing we have a face before. Uh the teams are energized and uh and up to the task, our portfolio is in good shape.
And we continue to actively manage it to ensure consistent performance. Uh, as we've talked about and I appreciate the questions, uh, we are very excited about where 4 is currently and more excited about where it could it where it's going.
Steve Michaels: I want to thank, uh, all the team members for their tireless work and dedication. And we look forward to updating you again uh, on our October call.
Steve Michaels: This concludes today's conference call.
Steve Michaels: Thank you for participating. You may now. Disconnect