Financial Analysis

"ACQUISITION Acquisition Overview On January2,2026 (the ""Acquisition Date""), PROG Beach, LLC (""PROG Beach""), a wholly owned subsidiary of the Company, acquired 100% of the issued and outstanding equity interests of Purchasing Power from Purchasing Power Parent, LLC (the ""Seller"") pursuant to a Unit Purchase Agreement dated December1,2025. Purchasing Power is a voluntary employee benefit program provider that allows employees of participating organizations to purchase brand-name products and services through payroll deduction or allotment arrangements. The transaction has been accounted for as a business combination under ASC805, ""Business Combinations."" Purchasing Power's results of operations have been included in the Company's condensed consolidated financial statements from the Acquisition Date. Management expects the acquisition to meaningfully expand the Company's platform by broadening consumers' access to flexible, inclusive and convenient payment options across high-demand categories and to strengthen the Company's partner ecosystem through Purchasing Power's more than 360 employer-client relationships and benefit-broker distribution channel. Consideration Transferred The total consideration transferred for purposes of ASC805 was $424.2 million. The consideration was paid entirely in cash and consisted of the following components: (in thousands) Amount Cash paid to Seller $ 216,220 Indebtedness of the Seller settled in cash by the Company at closing 1 199,283 …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

"COMMITMENTS AND CONTINGENCIES Legal and Regulatory Proceedings From time to time, the Company is party to various legal and regulatory proceedings arising in the ordinary course of business. Some of the proceedings to which the Company is currently a party are described below. The Company believes it has meritorious defenses to all of the claims described below, and intends to vigorously defend against the claims. However, these proceedings are still developing and due to the inherent uncertainty in litigation, regulatory and similar adversarial proceedings, there can be no guarantee that the Company will ultimately be successful in these proceedings, or in others to which it is currently a party. Substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon the Company's business, financial position and results of operations. The Company establishes an accrued liability for legal and regulatory proceedings when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. The Company continually monitors its litigation and regulatory exposure and reviews the adequacy of its legal and regulatory reserves on a quarterly basis. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. At June 30, 2026 and December 31, 2025, the Company had accrued $5.3 million and $3.8 milli …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"INDEBTEDNESS The Company's debt consists of the following: (in thousands) Interest rate Maturity June 30, 2026 December 31, 2025 Corporate debt Senior unsecured notes 6.00% November 2029 $ 600,000 $ 600,000 Term Loan A Variable 1 November 2029 Revolving facility outstanding Variable 2 November 2029 Less: unamortized debt issuance costs (4,490) (5,139) Total corporate debt, net 595,510 594,861 Asset-backed debt Class A - Series 2023-A Variable 3 April 2030 58,498 Class B - Series 2023-A Variable 3 April 2030 15,180 Class A - Series 2026-A 4.37% August 2030 122,680 Class B - Series 2026-A 4.81% August 2030 32,010 Class C - Series 2026-A 5.25% August 2030 29,330 Class D - Series 2026-A 5.40% August 2030 20,230 Class E - Series 2026-A 7.54% August 2030 15,750 Less: Unamortized debt issuance costs (2,124) Total asset-backed debt, net 291,554 Total debt, net $ 887,064 $ 594,861 1 Term Loan A bore interest at either a base rate or term SOFR plus an applicable margin based on the Company's leverage ratio. 2 The Revolving Facility bears interest at either a base rate or term SOFR plus an applicable margin based on the Company's leverage ratio. 3 The 2023-A facility bears interest on Class A at 2.05% plus the greater of the CP Rate (as defined in the agreement) or the floor rate of 0% and for Class B at 8.25% plus the greater of the term SOFR plus 0.1% or the floor rate of 3.0%. Corporate Debt Senior Unsecured Notes The Senior Notes are general unsecured obligations of the Company and …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

(in thousands) Three months ended June 30, Six months ended June 30, Revenue category 2026 2025 2026 2025 Total lease revenue pursuant to ASC 842 $ 549,830 $ 569,674 $ 1,146,694 $ 1,221,231 Total product, service, and other revenue pursuant to ASC 606 147,591 6,706 264,517 10,419 Total finance and fee income pursuant to ASC 310 22,294 12,123 51,178 25,281 Total revenues $ 719,715 $ 588,503 $ 1,462,389 $ 1,256,931

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"FAIR VALUE MEASUREMENT Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes financial assets and liabilities measured at fair value on a recurring basis: (in thousands) June 30, 2026 December 31, 2025 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Purchasing Power accounts receivable - acquired portfolio $ $ $ 106,069 $ $ $ Purchasing Power other receivables - acquired portfolio $ $ $ 10,063 $ $ $ Deferred compensation liability $ $ 3,914 $ $ $ 3,431 $ Receivables associated with the Purchasing Power acquired portfolio are measured at fair value on a recurring basis pursuant to the Company's election of the fair value option under ASC 825. The fair value of these receivables is estimated using a discounted cash flow methodology that incorporates significant unobservable inputs, including expected cash collections, default rates, and market-based discount rates commensurate with the credit risk of the underlying borrowers. Changes in fair value attributable to the passage of time, credit performance, discount rates, and other assumptions, are recognized within gain on change in the fair value of receivables. The Company maintains the PROG Holdings, Inc. Deferred Compensation Plan, which is an unfunded, non-qualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. The liability is recorded in accounts payable and accrued expenses in the condensed consol …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Recent Accounting Pronouncements Adopted In July 2025, the FASB issued ASU 2025-05, ""Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets"" (""ASU 2025-05""), which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606: "" Revenue from Contracts with Customers ."" The practical expedient permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets. ASU 2025-05 is effective for annual and interim periods beginning after December 15, 2025 on a prospective basis, with early adoption permitted. The Company adopted this guidance on January 1, 2026 on a prospective basis. The practical expedient is primarily applicable to Purchasing Power's six- and twelve-month retail installment agreements classified as accounts receivable. There was no material impact on our financial position or results of operations. Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, ""Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses"" (""ASU 2024-03""), which requires more detailed disclosures of certain categories of expenses, such as employee compensation, depreci …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

