PROG Holdings, Inc.
Q4 2020 Earnings Call Transcript

Published: 26 Feb 2021

[Operator:]

Good morning. My name is Andrea, and I will be your conference coordinator. At this time, I would like to welcome everyone to the PROG Holdings Inc. Fourth Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. I would now like to turn the call over to Mr. John Baugh, Vice President of Investor Relations for PROG Holdings. You may begin your conference.

[John Baugh:]

Thank you, and good morning, everyone. Welcome to the PROG Holdings fourth quarter 2020 earnings call, our first as a stand-alone company. Joining me this morning are Steve Michaels, PROG's Chief Executive Officer; and Brian Garner, our Chief Financial Officer. Many of you have already seen a copy of our earnings release issued this morning. For those of you that have not, it is available on the Investor Relations website at investor.progleasing.com.

[Steve Michaels:]

Thanks, John, and good morning, everyone. We're excited to report our results for the first time as a stand-alone fintech company. I'll start by thanking our employees for their hard work and dedication in support of our customers and point-of-sale retailers during this pandemic, while simultaneously executing the spin-off of our Aaron's business unit. With the spin in the rearview mirror and as we approach one year into this pandemic, we feel we are in a stronger position to execute on our plans and to return closer to our historical growth rates. In the fourth quarter, we grew revenues by 6.5%, adjusted EBITDA by 35.9% and non-GAAP EPS by 47.4%. Our fourth quarter performance was in line with the outlook we provided during the spin roadshow presentation. For the year 2020, we reported revenue growth of 14.9% to $2.485 billion and adjusted EBITDA of $320.9 million, an increase of 34.5%. This adjusted EBITDA is burdened by $22 million of spin related, unallocated corporate overhead expense. Our adjusted EBITDA would have been $343 million, adjusting for this unallocated expense as seen in the non-GAAP reconciliation of the earnings release.

[Brian Garner:]

Thanks, Steve and let me add my welcome to all of those on the call and a heartfelt thanks to our dedicated Progressive and Vive employees for making 2020 a success in the face of unprecedented challenges. I am honored to be part of the team and look forward to helping drive Progressive story forward. Starting with our Progressive Leasing segment, net revenues for the Progressive Leasing segment in the fourth quarter reached a new record for the period of $594 million an increase of $34 million or 6.2% compared to the fourth quarter of 2019. This revenue increase reflects the net of a series of both headwinds and tailwinds experienced during the period. I'll begin with the tailwinds. Throughout the quarter and as a continuation of recent trends our customers demonstrated strong financial resilience in the face of economic challenges as evidenced by improved levels of payment performance and associated lower levels of delinquencies in both early and late stages year-on-year. Next, revenues reflect the continued strong ramp of two large POS partners launched in 2019 as well as increases in e-commerce volume year-on-year. As we mentioned on previous calls, the optimization of new national retailers has historically been a multiyear process as messaging, training and marketing are tailored for our point-of-sale partners. We are very encouraged by the trends we are seeing there, particularly given the disruption of COVID. Finally on revenue tailwinds, lease buyout activity continues to be elevated including significant increases and 90-day buyout activity in the quarter compared to the same period last year. These buyout trends along with lower delinquencies continue to demonstrate changes in customer behavior and increased liquidity of our customers during this time. Shifting to revenue headwinds. Revenue in the period was pressured by recent softness in GMV driven by pandemic related challenges. This recent GMV pressure and high rates of buyout in recent periods has resulted in smaller overall portfolio size as of Q4. As seen in the earnings release, gross assets on lease as of December 31st, 2020 declined 5.6% from the year ago period reflecting a smaller base from which revenue is being generated. Given the short duration of the portfolio of six to seven months on average, we expect the size of Progressive Leasing portfolio to rebound fairly quickly as GMV returns to a growth trajectory. Directionally as we have stated previously, the current period revenue is largely a function of the trailing two to three quarters of GMV and the corresponding impact on portfolio size.

[Operator:]

We will now begin the question-and-answer session. And our first question comes from Ken Hill of Loop Capital. Please go ahead.

