PROG Holdings, Inc. Q3 FY2023 Earnings Call

Good day and thank you for standing by. Welcome to the PROG Holdings Q3 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. And I would now like to hand the conference over to your speaker today, Mr. John Baugh, Vice President of Investor Relations. Sir, please go ahead.

Thank you, and good morning, everyone. Welcome to the PROG Holdings Q3 2023 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 GMV performance and lease merchandise write-offs in future periods, consumer demand and the retail environment going forward, the level of 90-day buyouts in future periods, gross and EBITDA margins, our capital allocation priorities, our updated 2023 full year outlook, and our outlook for the fourth quarter of 2023. I want to call your attention to our Safe Harbor provision 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 that 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, 2022, as well as our quarterly report on Form 10-Q for the quarter ended September 30, 2023, 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. On today’s call, we will be referring to certain non-GAAP financial measures, including adjusted EBITDA and non-GAAP EPS, which have been adjusted for certain items that may affect the comparability of our performance with other companies. These non-GAAP measures are detailed in the reconciliation tables included with our earnings release. The company believes that these non-GAAP financial measures provide meaningful insight into the company’s operational performance and cash flows 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. With that, I would like to turn the call over to Steve Michaels, PROG Holdings President and Chief Executive Officer. Steve?

Thank you, John. Good morning, everyone, and thank you for joining us. Today, we are reporting better than expected Q3 financial results. We will also share our thoughts on a few important Q4 metrics and provide an update on our full year 2023 financial outlook, along with a brief glimpse into 2024. Despite a difficult operating environment, we’ve exceeded our financial outlook again this quarter, recording revenues for Q3 that were higher than expectations and adjusted EBITDA that was well above the range we provided in July. As you might recall, in the first half of the year, our earnings were lifted by the trend of fewer customers choosing 90-day buyout options, along with robust portfolio performance. Strong customer payment behavior trends continued in Q3, slightly offset by 90-day buyouts trending higher and back to pre-pandemic levels. Higher than expected gross margin and lower write-offs, combined with our disciplined approach to spending, supported our material Q3 earnings beat. I am once again extremely proud of the team’s ability to execute at a high level. The strong customer payment behavior is evidenced by our year-over-year 200-basis-point gross margin expansion, improved write-offs of 6.6%, as compared to 7.2% in Q3 last year, and adjusted EBITDA growth of $6.8 million or 10.4%, resulting in a 12.3% margin. Non-GAAP diluted EPS grew 32.4% year-over-year, as we also benefited from a lower share count. As you may have seen in this morning’s earnings release, we are incorporating our year-to-date outperformance and these favorable trends in our updated outlook for 2023. Progressive Leasing’s GMV decline of 6.5% was within our mid-single-digit decline expectations, despite challenging retail conditions. Our view is that the macro backdrop presents a blend of optimism and caution. We are seeing the rate of inflation ease, healthy labor markets and GDP forecasts stronger than initially projected. However, average Q3 retail traffic was down double digits year-over-year across large ticket consumer durables and we anticipate this is likely to persist. We’re also monitoring the potential impact of student loan payment resumption and recessionary concerns going into 2024. We believe our business model has a degree of insulation from a typical recession, during which an increase in unemployment and credit tightening above us could result in higher applicant volume and higher quality applicants at the top of our funnel for both Progressive Leasing and Vive. I’d like to highlight the resilience of our customers through uncertain macro conditions, evidenced by lower-than-anticipated and lower-than-historical trends of delinquent accounts moving to charge-offs. Our strategic move to tighten decisioning in mid-2022 and our active management of our portfolio since then have significantly benefited performance. Separately, strain on discretionary incomes has dampened demand for many of the leaseful products offered by our retail partners. We have skillfully navigated