Good morning, and welcome to the PROG Holdings Inc. First Quarter 2022 Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

Thank you, and good morning, everyone. Welcome to the PROG Holdings first quarter 2022 earnings call. Joining me this morning are Steve Michaels, PROG Holdings' President and Chief Executive Officer; and Brian Garner, our Chief Financial Officer. Many of you have already seen a copy of our earnings release issued this morning, which is available on our Investor Relations website investor.progholdings.com. During this call, certain statements we make will be forward-looking, including comments regarding our expectations related to Progressive Leasing's GMV and levels of write-offs for the remainder of 2022, including our targeted annual write-offs range for Progressive Leasing and our 2022 outlook. I want to call your attention to our safe harbor provisions for forward-looking statements that can be found at the end of the earnings press release that we issued earlier this morning. That safe harbor provision identifies risks that may cause actual results to differ materially from the expectations discussed in our forward-looking statements. There are additional risks that can be found in our Annual Report on Form 10-K for the year ended December 31, 2021, which we encourage you to read. Listeners are cautioned not to place undue emphasis on forward-looking statements we make today and we undertake no obligation to update any such statements.

Thank you, John, and good morning, everyone. I appreciate you joining us today as we discuss our first quarter results to provide updates on some key business initiatives. I want to begin by acknowledging some important achievements during the first quarter of 2022. First, our financial results, including lease portfolio performance, were in line with our expectations, and we believe we remain on track to achieve the full-year outlook we provided in our Q4 2021 earnings release, even in the current macroeconomic environment. Second, we converted a number of valuable partnership opportunities that should support future period GMV, including, as has been reported, the addition of a large national retailer. Third, our R&D team made great progress on new and enhanced products that we expect will improve our retailer experience and create more loyalty and engagement with our customers. And finally, we published our inaugural ESG review, highlighting the great work we do on behalf of our customers, colleagues, and communities. This review can be found on our Investor Relations page. As I mentioned, our Q1 results were in line with our internal forecast and we believe represent the low point for EBITDA margins and GMV and revenue growth rates for the year, even though we expect the macro environment to remain challenging. We have several initiatives throughout the balance of the year that we expect will increase our GMV for the remainder of 2022, including co-branded marketing campaigns, a more streamlined application flow, additional enhancements to the customer experience, and continued e-commerce integrations with new and existing partners. Not only do we expect these initiatives to deliver additional GMV, but they should also deepen our relationships with existing retail partners while differentiating our industry-leading platform. We shared on our call in late February that Progressive Leasing's GMV was comping slightly negative year-to-date. And the quarter concluded as we expected, resulting in a 1.1% decline in GMV from Q1 of 2021. We're pleased that e-commerce continued to grow faster than overall GMV and increased 10% year-over-year, representing 15.9% of our GMV in Q1 versus 14.3% in the prior year's quarter. First quarter consolidated revenues declined 1.5% year-over-year, which was in line with our expectation against the tough comp that benefited from historically high customer payment performance and elevated buyout revenue in the stimulus-driven prior-year period. A positive note, we ended the quarter with a 17.6% increase in our gross leased asset balance, which should drive stronger revenue in the back half of the year as we move further away from comping last year's stimulus-driven elevated buyout revenue. Our consolidated adjusted EBITDA margin was 9.1% in Q1 due to seasonally low gross margins for Progressive Leasing and pressure from increases in write-offs and SG&A expense. Progressive Leasing's write-offs were 7.3% in what was a tough comparison to the unsustainably low 2.6% level from last year's stimulus aided first quarter, but were relatively flat compared to the 7% Q1 result for the pre-pandemic year of 2019. Portfolio performance remains a key focus for us and the current performance of our lease pools continues to give us confidence that the write-offs should be within our targeted annual range of 6% to 8% for 2022. Since our founding, we've anchored ourselves to being prudent and measured in our decision-making with an eye focused on the long game and not short-term wins. We continually make small, iterative and deliberate adjustments to optimize our decision-making and we believe we have an advantage in this area due to our industry-leading models, technology, and experience. I will note that we have been at or below our targeted annual write-off range since 2016, regardless of macroeconomic conditions. During the quarter, we also saw healthy progress on key product and partnership initiatives. As I mentioned, we completed the integration with a large national e-commerce partner at the end of Q1 and we're optimistic about the new customers and GMV this partner can provide for us in the future. We also announced an agreement with Nationwide marketing group in February that provides thousands of SMB retailers access to our flexible leasing options. Additionally, since the first of the year, we completed numerous e-commerce integrations using our enhanced plug-ins. I believe these new partnerships and integrations demonstrate our ability to convert our robust partner pipeline. We've also worked hard over the past several quarters on new products and innovations that we expect to have significant positive impacts on our business. We believe that these efforts will position us to accelerate our growth while creating more engagement and loyalty from our customers. I want to close with some context on how our business typically performs during challenging economic cycles. The foundation of our business is strong and over the last 20 years, we have shown the ability to execute in various economic environments. As we've shared in the past, as macroeconomic pressures increase, we believe our products are needed more than ever. For consumers, our flexible payment solutions offer purchasing power when credit is less available. For retailers, we drive incremental sales for our existing partners and offer added value and fast integration to prospective partners. By delivering for both consumers and retailers in tough economic times, we believe we can capture an even greater share of our large underserved addressable market. I'll now turn the call over to Brian for a more detailed look at the quarter's financials.

Thanks, Steve. As mentioned, the first quarter's results are in line with our internal expectations. We anticipate Q1 will represent our most difficult comparison for the year with comps for several key metrics becoming more favorable in the back half of the year. During the quarter, GMV was slightly negative year-over-year as we faced the impacts of Omicron and comparing against the prior year results that were driven in part by stimulus payments. Buyout revenue was down year-over-year, while remaining above pre-pandemic contribution. The continued normalization for write-offs to pre-pandemic levels is on a trajectory and we expect will allow us to stay within our historical 6% to 8% annual range for 2022. We are reaffirming the outlook we provided in February. I'll now turn to some specifics on the quarter, beginning with the Progressive Leasing segment. Progressive Leasing's revenue was $692.9 million in the quarter compared to $708 million in the year-ago period, a 2.1% decrease due to the following. First, revenue was unfavorably impacted by an increase in our accounts receivable provision, which is recorded as a direct reduction to revenue. As you'll see in our 10-Q we filed today, this provision increased to $88.5 million for Q1 of 2022 from $36.5 million for Q1 of 2021. This $52 million increase in the AR provision reflects the portfolio normalization we anticipated as we compare against last year's historical lows and directly impacts adjusted EBITDA, which I will speak to in a moment. Second, revenue was pressured by a reduction in buyout revenue, as fewer customers elected to exercise an early buyout option in the period. While this dynamic creates a difficult revenue comparison to the prior year Q1, fewer buyouts contribute to a larger portfolio size ended in the quarter. These two headwinds were almost fully offset by meaningful growth in the gross leased asset portfolio, which ended the period up 17.6%. Continued growth in this metric is primarily influenced by GMV growth rates and lease outcomes and will be an important driver in future period revenues. Progressive Leasing's Q1 gross margin was 28.3% versus 28.7% in Q1 of 2021. The 40 basis point decline is a result of a higher AR provision offsetting reduction in early buyouts for the period. Over the next nine months, we expect gross margins to improve from Q1 as we move further away from the elevated early buyout levels, which is typical in our seasonal profile. SG&A for the Progressive Leasing segment was $85.9 million or 12.4% of revenues versus $72 million or 10.2% for Q1 of 2021, an increase of $13.9 million. This increase reflects continued investment in technology, marketing, and sales-related costs compared to the pandemic-reduced levels of SG&A in Q1 of last year. Progressive Leasing's write-offs were $50.3 million and 7.3% of revenue compared to $18.6 million and 2.6% of revenues in the year-ago period. As we've mentioned on previous calls, our annual target for write-offs is 6% to 8%, and we expect to end the full year 2022 within that range. Adjusted EBITDA for the Progressive Leasing segment in the first quarter was $63.5 million compared to $116.3 million in the same period of 2021. This decrease is primarily a reflection of portfolio normalization in Q1 of 2022, compared to historically strong portfolio performance in Q1 of 2021. Pivoting to consolidated results. Q1 revenue for PROG Holdings was $710.5 million compared to $721 million in the year-ago period, a 1.5% decrease. Adjusted EBITDA for Q1 was $64.6 million or 9.1% of revenues, compared to $118.1 million or 16.4% of revenues for the same period last year. We generated $98.3 million of cash from operations in Q1, which is net of the working capital required to grow our lease portfolio. Our Q1 GAAP diluted EPS was $0.49 and our non-GAAP EPS came in at $0.57. We have $600 million of gross debt and $184 million of cash at the end of the quarter or net leverage of approximately 1.2 times our trailing 12-month adjusted EBITDA. We also ended the period with $350 million of availability under our undrawn revolving credit facility. During the first quarter of 2022, we repurchased approximately $78.1 million of our outstanding common stock at an average share price of $35.48. At the quarter's end, we had $482.8 million remaining under our $1 billion share repurchase program. We continue to look for opportunities to use our strong balance sheet to execute on our capital allocation priorities. In summary, the Q1 results and the respective drivers of performance were consistent with our internal expectations. Based upon current visibility, including our expected improvement in GMV and margin from Q1 2022 levels, we remain optimistic about our ability to deliver on our full-year outlook, which can be viewed in detail in our Q4 2021 earnings release. I will now turn the call back over to the operator for the Q&A portion of the call.

We will now begin the question-and-answer session. The first question is from Kyle Joseph of Jefferies. Please go ahead.

Hey, good morning, guys. Thanks for having me on and taking my questions. I heard your comment regarding the new e-com retail partner. I was hoping to get some more color on the pipeline, particularly given that it's a much more challenging environment for retailers than we've seen over the last, call it, two plus years.

Yeah, Kyle, good morning. I mean, you're right. Certainly, as we talked about last quarter, the current conditions and looking out into the next two years, I would view as more favorable to pipeline conversion than the period that we just exited where retail sales were easier to come by, as we all know. So we continue to believe that all retailers should have a fully developed finance stack and when times are tough and return on marketing dollars are harder to come by, that's when retailers start to get serious about looking for tools that they may not have and that some of their competitors might have. So, we continue to have good conversations and look forward to converting that pipeline that's out there as we've identified the TAM as $30 billion to $40 billion, a large portion of which is not being served. So, it's our hope and certainly our strategy to go out and get as much of that as we can in this environment.

Got it, helpful, thanks. And I think I understand what's going on in terms of credit performance, obviously, challenging comps, inflation, etcetera, but I think it would be helpful obviously, you guys were private during the last real economic downturn, but can you give us a sense for how the business performed in, call it, 2008, 2009?

Yeah. And you're right, the business was private and I certainly none of the management team were here other than our co-founder Curtis, who is still here. But the dynamic that we saw, and I can relate it back to my experience on the Aaron's side back in the great financial crisis is that you just have kind of like a transitory effect of the customers through the market. There are some customers at the bottom end that get impacted by a job loss or inflation or some other pressures on their disposable income and they may not be as able to make their payments or acquire the durable goods that they need during that time period. But an even larger force is the top of the funnel widens and customers fall into the market that might have previously had access to traditional credit. And as we talked last time from a China sequence standpoint, we usually see the tightening happening or the stress happening on our customer first and then it kind of moves up the spectrum. And so, the top of the funnel hasn't really started to open up yet, but we're starting to hear some anecdotal news and see some data from some of our sources that probably will happen over the next couple of quarters. During the GFC, a couple of things happened with Progressive: it grew really fast. The portfolio performance was consistent because of that profile of consumer changing in the applicant flow. And as importantly, it was an inflection point for Progressive's growth because of what we talked about earlier, which was the retailers reaching for other tools. As it relates to my experience at the Aaron's business, during that time, write-offs were fairly consistent and comps were very strong. I would just add that it's a little noisy because we were opening a bunch of stores then that had kind of a naturalistic comps, but this business is resilient and can perform well in all macroeconomic cycles.

Got it. Very helpful. Thanks a lot for answering my questions.

Thanks, Kyle.

Good morning. Thanks for taking my questions. I guess first, I wanted to maybe dive in a little bit on the shape of the year. Clearly, kind of the Street was off a little bit on how we expected the year to shape out versus internal expectations. So maybe just to help clean up some of the Street models going forward, is there anything we should keep in mind for 2Q that sticks out to you and for 3Q and 4Q that we need to make sure we tighten up in the models where we can get kind of the shape of the year closer to how you and the team are thinking about it, Steve?

Yeah, I'll start and then Brian can chime in. I mean, you're right. I guess you've taken one for the team here. Here Q1 was a lot closer, but there are some forces that are impacting the shape of the year and we tried to communicate those last quarter. Clearly, from a comp standpoint, whether it be the impairment reserve on the inventory side or the AR reserve on the. Well, on the AR side, which is a contra-revenue account. Those things are being rebuilt and comping against really low levels from the first half of last year. So, what we would point you to is the size of the probably gross leased asset balance, which is the driver of future revenue growth. And before I get to the benefit, I'll let Brian chime in.

Yeah, Bobby, thanks for the question. I think there's a couple of things that hit on. First, just taken the shape of revenue to provide some context there, you heard my prepared remarks, we've outlined the headwinds and tailwinds in the revenue profile. And what I think we expect over the course of the year, recall back to 2021, we really started to see the normalization happen in late Q3 and Q4 in terms of buyouts starting to normalize a bit, the AR provision starting to normalize a little bit. So, as you comp those, it becomes much easier to grow revenue from a year-over-year perspective when you've got that gross leased asset growing high teens. So, I think that's the pathway to much stronger revenue growth in the back half of this year. I think from a margin profile standpoint, it really hinges on our expectations around gross margin and what we expect there as we move throughout the year. We talked about it; I mean, seasonally low is pretty typical in the first quarter with higher buyout rates and we expect that to improve gross margins over the course of the year, really starting to hit a stride in the back half, and that's going to translate down to better EBITDA margins. So that's how we're shaping up the course of the year. Obviously, there's a lot going on in the macro, but we've as Steve mentioned, we are resilient in many different cycles. And that's how we're thinking about the course of the rest of the year.

I want to emphasize that while we are affected by the macro environment, we have internal initiatives that I've mentioned which provide us insights into potential growth in GMV. It doesn't have to be huge growth, but it should speed up from this point forward. As the accounting complexities fade, we'll see progress. Therefore, it's a combination of some accounting factors and our internal initiatives that we believe will support growth in the latter half of the year.

I have two follow-up questions. First, regarding the accounting aspect, is the true-up in the reserves you mentioned for accounts receivable or inventory nearly complete after this quarter? Will there be any ongoing effects in the second and third quarters until we reach full normalization? Secondly, on the GMV front, could you provide insights on whether April showed improvement compared to March? Any information to help us build confidence in GMV acceleration would be appreciated, as we likely need GMV growth in the mid to high single digits to meet our revenue guidance by the end of the year.

Yeah, I'll start with your question around Q2 and I'll let Steve weigh in on the GMV item. The Q2 is, you're right, you're really going to see the year-over-year comps getting better starting with Q3 and Q4 meaningfully. But we do expect to step forward into Q2, just not as meaningful as acceleration we will see in the back half of the year. So there will be a ramp in the direction in the back half. But Stephen can weigh in.

The other thing on the revenue side is, we're still comping against elevated buyout levels in Q2 that started to kind of trend back towards normal in the back half. So that's another thing. And we all know buyouts are not awesome for gross margin, but they do bring revenue forward. So from a revenue comp, that will also ease in the back half. As it relates to GMV, I guess what I would say is, the quarter Q1 played out the way that we kind of expected it to and that we signaled back in late February, we had a tough first 45 days related to what we believe was Omicron. We actually had a pretty good kind of 30 days after that, from kind of mid-February to mid-March. And then as we signaled in February, we started comping against the very largest of the stimulus from the pandemic period that impacted GMV in the back half of March and into April. And that's and we basically saw that happening. So, April was impacted by that comp. But we were not going to comment on April beyond that. But we still feel that we can hit roughly that math that you did for the year from a GMV standpoint. But it doesn't need to be 20% for the year to hit our targets. They can be something in the mid to high single-digits; we can make it happen.

Okay, that's helpful. I appreciate the details. I'll jump back in the queue.

Thanks, Bobby.

Good morning. I don't suspect you're going to answer this question, but I'm going to ask it anyway. Who is the large e-commerce partner that you signed up?

Well, Anthony, I'm going to surprise you this morning because it's already been in writing, but we're back on Wayfair. So that was the one we are referring to. And as you know, we have been on Wayfair before. A couple of our competitors are on there. It's hard to be coy about an e-commerce player when anybody can just log onto the site and see. So we're happy to be partnering with Wayfair. We think it's a big opportunity and obviously they do a lot of furniture sales and a lot of our customers like to shop there. We believe it is a good indication. We are the largest VLTO player, but we're also the largest e-commerce player. And so, it makes sense that they would want to have us in their arsenal and we're proud to be partnering with them.

Got it. And just as my follow-up. So if I recall correctly, catapults on there, assuming is on there as well. So how do you sort of differentiate results you get sort of the lion's share or at least decent share of the lease originations at Wayfair?

Yeah, I'm not going to get too much into that flow specifically, but I mean, it is a unique instance. And we're getting some good volume there and look forward to grow in it.

Hey, good morning, and thanks for taking my questions. It's great to hear about Wayfair and the other wins that you've had. I'm curious if you could talk about what drove those? Do you think it's a function of some of your competitors having to tighten credit in this environment? I know you've also been working on your e-commerce capabilities. So I'm curious if that was a function as well?

Certainly, we would not be investing in technology if we did not believe it would yield returns on that investment. We are pleased with our progress and have enhanced our e-commerce capabilities over the last 15 to 18 months, which we believe positions us among the best in the market. Working with Wayfair and other national partners is a lengthy conversation, and I don't think it relates to the recent actions taken by competitors in the market. In smaller businesses within the SMB sector, multiple players exist, leading to a shift in market share when one player adjusts their decision-making. Our strategy has always been to maintain steady and consistent approval rates, avoiding volatility. This approach has benefitted us over time, not only in terms of consistent portfolio performance but also in fulfilling our commitments to retail partners, which we believe will continue to be advantageous in the future.

That's great to hear. And then we can see in the numbers that you've talked about that you're still investing SG&A dollars for growth. Can you just talk a little bit more about where that investment is going? And when should we expect to see the benefit and the returns on those investments?

We mentioned in February during our Q4 call that we see the GMV slowdown as a temporary situation. Our perspective on future growth and market potential remains unchanged, which is why we believe it's important to continue our investments during this time. We are focused on enhancing our product offerings, technology, and workforce, as we anticipate these will aid in tapping into the unserved market potential. We also discussed some of our research and development initiatives related to other fintech products. We are still within our projections regarding the impact for 2022, but we expect to see positive outcomes in 2023 and beyond. If our outlook on growth opportunities changed, we would adjust our SG&A approach accordingly. However, as I mentioned earlier, we view the next two years as a significant opportunity in this challenging retail landscape, and it's crucial that we maintain our momentum to position ourselves effectively to seize these opportunities.

It's great to hear. And if I could squeeze in just one quick follow-up to an earlier question. I think you talked on this call about GMV growth being in the mid to high single digits. But I remember on the last call, I think there was a comment about being more in the double digits in the last like seven or eight months of the year. So I'm curious if that was sort of an intentional comment to lower your outlook for GMV growth or you're still expecting that the double-digit growth in the back half?

I think I was referring to Bobby's math earlier and I wasn't being very precise. However, the outcome for the second half will depend on how Q2 performs. I recall the comment you're referencing, which mentioned that over the last seven or eight months, we were looking at a range in the high-single digits. Revenue is anticipated to fall within a range of 4% to 8%. Hence, GMV may show some variation to align with the revenue guidance we've provided.

Hey, good morning. Thanks for taking all the questions. Just a few follow-ups on our end. Wondering if you could just share any more insight into how you're thinking about 2Q? We've talked about how important that could be in shaping up the rest of the year. One question in particular would be, I think that seasonally we do tend to see the write-offs move up in 2Q from 1Q. Would that be something you'd be expecting to see? And then, again, any other commentary on how to think about 2Q will be appreciated.

Sure, I’ll take this. This is Brian. We anticipate a noticeable improvement in Q2 compared to Q1, with significant acceleration expected in the latter half of the year both in terms of margins and revenue growth. Regarding write-offs, you can look back to 2018 and into 2019 and observe the trend from Q4 to Q1 and then into Q2. I believe that reflects a reasonable ramp for us. It’s important to highlight that while this pattern is historically typical, we are focused on maintaining write-offs within a range of 6% to 8% by the end of the year, analyzing the trailing 12 months to stay within that range. We are making small, incremental adjustments along the way. However, it is not uncommon for write-offs to see a slight increase from Q1 to Q2.

Great. And then, as we think about your underwriting trends, one of the things we've always really appreciated about the business is how short your average terms are and how quickly that can affect results if you make a change. But have you made any other adjustments? Have you tightened incrementally in recent months? How is your underwriting evolving?

Yes, Brad. As Brian mentioned, we are continuously reviewing the portfolio you brought up, and we want to emphasize the short duration of it. The average lease lasts 12 months, with an average duration of 6.5 months. We have made some minor adjustments, and as I may have noted at a conference or during last quarter, we are always developing new models. If a new model was implemented that would have increased GMV but we adjusted the threshold to keep GMV flat, that could be considered a tightening. However, I am very proud of our decision-making team and the accuracy they bring to our risk committee discussions, as well as our ability to manage the portfolio. It's a dynamic environment out there right now. We have made a few small adjustments, but from a significant standpoint, our approval rates, despite the ongoing shift to online applications, remain roughly the same as last year. We will adjust further based on the data we observe.

It's very helpful. And maybe one last one for you, Steve. Just how you think about the acquisition landscape, obviously, the company has a history of doing strategic acquisitions like, buy now pay later like DAMI. In this world where the industry is seeing some tough trends, I'm sure prices for potential acquisitions are coming down, but it's also maybe a tougher environment to navigate. How are you thinking about the bandwidth and the interest level you all have in making an acquisition?

We are always looking for opportunities, which is why we maintain our balance sheet in its current condition. In recent years, it felt like valuations were too high, preventing us from making any moves. Now, as you've pointed out, it's harder to have confidence in the forecasts of potential targets, making it challenging to determine the right valuation. Despite these challenges, we remain interested in exploring options but will approach them with a disciplined mindset.

Great. Thank you so much.

Thanks, Brad.

Hey, thanks for taking the question. Wanted to start with just kind of the tax refund season and just any implications you're seeing related to that? And how that may affect either in Q2 results or how it did impact Q1 results?

This year's tax season was somewhat chaotic. Last year, we not only had tax season but also a significant stimulus in mid-March. It's been widely reported that the filing window opened early, but there were delays in distributing the funds. Depending on the source, the average refund is about the same or fluctuates by 5% compared to 2021 and even 2019. We observed expected behaviors, with increases in contact center volumes on certain significant days for ACH transfers. I would describe this tax season as somewhat subdued, although it’s challenging to distinguish between the effects of the major stimulus and the actual tax season dynamics. I believe we are nearing the end of it now, with just a few lingering issues remaining.

Thank you. I wanted to follow up on the share buyback. It's good to see some repurchases this quarter. How aggressive do you plan to be for the rest of the year, considering cash levels and buyout activity? Do you have the cash available to be aggressive with the buyback at these stock prices?

We had about $180 million or so in cash on the balance sheet at the end of the quarter. This figure might not be exactly accurate, but

$184 million.

We have an undrawn revolver, and we plan to maintain our balance sheet at a comfortable leverage level. This will depend on our cash flow generation, particularly free cash flow, and our leverage ratios. We find shares attractive at their current price and will continue to buy back stock in Q1. This will be a significant use of our available funds, but we want to stay around the 1.5 range and not exceed it too much. That will be a key factor in determining how aggressively we pursue buybacks.

Okay, thanks for that reminder. I'll step back for now. Thanks.

Great, thank you. You've answered a lot of my questions already. But could you just talk about what percentage of your customers right now are repeat? And if you're seeing any kind of changes in that rate as we normalize?

Thank you. Over the past few years, a growing percentage of leases originated in any given period are coming from EP customers, which is favorable because they are less risky and we want to integrate them back into our partner network. Additionally, in the last five to seven years, when we bring on a new national retailer, we see an influx of new customers, which is beneficial as it expands our database and can enhance lifetime value. Currently, we are seeing a repeat rate in the neighborhood of 50%, an increase from the mid-30s just three or four years ago.

Okay, great. And then, you've got some exclusive relationships. Did you say whether Wayfair is exclusive? And then also, how much of your GMV is coming from exclusive?

Wayfair works with multiple providers and is not exclusive to any single one. Referring back to our 10-K, about 72% of our 2021 GMV came from our top 10, which is in the mid-70s percentage range, and I believe all of our top 10 are exclusive.

Okay, that's great. Okay, great. Thank you.

Thank you.

Hey, thanks. Thanks for taking my questions. First, if you could talk about kind of go over again, the pipeline engagement with your retail partners. In the past couple of quarters, it just seems like there was less activity and most of the point of sale discussion had been more on buy now, pay later, but it sounds like with this quarter, we're getting the engagement coming back against. That's great. So, just wondering if you could maybe, I don't know, size the engagement, are we back to sort of the interest levels from retailers that we were back in 2019? And how does it look when you compare potential new partners looking to sign up, as well as your engagement with your maybe existing retail partners who are looking to expand the relationship? Thank you.

Yes, Vince, you're correct about the details concerning the pipeline. We had a strong performance in 2019 after launching both Best Buy and Lowe’s, and discussions around other potential opportunities have picked up. However, we did experience a pause during COVID, which impacted progress. It won't be an immediate turnaround. Yet, as retailers face macro challenges, they'll be in search of solutions and tools, which benefits us from a business development perspective and aids in converting pipeline prospects. In the short term, it's also important to observe the actions of existing retailers and their attitudes. As I've mentioned before, when retailers report 20% comp sales while facing supply chain issues, their willingness to engage in longer-term options diminishes. We experienced some pressures from our current partnerships due to this. However, we are noticing positive signals through fruitful discussions and partnerships with the marketing and merchandising teams of our existing retailers, especially concerning point-of-purchase promotions and co-branding initiatives, which could help offset traffic declines. While we're not immune to broader market effects, the impact isn't directly proportional; for instance, a retailer might see a 12% decline, but our gross merchandise value with them could remain flat or decline only by 5%. This indicates that while we are affected, it's not at a severe level. There are encouraging conversations taking place. We need pipeline conversion to ensure growth over the next several years. In the meantime, strengthening our relationships with current partners provides a beneficial alternative.

Okay, that's very helpful. Just a follow-up. It seems like you are gaining market share from your retail partners, as the consensus estimates for some of your publicly traded partners indicate their sales volumes are still down year-over-year for the remainder of the year. However, it appears that you can increase your gross merchandise volume by single digits, possibly even double digits. To clarify, it seems you are indeed seeing your market share grow as a percentage of your retailers' sales volume. Thank you.

Yeah, I know Q1 might not be the best read-through, because it's kind of at the tip of the sphere. But I think just even down 1% signals the strength of and the diversification of the broad retail partner channels that we have. And so, with the things that we've got, various initiatives that were already on the roadmap and maybe in some instances are even being accelerated, we are always standing ready and that's part of the reason why we have this investment layer. But we're saying, hey, there’s project X, Y, Z. Let's get it done and the retailer says, well, we can get that done before holiday '22. That’s going to be a '23 initiative. And then, all of a sudden, it’s like, oh, wait a minute, we are moving some puzzle pieces around and let’s work on that over the summer, so it’s in flight for holiday '22. Those are good conversations that we're having in ways for us to become more important, even with existing retailers. Thank you for joining us today. As we said in our prepared remarks, the macro environment is challenging. We don't expect it to let up anytime soon. But as we sit here today in this current environment, we feel confident about delivering on the outlook we provided less than 60 days ago. The environment for pipeline conversion and for our model to shine is stronger now than ever. Thank you to all the PROG family and all the PROG employees for helping us deliver that value to our customers and our retail partners. We look forward to updating you again here in mid-July.

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