[Ken Hill:]

Hey good morning everyone. Thanks for all the comments related to the e-commerce outlook there. Those are really helpful. I was curious though from a strategy perspective I know you talked a little bit about M&A being a part of the strategy going forward. But also I was wondering if you're considering things like partnerships on that front particularly as you grow out the e-commerce space. I know some of your peers have partnered up with buy now pay later firms to really increase their retail exposure there. So, I'm curious from your perspective if partnerships might seem more interesting going forward?

[Steve Michaels:]

Yes Ken. Thank you. This is Steve. Good morning. Certainly, I mean everything is open on the table for us. We've got a great network of retail partners already and we look to deliver more GMVs for those retail partners, but also additional products. But the BNPL space as you stated has been white hot and attracting a lot of attention. So, there are opportunities for us from a partnership standpoint as well as other waterfall type opportunities from a partnership standpoint. So, as we think about our R&D function that we recently stood up as well as the -- when I think about strategy and M&A it certainly involves potential partnerships not just outright acquisitions.

[Ken Hill:]

Got it. And if I could a follow-up. I think you mentioned kind of reengaging some customers you've had in the past I think on your platform somewhere in the neighborhood of I want to say 12 million customers in the database there. I was wondering if you could talk a little more specifically on how you're reengaging those customers and who maybe haven't used your products more recently? And then maybe what some of the initial returns look like there.

[Steve Michaels:]

Yes. We do have a very strong database. And in our active customer base, we also have a very engaged customer that engages with our digital platforms very frequently. So we think that we've got an opportunity to speak to that customer through multiple platforms frequently. But specific to your question about the large database of maybe inactive customers that we haven't seen in a while, we've got marketing campaigns that are not only prospecting for new customers, but also reaching out to our previous or inactive customers that have done business with us the past, and representing or offering of or surfacing offers to them to come back. And that's one thing the power of our retail partnership network and the power of the brands that we partner with are very compelling to our customers and they want to shop at those retailer environments. So we're seeing some success in getting in shortening the time to repeat -- for our customers to repeat. We have a high repeat business in our history, and it's actually increasing each year. But a lot of our marketing efforts are actually compressing the time from the time that they finish a lease, to the time they start a second lease. And we believe it's helpful in a couple of ways. It helps our customers get the -- acquire the products that they want, but it also helps us through to our retail partners that we're driving incremental business into their environment, which continues to underscore improve our value as a provider for them.

[Ken Hill:]

Got it. That's great detail. Thanks for taking the questions.

[Steve Michaels:]

Thank you.

[Operator:]

The next question comes from Kyle Joseph of Jefferies. Please go ahead.

[Kyle Joseph:]

Hey, good morning guys. Thanks for have me on.

[Steve Michaels:]

Good morning, Kyle.

[Brian Garner:]

Good morning.

[Kyle Joseph:]

Good morning. Sorry, not invoice GMV, apologies.

[Brian Garner:]

Thank you.

[Kyle Joseph:]

As we go through 2021, you talked about some of the headwinds there in terms of supply chain challenges, and that again more brick-and-mortar exposure. But with that, I guess, you break it apart into two components with vaccines and whatnot? At what point do you expect the brick-and-mortar headwinds to kind of ease? And then give us a sense for supply chain issues and when do you think those trends normalize?

[Steve Michaels:]

Yes. Thanks Kyle. I'll start with the supply chain. I mean, obviously the supply chain has already started to heal. It was the most acute last summer, and especially in the furniture and appliance verticals. It still existed at various levels depending on the size of the retailer through the holiday shopping season, and we've heard from some of our partners and other sources that there's record backlogs in furniture retail. And we've actually experienced it in our approve what we would have called approved not converted, because the customer would be approved, would enter into a deal, but because the lead time was eight or 12 weeks, the customer would end up canceling the deal. And so our queue of that has really risen to an all-time high. But we don't expect that to be a meaningful headwind as we move through the through 2021 through the top half and back half of 2021. We think those things are going to start to heal a little bit more. And then as you talked about as it relates to the pandemic, we don't have a crystal ball, right? We've got potential stimulus coming. But we all think that whether it'd be availability of vaccinations or what some -- throughout 2021, the economy and our movement around will reopen and the people will return back to stores in a bigger way, and we think that will be a tailwind for us. But also it's our focus and it's our -- and our energy is around being there where the customer wants to shop. So that's why you'll hear much focus on our e-commerce initiatives, because we think they are important. However, we think it's important to have a -- there's an overused term, but an omni-channel solution where customers can -- because in many customer shopping journeys, they will cross over channels. They may start online and go in-store and then finish on their mobile phone. And we want to have a seamless integration across those channels for our retail partners. So we think that in-store traffic will rebound and that will be a help to us from a GMV standpoint in 2021. But we also think that our efforts to grow in our e-com capabilities and our e-com presence with our retail partnership network will pay dividends as well. So that remains to be seen as 2021 plays out, but that's our current expectation.

[Kyle Joseph:]

Got it. Very helpful. And then next the fourth quarter was active in terms of headlines in the virtual lease-to-own space. Can you just give us a refresher on the competitive environment any recent changes you've seen and walk us through how that is a nationwide retail partner bases versus smaller geographical?

[Steve Michaels:]

Yes. Certainly was a lot of activity in the fourth quarter. Starting with our spin transaction, and then December heated up even more. So, listen from a competitive standpoint, it's always been competitive. And some of the actions that were taken by our competitors will create even more formidable competitors and -- but we're up to that challenge. So I would say that from a competitive standpoint, it hasn't changed a ton. We still have a very competitive SMB space with multiple players and some sizable ones that are growing fast. In the enterprise world, it's less competitive, but there are several players that can -- that we expect that we will see as we try to land and convert the pipeline that we have out there. So the moves over the last couple of months and the Renaissance one in particular I would call out by name is certainly something to watch, but we feel confident in the -- what we bring to a potential retailer that's evaluating this solution. We've got the scale and the referenceability and the infrastructure and the know-how to provide an omni-channel solution for them. And we expect that we will continue to win our fair share.

[Kyle Joseph:]

Got it. very helpful. Thanks for answering all my questions. Appreciate it guys.

[Steve Michaels:]

Thanks, Kyle.

[Operator:]

The next question comes from Jason Haas of Bank of America. Please go ahead.

[Jason Haas:]

Great. Thanks for taking my question, and good morning.

[Steve Michaels:]

Good morning.

[Jason Haas:]

I'm curious if you could speak a little bit more towards some of the quarter-to-date trends you're seeing just because it's -- I imagine, there's been some maybe some volatility due to just stimulus the weather maybe had an impact and also with tax refunds being delayed. So I'm just curious how each of those if they had an impact at all on your business? Thanks.

[Steve Michaels:]

Yes. Thanks Jason. You're right. I mean, you hit and nailed them. We did see an impact in GMV from stimulus right, at the beginning of the year. Although, it was probably a little bit more muted than what we saw in April-ish time frame of last year. And then, we had some good trends. As we said, we were year-to-date we were up mid-single digits in GMV. As you think about that, we have the stimulus impact. And then exactly what you said the tax refunds are 85% delayed. Sorry, 85% down year-over-year so far. I think that the anticipation is that they'll start hitting this week and probably into the next two weeks of March. So we'll be watching to see that impact. Although, there's also concerns around the fact that overall size of the average refund will be down kind of low double-digits. So we're watching that. And then, we were certainly on a higher year-to-date trajectory from a GMV until the last kind of 10 days of weather related challenges. And certainly Texas is a big state for us and had some really big disruptions. So, we've got all of those things kind of baked into the year-to-date numbers. And then, we'll be watching the release of the tax refunds throughout the balance of the quarter. And then obviously, as we get into the back half of March, we start to get into comparing against the onset of the pandemic last year, so a lot of moving parts to bake into the cake for Q1 GMV.

[Jason Haas:]

Thanks. And then, as a follow-up question, could you provide some more color on how the rollouts. I guess, now they've been around for some time. But I'm curious if you can provide more color on the rollouts of some of your largest partners, just in terms of how employees are getting used to the systems, how management is supporting the programs? And just any more color on those, cadence of those rollouts?

[Steve Michaels:]

Yeah. And without mentioning anybody by name, I think everybody knows which ones you're referring to. We're very pleased with the results and the rollout throughout 2020 and year-to-date 2021 in our major -- in our recent major launches from 2019. You mentioned it a little bit ago, which is true but it feels like, we're -- it's just an instant ago. We're in the very early innings of growth with those partners and management. We have great dialogue between our teams. We have lots of sessions on how to continue to grow, and what tools need to be provided in order to have further penetration. But even as those tools mature and as Brian said in his prepared remarks, it is a multiyear process. We're very pleased with how -- with the ramp and the growth in 2020 in both of those national partners and expect big things in 2021.

[Jason Haas:]

Great to hear. Thank you.

[Steve Michaels:]

Thank you.

[Operator:]

The next question comes from Brad Thomas of KeyBanc Capital Markets. Please go ahead.

[Brad Thomas:]

Hi. Good morning and congratulations on your first stand-alone call here, as a company.

[Steve Michaels:]

Thanks Brad.

[Brad Thomas:]

A couple of -- you're welcome, Steve. A couple of questions if I may, first around, the changes in the decisioning, I believe, you said, your approval rate is running about where it was this time last year. When we think about the back half of this year and lapping those quarters where your losses were at 2.1% and then 4.5%. What's the opportunity to add to revenues in those quarters if you underwrite at a higher level if you decision at a higher level and how much could that potentially add revenues in the back half?

[Steve Michaels:]

Yeah Brad, without -- kind of quantifying the revenue and I'll let Brian chime in here as well. But from a GMV standpoint, I would say, decisioning definitely had an impact on our GMV in 2020. And we think that, the decisions we made in March of 2020 were appropriate at the time. They may have proved a little conservative now but now what we knew then we would probably make the same -- we would make the same decision. So -- but having said that, we did make the moves that I outlined in my prepared remarks and we expect that that will help GMV in 2021, I think, we said in previous calls that in the -- let's call it Q3 of 2020. The back half of 2020 we had -- our approval rates were about 500 basis points to 700 basis points lower than the previous year. So it wasn't an immaterial number. And so as you think about revenue which was your question, that's a more difficult question to answer, because that is mostly driven by GMV that will be delivered in Q1 and Q2, but as you're thinking about comping GMV in the back half, we think there's a lot of factors that would create some tailwinds and a good comp. And decisioning is certainly probably in the top three not number one but in the top three.

[Brian Garner:]

Yes. I think that's right. And so, Steve mentioned, there's going to be a bit of a lag from the time you make those decisioning changes to we see them hitting in revenue in one to two quarters typically. But yes, I think as we frame up Q1 and beyond, I think the expectation around write-offs in general is to see some movement there to take it up a bit. We're looking for opportunities to the extent, where there's profitable deals to decision on and let them in the funnel. So we continue to watch that. And look to be opportunistic. We've got a best-in-class decisioning team that is making it their priority. So as this environment changes with stimulus and looking at changes in customer behavior, we're consistently looking at that and looking for opportunity to grab that GMV to the extent that is added into the bottom line.

[Brad Thomas:]

That's very helpful. And then, Steve, if you could just remind me the Aaron's and Progressive last year in the first quarter increased reserves as a result of the environment that we were going into and the risk of losses being higher. And I believe, as of the third quarter you all had not released those reserves. Can you just give us an update on, where some of the reserves stand today for current conditions and expectations relative to these strong write-off trends?

[Brian Garner:]

Yes, sure. I can take that. You're right. We recorded about $16 million of incremental COVID reserves back in Q1. This dynamic had begun. And we had uncertainty around how the customer is going to perform. As we closed out the year, we brought that reserve down slightly to $14 million. We feel there's still meaningful uncertainty out there with the muted tax season. And ultimately it still remains to be seen on how this customer is going to handle rent deferrals and things like that. So effectively we feel like, we're adequately reserved. I wouldn't say we're reserved for a catastrophic case, but I think we're conservative with the base case. And I think -- I don't think there's going to be additions to that reserve-based on what we can see right now as we move forward.

[Brad Thomas:]

Got you. Just to make sure, I heard you right the reserve is now $14 million down from $16 million?

[Brian Garner:]

Yes, it's brought down a couple of million dollars based upon our most recent analysis.

[Brad Thomas:]

Perfect. And as a last housekeeping item are you able to share with us the percentage of revenue that you have coming from California right now?

[Steve Michaels:]

Yes, we can share that. For 2020, it was approximately 9%.

[Brad Thomas:]

Great. Thank you all so much.

[Brian Garner:]

Thanks, Brad.

[Operator:]

The next question comes from Alex Maroccia of Berenberg. Please go ahead.

[Alex Maroccia:]

Good morning, guys. Thanks for taking my questions. The first one is on your e-comm strategy and it piggybacks off your previous comments around SMBs versus enterprise-focused virtually to own companies. So will you in particular be focused on landing a handful of very large retailers similar to your legacy partners from an e-comm standpoint, or can we expect you to target a large volume of smaller DTC start-up similar to what your peers have been targeting?

[Steve Michaels:]

I would say, yes, to both of those. Our strategy we've got -- we'll have teams focus on both of those different markets. We certainly -- our biggest near-term opportunity is to as we've talked about before convert and get fully transactional in the e-com checkout part of our existing network of enterprise partners. But at the same time, we know that simple and integration less plug-ins with the popular platforms like Shopify and Demandware and Magento for -- in the SMB space are a big opportunity as well. And so we've got teams that are not only focused, but incentivized on both of those very important areas.

[Alex Maroccia:]

Okay. Great. That's helpful. And then on a related note can you discuss some of the margin impacts of an expanding e-com business? Just because, I guess, most importantly I would think e-comm write-offs could be a bit different and then returns are more expensive since there's not a physical store involved. So is this thinking correct?

[Brian Garner:]

All things being equal, typically how we handle e-commerce you're going to see a lower approval rate on e-commerce. And so our decisioning team will effectively assess that risk. Being a little tighter in terms of their decisioning profile and let that all in as we evaluate the margins the profitability of e-commerce deals we're able to achieve effectively very similar margins to what we would see in say our brick-and-mortar transaction. So you're right the risk of the customer is generally elevated, but we're able to solve for that through our proprietary decisioning.

[Alex Maroccia:]

Okay. Thanks. Good luck with the quarter.

[Brian Garner:]

Thank you.

[Operator:]

The next question comes from Bobby Griffin of Raymond James. Please go ahead.

[Bobby Griffin:]

Good morning, everybody. Thank you for taking my questions. First, Steve I just wanted to quickly go back to your -- in your prepared remarks you mentioned I think three headwinds to GMV, cash payments, the e-commerce aspect and then the supply chain. Were those given rank order in your view, or if not can you maybe size up or help us think about which one you thought was the biggest headwind during the quarter?

[Steve Michaels:]

I think, yes, those were in rank order. I mean what we did see and we've had anecdotal evidence from our partners is that even though they may have had positive comps in the quarter because ultimately the holiday shopping season was up year-over-year. They saw a shift of composition of cash sales or personal credit card usage versus people reaching for offered point-of-sale finance options within their environment. So that was certainly a headwind for us. We also saw -- and I think, I mentioned this on last call we also saw some supply chain issues manifest themselves through visibility into a truck of furniture coming into the store. But by the time the truck is out there it was all pre-sold. So there was less -- even though they had good comps in that category there was less availability for -- inventory availability for people who were using financing because they were sold with people who put deposits down in cash. So I would say back to your original question it was in rank order of how we thought. What changed and what we thought the impact was since we basically gave our outlook on October 29.

[Bobby Griffin:]

Okay. And then on the e-commerce aspect --and trying to drive better penetration there with your customers or your partners, obviously, getting the service offered online as the first step. But can you maybe talk about some of the marketing angles or the initiatives? Because I'm just thinking about it from a high level, if I walk in a store there's a store associate that can tell me about rent to own, educate me about rent to own but it could be a little bit more difficult for a customer to realize that XYZ retailer offers that online when they're shopping online. So is there any new programs there that you're putting in place or how you're working with your partners on that aspect?

[Steve Michaels:]

Yes. That's a real challenge basically is getting that awareness and visibility online, especially, because everything is mobile-first and real estate on a mobile phone is the most valuable commodity as it relates to landing pages and checkout parts. So -- but we've got -- we work very well with our partners. We've got great marketing collaboration and we can reach for particular promotions that can drive people to knowing that the offering exists online and then that raises awareness. But it is a --we have a button basically says pay with Progressive or something, but it's -- until that after they put something in the card. So we've got work to do and it's in collaboration with our retail partners on, how we raise that awareness and it's in both of our best interest as well as the customers to make sure they know it's available and those plans are happening and also being enhanced all the time.

[Bobby Griffin:]

Okay. And then I guess, lastly for me, on the tax refund season, I mean, clearly a lot of moving parts here. But historically, if I remember correctly when your customer get refunds it drives buyouts and they buy out of the contract early. So there's good cash flow into your business. If refunds are down dollar-wise or just the amount or something, how do you foresee that playing out? I mean, you can see customers I guess hold on to the product a little longer. But then at the same time you don't have your customer base with new cash for new purchases or something. But so just any high-level thoughts about how you guys view this potentially playing out would be helpful for us to think about?

[Brian Garner:]

Yeah. I think what I say to that, I mean in the order of course, what we see during tax season is typically a spike in 90 days with the buyouts. Collections tend to be higher you get some improvement in your delinquency metrics. And GMV tends to also benefit. So in isolation, pushing tax season out and a more muted tax season, does impact these metrics. However, if you think about stimulus, and what's on the horizon there that obviously throws a big wrench and trying to hold that in isolation. There's obviously moving parts there. So I think there's --- I think generally the macro trends point towards a continued strong portfolio and maybe a slight delay in GMV volume as we think about a delayed tax season. But from a cash flow perspective, one of the strengths of this model is the ability to turn the portfolio quickly. So even with that considered and having that tax season pushed out a little bit, the company is able to self-fund pretty easily during this point in time in terms of cash flow from operations being positive. So I don't think, there's any concern there. I think there's probably a little bit temporary dynamic of pushing back the metrics that I specified. And ultimately, I think we'll be in good shape, but there's certainly a lot of liquidity out there right now and the stimulus is going to add to that.

[Bobby Griffin:]

Okay. I appreciate that. And I guess one quick model. Can you I guess, can you give us the active doors in 4Q where we can clean up our model?

[Brian Garner:]

Yeah. I can give you the back doors. So doors were 20,700 just down from 2,200 same period last year – yes, sorry 22,000 last year. So 20,700 down from 22,000 in the same period last year. So really that's being driven by – we talked about some store closures during the pandemic some of our large national retail partners had some permanent closures that are playing through that number. And I mean, I'd be amiss, if I didn't say that particularly as we shift more towards e-commerce. And with these big-box retailers ramping and become a higher concentration that metric becomes less and less important. We see more productivity in these big-box retailers. It's going to skew these numbers say from a regional mom and pop. So I mean, just keep that in mind as you're assessing that but those are the figures for the quarter.

[Bobby Griffin:]

Yes, we should see – I mean, as that moves up we should see higher invoice – I mean higher – excuse me GMV its going to take me a while to get use to that new metric GMV. Thank you. I appreciate the time. Thank you

[Operator:]

The next question comes from Vincent Caintic of Stephens. Please go ahead.

[Vincent Caintic:]

Hey, good morning. Thank you for taking my questions. I had a kind of a clarifying question about some of the online details you gave. So the online GMV mid-single digits and you expect it to more than double to the lower mid-teens percentage of GMV. Is that the percentage of a – or I should say closed applications online so the application gets funded online. And then, if so I'm just kind of wondering when you think about the opportunity what could that percentage be that you do online you close online?

[Steve Michaels:]

Yeah. Thank you, Vincent. So I guess we – I think I mentioned this but we narrowly define e-commerce, right? So we have multiples of that from a percentage standpoint that have an e-commerce component to them when it comes to GMV. Like, if we think about App starts and things of that nature, but we narrowly define e-comm as it has to finish in the retailers' card. That means lease signing first payment arrange delivery that type of stuff. So that's what we're referring to when we talk about mid-single digits. And then – and with that definition, we're talking about being in the low to mid-teens in 2021 of overall GMV. And obviously, our GMV is quite large. So that's a really big business. What it could be is I would say, we're somewhat agnostic to because it's ultimately driven by the customer. The customer will decide where they want to engage with our retail partners. We do think there's opportunities to – through our marketing efforts and through our repeat business to keep them – to have more customers do business online and drive customers through into the e-com environments. But ultimately, we expect there'll be channel shift. There'll be some people that go in-store -- that used to go in-store, now they'll be online. But we expect it will continue to grow and it will grow faster than the rest of the channel, but we're not targeting a number because it's really all about where the customer wants to participate with us.

[Vincent Caintic:]

Okay. That's very helpful. Thank you. And I wanted to -- last question. I wanted to follow-up on the question about competition and in virtual lease to own. And over in the fourth quarter, we had a couple of these guys go public or announced that they're going public, whether it was the Rent-A-center acquisition of Acima or this Catapult going public. I think the investor questions I've been getting is, now they're familiar with other competitors out there. And so I just wanted to kind of throw a broad question to you. Maybe why does the retailer pick Progressive over the other guys and essentially give us a sales pitch because -- sales pitch on Progressive sense and how it differentiates versus some of the other players out there? Thank you.

[Steve Michaels:]

Yes. Thank you. I mean, listen, and that's going to change based on what retail you're speaking to. But from an enterprise account standpoint, Progressive is still the largest. It's the most referenceable. We're the only one currently servicing the largest national retailers that offer this solution in the country. And that comes with the ability and the history of servicing their customers and their retail sales associates through customer support, merchant support, very well. Then it also comes with the infrastructure and the tech chops and everything that allows them to feel confident, that we're going to take care of their customers and all the way to their data. So that history is very important. We believe that our referenceability and our track record mean that we'll be in the conversation for all these retailers that are looking for a solution. And our road map and our technology road map will help to paint the picture as to why it progresses, who to choose. In the SMB space, it's very competitive, and we're not going to go out and just compete on price or rebate. But we have a great track record there of delivering value and taking care of the customers. Our customers love us. We've got great reviews. The voice of the customer speaks very loudly for us, and we use that in, as you say, our sales pitch. So we've got a Net Promoter score of 62, which is outstanding, and it's basically our customers speaking that we treat them well. And they like us. So we -- and then the last thing, and it's very important, and I alluded to it earlier, is we are not just to save the sale solution for a retailer. We are a value-added partner that may have started a few years ago as they drive their marketing rails and save the sale. Now, we are a incremental driver of business of customers that were not historically doing -- transacting in these retail environments. And so, our network effect and our -- the digital ecosystem that we can bring to bear and provide for these retailers and prove to them that our marketing effects, our relationship with the customers have driven them into that retailer is very powerful, and it not only helps us maintain retailer relationships, but to track new ones.

[Vincent Caintic:]

Okay. That's very, very helpful. Thank you, very much.

[Steve Michaels:]

Thank you, Vincent.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Steve Michaels for any closing remarks.

[Steve Michaels:]

Well, thank you, everyone. Thank you for joining us today, and thank you for your interest in our company. We are -- it's certainly uncertain out there. It's certainly uncertain. But even in this uncertain environment, our team is very excited about our launch as a stand-alone company and our opportunity to continue Progressive's history of growth and innovation. I want to thank all of our employees for their tireless work to help provide simple and affordable purchase options to the credit challenged consumer. And we look forward to updating you again next quarter.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. And you may now disconnect.