these demand headwinds through strong operational execution, balancing GMV pressures with portfolio management, cost control, and strategic investments to enable future growth. For the holiday season, we have planned initiatives aimed at maximizing retailer traffic conversion, as we are expecting traffic to be down year-over-year. We anticipate our Q4 GMV year-over-year comparison to be roughly similar to Q3, although the all-important holiday season and its material impact on our quarterly GMV results are still in front of us. On the portfolio performance side, we expect Q4 to align more closely to pre-pandemic levels with normalized 90-day customer buyout activity. Next, I’d like to provide some initial thoughts on 2024. As I mentioned earlier in our thoughts on the macro environment, demand for leaseable categories is down year-over-year and it is our view that trend will likely continue into 2024. We intend to partially offset these headwinds through achieving deeper integrations with existing retail partners, capitalizing on anticipated tighter conditions in the credit stack above us, and expanding our retailer base. As we conclude 2023, a high single-digit negative year-over-year comparison in our gross leased assets will bring revenue pressures, predominantly in the first half of 2024. We have proven our ability to navigate through dynamic and challenging environments, managing these headwinds through prudent cost management and strategic investments, while generating robust profits and cash flow. Sustainable growth remains a key focus within our three-pillared strategy to grow, enhance, and expand. As a reminder, the growth pillar emphasizes our dedication to business development efforts across new and existing retail partnerships. In 2023, within a retail challenge environment, we grew our balance of share within our top partners and continued our track record of renewing key retailers with multi-year exclusive contracts. Also, our pursuit of new retail opportunities across regional and national brands is an important component of our strategy to capture more of our industry’s $30 billion to $40 billion addressable market. We are focused on growth efforts across several other dimensions, including brand awareness and new customer acquisition through marketing, products boosting our direct consumer business, and strategic partnerships. E-commerce penetration remains a strength, with nearly three times the number of new partners added via our customizable integration process through Q3 this year compared to last, and the channel consistently contributes around 15% of total GMV. Under the enhanced pillar of our strategy, our initiatives are focused on improving customer experience and optimizing the sales funnel from awareness to purchase. We made progress on our 2023, 2024 tech roadmap, which, as a reminder, is centered on three core areas: improving our customer-centric flexible lease platform, providing self-service tools to enable a superior retailer experience while helping the customer make the best and most informed choices, and offering greater personalization for a streamlined shopping and decisioning experience. As for the expand pillar, we are evolving and integrating the other products in our ecosystem to help empower our customers through their financial journey. During this challenging macro environment, we want to bring awareness to a larger breadth of potential customers that could benefit from the virtual lease-to-own payment option supplemented by the other products in our ecosystem, such as our second-look product Vive, Buy Now, Pay Later option four, and credit builder loan, Build. The core of how we operate and grow remains in the execution of our mission to create a better today and unlock the possibilities of tomorrow through financial empowerment. Lastly, we look forward to further productivity gains and improvement to our customer experience through the application of generative AI led by our PROG Labs Group. Turning to capital allocation, we acquired an additional 1 million shares of our common stock in Q3 at an average price of $34.85 per share, bringing our year-to-date purchases to 7.5% of our outstanding shares. Year-to-date, we have generated $292 million of cash flow from operations, closing the quarter with a cash balance of $295 million. Our capital allocation priorities remain unchanged, and we expect to fund growth, look for strategic M&A opportunities, and return excess cash to shareholders. Our strong results year-to-date are driven by the hard work and strategic initiatives put forth by our teams, and I would like to extend my thanks to our employees and partners for their efforts. With that, I’ll turn the call over to our CFO, Brian Garner. Brian?

Thanks, Steve. Let me start by summarizing our Q3 financial highlights. For the third consecutive quarter, we exceeded earnings expectations even in a challenging demand environment. Our active management of the lease portfolio has continued to yield strong returns, and customer payment performance improved significantly compared to our Q3 outlook from July. The management of portfolio performance and SG&A were key drivers of our strong results, with Progressive Leasing’s adjusted EBITDA margins slightly exceeding our targeted annual range of 11% to 13%. During this quarter, we observed resilience in our delinquent accounts, with a smaller percentage moving to charge-off compared to historical trends. Revenue from customers exercising their 90-day purchase option returned to more normalized levels, as we had anticipated in July. Consolidated revenues for Q3 declined by 6.9% year-over-year, with our gross leased asset balance decreasing by 10.7% at the start of the quarter and finishing down 9.6%, due to the ongoing challenges in the durable consumer goods retail environment. Nevertheless, our revenue performance surpassed the high end of our outlook, driven by stronger customer payment behavior. Consolidated adjusted EBITDA rose by 10.4% to $71.7 million from $65 million in the same period last year, as we achieved margin expansion through effective portfolio management. Non-GAAP diluted EPS grew to $0.90 per share, a 32.4% increase from $0.68 per share in Q3 of 2022. In our Progressive Leasing segment, GMV declined by 6.5% compared to the prior year, which is an improvement over the 14.7% decline we experienced last quarter, as we fully lapped the tightened decision-making implemented in late Q2 2022. While we noticed softness in GMV across most categories, broader retail trends reflected double-digit declines in appliances, furniture, and electronics. Nevertheless, we are confident that our performance indicates an increase in our share of the results from our top five retailers within our leasable categories. Revenue in this segment dropped by 7%, primarily driven by the reduced gross leased asset balance during the quarter, though this was partially offset by strong customer payment performance. Progressive Leasing’s gross margin surpassed expectations at 32.3%, compared to 30.3% last year, primarily influenced by robust portfolio performance. Our write-offs decreased to 6.6%, down from 7.2% last year, and we expect our write-offs for the year to remain comfortably within our target range of 6% to 8%. SG&A expenses for Progressive Leasing accounted for 13.7% of revenue, compared to 12.4% in the previous year. We continue to invest in areas that enable us to scale and drive future growth, but we have adjusted our spending in line with the current demand environment. Adjusted EBITDA for the Progressive Leasing segment reached $74.8 million, compared to $68.4 million during the same period last year. The margins of 13.3% marked a 200 basis point improvement at the high end of our targeted annual range of 11% to 13%. Looking at consolidated results, Q3 revenues for PROG Holdings were $582.9 million, compared to $625.8 million in the same quarter last year, reflecting a 6.9% decrease. Adjusted EBITDA was $71.7 million, or 12.3% of revenues, compared to $65 million, or 10.4% last year. Year-to-date, we have generated $292.5 million in cash from operations, taking into account the working capital needed for GMV. We still expect a cash usage in Q4, as is typical during the seasonal holiday boost to GMV. Our Q3 GAAP diluted EPS was $0.76, and adjusted EPS stood at $0.90. At the end of the third quarter, we had $600 million of gross debt and $294.8 million in cash, resulting in a net leverage ratio of 0.98 times trailing 12 months adjusted EBITDA. We remain undrawn on our $350 million revolver at the quarter's end. During the quarter, we repurchased 1 million shares of common stock at an average price of $34.85 per share. At the end of Q3, we had $229 million remaining under a previously approved $1 billion share repurchase program. As for our Q4 outlook, we are encouraged by our solid portfolio results and are taking a disciplined approach to spending given the current challenging demand environment. While we anticipate strong gross margins and EBITDA margins to continue into Q4, a smaller portfolio size and challenging GMV conditions will put pressure on revenues as we approach year-end. We expect to finish the year with a gross leased asset balance down in the high single digits. While we are not providing detailed insights for 2024 at this time, the year-end decline in the leased portfolio size will influence revenues in the first half of 2024. We will actively manage what we can to optimize our internal operations where possible and maximize portfolio returns while pursuing growth opportunities. For Q4, we expect consolidated revenue in the range of $549 million to $569 million, consolidated adjusted EBITDA between $58 million to $63 million, and non-GAAP diluted EPS in the range of $0.61 to $0.71. In closing, I want to express my appreciation to the team for their hard work this past quarter, which resulted in very strong outcomes despite a tough environment.

Thank you. Our first question will come from Kyle Joseph of Jefferies. Your line is open.

Hey. Good morning, guys. Congrats on navigating a difficult environment. In terms of GMV in the quarter, can you give us a sense for the cadence? Did it really snap back towards kind of that down mid-single digits in July or did it gradually kind of build back towards that level?

Yeah. Thanks, Kyle. Good morning. As we talked about from lapping the decisioning that we tightened in June of 2022, it was a little bit more of a progression, because the way we look at decisioning a few different ways and approval rates, I should be more specific, a few different ways and kind of a trailing four-week average is probably the best way to look at it, because of some of the lags in conversion and funding from an approved application. So it took a little while in July and but we did see those approval rates kind of get on par and flip back over kind of in early August. But so we got into that mid-single-digit range for most of the quarter. Although I will say that based on all the retail reports and the traffic reports, and we haven’t seen a lot of the retailers reporting their results yet, the publicly available ones anyways, but the quarter seemed to soften a little bit as the quarter went on. So our mid-single-digit negative GMV was consistent with what we were expecting, but we didn’t see any material improvement, like, from month to month to month within our retail partners.

Got it. And then just one follow-up from me, just want to touch on the health of the underlying consumer. Frankly, it sounds like the consumer is getting a little bit better off in terms of seeing a normalization of 90-day buyouts, ongoing strength in payment activity. And frankly, I think typically losses go up between the second quarter and the third quarter, unless the last four years have really screwed up seasonality. But just kind of, yeah, your thoughts on the underlying consumer and if that’s something you bake into the potential resumption of demand.

Yeah. It’s been an interesting year in that regard. After a pretty stressful 2022, which is well documented, the consumer has been really resilient this year. Our portfolio performance has been strong and we obviously improved the quality of the portfolio through our decisioning posture, but the customer has performed well. And you mentioned 90-day buyouts, they were historically low, but they’re starting to trend back up a little bit, which could indicate the fact that they’ve got a little bit more cash or liquidity. An interesting dynamic, I think we mentioned in the prepared remarks, is that we are seeing customers go delinquent, but the behavior within those delinquent buckets has changed a little bit to where they’re not just based on historical patterns rolling through the buckets to charge-off. They may camp out in a delinquent bucket for a little while and that’s fine for us because as long as we’re communicating with them, we’re happy to work out a plan or figure out something for them to have a positive outcome. So that’s been a positive result. Brian and I have sat here on these calls and talked about we’re not counting on Goldilocks lasting forever, and it’s certainly persisted longer than we thought. But the low charge-offs are positive. But the really Goldilocks was described as the low 90-day buyout activity and low charge-offs and the 90-day buyout activity is trending back up. So I would just say, I’m not sure if they’re getting stronger, but they’ve certainly been resilient all year. There are a lot of headwinds out there and muddled macro data. We’re certainly watching the student loan situation. I think it’s too early to tell what the impact of that will be and how it will impact performance. So as always, we have our hands firmly on the wheel as it relates to the portfolio and our decisioning posture. But right now, certainly pleased with the performance of the portfolio and the resilience of the consumer.

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

You got it. Thank you.

Thank you. One moment please for our next question. And our next question will come from Brad Thomas of KeyBanc Capital Markets. Your line is open.

Good morning, Steve, Brian, and John. My first question was just if you could talk a little bit about door counts and what we’re seeing in terms of the cadence of doors and how things are going as you work with some of your current retail partners on some of the e-commerce rollouts for them?

I will begin, and then Brian will provide the door count numbers. We are seeing significant progress in e-commerce. We've discussed our plug-ins and integration list rollouts, and success is evident there. We are experiencing strong momentum and even prioritization from some of our larger retail partners, with whom we don't yet have transactional e-commerce. Our product innovations have accelerated this process, and partnering effectively with our larger enterprise customers for e-commerce implementation has been beneficial. Currently, we are nearing a code freeze for the holiday season, which means not much will change between now and then. However, the deeper integrations we've established will benefit us in the future, and we are eager to facilitate transactions wherever our customers prefer. This requires a seamless omnichannel experience, which we are making great strides toward. Now, I will hand it over to Brian for the door count update.

Yeah, Brad. The doors were right around 19,500. So that’s approximately a 2% decline from a year-over-year perspective. I think the only color that I’d give, as we’ve stated before, is, obviously, we have a meaningful level of GMV coming through e-commerce stores, and that tends to skew that number a bit. So it’s trending down slightly, and I think that’s consistent with Steve’s remarks around the foot traffic and retail more broadly being pretty challenged during the period.

Okay. That’s helpful. And then, obviously, we know this is a tough environment for the end market for many of your retail partners. Can you talk a little bit about if you end up with a retailer that closes a door or goes out of business, what leverage you’re able to pull to try to keep that customer within the progressive system?

We have certainly seen our marketing capabilities improve over time, which has led to a higher rate of repeat business. We regularly communicate with our customers through various marketing campaigns, allowing us to understand what they leased previously and suggest potential interests for their next lease. If a particular retailer is no longer operating, we can guide the customer to a different door within the same environment, or even direct them to another retailer with similar products if necessary. While it's not a perfect system and doesn't guarantee a one-to-one replacement, we are confident in our ability to retain customers within the PROG ecosystem.

Great. Thank you so much.

Thank you. One moment please for our next question. The next question will come from Jason Haas of Bank of America. Your line is open.

Hey. Good morning and thanks for taking my questions. It’s good to see that the progressive EBITDA margin looks like it’s going to be above 13% for the year. I know the long-term target has been 11% to 13%. So I’m curious if that’s you could be above that 13%, above that high end of the range going forward or I think you alluded to there could be revenue pressure on revenue next year, just given where the gross lease to asset balance is going to end this year. So just curious how you’re thinking about. I know it’s early, but how do you think about that margin target for next year and beyond?

Yeah. Jason, I think more broadly, we’re holding to this 11% to 13% range. I think that’s a good range for the Progressive Leasing segment. The tailwinds that we’ve seen this year, to Steve’s point about the Goldilocks scenario, have certainly played their way out in EBITDA margins. The 13.3% that we saw this quarter and the trend that we’re on for the year is certainly over-earning what we typically would expect. Now, I think the state of the consumer is anyone’s guess in terms of the long term, but I think we’re cautiously optimistic about what we’re seeing in terms of payment behavior and resiliency that we’re seeing with even our delinquent accounts. Like Steve said, we’re seeing a higher yield in the portfolio that’s delinquent than we typically have seen. So going into 2024, without getting too specific, I’d expect maybe to pull back more comfortably within that 11% to 13% range versus being over the high end of it. So I do expect some correction there. But then, again, I’ve been surprised at how long this Goldilocks scenario has persisted to date. So I guess the commentary I’d give is we enter 2024.

Got it. That’s helpful. And then as a follow-up, have you seen any impact from the cybersecurity incident that you had, or is it still in the case that there hasn’t been any impact on the business from that?

Yeah. Jason, obviously, we can’t give too much more color there, and when we file the Q, you’ll see not a whole lot of different disclosures. But the internal teams responded quickly. We engaged leading third-party experts and did a longstanding investigation and notified law enforcement, and there were no major operational impacts to Progressive Leasing, and the other subsidiaries weren’t impacted. So, I mean, the investigation remains ongoing, but as you can see from the tables that we provided in the release, the incident did not have a material impact on the third-quarter results, but we’ll continue to update you as we learn new information.

Got it. That’s helpful. Thank you.

Thank you. Again, one moment for our next question. And our next question will come from Anthony Chukumba of Loop Capital Markets. Your line is open.

Good morning and thank you so much for taking my question. You had a really nice sequential improvement in GMV between the second quarter and third quarter. I guess my first question is, what are your sort of high level GMV expectations for the fourth quarter? Particularly, yeah, just what are your expectations for the fourth quarter?

We expect Q4 to be roughly in a similar range to Q3, experiencing a decline in the mid-single digits. Initially, we anticipated an improvement in Q4 compared to Q3, which could still occur due to the upcoming holiday season, as the holiday impacts on GMV are significant for Q4. However, recent observations and reports suggest that traffic expectations have softened since the summer. We currently project a negative mid-single-digit range, consistent with previous forecasts. Even when we were down in the mid-teens, we indicated that about two-thirds of that decline was related to our year-over-year decision-making, and now that we've moved past that, we are left with this mid-single-digit decrease. It’s important to note that we are outperforming the overall market comparison, which demonstrates our ability to partner effectively and maintain market share during challenging times. While the categories we operate in are facing larger declines than mid-single digits, we are still achieving our goals, maintaining a level of optimism, and aiming to exceed these projections. Our baseline expectation is a decline similar to Q3.

Got it and apologies for having missed that in your remarks. I haven’t had my morning coffee. I guess somewhat related question. As you think about 2024, and I know you gave some high level thoughts on that, but I guess it’s just the sort of obligatory question. What’s going on right now in terms of your new partner pipeline, because you mentioned that was something that could potentially help you in 2024, given the fact that your gross lease assets are going to be down heading into 2024?

Yes, you're correct, and it's something we consistently prioritize. The question about our pipeline has become a customary part of these discussions. We are indeed seeing some positive developments with smaller accounts that we can't disclose. Our e-commerce products are definitely contributing to this progress. We always enter our planning for the next year with the expectation of securing a significant enterprise account win. The timing of that win within the year affects our gross merchandise volume, and we’ll have to wait and see how that plays out. We don't mention specific names, but we take into account our pipeline for gross merchandise volume to keep us motivated, and this approach will continue into 2024.

Got it. Thanks and good luck with the remainder of the year.

Thanks, Anthony.

Thank you. One moment please for our next question. Our next question will come from Bobby Griffin of Raymond James. Your line is open.

Good morning, buddy. Thanks for taking my questions.

Thanks, Bobby.

I guess the first question is, you guys have done a great job this year on operating expense control. But at the same time, you’ve called out some investments and working on the integration of e-commerce and stuff. So as we think about where we are from a spending perspective, is there a catch-up period that has to come with SG&A next year in 2024, or do you feel good that even with some of the more cost-conscious approach you’ve taken this year, the pace of investments has remained pretty stable so there isn’t a catch-up period in the next year?

I’ll begin, and then Brian can add his thoughts. As we reflect on the key focus for 2023, which is managing what we can control, we have to prioritize SG&A alongside our portfolio. We are committed to maintaining a margin of 11% to 13%. Looking ahead to 2024, particularly in the first half, we expect some revenue challenges related to our portfolio size at the end of this year. We will take necessary actions to ensure we meet our targets. In terms of addressing our technical debt, we are focusing on retiring older systems like ERPs and HCMs. However, we won't neglect new revenue-generating initiatives just because the demand is slow. Our aim during this period of reduced GMV is to expand our base of retailers and customers so we can seize growth opportunities when demand picks up again. This is not merely a catch-up phase; we are managing this situation effectively. While we have experienced some wage inflation this year, we are also looking for efficiency opportunities. This is a critical time for us to actively manage the business to achieve our goals, with a significant emphasis on SG&A.

Okay. That’s helpful. And then I appreciate the comments on 2024, at least the first part. That makes sense from the revenue perspective, given what’s going on with the size of the portfolio. As profits have flown through the P&L, is there anything that we should keep in mind that took place this year as we calibrate our models for next year? Just large items that either were a tailwind this year or could end up being a headwind next year. I know we talked about less early buyouts, but it still appears early buyouts are above pre-COVID levels, right?

They are starting to return to pre-COVID levels. I want to highlight the gross margins we recorded in the first half of 2023, as these will be a challenging comparison for 2024. We have approached this year with caution, which has contributed to our better-than-expected performance regarding consumer behavior and resilience in this tough environment, ultimately boosting our gross margins. Whether this trend continues next year is a crucial factor for our model. The strong gross margin performance during the first half was a favorable scenario. However, I would advise caution in assuming that we can replicate that level of performance as a baseline. Regarding SG&A, there will always be some fixed costs in our business, even with our high variability. As we enter next year with a lower gross lease asset balance, deleveraging could be a possibility, which we should monitor. But as Steve mentioned, this is an area we actively manage, always informed by our top-line performance. As we encounter challenges, we will scrutinize inefficiencies and discretionary spending more closely to achieve our long-term EBITDA margin target of 11% to 13% for the Progressive Leases segment. We are having an excellent year from a margin standpoint, but I anticipate some softening in both bottom-line margin and gross margin as we look to 2024.

Thank you, Brian. That’s helpful. I guess the last one for me, predicting how the student loan impact flows through is highly uncertain. So I get that, we’ve had a couple of months of student loans returning. So have you seen anything interesting in your data set to kind of help us think about the behavior and what that could do, or is it still too early in terms of the payments returning?

Yeah. I think it’s too early. I mean, we obviously are watching folks in our portfolio that have student loan trade lines also in our applicant pool as well. The data are muddled a little bit, because there are various programs available for relief or deferments, and I would guess that our consumer is probably the largest beneficiaries of those. The payments, I believe, restarted in October. So it’s too early to tell how that’s going to affect performance. But we are watching it. And to the extent that other providers above us in the stack are also watching it and making adjustments, it could also further the opening of the top of the funnel that we’ve been anticipating and talking about for several quarters now.

Okay. Thank you for the details and congrats on the upside this quarter, the strong operational quarter.

Thanks, Bobby.

Thank you again for joining us this morning and for your continued interest in PROG Holdings. Our teams did a great job and delivered another strong quarter. We feel good about the positioning of our portfolio. We’re making the right investments in people and technology to further our three-pillared strategy of grow, enhance, expand. We look forward to updating you on the full year, as well as a more detailed view on our 2024 thoughts when we have our next call in February. Have a great day.

This concludes today’s conference call. Thank you all for participating. You may now disconnect and have a pleasant day.