RESTRUCTURING EXPENSES During 2022, the Company initiated restructuring activities intended to reduce expenses, consolidate certain segment corporate headquarters, and align the cost structure of the business with the Company's near-term revenue outlook. The Company has incurred aggregate expenses of $48.4 million since the inception of the restructuring activities in 2022. These costs were primarily comprised of early contract termination costs, employee severance, a reduction of management and information technology space and impairment of capitalized software for our other strategic initiatives and products. The Company will continue to monitor the impacts of changes in macroeconomic conditions on its businesses and may take additional steps to further adjust the Company's cost structure based on unfavorable changes in these conditions, which may result in further restructuring charges in future periods. The Company had no restructuring activities during the three and six months ended June 30, 2025. The following tables summarize restructuring charges recorded within operating expenses in the condensed consolidated statements of earnings for the three and six months ended June 30, 2026: Three months ended June 30, 2026 (in thousands) Progressive Leasing Purchasing Power Four Other Total Severance $ $ 44 $ $ $ 44 Total restructuring expenses $ $ 44 $ $ $ 44 Six months ended June 30, 2026 (in thousands) Progressive Leasing Purchasing Power Four Other Total Severance $ 526 $ …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

REVENUE RECOGNITION The Company generates revenue from multiple sources, including leasing arrangements (ASC 842), contracts with customers (ASC 606), and financing and fee income (ASC 310). Revenue is disaggregated below by source. Revenue Disaggregation The Company disaggregates revenue by major revenue stream based on the nature of its revenue-generating activities, applicable accounting guidance, and by performance obligations, as management believes these categories depict how economic factors affect revenue. (in thousands) Three months ended June 30, Six months ended June 30, Revenue category 2026 2025 2026 2025 Total lease revenue pursuant to ASC 842 $ 549,830 $ 569,674 $ 1,146,694 $ 1,221,231 Total product, service, and other revenue pursuant to ASC 606 147,591 6,706 264,517 10,419 Total finance and fee income pursuant to ASC 310 22,294 12,123 51,178 25,281 Total revenues $ 719,715 $ 588,503 $ 1,462,389 $ 1,256,931

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"SEGMENTS As of June 30, 2026, the Company has three reportable segments: Progressive Leasing, Purchasing Power and Four. Progressive Leasing partners with traditional and e-commerce retailers, mainly in the consumer residential electronics, furniture and appliance, mobile phones and accessories, jewelry, mattresses, and automobile electronics and accessories industries to offer a lease-purchase solution primarily for customers who may not have access to traditional credit-based financing options. It does so by offering leases with weekly, bi-weekly, semi-monthly and monthly payment frequencies. Purchasing Power is a voluntary employee benefit program provider allowing employees of its employer-clients to purchase brand-name products and services from Purchasing Power and then pay for those purchases through either automatic payroll deductions or allotments. Millions of employees nationwide have access to Purchasing Power's purchasing options. Four is a buy-now, pay-later company that allows shoppers to pay for merchandise through four interest-free installments. As of December 31, 2025, Four was a reportable segment, as its financial results were considered significant to the Company's consolidated financial results. Prior year segment information has been recast for comparability to reflect Four as a reportable segment for the year ended December 31, 2025. For the periods prior to becoming a reportable segment, the revenues, loss before income taxes, and assets of Four were …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business PROG Holdings, Inc. (""we,"" ""our,"" ""us,"" the ""Company,"" or ""PROG Holdings"") is a financial technology holding company that provides transparent and competitive payment options to consumers. On January 2, 2026, the Company acquired 100% of the equity interests of P-Squared, LLC and its subsidiaries (""Purchasing Power""). The results of Purchasing Power are included in the Company's condensed consolidated financial statements beginning on the acquisition date. As of June 30, 2026, PROG Holdings has three reportable segments: (i) Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider; (ii) Purchasing Power, a voluntary employee benefit program provider, allowing employees to purchase brand-name products and services through either automatic payroll deductions or allotments and (iii) Four Technologies, Inc. (""Four""), a modern cloud-native mobile app which offers Buy Now, Pay Later (""BNPL"") payment options to consumers through the Four platform. Our Progressive Leasing segment provides consumers with lease-purchase solutions through its point-of-sale partner locations and e-commerce website partners in the United States and Puerto Rico (collectively, ""POS partners""), as well as through its direct-to-consumer app, PROG Marketplace, which allows consumers to shop hundreds of retailers at their convenience. It does so by purchasing merchandi …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing