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What changed in PROG Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PROG Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+345 added−384 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in PROG Holdings, Inc.'s 2024 10-K

345 paragraphs added · 384 removed · 277 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn addition to providing support to our ERGs, our efforts to promote DE&I practices include: • Hosting internal and guest speakers to discuss topics relevant to DE&I matters; • Conducting training to educate our employees about various DE&I themes, racial justice, disability inclusion and LGBTQ+ allyship, among other themes; • Improving and formalizing mentorship programs targeted towards our female, minority and LGBTQ+ employees, which were implemented in 2023; • Implementing a talent review process that is designed to utilize a multi-factor approach to understanding the talents of our employees and the potential they have to be future leaders of the Company; and • Providing the ERGs with financial and other resources to support their missions.
Biggest changeOur other efforts to promote a sense of inclusiveness and belonging among all of our employees include: • Hosting internal and guest speakers to discuss topics related to fostering a welcoming and inclusive workplace; • Growing our mentorship programs that are offered to all employees • Partnering with the Company's ERGs to connect with diverse candidate pools and obtain internal referrals for sourcing job candidates; • Providing the ERGs with resources to support their missions in the community, such as volunteering and giving in areas we serve; and • Completing an ongoing talent review process that is designated to utilize a multi-factor approach to understanding the talents of our employees and the potential they have to be future leaders of the Company.
Progressive Leasing provides consumers with lease-purchase solutions for merchandise, including furniture, appliances, electronics, jewelry, mobile phones and accessories, mattresses, and automobile electronics and accessories from leading traditional and e-commerce retailers (whom we refer to as our point-of-sale partners, "POS partners," or "retail partners").
Progressive Leasing provides consumers with lease-purchase solutions for merchandise, including furniture, appliances, electronics, mobile phones and accessories, jewelry, mattresses, and automobile electronics and accessories from leading traditional and e-commerce retailers (whom we refer to as our point-of-sale partners, "POS partners," or "retail partners").
Progressive Leasing provides e-commerce, app-based, and in-store point-of-sale lease-to-own solutions through approximately 23,000 third-party POS partner locations and e-commerce websites in 45 states, the District of Columbia and Puerto Rico. It does so by purchasing the desired merchandise from POS partners and, in turn, leasing that merchandise to customers through a cancellable lease-to-own transaction.
Progressive Leasing provides in-store, app-based, and e-commerce point-of-sale lease-to-own solutions through approximately 23,000 third-party POS partner locations and e-commerce websites in 45 states, the District of Columbia and Puerto Rico. It does so by purchasing the desired merchandise from POS partners and, in turn, leasing that merchandise to customers through a cancellable lease-to-own transaction.
Other individuals who find the lease-to-own model attractive are customers who, despite access to credit, do not wish to incur additional debt or have only a temporary need for the merchandise. 11 Government Regulation Our Progressive Leasing, Vive and Four businesses are extensively regulated by and subject to the requirements of various federal, state and local laws and regulations.
Other individuals who find the lease-to-own model attractive are customers who, despite access to credit, do not wish to incur additional debt or have only a temporary need for the merchandise. Government Regulation Our Progressive Leasing, Vive and Four businesses are extensively regulated by and subject to the requirements of various federal, state and local laws and regulations.
We are expanding and innovating our e-commerce capabilities to benefit existing and new POS partners and customers. • Expand our ecosystem to increase access and deliver more value to our consumers - We expect to broaden our financial technology product ecosystem through research and development ("R&D") efforts and strategic acquisitions that will result in a more loyal and engaged customer base.
We are expanding and innovating our e-commerce capabilities to benefit existing and new POS partners and customers. • Expand our ecosystem to increase access and deliver more value to our customers - We expect to broaden our financial technology product ecosystem through research and development ("R&D") efforts and strategic acquisitions that will result in a more loyal and engaged customer base.
We empower our employees to give to causes they feel passionately about, through volunteering, making financial donations, which we match up to certain limits, serving as nonprofit board members, and participating in our Company-sponsored Day of Service.
We also empower our employees to give to causes they feel passionately about, through volunteering, making financial donations, which we match up to certain limits, serving as nonprofit board members, and participating in our Company-sponsored Day of Service.
For example, in April 2020, Progressive Leasing entered into a settlement (the "FTC Settlement") with the Federal Trade Commission ("FTC") to resolve allegations by the FTC that certain of Progressive Leasing's advertising and marketing practices violated the FTC Act.
For example, in April 2020, Progressive Leasing entered into a settlement (the "FTC Settlement") with the Federal Trade Commission ("FTC") to resolve allegations by the FTC that certain of Progressive 11 Leasing's advertising and marketing practices violated the FTC Act.
Progressive Leasing's proprietary algorithms utilize the customer application, customer history, known fraud attributes, retailer/vertical performance and other information in the decision-making process. 7 Lease Agreement and Collection The Progressive Leasing customer has the option to acquire ownership of merchandise over a fixed term, usually 12 months, by making weekly, bi-weekly, semi-monthly, or monthly lease payments.
Progressive Leasing's proprietary algorithms utilize the customer application, customer history, known fraud attributes, retailer/vertical performance and other information in the decision-making process. 7 Lease Agreement and Collection The Progressive Leasing customer has the option to acquire ownership of merchandise over a fixed term of up to 12 months, by making weekly, bi-weekly, semi-monthly, or monthly lease payments.
Through a variety of media testing methods, we can verify the impact of our paid digital media on in-store and online shopping trips and lease origination activity. In addition, targeted, personalized email and SMS marketing campaigns leverage our large customer database, educating customers about lease-to-own offerings, and driving lease conversion and sales for our POS partners.
Through a variety of media testing methods, we can verify the impact of our paid digital media on in-store and online shopping trips and lease origination activity. In addition, targeted, personalized email and text marketing campaigns leverage our large customer database, educating customers about lease-to-own offerings, and driving lease conversion and sales for our POS partners.
Shoppers use Four's platform to purchase furniture, clothing, electronics, health and beauty, footwear, jewelry, and other consumer goods from retailers across the United States. Four was not a reportable segment for the year ended December 31, 2023 as its financial results were not material to the Company's results of operations or financial condition.
Shoppers use Four's platform to purchase furniture, clothing, electronics, health and beauty, footwear, jewelry, and other consumer goods from retailers across the United States. Four was not a reportable segment for the year ended December 31, 2024 as its financial results were not material to the Company's results of operations or financial condition.
We also make available on our website our Code of Ethics, our Corporate Governance Guidelines, and the charters for the Audit, Compensation and Nominating and Corporate Governance Committees of the Board of Directors. The SEC maintains an internet site, www.sec.gov, containing reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. 13
We also make available on our website our Code of Ethics, our Corporate Governance Guidelines, and the charters for the Audit, Compensation and Nominating and Corporate Governance Committees of the Board of Directors. The SEC maintains an internet site, www.sec.gov, containing reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. 12
We will leverage our extensive database of lease agreements to offer current and previous customers products that meet their needs. Operating Segments As of December 31, 2023, the Company has three operating segments: Progressive Leasing, Vive and Four.
We will leverage our extensive database of lease and loan agreements to offer current and previous customers products that meet their needs. Operating Segments As of December 31, 2024, the Company has three operating segments: Progressive Leasing, Vive and Four.
Purchasing and POS Partner Relationships The following table details the percentage of Progressive Leasing's revenues attributable to different categories of merchandise offered by its POS partners: Year Ended December 31, Progressive Leasing POS Partner Merchandise Category 1 2023 2022 2021 Furniture, Appliances and Electronics 2 58 % 57 % 57 % Jewelry 15 % 17 % 17 % Mobile Phones and Accessories 15 % 14 % 12 % Mattresses 6 % 6 % 7 % Automobile Electronics and Accessories 3 % 3 % 4 % Other 3 % 3 % 3 % 1 Revenues from a POS partner are attributed to a single category even if the POS partner may carry merchandise across multiple categories. 2 Progressive Leasing also classifies some electronics within mobile phones and accessories, automobile electronics and accessories, and other.
Purchasing and POS Partner Relationships The following table details the percentage of Progressive Leasing's revenues attributable to different categories of merchandise offered by its POS partners: Year Ended December 31, Progressive Leasing POS Partner Merchandise Category 1 2024 2023 2022 Furniture, Appliances and Electronics 2 58 % 58 % 57 % Mobile Phones and Accessories 16 % 15 % 14 % Jewelry 15 % 15 % 17 % Mattresses 5 % 6 % 6 % Automobile Electronics and Accessories 2 % 3 % 3 % Other 4 % 3 % 3 % 1 Revenues from a POS partner are attributed to a single category even if the POS partner may carry merchandise across multiple categories. 2 Progressive Leasing also classifies some electronics within mobile phones and accessories, automobile electronics and accessories, and other.
During 2023, three POS partners each individually provided customer relationships that generated greater than 10% of our consolidated revenues. Marketing and Advertising Progressive Leasing actively markets its leasing services to help its customers achieve ownership of durable goods and drive new shoppers and incremental revenue for our POS partners.
During 2024, two POS partners each individually provided customer relationships that generated greater than 10% of our consolidated revenues. Marketing and Advertising Progressive Leasing actively markets its leasing services to help its customers achieve ownership of durable goods and drive new shoppers and incremental revenue for our POS partners.
Violations of these laws and regulations may subject them to government investigations and significant monetary penalties, remediation expenses and compliance-related burdens. Federal regulatory authorities are increasingly focused on alternative consumer financial services and products that our Progressive Leasing, Vive and Four businesses provide.
Violations of these laws and regulations may subject them to government investigations and significant monetary penalties, remediation expenses and compliance-related burdens. Federal regulatory authorities have been focused on alternative consumer financial services and products that our Progressive Leasing, Vive and Four businesses provide.
The following table details the percentage of Vive's revenues attributable to different categories of services and merchandise offered by its POS partners: Year Ended December 31, Vive POS Partner Services and Merchandise Category 1 2023 2022 2021 Furniture and Mattresses 55 % 55 % 48 % Medical and Dental 17 % 20 % 26 % Home Exercise and Home Improvement 14 % 11 % 8 % Other 14 % 14 % 18 % 1 Revenues from a POS partner are attributed to a single category even if the POS partner may offer services or merchandise across multiple categories.
The following table details the percentage of Vive's revenues attributable to different categories of services and merchandise offered by its POS partners: Year Ended December 31, Vive POS Partner Services and Merchandise Category 1 2024 2023 2022 Furniture and Mattresses 50 % 55 % 55 % Home Exercise and Home Improvement 18 % 14 % 11 % Medical and Dental 14 % 17 % 20 % Other 18 % 14 % 14 % 1 Revenues from a POS partner are attributed to a single category even if the POS partner may offer services or merchandise across multiple categories.
Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers. The Progressive Leasing segment comprised approximately 97% of our consolidated revenues for the year ended December 31, 2023.
Progressive Leasing consequently has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers. The Progressive Leasing segment comprised approximately 96% of our consolidated revenues for the year ended December 31, 2024.
Four's most significant working capital assets are loans receivable. Consistent and dependable sources of liquidity are required for Progressive Leasing and Four to purchase such merchandise, and for Vive to acquire new loans through its third-party bank partners.
Four's most significant working capital assets are loans receivable. Consistent and dependable sources of liquidity are required for Progressive Leasing to purchase such merchandise, and for Vive and Four to acquire new loans, with Vive doing so through third-party bank partners.
Our commitment to our customers is ongoing throughout their lease term. Progressive Leasing customers have the option to cancel their lease-to-own agreement and return the merchandise at any time. We provide customers the convenience to return merchandise by either scheduling a pick-up or shipping the merchandise to our warehouse in Draper, Utah.
Progressive Leasing customers have the option to cancel their lease-to-own agreement and return the merchandise at any time. We provide customers the convenience to return merchandise by either scheduling a pick-up or shipping the merchandise to our warehouse in Draper, Utah.
Vive's current network of over 7,500 POS partner locations and e-commerce websites includes furniture, mattresses, fitness equipment, and home improvement retailers, as well as medical and dental service providers. The Vive segment comprised approximately 3% of our consolidated revenues for the year ended December 31, 2023.
Vive's current network of over 6,200 POS partner locations and e-commerce websites includes furniture, mattresses, fitness equipment, and home improvement retailers, as well as medical and dental service providers. The Vive segment comprised approximately 3% of our consolidated revenues for the year ended December 31, 2024.
However, these laws, agreements, and procedures provide only limited protection. We own, or are otherwise entitled to use, the various trademarks, trade names, and service marks used in our businesses, including those used with the operations of Progressive Leasing, Vive, and Four.
However, these laws, agreements, and procedures provide only limited protection. We own, or are otherwise entitled to use, the various trademarks, trade names, and service marks used in our businesses, including those used with the operations of Progressive Leasing, Vive, and Four. We intend to file for additional trade name and trademark protection when appropriate.
We intend to file for additional trade name and trademark protection when appropriate. 12 Although we rely on intellectual property and proprietary rights, copyrights, trademarks and trade secrets, as well as contractual protections, in our business, we also seek to preserve the integrity and confidentiality of our intellectual property and proprietary rights through appropriate technological restrictions, such as physical and electronic security measures.
Although we rely on intellectual property and proprietary rights, copyrights, trademarks and trade secrets, as well as contractual protections, in our business, we also seek to preserve the integrity and confidentiality of our intellectual property and proprietary rights through appropriate technological restrictions, such as physical and electronic security measures.
The Progressive Leasing segment comprised approximately 97% of our consolidated revenues for the year ended December 31, 2023.
The Progressive Leasing segment comprised approximately 96% of our consolidated revenues for the year ended December 31, 2024.
Although the Company believed the Pennsylvania Attorney General's claims were without merit, it entered into a settlement agreement with the Pennsylvania Attorney General in January 2024, pursuant to which the Attorney General agreed to release its claims against Progressive Leasing. That settlement was approved on January 26, 2024 by the court where the lawsuit was pending.
Although the Company believed the Pennsylvania Attorney General's claims were without merit, it entered into a settlement agreement with the Pennsylvania Attorney General in January 2024, pursuant to which the Attorney General agreed to release its claims against Progressive Leasing.
For the years ended December 31, 2023, 2022, and 2021, personnel expenses were $187.2 million, $194.2 million, and $189.6 million, respectively. Seasonality Progressive Leasing's revenue mix is moderately seasonal. Adjusting for growth, the first quarter of each year generally has higher revenues than any other quarter.
For the years ended December 31, 2024, 2023, and 2022, personnel costs, excluding stock-based compensation expense, were $172.5 million, $187.2 million, and $194.2 million, respectively. Seasonality Progressive Leasing's revenue mix is moderately seasonal. Adjusting for growth, the first quarter of each year generally has higher revenues than any other quarter.
We also send email/text reminders to customers and provide payment options and instructions. We foster relationships with POS partners to better serve new and existing customers. Our Progressive Leasing segment offers centralized customer and retailer support through internal employee representatives located primarily in Utah, Arizona and Texas.
We foster relationships with POS partners to better serve new and existing customers. Our Progressive Leasing segment offers centralized customer and retailer support through internal employee representatives located primarily in Utah, Arizona and Texas. Our Vive segment offers centralized customer and merchant support through internal employee representatives located primarily in Utah and Arkansas.
The Company's provision for lease merchandise write-offs as a percentage of lease revenues targeted annual range is 6% to 8%. Vive's Credit Decisioning and Collection Vive partners with merchants to provide a variety of revolving credit products originated through third-party federally insured banks to customers that may not qualify for traditional prime lending offers (referred to as "second-look" financing programs).
Vive's Credit Decisioning and Collection Vive partners with merchants to provide a variety of revolving credit products originated through third-party federally insured banks to customers that may not qualify for traditional prime lending offers (referred to as "second-look" financing programs).
None of our employees are covered by a collective bargaining agreement, and we believe that our relations with employees are good. 10 The information in the tables below summarizes our gender, ethnicity and race diversity metrics as of December 31, 2023: December 31, 2023 Male Female Vice Presidents and Above 81.6 % 18.4 % All Other Employees 46.9 % 53.1 % December 31, 2023 Hispanic or Latino White Black or African American Native Hawaiian or Pacific Islander Asian American Indian or Alaskan Native Two or More Races Vice Presidents and Above 2.6 % 81.6 % 2.6 % —% 10.6 % —% 2.6% All Other Employees 29.2 % 52.7 % 9.0 % 1.1 % 4.7 % 0.4 % 2.9 % We foster a culture of learning that provides employees with development opportunities to support their unique career paths.
The information in the tables below summarizes our gender, ethnicity and race diversity metrics as of December 31, 2024: December 31, 2024 Male Female Vice Presidents and Above 82.9 % 17.1 % All Other Employees 43.6 % 56.4 % 10 December 31, 2024 Hispanic or Latino White Black or African American Native Hawaiian or Pacific Islander Asian American Indian or Alaskan Native Two or More Races Vice Presidents and Above 5.7 % 80.0 % 2.9 % —% 11.4 % —% —% All Other Employees 22.1 % 56.4 % 8.5 % 1.5 % 5.0 % 0.5 % 6.0 % We foster a culture of learning that provides employees with development opportunities to support their unique career paths.
In addition to federal regulatory oversight, currently, nearly every state specifically regulates lease-to-own transactions via state statutes, and are holding businesses like Progressive Leasing to higher standards of training, monitoring and compliance.
The Company is fully cooperating with the FTC in responding to the FTC's request for information and documents. In addition to federal regulatory oversight, currently, nearly every state specifically regulates lease-to-own transactions via state statutes, and are holding businesses like Progressive Leasing to higher standards of training, monitoring and compliance.
Additionally, we utilize a third-party service provider in Cali, Colombia to assist us with our customer support efforts. Our customer service representatives for Vive are located 8 primarily in Utah and Arkansas. Since early 2020, substantially all customer service representatives for Progressive Leasing and Vive have transitioned to working remotely.
Additionally, we utilize third-party service providers in Cali, Colombia 8 and Makati, Philippines to assist us with our customer support and collection efforts. Since early 2020, substantially all customer service representatives for Progressive Leasing and Vive have transitioned to working remotely. Our commitment to our customers is ongoing throughout their lease term.
For customer agreements that are past due, the Company's policy is to write off lease merchandise after 120 days. The provision for lease merchandise write-offs as a percentage of lease revenues was 6.7%, 7.7% and 4.8% for the years ended December 31, 2023, 2022, and 2021, respectively.
The provision for lease merchandise write-offs as a percentage of lease revenues was 7.5%, 6.7% and 7.7% for the years ended December 31, 2024, 2023, and 2022, respectively. The Company's targeted annual range for the provision for lease merchandise write-offs as a percentage of lease revenues is 6% to 8%.
We support our employees in owning their development and growth, and we provide development training and resources to empower employees to achieve their personal best at work. In 2023, we launched a career development framework tool that links employees to online learning curricula in multiple delivery formats as a way to further aid employees in their development.
We support our employees in owning their development and growth, and we provide development training and resources to empower employees to achieve their personal best at work.
In particular, our employee resource groups ("ERGs") help to ensure the many experiences of our diverse employees, customers and communities are reflected in our decisions and actions. Our ERGs receive executive, monetary and other support from the Company and participation by all employees in all positions and locations is encouraged and welcomed.
We work hard to cultivate a welcoming and nurturing workplace for all employees, including by supporting our employee resource groups ("ERGs") to help to ensure the many experiences of our diverse employees, customers and communities are reflected in our decisions and actions.
The customer payment assistance team contacts customers within a few days after the due date to encourage them to keep their agreement current. If the customer chooses to return the merchandise, arrangements may be made to receive the merchandise from the customer by either scheduling a pick-up or shipping the merchandise to our warehouse in Draper, Utah.
If the customer chooses to return the merchandise, arrangements may be made to receive the merchandise from the customer by either scheduling a pick-up or shipping the merchandise to our warehouse in Draper, Utah. Merchandise pick-ups are handled by Progressive Leasing employees in a variety of locations throughout the United States.
If a payment is not made in a timely manner, collections are managed in-house through our customer payment assistance team and proprietary lease management system. The customer payment assistance team contacts customers within a few days after the due date to encourage them to keep their agreement current.
The customer payment assistance team contacts customers within a few days after the due date to encourage them to keep their agreement current. We also send email and/or text reminders to customers and provide payment options and instructions.
As of December 31, 2023, our employee count was 1,420 for Progressive Leasing, 167 for Vive, and 19 for Four and Other, the majority of which were full time employees. On January 25, 2024, the Company announced the continuation of cost reduction initiatives, which included a reduction in Progressive Leasing's workforce.
As of December 31, 2024, our employee count was 1,261 for Progressive Leasing, 124 for Vive, and 18 for Four and Other, the majority of which were full time employees. None of our employees are covered by a collective bargaining agreement, and we believe that our relations with employees are good.
There can be no assurances that other state attorneys general will not pursue similar legal actions against the Company in future periods. At December 31, 2023, the Company had accrued $1.0 million for the lawsuit within accounts payable and accrued expenses in the consolidated balance sheets, as the settlement was believed to be probable and reasonably estimable.
There can be no assurances that other state attorneys general will not pursue similar legal actions against the Company in future periods. Intellectual Property Intellectual property and proprietary rights are important to the success of our business.
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Progressive Leasing partners with multiple third-party vendors to sell its returned merchandise.
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We also utilize a third-party service provider to assist in pick-ups when the merchandise is too large, or the return is outside our coverage areas. For customer agreements that are past due, the Company's policy is to write off lease merchandise after 120 days.
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Human Capital Diversity, equity and inclusion ("DE&I") is integral to our ability to grow and thrive. We strive to nurture a culture of inclusion, holding all employees accountable for advancing our culture of belonging while supporting a diverse environment free from discrimination, harassment and bullying.
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Human Capital We believe that a diverse workforce composed of individuals from various backgrounds, experiences, and perspectives fosters creativity and accelerates innovation. In fiscal 2024, we continued to focus on activities that promote an inclusive environment to reflect the consumers we serve and the communities in which we operate.
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In supporting a diverse and inclusive workplace, we focus on hiring, retention and advancement of women and underrepresented groups, and work hard to cultivate a welcoming and nurturing workplace that will activate the next generation of innovators.
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Our ERGs receive executive, monetary and other support from the Company and participation is voluntary and open to all employees in all positions and locations for all of our ERGs.
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Currently, our ERGs include The Black Inclusion Group ("BIG"); Women In Leadership ("WIL"); Adelante!; PROGPeople Respecting Individuality, Diversity and Equality ("PRIDE"); Veterans and Allies Leading the Organization Responsibly ("VALOR"); and Pacific Islanders & Asians Celebrating Equality ("PACE").
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During the third quarter of 2024, Progressive Leasing received a written request from the FTC to evidence Progressive Leasing's compliance with the FTC Settlement by providing the FTC with information and documents, including those related to customer complaints and advertising and marketing materials.
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The tool provides content on topics such as compliance and specific business-related needs, as well as assessments, videos and digital learning modules, which are available live, in-person and online.
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More recently, the Consumer Financial Protection Bureau ("CFPB") has filed a lawsuit against one of our lease-to-own competitors, alleging violations of various laws, and has indicated that it may take legal action against another one in connection with its investigation of that competitor.
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Furthermore, our Vive business, through its bank partners, offers Vive branded credit cards and other private label credit card products for subprime and near-prime consumers.
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Accordingly, it is subject to federal laws and regulations with respect to cardholder agreement terms and disclosures (e.g., the Truth In Lending Act), credit discrimination (e.g., the Equal Credit Opportunity Act), credit reporting (e.g., the Fair Credit Reporting Act), and servicing and collection activities.
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The BNPL industry is also under increasing scrutiny from federal regulators as the CFPB has been reviewing the business practices of a number of companies that offer BNPL services and has alleged several areas of perceived risks of consumer harm, including inconsistent consumer protections and the risk of borrowers becoming overextended.
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We expect applicable federal regulatory agencies will continue their increased focus on alternative consumer financial services and products, and, as a result, businesses such as ours may be held to higher standards of monitoring, disclosure and reporting, regardless of whether new laws or regulations governing our industry are adopted.
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Intellectual Property Intellectual property and proprietary rights are important to the success of our business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny interruptions or delays in their platform availability, whether as a result of a failure to perform on the part of a vendor, any damage to one of their vendor's systems or facilities, the termination of any third-party vendor agreement, software failures, the inadequacy of their or their vendor's business continuity and disaster recovery plans, their or their vendor's error, natural disasters, terrorism, other man-made problems, security breaches, whether accidental or willful, or other factors, may harm their relationships with their POS partners and customers and also harm their reputation.
Biggest changeAny interruptions or delays in a vendor's platform availability, any damage to a vendor's systems or facilities, any software failures or other disruption in our vendors' information technology systems may harm the relationship our businesses have with their POS partners and customers and also harm their reputation. In addition, both Progressive Leasing and Vive source certain information from third parties.
Risk Factors Risks Related to our Businesses, Regulatory Environment and Industry Our businesses are subject to extensive federal, state and local laws and regulations, including certain laws and regulations unique to the industries in which our businesses operate, that may subject them to government investigations and significant monetary penalties, remediation expenses and compliance-related burdens that may result in them changing the manner in which they operate, which may be materially adverse to several aspects of our performance.
Risk Factors Risks Related to our Regulatory Environment, Industry and Businesses Our businesses are subject to extensive federal, state and local laws and regulations, including certain laws and regulations unique to the industries in which our businesses operate, that may subject them to government investigations and significant monetary penalties, remediation expenses and compliance-related burdens that may result in them changing the manner in which they operate, which may be materially adverse to several aspects of our performance.
Progressive Leasing serves subprime consumers. Its lease-to-own business model poses inherent risks that may have a material and adverse effect on our results, financial condition, and prospects. Progressive Leasing offers lease-to-own solutions to subprime consumers through point-of-sale retail partners via in-store, mobile, and online solutions.
Progressive Leasing serves subprime consumers, and its lease-to-own business model poses inherent risks that may have a material and adverse effect on our results, financial condition, and prospects. Progressive Leasing offers lease-to-own solutions to subprime consumers through point-of-sale retail partners via in-store, mobile, and online solutions.
Given the complex, rapidly changing, and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, a claim of infringement, misappropriation, or other 27 violation against us may require us to spend significant amounts of time and other resources to defend against the claim (even if we ultimately prevail), pay significant money damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies, or other intellectual property (temporarily or permanently), cease offering certain products or services, obtain a license, which may not be available on commercially reasonable terms or at all, or redesign our products or services or functionality therein, which may be costly, time-consuming, or impossible.
Given the complex, rapidly changing, and competitive technological and business environment in which we operate, and the potential risks and uncertainties of intellectual property-related litigation, a claim of infringement, misappropriation, or other violation against us may require us to spend significant amounts of time and other resources to defend against the claim (even if we ultimately prevail), pay significant money damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies, or other intellectual property (temporarily or permanently), cease offering certain products or services, obtain a license, which may not be available on commercially reasonable terms or at all, or redesign our products or services or functionality therein, which may be costly, time-consuming, or impossible.
The attractiveness of Progressive Leasing's platform to POS partners depends upon, among other things: its brand and reputation; its ability to sustain its value proposition to POS partners for consumer acquisition; the attractiveness to POS partners of its virtual and data-driven platform; the services, products and customer decisioning standards offered by Progressive Leasing's competitors; the amount of rebates or other incentive payments offered to those POS partners by Progressive Leasing, and its ability to perform under, and maintain, its POS partner agreements, most of which have terms that do not exceed three years.
The attractiveness of Progressive Leasing's platform to POS partners depends upon, among other things: its brand and reputation; its ability to sustain its value proposition to POS partners for consumer acquisition; the attractiveness to POS partners of its virtual and data-driven platform; the services, products and customer decisioning standards offered by Progressive Leasing's competitors; the amount of rebates or 15 other incentive payments offered to those POS partners by Progressive Leasing, and its ability to perform under, and maintain, its POS partner agreements, most of which have terms that do not exceed three years.
In addition, the brick and mortar operations of our POS partners are subject to the effects of adverse acts of nature, such as winter storms, hurricanes, hail storms, strong winds, earthquakes and tornadoes, which have in the past caused damage such as flooding and other damage in specific geographic locations, including in California, Florida and Texas, three of our large markets, and may, depending upon the location and severity of such events, unfavorably impact our business continuity.
In addition, the brick and mortar operations of our POS partners are subject to the effects of adverse acts of nature, such as winter storms, hurricanes, hail storms, strong winds, earthquakes, wildfires and tornadoes, which have in the past caused damage such as flooding and other damage in specific geographic locations, including in California, Florida and Texas, three of our large markets, and may, depending upon the location and severity of such events, unfavorably impact our business continuity.
Although Vive and Four serve subprime and near-prime consumers, their business models differ significantly from Progressive Leasing's lease-to-own business, which means each of these businesses have different risk profiles. Through its Vive branded credit cards and other private label credit card products, Vive offers POS partners a variety of revolving loans for subprime and near-prime consumers.
Although Vive and Four also serve subprime and near-prime consumers, their business models differ significantly from Progressive Leasing's lease-to-own business, which means each of these businesses have different risk profiles. Through its Vive branded credit cards and other private label credit card products, Vive offers POS partners a variety of revolving loans for subprime and near-prime consumers.
The unexpected or abrupt departure of one or more of our key personnel, or the departure of certain of our information technology or other employees in connection with our global workforce outsourcing strategy, and the failure to effectively transfer knowledge and effect smooth key personnel transitions 20 may have an adverse effect on our businesses resulting from the loss of such person's skills, knowledge of our businesses, and years of industry experience.
The unexpected or abrupt departure of one or more of our key personnel, or the departure of certain of our information technology or other employees in connection with our global workforce outsourcing strategy, and the failure to effectively transfer knowledge and effect smooth key personnel transitions may have an adverse effect on our businesses resulting from the loss of such person's skills, knowledge of our businesses, and years of industry experience.
Assuming all loans are fully drawn, each quarter point change in interest rates would result in a $0.9 million change in annual interest expense on our indebtedness under our Revolving Facility. In the future, we may enter into 30 interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility.
Assuming all loans are fully drawn, each quarter point change in interest rates would result in a $0.9 million change in annual interest expense on our indebtedness under our Revolving Facility. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility.
These competitors may have significantly greater financial and operating resources, greater name recognition in certain markets and more developed products and services, which may allow them to grow faster, including through acquisitions, and to offer more aggressive exclusivity, rebate and/or other incentive payments to existing and potential POS partners, some of whom may be our POS partners.
These competitors may have significantly greater financial and operating resources, greater name recognition in certain markets and more developed products and services, which may allow them to grow faster, including through acquisitions, and to offer more aggressive exclusivity, rebate and/or other incentive payments to 18 existing and potential POS partners, some of whom may be our POS partners.
Misconduct by our employees or third-party contractors or other third parties who are directly or indirectly associated with our business, or even unsubstantiated allegations of misconduct, may result in a material adverse effect on our reputation and our business. 26 We may be unable to sufficiently obtain, maintain, protect, or enforce our intellectual property and other proprietary rights.
Misconduct by our employees or third-party contractors or other third parties who are directly or indirectly associated with our business, or even unsubstantiated allegations of misconduct, may result in a material adverse effect on our reputation and our business. We may be unable to sufficiently obtain, maintain, protect, or enforce our intellectual property and other proprietary rights.
In addition to compliance costs, we may continue to incur substantial expenses to respond to regulatory and other third-party investigations and enforcement actions, proposed fines and penalties, criminal or civil sanctions, and private litigation, as well as potential "headline risks" that may negatively impact our business and may adversely affect our share price.
In addition to compliance costs, we may continue to incur substantial expenses to respond to regulatory and other third-party investigations and enforcement actions, proposed fines and 13 penalties, criminal or civil sanctions, and private litigation, as well as potential "headline risks" that may negatively impact our business and may adversely affect our share price.
The attractiveness of Progressive Leasing's data-driven platform to consumers depends upon, among other things: the number and variety of its POS partners and the mix of products and services available through its platform; its brand and reputation; customer experience and satisfaction; trust and perception of the value it provides; technological innovation; and the services, products and customer decisioning standards 17 offered by its competitors.
The attractiveness of Progressive Leasing's data-driven platform to consumers depends upon, among other things: the number and variety of its POS partners and the mix of products and services available through its platform; its brand and reputation; customer experience and satisfaction; trust and perception of the value it provides; technological innovation; and the services, products and customer decisioning standards offered by its competitors.
With respect to these transactions, consumer advocacy groups and media reports generally focus on the 21 total cost to a consumer to acquire merchandise, which is often alleged to be higher than the interest typically charged by banks or similar lending institutions to consumers with better credit histories.
With respect to these transactions, consumer advocacy groups and media reports generally focus on the total cost to a consumer to acquire merchandise, which is often alleged to be higher than the interest typically charged by banks or similar lending institutions to consumers with better credit histories.
Lease revenue and 28 interest income is the highest in the first quarter of each year due to the typical increased payment activity associated with tax refund proceeds often received by customers in the first quarter. This seasonality requires the Company to manage its cash flows over the course of the year.
Lease revenue and interest income is the highest in the first quarter of each year due to the typical increased payment activity associated with tax refund proceeds often received by customers in the first quarter. This seasonality requires the Company to manage its cash flows over the course of the year.
Any short-term reductions in revenue or profitability may be more severe than they (or we) anticipate or these decisions may not produce the long-term benefits that they (or we) expect, in which case several aspects of our performance may be materially and adversely affected.
Any short-term reductions in revenue or profitability may be more severe than we anticipate or these decisions may not produce the long-term benefits that we expect, in which case several aspects of our performance may be materially and adversely affected.
While the indenture that governs the senior notes and the Revolving Facility limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions.
While the indenture that governs the senior notes and the Revolving Facility limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other 27 intercompany payments to us, these limitations are subject to qualifications and exceptions.
An increase in competition may cause our POS partners to no longer offer our product and services in favor of our competitors, or to offer our product and services and the products of its competitors simultaneously at the same store locations, which may slow growth in our business and limit or reduce profitability.
An increase in competition may cause our POS partners to no longer offer our product and services in favor of our competitors, or to offer our product and services and the products of our competitors simultaneously at the same store locations, which may slow growth in our business and limit or reduce profitability.
We may also be required to undertake additional cost reduction steps, including a further reduction of our workforce, which could also be disruptive to our businesses and potentially lower the anticipated benefits with respect to our future performance, including with respect to GMV and revenue.
We may also be required to undertake additional cost reduction steps, including a further reduction of our workforce, which could also be 23 disruptive to our businesses and potentially lower the anticipated benefits with respect to our future performance, including with respect to GMV and revenue.
The program may be suspended or discontinued at any time in the future without prior notice. Repurchases under our share repurchase program will reduce the market liquidity for our stock, potentially affecting its trading volatility and price.
The share repurchase program and/or the dividend program may be suspended or discontinued at any time in the future without prior notice. Repurchases under our share repurchase program will reduce the market liquidity for our stock, potentially affecting its trading volatility and price.
Progressive Leasing and Vive face competition from national, regional and local operators of lease-to-own stores, virtual lease-to-own companies, traditional and e-commerce retailers (including many that offer layaway programs and title or installment lending), traditional and online sellers of used merchandise, and various types of consumer finance companies that may enable our customers to shop at traditional or online retailers, as well as with rental stores that do not offer their customers a purchase option.
For example, Progressive Leasing and Vive face competition from national, regional and local operators of lease-to-own stores, virtual lease-to-own companies, traditional and e-commerce retailers (including many that offer layaway programs and title or installment lending), traditional and online sellers of used merchandise, and various types of consumer finance companies that may enable our customers to shop at traditional or online retailers, as well as with rental stores that do not offer their customers a purchase option.
Among the factors that may affect our stock price are: • how our actual financial performance compares to the financial performance outlook we provide; • quarterly variations in our key operating metrics, such as revenue, active customer count, GMV and profitability that are not necessarily indicative of longer-term operating performance and valuation; • the stock price performance of comparable companies and quarterly variations in their results of operations; • changes in earnings estimates or buy/sell recommendations by securities or industry analysts; • investor perceptions of us and our industry; • federal, state or local regulatory proposals, initiatives, actions or changes that are, or are perceived to be, adverse to our operations, including any continuing impacts of the FTC Settlement as discussed above; • actions by institutional and "activist" shareholders, including future purchases and sales of our stock; • our capital allocation strategy and financial policies, including continued share repurchases under our current share repurchase program as discussed above; • additions or departures of key personnel; • continuing uncertain macroeconomic conditions, in particular those relating to inflationary pressures and elevated interest rates.
Among the factors that may affect our stock price are: • how our actual financial performance compares to the financial performance outlook we provide; • quarterly variations in our key operating metrics, such as revenue, active customer count, GMV and profitability that are not necessarily indicative of longer-term operating performance and valuation; • the stock price performance of comparable companies and quarterly variations in their results of operations; • changes in earnings estimates or buy/sell recommendations by securities or industry analysts; • investor perceptions of us and our industry; • federal, state or local regulatory proposals, initiatives, actions or changes that are, or are perceived to be, adverse to our operations, including any continuing impacts of the FTC Settlement as discussed above; • actions by institutional and "activist" shareholders, including future purchases and sales of our stock; • our capital allocation strategy and financial policies, including continued share repurchases under our current share repurchase program as discussed above; • additions or departures of key personnel; and • continuing uncertain macroeconomic conditions, in particular those relating to persistent inflationary pressures and elevated interest rates for prolonged periods.
Similarly, either Vive or Four's inability to timely and effectively respond to such characterizations may harm its relationships with its merchant partners and customers, and result in declines in transactions and revenue.
Similarly, either Vive or Four's inability to timely and effectively respond to such 19 characterizations may harm its relationships with its merchant partners and customers, and result in declines in transactions and revenue.
This may result in the inability to approve otherwise qualified applicants, 22 which may adversely affect Progressive Leasing and Vive by negatively impacting their reputations and reducing their transaction volumes.
This may result in the inability to approve otherwise qualified applicants, which may adversely affect Progressive Leasing and Vive by negatively impacting their reputations and reducing their transaction volumes.
In the event Progressive Leasing is found to be in violation of the terms of the FTC Settlement, the FTC could, among other actions, initiate further enforcement proceedings, seek an injunction or other restrictive orders and impose civil monetary penalties against Progressive Leasing and its officers, which would divert the attention of our management team and may have a material adverse effect on several aspects of our performance.
In the event Progressive Leasing is found to be in violation of the terms of the FTC Settlement, the FTC could, among other actions, initiate further enforcement proceedings, seek an injunction or other restrictive orders and attempt to impose monetary penalties against Progressive Leasing and its officers, which would divert the attention of our management team and may have a material adverse effect on several aspects of our performance.
Acquisitions and investments also may not perform to our expectations for various reasons, including the loss of key personnel, customers or vendors.
Acquisitions, investments and divestitures also may not perform to our expectations for various reasons, including the loss of key personnel, customers or vendors.
In April 2020, our Progressive Leasing business entered into a settlement with the FTC (the "FTC Settlement") to resolve allegations by the FTC that certain of Progressive Leasing's advertising and marketing practices violated the FTC Act, even though Progressive Leasing believed it was in compliance with the FTC Act, and thus, did not admit any violations of that act or any other laws.
For example, in April 2020, our Progressive Leasing business entered into a settlement with the FTC (the "FTC Settlement") to resolve allegations by the FTC that certain of Progressive Leasing's advertising and marketing practices violated the FTC Act, even though Progressive Leasing believed it was in compliance with the FTC Act, and thus, did not admit any violations of that act or any other laws.
We may not be able to successfully integrate the personnel, operations, businesses, products, or technologies of an acquisition or investment. Integration may be particularly challenging if we enter into a line of business in which we have limited experience and the business operates in a difficult legal, regulatory or competitive environment.
We may not be able to successfully integrate or disaggregate the personnel, operations, businesses, products, or technologies of an acquisition, investment or divestiture. Integration may be particularly challenging if we enter into a line of business in which we have limited experience and the business operates in a difficult legal, regulatory or competitive environment.
As a result, open source software may have security vulnerabilities, defects, or errors of which we are not aware.
As a result, open source software may have security vulnerabilities, defects, or 26 errors of which we are not aware.
Furthermore, we cannot be certain that insurance coverage will continue to be available on acceptable terms or at all, or that the insurer will not deny coverage as to any future claim, including claims related to the most recent cybersecurity incident experienced by Progressive Leasing discussed above.
Furthermore, we cannot be certain that insurance coverage will continue to be available on acceptable terms or at all, or that the insurer will not deny coverage as to any future claim, including claims related to the cybersecurity incident experienced by Progressive Leasing discussed above.
Vive's and Four's allowance for loan losses may prove to be insufficient to cover losses on outstanding loans. Each of Vive and Four maintains an allowance for loan losses that we believe is appropriate at December 31, 2023.
Vive's and Four's allowance for loan losses may prove to be insufficient to cover losses on outstanding loans. Each of Vive and Four maintains an allowance for loan losses that we believe is appropriate at December 31, 2024.
The processing of the information they acquire in connection with their customers' and POS partners' use of their services is subject to numerous privacy, data protection, cybersecurity, and other laws and regulations in the United States.
The processing of the information they acquire in connection with their customers' and POS partners' use of their services is subject to numerous privacy, data protection, cybersecurity, and other laws and regulations.
We may find that we do not have adequate operations or expertise to manage the new business. The integration of any acquisition or investment may divert management's time and resources from our core business, which may impair our relationships with our current employees, 25 customers and strategic partners and disrupt our operations.
We may find that we do not have adequate operations or expertise to manage the new business. The integration or disaggregation of any acquisition, investment or divestiture may divert management's time and resources from our core business, which may impair our relationships with our current employees, customers and strategic partners and disrupt our operations.
If we fail to integrate acquisitions or strategic investments or realize the expected benefits, we may lose the return on these acquisitions or investments or incur additional transaction costs, and several aspects of our performance may be materially harmed as a result.
If we fail to integrate acquisitions or strategic investments, divest businesses or realize the expected benefits, we may lose the return on these acquisitions, investments or divestitures or incur additional transaction costs, and several aspects of our performance may be materially harmed as a result.
Competition for senior executives and key talent in the information technology, finance and sales areas in our industry is intense and the failure to identify, hire, develop, motivate, and retain highly qualified personnel may adversely affect our business and operations.
Competition for senior executives and key talent in the information technology, finance and sales areas in the consumer financial services industry is intense and the failure to identify, hire, develop, motivate, and retain highly qualified personnel may adversely affect our business and operations.
As of December 31, 2023, we would have had undrawn commitments available to be borrowed under the Revolving Facility of up to $350.0 million. We also would have had available to us an uncommitted incremental facility under the Revolving Facility of up to $300.0 million, with availability subject to satisfaction of certain conditions.
As of December 31, 2024, we would have had undrawn commitments available to be borrowed under the Revolving Facility of $300 million. We also would have had available to us an uncommitted incremental facility under the Revolving Facility of up to $300.0 million, with availability subject to satisfaction of certain conditions.
The transactions offered to consumers by our Progressive Leasing, Vive and Four businesses may be negatively characterized by federal, state and local government officials, consumer advocacy groups and the media, and if those negative characterizations become increasingly accepted by consumers and/or others with whom we do business, several aspects of our performance may be materially and adversely affected.
The transactions offered to consumers by our businesses may be negatively characterized by federal, state and local government officials, consumer advocacy groups and the media, and if those negative characterizations become increasingly accepted by consumers and/or others with whom we do business, several aspects of our performance may be materially and adversely affected.
In addition, certain aspects of Progressive Leasing's, Vive's and Four's businesses, such as the content of their advertising and other disclosures to customers about transactions, their respective data collection practices, the manner in which they may contact their customers, the decisioning process regarding whether to enter into a transaction with a potential customer, their credit reporting practices, and the manner in which they process and store certain customer, employee and other information are subject to federal and state laws and regulatory oversight.
In addition, certain aspects of our businesses, such as the content of their advertising and other disclosures to customers about transactions, their respective data collection practices, the manner in which they may contact their customers, the decisioning process regarding whether to enter into a transaction with a potential customer, their credit reporting practices, and the manner in which they process and store certain customer, employee and other information are subject to federal and state laws and regulatory oversight.
We believe that developing, protecting and maintaining awareness of our Progressive Leasing, Vive and Four brands in a cost-effective manner is critical to our success. Successful promotion of our brands will depend largely on the effectiveness of our marketing efforts and the experience of POS partners as well as our customers.
We believe that developing, protecting and maintaining awareness of our brands in a cost-effective manner is critical to our success. Successful promotion of our brands will depend largely on the effectiveness of our marketing efforts and the experience of POS partners as well as our customers.
In addition, if our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on the effectiveness of our internal control over financial reporting, when required, or if material weaknesses in our internal controls are identified, we may be subject to increased regulatory scrutiny and a loss of public and investor confidence, which may also have a material adverse effect on our business and our stock price.
In addition, if our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on the effectiveness of our internal control over financial reporting, when required, or if material weaknesses in our internal controls are identified, we may be subject to increased regulatory scrutiny and a loss of public and investor confidence, which may also have a material adverse effect on our business and our stock price. 29 Our risk management processes and procedures may not be effective in mitigating our risks.
Unexpected changes in customer behavior caused by uncertain macroeconomic conditions, including, for example, inflationary pressures, supply chain disruptions, strained consumer liquidity or increases in unemployment levels may lead to increased incidences and costs related to lease merchandise write-offs.
Unexpected changes in customer behavior caused by uncertain macroeconomic conditions, including, for example, persistent inflationary pressures, strained consumer liquidity or increases in unemployment levels may lead to increased incidences and costs related to lease merchandise write-offs.
We believe our proprietary lease and loan decisioning processes to be a key to the success of our Progressive Leasing, Vive and Four businesses. These decisioning processes assume behavior and attributes observed for prior customers, among other factors, are indicative of performance by our future customers.
We believe our proprietary lease and loan decisioning processes to be a key to the success of our businesses. These decisioning processes assume behavior and attributes observed for prior customers, among other factors, are indicative of performance by our future customers.
In addition, both Progressive Leasing and Vive source certain information from third parties. For example, the decisioning engine utilized by Progressive Leasing and Vive is based on algorithms that evaluate a number of factors and currently depend on sourcing certain information from third parties, including consumer reporting agencies.
For example, the decisioning engine utilized by Progressive Leasing and Vive is based on algorithms that evaluate a number of factors and currently depend on sourcing certain information from third parties, including consumer reporting agencies.
We depend on our POS partners' abilities to deliver products to customers at the right time and in the right quantities. Accordingly, it is important for our POS partners to maintain optimal levels of inventory and respond rapidly to shifting demands.
We depend on our POS partners' abilities to deliver products to customers at the right time, in the right quantities and at the right price. Accordingly, it is important for our POS partners to obtain products at reasonable prices, maintain optimal levels of inventory and respond rapidly to shifting demands.
In particular, we rely significantly on the continued service of our data scientists and information technology engineers in order to maintain our complex information technology infrastructure, avoid information technology control deficiencies and develop new products as part of our go-forward business strategy. Trained and experienced personnel are in high demand and may be in short supply.
In particular, we rely significantly on the continued service of our data scientists and information technology engineers in order to maintain our complex information technology infrastructure, perform information technology controls and develop new products as part of our go-forward business strategy. Trained and experienced personnel are in high demand and may be in short supply.
Many of the companies with which we compete for experienced employees have greater resources than we do and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to competitors that may seek to recruit them.
Many of the companies with which we compete for experienced employees have greater resources than we do and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to other consumer financial services companies that may seek to recruit them.
Any security breach suffered by us, Progressive Leasing, Vive, Four or our vendors, any unauthorized, accidental, or unlawful access or loss of data, or the perception that any such event has occurred, may result in a disruption to our, Progressive Leasing's, Vive's or Four's operations, litigation, an obligation to notify regulators and affected individuals, the triggering of indemnification and other contractual obligations, regulatory investigations, government fines and penalties, reputational damage, and loss of customers and ecosystem partners, and our business may be materially and adversely affected.
Any security breach suffered by us or our vendors, any unauthorized, accidental, or unlawful access or loss of data, or the perception that any such event has occurred, may result in a disruption to our operations, litigation, an obligation to notify regulators and affected individuals, the triggering of indemnification and other contractual obligations, regulatory investigations, government fines and penalties, reputational damage, and loss of customers and ecosystem partners, and our business may be materially and adversely affected.
Unauthorized parties have in the past attempted and may in the future attempt to gain access to Progressive Leasing's, Vive's or Four's systems or facilities through various means, including, among others, hacking into our or their POS partners' or customers' systems or facilities, or attempting to fraudulently induce employees, POS partners, customers or others into disclosing usernames, passwords, or other sensitive information, which may in turn be used to access systems and gain access to confidential, proprietary, or sensitive information.
Unauthorized parties have in the past attempted and may in the future attempt to gain access to our information technology security systems through various means, including, among others, hacking into our or their POS partners' or customers' systems or facilities, or attempting to fraudulently induce employees, POS partners, customers or others into disclosing usernames, passwords, or other sensitive information, which may in turn be used to access systems and gain access to confidential, proprietary, or sensitive information.
Any real or perceived errors, failures, bugs, or defects in the software may not be found until customers use Progressive Leasing's, Vive's or Four's platforms and may result in outages or degraded quality of service that may adversely impact their respective businesses, as well as negative publicity, loss of or delay in market acceptance of their products and services, and harm to their brands or weakening of their competitive positions.
Any real or perceived errors, failures, bugs, or defects in the software may not be found until customers use our businesses' platforms and may result in outages or degraded quality of service that may adversely impact their respective businesses, as well as negative publicity, loss of or delay in market acceptance of their products and services, and harm to their brands or weakening of their competitive positions.
Even if we become aware of any security vulnerabilities, defects, or errors, it may take a significant amount of time for either us or the programmers who developed the open source software to address such vulnerabilities, defects, or errors, which may negatively impact our products and services, including by adversely affecting the market's perception of Progressive Leasing's, Vive's and/or Four's products and services, impairing the functionality of their products and services, delaying the launch of new products and services, or resulting in the failure of their products and services, any of which may result in liability to them (and us).
Even if we become aware of any security vulnerabilities, defects, or errors, it may take a significant amount of time for either us or the programmers who developed the open source software to address such vulnerabilities, defects, or errors, which may negatively impact our products and services, including by adversely affecting the market's perception of our products and services, impairing the functionality of our products and services, delaying the launch of new products and services, or resulting in the failure of our products and services, any of which may result in liability to us and our businesses.
As described above, Progressive Leasing, Vive and Four increasingly use e-commerce platforms, including the websites of our POS partners, to obtain application information and distribute certain legally required notices to their lease and loan applicants, and to obtain electronically signed documents in lieu of paper documents with tangible consumer signatures.
As described above, our businesses increasingly use e-commerce platforms, including the websites of our POS partners, to obtain application information and distribute certain legally required notices to their lease and loan applicants, and to obtain electronically signed documents in lieu of paper documents with tangible consumer signatures.
If we fail to successfully promote, protect, and maintain our brands or if we incur substantial expenses in an unsuccessful attempt to promote, protect, and maintain our brands, Progressive Leasing, Vive or Four may lose their existing POS partners and customers to their competitors or be unable to attract new POS partners and customers.
If we fail to successfully promote, protect, and maintain our brands or if we incur substantial expenses in an unsuccessful attempt to promote, protect, and maintain our brands, we may lose their existing POS partners and customers to their competitors or be unable to attract new POS partners and customers.
While there was no major operational impact to any of Progressive Leasing's services as a result of the incident, and the Company's other subsidiaries were not impacted, this incident, as well as any other breach of our systems or facilities, or those of Progressive Leasing, Vive or Four, may continue to result in the risks discussed herein.
While there was no major operational impact to any of Progressive Leasing's services as a result of the incident, and our other subsidiaries were not impacted, this incident, as well as any other breach of our systems or facilities, or those of our other businesses, may continue to result in the risks discussed herein.
As discussed above, BNPL offerings have recently become subject to enhanced regulatory scrutiny by federal regulatory authorities, including the CFPB, which allege several areas of perceived risks to consumers, including the risks that borrowers will become overextended.
As discussed above, BNPL offerings have become subject to enhanced regulatory scrutiny by federal and state regulatory authorities which allege several areas of perceived risks to consumers, including the risks that borrowers will become overextended.
The timing and actual number of further share repurchases following the date of this Annual Report on Form 10-K, if any, will depend on a variety of factors, including the price and availability of our shares, trading volume, general market conditions, and projected cash positions in light of other capital allocation opportunities such as organic growth and strategic acquisitions.
The timing and actual number of further share repurchases and/or the continuation of our dividend program following the date of this Annual Report on Form 10-K, if any, will depend on a variety of factors, including the price and availability of our shares, trading volume, our earnings and financial condition, general market conditions, and projected cash positions in light of other capital allocation opportunities such as organic growth and strategic acquisitions.
Public health emergencies such as this, as well as international trade disputes, unstable foreign and domestic economic and political conditions, geopolitical conflicts, acts of terrorism and other factors beyond our control, could result in similar supply chain disruptions and inventory shortages for our POS partners in future periods, which could adversely affect their sales and Progressive Leasing's GMV, revenue and earnings.
International trade disputes such as this, as well as unstable foreign and domestic economic and political conditions, geopolitical conflicts, acts of terrorism, public health emergencies and other factors beyond our control, could result in supply chain disruptions, inventory shortages and/or material increases in the price of goods for our POS partners in future periods, which could adversely affect their sales and Progressive Leasing's GMV, revenue and earnings.
See "Risks Related to Our Indebtedness." The loss of the services of our key executives or our inability to attract and retain key talent, particularly with respect to our information technology function, may have a material adverse impact on our operations.
The loss of the services of our key executives or our inability to attract and retain key talent, particularly with respect to our information technology function, may have a material adverse impact on our operations.
To the extent Progressive Leasing, Vive and Four use or are dependent on any particular third-party data, technology, or software, they may also be harmed if such data, technology, or software becomes non-compliant with existing regulations or industry standards, becomes subject to third-party claims of intellectual property infringement, misappropriation, or other violation, or malfunctions or functions in a way we did not anticipate.
To the extent any of our businesses use or are dependent on any particular third-party data, technology, or software, they may also be harmed if such data, technology, or software becomes non-compliant with existing regulations or industry standards, becomes subject to third-party claims of intellectual property infringement, misappropriation, or other violation, or malfunctions or functions in a way we did not anticipate.
Our business continuity and disaster recovery plans may not be sufficient to prevent losses in the event we experience a significant disruption in, or errors in, service on Progressive Leasing's, Vive's or Four's platforms.
Our business continuity and disaster recovery plans may not be sufficient to prevent losses in the event we experience a significant disruption in, or errors in, service on our platforms.
If portions of Progressive Leasing's, Vive's and Four's proprietary software are determined to be subject to an open source license, they may also be required to, under certain circumstances, publicly release or license, at no cost, their products and services that incorporate the open source software or the affected portions of their source codes, which may allow our competitors or other third parties to create similar products and services with lower development effort, time, and costs, and may ultimately result in a loss of transaction volumes for each of Progressive Leasing, Vive and Four.
If portions of our proprietary software are determined to be subject to an open source license, they may also be required to, under certain circumstances, publicly release or license, at no cost, their products and services that incorporate the open source software or the affected portions of their source codes, which may allow our competitors or other third parties to create similar products and services with lower development effort, time, and costs, and may ultimately result in a loss of transaction volumes.
The errors or inaccuracies in Progressive Leasing's, Vive's and Four's models may be material, and may lead them to make wrong or sub-optimal decisions in managing their businesses, which may have a material adverse effect on several aspects of our performance.
The errors or inaccuracies in our businesses' models may be material, and may lead them to make wrong or sub-optimal decisions in managing their businesses, which may have a material adverse effect on several aspects of our performance.
Any loss of the right to use any of this data, technology, or software may result in delays in the provisioning of Progressive Leasing's, Vive's and Four's products and services until equivalent or replacement data, technology, or software is either developed by them, or, if available, is identified, obtained, and integrated, and there is no guarantee that they would be successful in developing, identifying, obtaining, or integrating equivalent or similar data, technology, or software, which may result in the loss or limiting of their products, services, or features available in their products or services.
Any loss of the right to use any of this data, technology, or software may result in delays in the provisioning of one or more of our businesses' products and services until equivalent or replacement data, technology, or software is either developed by them, or, if available, is identified, obtained, and integrated, and there is no guarantee that they would be successful in developing, identifying, obtaining, or integrating equivalent or similar data, technology, or software, which may result in the loss or limiting of their products, services, or features available in their products or services.
Legislative or regulatory proposals regarding our industry, or interpretations of them, may subject Progressive Leasing, Vive and Four to "headline risks" that could negatively impact each of them in a particular market or in general and, therefore, may adversely affect our share price.
Legislative or regulatory proposals regarding our industry, or interpretations of them, may subject our businesses to "headline risks" that could negatively impact each of them in a particular market or in general and, therefore, may adversely affect our share price.
This increased attention may increase Progressive Leasing's, Vive's and Four's compliance costs significantly, result in additional fines or monetary penalties or settlements due to future government investigations, and materially and adversely impact the manner in which they operate, which may be materially adverse to several aspects of our performance.
This increased attention may significantly increase the compliance costs for our businesses, result in additional fines or monetary penalties or settlements due to future government investigations, and materially and adversely impact the manner in which they operate, which may be materially adverse to several aspects of our performance.
These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause consumers to lose confidence in the effectiveness of our, Progressive Leasing's, Vive's or Four's data security measures.
These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause consumers to lose confidence in the effectiveness of our data security measures.
In many cases, these systems are developed by internal and/or external resources and customized specifically for the Progressive Leasing, Vive and Four businesses, resulting in a higher likelihood that they may have undetected errors, failures, bugs, or defects than other commercially available software and platforms.
In many cases, these systems are developed by internal and/or external resources and customized specifically for our businesses, resulting in a higher likelihood that they may have undetected errors, failures, bugs, or defects than other commercially available software and platforms.
Additionally, any acquisition or investment may expose us to increased information security risk as we integrate new systems that we may not be as familiar with or bring them in line with the requirements of our information security and business continuity programs.
Additionally, any acquisition, investment or divestiture may expose us to increased information security risk as we integrate new systems that we may not be as familiar with or bring them in line with the requirements of our information security and business continuity programs or provide data and information access to third parties.
While this model allows Progressive Leasing to address an underserved, credit-challenged segment of the population with an innovative lease-to-own solution that integrates seamlessly with the traditional and e-commerce retailers with whom Progressive Leasing partners (whom we refer to as our point of sale or "POS" partners), it creates specific and unique risks including, among others: 15 • reliance on POS partners (over whom Progressive Leasing does not exercise full control and oversight) for many important business functions, from advertising through assistance with lease transaction applications, including, for example, explaining the nature of the lease-to-own transaction when asked to do so by a consumer; • the potential that federal, state and local regulators will continue to focus on alternative financial services products, including consumer protection with respect to such products within the subprime financial marketplace, and impact lease-to-own transactions by adopting new regulations (or applying existing laws and regulations that were never intended to apply to lease-to-own transactions) that require Progressive Leasing to change its business practices in a materially adverse manner; • indemnification obligations to POS partners for losses stemming from, among other matters, Progressive Leasing's violation of federal, state or local laws or regulations or failure to take the appropriate steps to protect its POS partners' and customers' information from being accessed or stolen by unauthorized third parties through cyber-attacks or "hacking" or similar occurrences; • reliance on automatic bank account drafts for lease payments, which may become disfavored as a payment method by regulators and/or providers, or may otherwise become unavailable; and • an increase in the risk of consumer fraud since lease decisions are made through remote technology-based platforms and, because transactions are consummated through the Internet, there is a risk customers may challenge, among other potential claims, the authenticity of their documents and whether their electronic signatures are valid.
While this model allows Progressive Leasing to address an underserved, credit-challenged segment of the population with an innovative lease-to-own solution that integrates seamlessly with the traditional and e-commerce retailers with whom Progressive Leasing partners (whom we refer to as our point of sale or "POS" partners), it creates specific and unique risks including, among others: • reliance on POS partners (over whom Progressive Leasing does not exercise full control and oversight) for many important business functions, from advertising through assistance with lease transaction applications, including, for example, explaining the nature of the lease-to-own transaction when asked to do so by a consumer; • the potential that federal, state and local regulators will continue to focus on alternative financial services products, including consumer protection with respect to such products within the subprime financial marketplace, and impact lease-to-own transactions by adopting new regulations (or applying existing laws and regulations that were never intended to apply to lease-to-own transactions) that require Progressive Leasing to change its business practices in a materially adverse manner; • indemnification obligations to POS partners for losses stemming from, among other matters, Progressive Leasing's violation of federal, state or local laws or regulations or failure to take the appropriate steps to protect its POS partners' and customers' information from being accessed or stolen by unauthorized third parties through cyber-attacks or "hacking" or similar occurrences; and • reliance on automatic bank account drafts for lease payments, which may become disfavored as a payment method by regulators and/or providers, or may otherwise become unavailable.
While we believe these initiatives have thus far benefited the Company, particularly as they relate to aligning our servicing costs with our 19 expectations regarding GMV and revenue, such initiatives may ultimately prove to be inadequate or have unintended consequences disruptive to our businesses, including those relating to the implementation of a global workforce outsourcing strategy for certain of the Company's information technology functions.
While we believe these prior cost reduction initiatives have benefited the Company, particularly as they relate to aligning our servicing costs with our expectations regarding GMV and revenue, such initiatives may ultimately prove to be inadequate or have unintended consequences disruptive to our businesses, including those relating to the continued implementation of a global workforce outsourcing strategy for certain of the Company's information technology and customer service functions.
We continue to establish and enhance processes and procedures intended to identify, measure, monitor, manage and control the types of risk to which we are subject, including, but not limited to, decisioning risks related to the leases and loans Progressive Leasing, Vive and Four originate, strategic risk, regulatory risk and operational risk.
We continue to establish and enhance processes and procedures intended to identify, measure, monitor, manage and control the types of risk to which we are subject, including, but not limited to, decisioning risks related to the leases and loans our businesses originate, strategic risk, regulatory risk and operational risk.
In other cases, our insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant. Some aspects of Progressive Leasing's, Vive's and Four's platforms include open source software, and their use of open source software may negatively affect several aspects of our performance.
In other cases, our insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant. Some aspects of our information technology platforms include open source software, and our use of open source software may negatively affect several aspects of our performance.
Some aspects of Progressive Leasing's, Vive's and Four's platforms include software covered by open source licenses. The terms of various open source licenses have not been interpreted by United States courts, and there is a risk that such licenses may be construed in a manner that imposes unanticipated conditions or restrictions on Progressive Leasing's, Vive's and Four's platforms.
Some aspects of our information technology platforms include software covered by open source licenses. The terms of various open source licenses have not been interpreted by United States courts, and there is a risk that such licenses may be construed in a manner that imposes unanticipated conditions or restrictions on our platforms.
The loss of any key POS partners would have a material adverse effect on our business. For example, during 2023, we derived 51.3% of our consolidated revenues from customers of Progressive Leasing's top three POS partners, and 78.6% of our consolidated revenues from customers of Progressive Leasing's top ten POS partners.
The loss of any key POS partners would have a material adverse effect on our business. For example, during 2024, we derived 52.6% of our consolidated revenues from customers of Progressive Leasing's top three POS partners, and 78.2% of our consolidated revenues from customers of Progressive Leasing's top ten POS partners.
Consumer complaints with respect to our industry have resulted in, and may in the future result in, state, federal and local regulatory and other investigations. In addition, while we are not aware of any whistleblower claims regarding Progressive Leasing's, Vive's or Four's specific business practices, such claims are on the rise generally.
Consumer complaints with respect to our industry have resulted in, and may in the future result in, state, federal and local regulatory and other investigations. In addition, while we are not aware of any whistleblower claims regarding the specific practices of our businesses, such claims are on the rise generally.
We cannot ensure that Progressive Leasing, Vive and Four have not incorporated open source software in their software in a manner that is inconsistent with the terms of the applicable license or their current policies, and they may inadvertently use open source in a manner that they (and we) do not intend or that may expose them (or us) to claims for breach of contract or intellectual property infringement, misappropriation, or other violation.
We cannot ensure that we have not incorporated open source software in our software in a manner that is inconsistent with the terms of the applicable license or our current policies, and we may inadvertently use open source in a manner that we do not intend or that may expose us to claims for breach of contract or intellectual property infringement, misappropriation, or other violation.
Similarly, the business continuity and disaster recovery plans maintained by Progressive Leasing, Vive and Four, as well as those maintained by any third-party vendors, may not adequately or efficiently prevent or protect against the types of damage or service interruptions discussed above.
Similarly, the business continuity and disaster recovery plans we maintain, as well as those maintained by any third-party vendors, may not adequately or efficiently prevent or protect against the types of damage or service interruptions discussed above.
As a result of these restrictions, we may be: • limited in how we conduct our business; • unable to raise additional debt or equity financing to operate during general economic or business downturns, or at other times; or • unable to compete effectively or to take advantage of new business opportunities.
As a result of these restrictions, we may be: • limited in how we conduct our business; • unable to raise additional debt or equity financing to operate during general economic or business downturns, or at other times; or • unable to compete effectively or to take advantage of new business opportunities. 28 These restrictions may affect our ability to grow in accordance with our strategy.
In recent years, federal regulatory authorities have increasingly focused on alternative consumer financial services products, including consumer protection within the subprime financial marketplace in which our Progressive Leasing, Vive and Four businesses operate.
In recent years, federal regulatory authorities have increasingly focused on alternative consumer financial services products, including consumer protection within the subprime financial marketplace in which our businesses operate.
The ability of the Company, Progressive Leasing, Vive and Four to protect confidential, proprietary, or sensitive information, including the confidential information of their customers, may be adversely affected by cyber-attacks or similar disruptions, which may result in significant costs, litigation and reputational damage or otherwise have a material adverse impact on several aspects of our performance.
Our inability to protect confidential, proprietary, or sensitive information, including the confidential information of our customers, may be adversely affected by cyber-attacks or similar disruptions, which may result in significant costs, litigation and reputational damage or otherwise have a material adverse impact on several aspects of our performance.
If Progressive Leasing, Vive or Four fail to comply, or are alleged to have failed to comply, with the terms and conditions of their open source licenses, they may be required to incur significant legal expenses defending such allegations, be subject to significant damages, be enjoined from the sale of their products and services, and be required to comply with onerous conditions or restrictions on their products and services, any of which may be materially disruptive to our business.
If we fail to comply, or are alleged to have failed to comply, with the terms and conditions of our open source licenses, we may be required to incur significant legal expenses defending such allegations, be subject to significant damages, be enjoined from the sale of their products and services, and be required to comply with onerous conditions or restrictions on our products and services, any of which may be materially disruptive to us and our businesses.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn furtherance of detecting, identifying, classifying and mitigating cybersecurity and other data security threats, the Company also: • adopted and maintains information security and privacy policies; • conducts targeted audits and penetration tests throughout the year, using both internal and external resources; • engages nationally-known third party cybersecurity consultants to independently evaluate the Company's information security maturity on a regular basis; • maintains a vendor risk management program, which includes receiving the results of cybersecurity audits conducted on vendors, for a portion of our vendors, and conduct cyber related risk assessments on other vendors; • provides mandatory security and privacy training and awareness to all of its employees so that employees understand the behaviors and requirements necessary to safeguard information resources at the Company; • maintains cyber liability insurance; and • complies with the Payment Card Industry Data Security Standard. 33 The Company has a dedicated team of employees overseeing its cybersecurity program and initiatives, led by the Company's Chief Information Security Officer (who has over twenty years' experience working in cyber and information security roles with large companies, including multiple senior executive positions), and works directly in consultation with internal and external advisors in connection with these efforts.
Biggest changeDepartment of Commerce’s National Institute of Standards and Technology (NIST) Cybersecurity Framework. 30 In furtherance of detecting, identifying, classifying and mitigating cybersecurity and other data security threats, the Company also: • adopted and maintains information security and privacy policies; • conducts targeted audits and penetration tests throughout the year, using both internal and external resources; • engages nationally-known third party cybersecurity consultants to independently evaluate the Company's information security maturity on a regular basis; • maintains a vendor risk management program, which includes receiving the results of cybersecurity audits conducted on vendors, for a portion of our vendors, and conducting cyber related risk assessments on other vendors; • provides mandatory security and privacy training and awareness to all of its employees so that employees understand the behaviors and requirements necessary to safeguard information resources at the Company; • maintains cyber liability insurance; and • complies with the Payment Card Industry Data Security Standard.
While there was no major operational impact to any of Progressive Leasing’s services as a result of the incident, and the Company’s other subsidiaries were not impacted, this incident, as well as any other breach of the Company’s systems or facilities, or those of Progressive Leasing, Vive or Four, may continue to result in cybersecurity-related risks.
While there was no major operational impact to any of Progressive Leasing’s services as a result of the incident, and the Company’s other subsidiaries were not impacted, this incident, as well as any other breach of the Company’s systems or facilities, or those of Progressive Leasing, Vive, Four, or the Company's other strategic operations may continue to result in cybersecurity-related risks.
For more information about these and other cybersecurity risks faced by the Company, see Part 1. Item 1A. "Risk Factors."
For more information about these and other cybersecurity risks faced by the Company, see Part 1. Item 1A. "Risk Factors." 31
In addition, the Audit Committee assists the Board of Directors in monitoring the Company's cybersecurity investments, initiatives, key benchmarks and risk mitigation plans, and regularly makes inquiries of the Company's management team, internal auditors and independent auditors in connection therewith.
In addition, the Audit Committee assists the Board of Directors in monitoring the Company's cybersecurity investments, initiatives, key benchmarks and risk mitigation plans, and regularly receives updates about such matters from the Company's Chief Information Security Officer, and makes inquiries of the Company's management team, internal auditors and independent auditors in connection therewith.
This cybersecurity program is based in-part on, and its maturity is measured using, the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) Cybersecurity Framework.
This cybersecurity program is based in-part on, and its maturity is measured using, the U.S.
In addition, the Company maintains an Enterprise Information Security Committee comprised of a cross-functional group of senior executives and other employees that meet on a regular basis to provide oversight with respect to the Company's cybersecurity program and initiatives. The Company's Board of Directors has ultimate oversight responsibility for risks relating to the Company's cybersecurity program.
In addition, the Company's Chief Information Security Officer and other Information Security Department managers meet with executives and other employees from various departments on a regular basis to discuss cybersecurity risk mitigation and the Company's cybersecurity program and initiatives. The Company's Board of Directors has ultimate oversight responsibility for risks relating to the Company's cybersecurity program.
Added
The Company has a dedicated team of employees overseeing its cybersecurity program and initiatives, led by the Company's Chief Information Security Officer (who has over twenty years' experience working in cyber and information security roles with large companies, including multiple senior executive positions), and works directly in consultation with internal and external advisors in connection with these efforts.

Item 2. Properties

Properties — owned and leased real estate

3 edited+3 added−1 removed1 unchanged
Biggest changeDraper, Utah 2 Progressive Leasing and Vive—Corporate Management – Leased 148,000 Glendale, Arizona 1, 2 Progressive Leasing—Corporate Management – Leased 69,000 1 During 2022, the office space in Arizona was consolidated to a single floor as part of the Company's restructuring initiatives and partial impairment was recognized for the abandoned portion of the right-of-use lease asset. 2 On January 25, 2024, the Company announced that it had taken several restructuring actions, including the planned reduction and consolidation of its office space in Utah and Arizona.
Biggest changeDuring 2022, the office space in Arizona was consolidated to a single floor as part of the Company's restructuring initiatives and partial impairment was recognized for the abandoned portion of the right-of-use lease asset.
ITEM 2. PROPERTIES The Company leases management and information technology space for corporate functions under operating leases expiring at various times through 2027. Most of the leases contain renewal options for additional periods ranging from three to five years.
ITEM 2. PROPERTIES The Company leases management and information technology space for corporate functions under operating leases expiring at various times through 2028. Most of the leases contain renewal options for additional periods ranging from three to five years.
The following table sets forth certain information regarding our corporate and segment management facilities as of December 31, 2023: LOCATION SEGMENT, PRIMARY USE AND HOW HELD SQ. FT.
The following table sets forth certain information regarding our corporate and segment management facilities as of December 31, 2024: LOCATION 1 SEGMENT, PRIMARY USE AND HOW HELD SQ. FT.
Removed
During the first quarter of 2024, the Company will reduce its office space in Utah by 50% and completely vacate the office space in Arizona, and corresponding impairment will be recognized for the abandoned right-of-use lease assets. The existing lease agreements for Utah and Arizona expire in August 2027 and March 2025, respectively.
Added
Draper, Utah Progressive Leasing and Vive — Corporate Management – Leased 74,000 Aventura, Florida Four — Corporate Management – Leased 6,769 1 The Company previously leased offices for corporate management of its Progressive Leasing segment in Glendale, Arizona.
Added
On January 25, 2024, the Company announced that it had taken several restructuring actions, including the reduction and consolidation of its office space in Utah and Arizona. During the first quarter of 2024, the Company reduced its office space in Utah by 50% and completely vacated the office space in Arizona.
Added
The closure of the office space in Arizona was not due to a reduction in the workforce there, but rather, was due to the employees who had worked in that space being allowed to permanently work from home. A corresponding impairment was recognized for the abandoned right-of-use lease assets. The existing lease agreement for Utah expires in August 2027.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, an adverse resolution of a number of these items may have a material adverse impact on our business, financial position or results of operations. For further information, see Note 10 in the accompanying consolidated financial statements under the heading "Legal Proceedings," which discussion is incorporated by reference in response to this Item 3. 34 ITEM 4.
Biggest changeHowever, an adverse resolution of a number of these items may have a material adverse impact on our business, financial position or results of operations. For further information, see Note 9 in the accompanying consolidated financial statements under the heading "Legal Proceedings," which discussion is incorporated by reference in response to this Item 3. ITEM 4.
MINE SAFETY DISCLOSURES Not applicable. 35 PART II
MINE SAFETY DISCLOSURES Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDecember 31, 2018 2019 2020 2021 2022 2023 PROG Holdings, Inc. $ 100.00 $ 136.15 $ 148.69 $ 124.51 $ 46.62 $ 85.31 S&P MidCap 400 100.00 126.20 143.44 178.95 155.58 181.15 S&P SmallCap 600 100.00 122.78 136.64 173.29 145.39 168.73 S&P North American Technology Sector 100.00 142.68 207.11 261.79 169.22 272.66 37 ITEM 6. [RESERVED] Not applicable.
Biggest changeDecember 31, 2019 2020 2021 2022 2023 2024 PROG Holdings, Inc. $ 100.00 $ 109.20 $ 91.45 $ 34.24 $ 62.66 $ 86.73 S&P MidCap 400 100.00 113.66 141.80 123.28 143.54 163.54 S&P SmallCap 600 100.00 111.29 141.13 118.41 137.42 149.37 S&P North American Technology Sector 100.00 145.15 183.47 118.60 191.10 260.04 34 ITEM 6. [RESERVED] Not applicable.
Securities Authorized for Issuance Under Equity Compensation Plans Information concerning the Company's equity compensation plans is set forth in Item 12 of Part III of this Annual Report on Form 10-K. 36 Performance Graph Comparison of 5 Year Cumulative Total Return* Among PROG Holdings, Inc., the S&P MidCap 400 Index, the S&P SmallCap 600 Index, and the S&P North American Technology Sector Index *$100 invested on 12/31/18 in stock or index, including reinvestment of dividends.
Securities Authorized for Issuance Under Equity Compensation Plans Information concerning the Company's equity compensation plans is set forth in Item 12 of Part III of this Annual Report on Form 10-K. 33 Performance Graph Comparison of 5 Year Cumulative Total Return* Among PROG Holdings, Inc., the S&P MidCap 400 Index, the S&P SmallCap 600 Index, and the S&P North American Technology Sector Index *$100 invested on 12/31/19 in stock or index, including reinvestment of dividends.
The authorization, effective November 3, 2021, provided the Company with the ability to repurchase shares up to a maximum amount of $1.0 billion. Subject to the terms of the Board's authorization and applicable law, repurchases may be made at such times and in such amounts as the Company deems appropriate. Repurchases may be discontinued at any time.
The authorization, effective February 21, 2024, provided the Company with the ability to repurchase shares up to a maximum amount of $500 million. Subject to the terms of the Board's authorization and applicable law, repurchases may be made at such times and in such amounts as the Company deems appropriate. Repurchases may be discontinued at any time.
Issuer Purchases of Equity Securities The following table presents our share repurchase activity for the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 1 October 1, 2023 through October 31, 2023 200,000 $ 27.75 200,000 $ 223,450,364 November 1, 2023 through November 30, 2023 683,913 28.16 683,913 204,188,047 December 1, 2023 through December 31, 2023 220,000 29.48 220,000 197,702,595 Total 1,103,913 1,103,913 1 Share repurchases are conducted under authorizations made from time to time by the Company's Board of Directors.
Issuer Purchases of Equity Securities The following table presents our share repurchase activity for the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 1 October 1, 2024 through October 31, 2024 75,000 $ 43.95 75,000 $ 398,516,145 November 1, 2024 through November 30, 2024 485,309 47.55 485,309 375,437,702 December 1, 2024 through December 31, 2024 300,000 46.96 300,000 361,349,309 Total 860,309 860,309 1 Share repurchases are conducted under authorizations made from time to time by the Company's Board of Directors.
The number of shareholders of record of the Company's common stock at February 16, 2024 was 430. The closing price for the common stock at February 16, 2024 was $31.11.
The number of shareholders of record of the Company's common stock at February 14, 2025 was 165. The closing price for the common stock at February 14, 2025 was $42.82.
Removed
On February 21, 2024, the Company's Board of Directors declared a quarterly cash dividend in the amount of $0.12 per share of outstanding common stock, payable on March 28, 2024 to shareholders of record as of March 14, 2024.
Removed
The future declaration and payment of dividends to holders of our common stock may be limited by the provisions of Georgia law, among other considerations.
Removed
The future payment of dividends, if permitted, will be at the sole discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, and other considerations that our Board of Directors deems relevant.
Removed
On February 21, 2024, the Company's Board of Directors reauthorized the repurchase of Company common stock up to an aggregate purchase price of $500 million under the Company's existing share repurchase program, with such reauthorized share repurchase program to be extended for a period of three years from February 21, 2024, or until the $500 million aggregate purchase price of Company common stock purchased pursuant to the reauthorized share repurchase program has been met, whichever occurs first.
Removed
No share repurchases have been made under the reauthorized share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+36 added−41 removed61 unchanged
Biggest changeThe increase in Vive revenues was primarily driven by a larger loan portfolio throughout 2022 as compared to 2021. 45 Operating Expenses Information about certain significant components of operating expenses is as follows: Change Year Ended December 31, 2022 vs. 2021 (In Thousands) 2022 2021 $ % Personnel Costs 1 $ 194,195 $ 189,576 $ 4,619 2.4 % Stock-Based Compensation 17,521 21,349 (3,828) (17.9) Occupancy Costs 6,466 6,633 (167) (2.5) Advertising 15,762 17,502 (1,740) (9.9) Professional Services 22,824 24,106 (1,282) (5.3) Sales Acquisition Expense 2 28,828 22,374 6,454 28.8 Computer Software Expense 3 27,629 20,674 6,955 33.6 Bank Service Charges 12,491 11,542 949 8.2 Other Sales, General and Administrative Expense 40,574 32,717 7,857 24.0 Sales, General and Administrative Expense 4 366,290 346,473 19,817 5.7 Provision for Loan Losses 41,232 17,668 23,564 133.4 Depreciation and Amortization 33,851 33,258 593 1.8 Restructuring Expense 9,001 — 9,001 nmf Operating Expenses $ 450,374 $ 397,399 $ 52,975 13.3 % nmf—Calculation is not meaningful 1 Personnel costs excludes stock-based compensation expense, which is reported separately in the operating expense table. 2 Sales acquisition expense includes vendor incentives and rebates to POS partners, external sales commissions, amortization of initial direct costs and amounts paid to various POS partners to be their exclusive provider of lease-to-own solutions. 3 Computer software expense consists primarily of software subscription fees, licensing fees and non-capitalizable software implementation costs. 4 Progressive Leasing's sales, general and administrative expense was $321.3 million and $316.3 million during the years ended December 31, 2022 and 2021, respectively.
Biggest changeThe increase to Other revenue was primarily driven by a 198.3% increase in Four's GMV as compared to the same period in 2023, due to increased loan originations. 39 Operating Expenses Information about certain significant components of operating expenses is as follows: Change Year Ended December 31, 2024 vs. 2023 (In Thousands) 2024 2023 $ % Personnel Costs 1 $ 172,542 $ 187,199 $ (14,657) (7.8) % Stock-Based Compensation 29,179 24,920 4,259 17.1 Occupancy Costs 4,199 5,429 (1,230) (22.7) Advertising 20,102 17,203 2,899 16.9 Professional Services 32,277 26,882 5,395 20.1 Sales Acquisition Expense 2 29,175 28,205 970 3.4 Computer Software Expense 3 28,057 26,673 1,384 5.2 Bank Service Charges 11,042 11,246 (204) (1.8) Other Sales, General and Administrative Expense 36,969 38,005 (1,036) (2.7) Sales, General and Administrative Expense 363,542 365,762 (2,220) (0.6) Provision for Loan Losses 55,950 40,757 15,193 37.3 Depreciation and Amortization 26,977 32,032 (5,055) (15.8) Restructuring Expense 22,691 12,533 10,158 81.1 Operating Expenses $ 469,160 $ 451,084 $ 18,076 4.0 % 1 Personnel costs excludes stock-based compensation expense, which is reported separately in the operating expense table. 2 Sales acquisition expense includes vendor incentives and rebates to POS partners, external sales commissions, amortization of initial direct costs and amounts paid to various POS partners to be their exclusive provider of lease-to-own solutions. 3 Computer software expense consists primarily of software subscription fees, licensing fees and non-capitalizable software implementation costs.
Operating Expenses . Operating expenses include personnel costs, stock-based compensation expense, occupancy costs, advertising, decisioning expense, professional services expense, sales acquisition expense, computer software expense, bank service charges, the provision for loan losses, fixed asset depreciation expense, intangible asset amortization, and restructuring expense, among other expenses. Impairment of Goodwill.
Operating expenses include personnel costs, stock-based compensation expense, occupancy costs, advertising, decisioning expense, professional services expense, sales acquisition expense, computer software expense, bank service charges, the provision for loan losses, fixed asset depreciation expense, intangible asset amortization, and restructuring expense, among other expenses. Impairment of Goodwill.
Factors impacting the change in earnings before income tax expense for each reporting segment are discussed above. Income Tax Expense Income tax expense increased to $57.4 million for the year ended December 31, 2023 compared to $49.5 million in 2022 primarily due to higher earnings before income tax expense for 2023 as compared to the prior year.
Factors impacting the change in earnings before income tax expense for each reporting segment are discussed above. Income Tax Expense Income tax expense increased to $57.4 million for the year ended December 31, 2023 compared to $49.5 million in 2022 primarily due to higher earnings before income tax expense in 2023 as compared to prior year.
The lower stock-based compensation in 2022 was the result of: (i) the Company determining in the second quarter of 2022 that performance stock units that had been granted to Four executives were no longer probable of being earned resulting in lower expense in 2022 compared to 2023; (ii) no stock-based compensation expense being recognized for Progressive Leasing performance stock units granted in 2022 as these performance metrics related to those performance stock units were not met; and (iii) other stock-based forfeitures in 2022 related to the Progressive Leasing restructuring program.
The lower stock-based compensation in 2022 was the result of: (i) the Company determining in the second quarter of 2022 that performance stock units that had been granted to Four executives were no longer probable of being earned resulting in lower expense in 2022 compared to 2023; (ii) no stock-based compensation expense being recognized for Progressive Leasing performance stock units granted in 2022 as the performance metrics related to those performance stock units were not met; and (iii) other stock-based forfeitures in 2022 related to the Progressive Leasing restructuring program.
With the assistance of our cybersecurity experts, the Company located the Progressive Leasing customers and other individuals whose information was impacted and notified them, consistent with state and federal requirements. The Company also took a number of additional measures to demonstrate its continued support and commitment to data privacy and protection.
With the assistance of cybersecurity experts, the Company located the Progressive Leasing customers and other individuals whose information was impacted and notified them, consistent with state and federal requirements. The Company also took a number of additional measures to demonstrate its continued support and commitment to data privacy and protection.
Other capital requirements include (i) expenditures related to software development; (ii) expenditures related to our corporate operating activities; (iii) personnel expenditures; (iv) income tax payments; (v) funding of loans receivable for Vive; and (vi) servicing our outstanding debt obligations.
Other capital requirements include (i) expenditures related to software development; (ii) expenditures related to our corporate operating activities; (iii) personnel expenditures; (iv) income tax payments; (v) funding of loans receivable for Vive and Four; and (vi) servicing our outstanding debt obligations.
Our active customer count represents the total number of customers that have an active lease agreement with Progressive Leasing, or an active loan with Vive or Other. Active customer counts include customers that may have an active lease or loan agreement with more than one segment.
Our active customer count represents the total number of customers that have an active lease agreement with Progressive Leasing, or an active loan with Vive or our other operations. Active customer counts include customers that may have an active lease or loan agreement with more than one segment.
Our current estimate is that the average life of an outstanding credit card loan is approximately one to two years, depending on the respective FICO score segmentation. 50 The Company calculates the Vive allowance for loan losses based on internal historical loss information and incorporates observable and forecasted macroeconomic data over a six-month reasonable and supportable forecast period.
Our current estimate is that the average life of an outstanding credit card loan is approximately one to two years, depending on the respective FICO score segmentation. 48 The Company calculates the Vive allowance for loan losses based on internal historical loss information and incorporates observable and forecasted macroeconomic data over a six-month reasonable and supportable forecast period.
The increase to Other revenue was primarily driven by a 67.2% increase in Four's GMV as compared to the same period in 2022. 42 Operating Expenses Information about certain significant components of operating expenses is as follows: Change Year Ended December 31, 2023 vs. 2022 (In Thousands) 2023 2022 $ % Personnel Costs 1 $ 187,199 $ 194,195 $ (6,996) (3.6) % Stock-Based Compensation 24,920 17,521 7,399 42.2 Occupancy Costs 5,429 6,466 (1,037) (16.0) Advertising 17,203 15,762 1,441 9.1 Professional Services 26,882 22,824 4,058 17.8 Sales Acquisition Expense 2 28,205 28,828 (623) (2.2) Computer Software Expense 3 26,673 27,629 (956) (3.5) Bank Service Charges 11,246 12,491 (1,245) (10.0) Other Sales, General and Administrative Expense 38,005 40,574 (2,569) (6.3) Sales, General and Administrative Expense 4 365,762 366,290 (528) (0.1) Provision for Loan Losses 40,757 41,232 (475) (1.2) Depreciation and Amortization 32,032 33,851 (1,819) (5.4) Restructuring Expense 12,533 9,001 3,532 39.2 Operating Expenses $ 451,084 $ 450,374 $ 710 0.2 % 1 Personnel costs excludes stock-based compensation expense, which is reported separately in the operating expense table. 2 Sales acquisition expense includes vendor incentives and rebates to POS partners, external sales commissions, amortization of initial direct costs and amounts paid to various POS partners to be their exclusive provider of lease-to-own solutions. 3 Computer software expense consists primarily of software subscription fees, licensing fees and non-capitalizable software implementation costs. 4 Progressive Leasing's sales, general and administrative expense was $315.1 million and $321.3 million during the years ended December 31, 2023 and 2022, respectively.
The increase in Other revenue was primarily driven by a 67.2% increase in Four's GMV as compared to the same period in 2022. 42 Operating Expenses Information about certain significant components of operating expenses is as follows: Change Year Ended December 31, 2023 vs. 2022 (In Thousands) 2023 2022 $ % Personnel Costs 1 $ 187,199 $ 194,195 $ (6,996) (3.6) % Stock-Based Compensation 24,920 17,521 7,399 42.2 Occupancy Costs 5,429 6,466 (1,037) (16.0) Advertising 17,203 15,762 1,441 9.1 Professional Services 26,882 22,824 4,058 17.8 Sales Acquisition Expense 2 28,205 28,828 (623) (2.2) Computer Software Expense 3 26,673 27,629 (956) (3.5) Bank Service Charges 11,246 12,491 (1,245) (10.0) Other Sales, General and Administrative Expense 38,005 40,574 (2,569) (6.3) Sales, General and Administrative Expense 365,762 366,290 (528) (0.1) Provision for Loan Losses 40,757 41,232 (475) (1.2) Depreciation and Amortization 32,032 33,851 (1,819) (5.4) Restructuring Expense 12,533 9,001 3,532 39.2 Operating Expenses $ 451,084 $ 450,374 $ 710 0.2 % 1 Personnel costs excludes stock-based compensation expense, which is reported separately in the operating expense table. 2 Sales acquisition expense includes vendor incentives and rebates to POS partners, external sales commissions, amortization of initial direct costs and amounts paid to various POS partners to be their exclusive provider of lease-to-own solutions. 3 Computer software expense consists primarily of software subscription fees, licensing fees and non-capitalizable software implementation costs.
For the year ended December 31, 2023 and the comparable prior year periods, some of the key revenue, cost and expense items that affected earnings before income taxes were as follows: Revenues . We separate our total revenues into two components: (i) lease revenues and fees and (ii) interest and fees on loans receivable.
For the year ended December 31, 2024 and the comparable prior year periods, some of the key revenue, cost and expense items that affected earnings before income taxes were as follows: Revenues . We separate our total revenues into two components: (i) lease revenues and fees and (ii) interest and fees on loans receivable.
Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. 49 Critical Accounting Policies We discuss the most critical accounting policies below.
Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. 47 Critical Accounting Policies We discuss the most critical accounting policies below.
Cash used in financing activities in 2023 was primarily for the Company's repurchase of $139.6 million of its common stock, compared to $223.6 million of share repurchases in the prior year. The Company also used cash for an immaterial amount of debt issuance costs in 2023 compared to $1.6 million in 2022.
Cash used in financing activities in 2023 was primarily for the Company's repurchase of $139.6 million of its common stock, compared to $223.6 million of share repurchases in 2022. The Company also used cash for an immaterial amount of debt issuance costs in 2023 compared to $1.6 million in 2022.
Vive acquires loans receivable from its third-party bank partners at a discount from the face value of the loan. The discount is comprised mainly of a merchant fee discount, which represents a pre-negotiated, nonrefundable discount that generally ranges from 3.0% to 25% of the loan face value.
Vive acquires loans receivable from its third-party bank partners at a discount from the face value of the loan. The discount is comprised mainly of a merchant fee discount, which represents a pre-negotiated, nonrefundable discount that generally ranges from 3.0% to 30.0% of the loan face value.
("Four"), an innovative Buy Now, Pay Later ("BNPL") company that allows shoppers to pay for merchandise through four interest-free installments. Four's proprietary platform capabilities and its base of customers and retailers expand PROG Holdings' ecosystem of financial technology offerings by introducing a payment solution that further diversifies the Company's consumer financial technology offerings.
("Four"), is a Buy Now, Pay Later ("BNPL") company that allows shoppers to pay for merchandise through four interest-free installments. Four's proprietary platform capabilities and its base of customers and retailers expand PROG Holdings' ecosystem of financial technology offerings by introducing a payment solution that further diversifies the Company's consumer financial technology offerings.
Our corporate and segment management office leases contain renewal options for additional periods ranging from three to five years. Approximate future minimum payments for operating leases that have initial or remaining non-cancelable terms in excess of one year as of December 31, 2023 are disclosed in Note 7 in the accompanying consolidated financial statements. Contractual Obligations and Commitments .
Our corporate and segment management office leases contain renewal options for additional periods ranging from three to five years. Approximate future minimum payments for operating leases that have initial or remaining non-cancelable terms in excess of one year as of December 31, 2024 are disclosed in Note 6 in the accompanying consolidated financial statements. Contractual Obligations and Commitments .
The Progressive Leasing segment comprised approximately 97% of our consolidated revenues for the year ended December 31, 2023. Our Vive segment primarily serves customers that may not qualify for traditional prime lending offers who desire to purchase goods and services from participating merchants. Vive offers customized programs, with services that include revolving loans through private label and Vive-branded credit cards.
The Progressive Leasing segment comprised approximately 96% of our consolidated revenues for the year ended December 31, 2024. Our Vive segment primarily serves customers that may not qualify for traditional prime lending offers who desire to purchase goods and services from participating merchants. Vive offers customized programs, with services that include revolving loans through private label and Vive-branded credit cards.
Shoppers use Four to purchase furniture, clothing, electronics, health and beauty products, footwear, jewelry, and other consumer goods from retailers across the United States. Four is not a reportable segment for the year ended December 31, 2023 as its financial results are not material to the Company's consolidated financial results.
Shoppers use Four to purchase furniture, clothing, electronics, health and beauty products, footwear, jewelry, and other consumer goods from retailers across the United States. Four is not a reportable segment for the year ended December 31, 2024 as its financial results are not significant to the Company's consolidated financial results.
The Company has no long-term commitments to purchase merchandise nor does it have significant purchase agreements that specify minimum quantities or set prices that exceed our expected requirements for three months. Deferred income tax liabilities as of December 31, 2023 were approximately $104.8 million.
The Company has no long-term commitments to purchase merchandise nor does it have significant purchase agreements that specify minimum quantities or set prices that exceed our expected requirements for three months. Deferred income tax liabilities as of December 31, 2024 were approximately $74.3 million.
The $14.7 million decrease in investing cash outflows was primarily the result of a $25.3 million increase in proceeds from loans receivable, partially offset by a $11.1 million increase in cash outflows for investments in loans receivable. Cash used in investing activities was $53.5 million and $82.2 million during the years ended December 31, 2022 and 2021, respectively.
Cash used in investing activities was $38.8 million and $53.5 million during the years ended December 31, 2023 and 2022, respectively. The $14.7 million decrease in investing cash outflows was primarily the result of a $25.3 million increase in proceeds from loans receivable, partially offset by a $11.1 million increase in cash outflows for investments in loans receivable.
Delinquent loans receivable are those that are 30 days or more past due based on their contractual billing dates. The Company places loans receivable on nonaccrual status when they are greater than 90 days past due or upon notification of cardholder bankruptcy, death or fraud.
Vive's delinquent loans receivable are those that are 30 days or more past due based on their contractual billing dates. Vive's loans receivable are placed on nonaccrual status when they are greater than 90 days past due or upon notification of cardholder bankruptcy, death or fraud.
The decrease was also a result of a decline in Progressive Leasing's GMV for the year ended 2023, as compared to 2022, resulting from decreased customer demand for many of the products offered by our POS partners and tightened lease decisioning beginning in mid-2022.The decline in revenues was partially offset by improved customer payment activity in 2023, as compared to 2022.
The decrease was also a result of a decline in Progressive Leasing's GMV for the year ended 2023, as compared to 2022, resulting from decreased customer demand for many of the products offered by our POS partners and tightened lease decisioning beginning in mid-2022.
The indenture also contains customary events of default for transactions of this type and amount. The Company was in compliance with these covenants at December 31, 2023 and believes that it will continue to be in compliance in the future. Commitments Income Taxes. During the year ended December 31, 2023, we made net income tax payments of $100.4 million.
The indenture also contains customary events of default for transactions of this type and amount. The Company was in compliance with these covenants at December 31, 2024 and believes that it will continue to be in compliance in the future. 46 Commitments Income Taxes. During the year ended December 31, 2024, we made net income tax payments of $49.8 million.
In light of these macroeconomic challenges and to align the cost structure of our business with our near-term revenue outlook, the Company executed on a number of cost reduction initiatives during 2022, 2023, and the first quarter of 2024 to drive efficiencies and right-size variable costs, while attempting to minimize the negative impact on growth-related initiatives.
In light of these macroeconomic challenges and to align the cost structure of our business with our near-term revenue outlook, the Company executed on a number of cost reduction initiatives beginning in 2022 and continuing into 2024, to drive efficiencies and right-size variable costs, while attempting to minimize the negative impact on growth-related initiatives.
The Company, through its Vive business, had unconditionally cancellable unfunded lending commitments totaling approximately $523.9 million and $513.7 million as of December 31, 2023 and 2022, respectively, that do not give rise to revenues and cash flows.
The Company, through its Vive business, had unconditionally cancellable unfunded lending commitments totaling approximately $461.1 million and $523.9 million as of December 31, 2024 and 2023, respectively, that do not give rise to revenues and cash flows.
These costs related primarily to third-party legal and consulting services and credit monitoring services for Progressive Leasing's customers and employees that were impacted and are included within professional services expense as a component of operating expenses in the consolidated statements of earnings. 39 Highlights The following summarizes significant highlights from the year ended December 31, 2023: • We reported revenues of $2.4 billion in 2023, a decrease of 7.3% compared to 2022.
These costs related primarily to third-party legal and consulting services and credit monitoring services for Progressive Leasing's customers and employees that were impacted and are included within professional services expense as a component of operating expenses in the consolidated statements of earnings. 36 Highlights The following summarizes significant highlights from the year ended December 31, 2024: • We reported revenues of $2.5 billion in 2024, an increase of 2.3% compared to 2023.
Future interest payments related to our Revolving Facility are based on the borrowings outstanding at that time. Future interest payments may be different depending on future borrowing activity and interest rates. The Company had no outstanding borrowings under the Revolving Facility as of December 31, 2023.
Future interest payments related to our Revolving Facility are based on the borrowings outstanding at that time. Future interest payments may be different depending on future borrowing activity and interest rates. The Company had $50.0 million of outstanding borrowings under the Revolving Facility as of December 31, 2024.
For customer agreements that are past due, the Company's policy is to write off lease merchandise after 120 days. As of December 31, 2023 and 2022, the allowance for lease merchandise write-offs was $44.2 million and $47.1 million, respectively.
For customer agreements that are past due, the Company's policy is to write off lease merchandise after 120 days. As of December 31, 2024 and 2023, the allowance for lease merchandise write-offs was $51.9 million and $44.2 million, respectively.
Interest expense is presented net of interest income earned on the Company's deposits in cash and cash equivalents. 41 Results of Operations Results of Operations – Years Ended December 31, 2023 and 2022 Change Year Ended December 31, 2023 vs. 2022 (In Thousands) 2023 2022 $ % REVENUES: Lease Revenues and Fees $ 2,333,588 $ 2,523,785 $ (190,197) (7.5) % Interest and Fees on Loans Receivable 74,676 74,041 635 0.9 2,408,264 2,597,826 (189,562) (7.3) COSTS AND EXPENSES: Depreciation of Lease Merchandise 1,576,303 1,757,730 (181,427) (10.3) Provision for Lease Merchandise Write-offs 155,250 193,926 (38,676) (19.9) Operating Expenses 451,084 450,374 710 0.2 Impairment of Goodwill — 10,151 (10,151) nmf 2,182,637 2,412,181 (229,544) (9.5) OPERATING PROFIT 225,627 185,645 39,982 21.5 Interest Expense, Net (29,406) (37,401) 7,995 21.4 EARNINGS BEFORE INCOME TAX EXPENSE 196,221 148,244 47,977 32.4 INCOME TAX EXPENSE 57,383 49,535 7,848 15.8 NET EARNINGS $ 138,838 $ 98,709 $ 40,129 40.7 % nmf—Calculation is not meaningful Revenues Information about our revenues by source and reportable segment is as follows: Year Ended December 31, 2023 Year Ended December 31, 2022 (In Thousands) Progressive Leasing Vive Other Total Progressive Leasing Vive Other Total Lease Revenues and Fees $ 2,333,588 $ — $ — $ 2,333,588 $ 2,523,785 $ — $ — $ 2,523,785 Interest and Fees on Loans Receivable — 68,912 5,764 74,676 — 70,911 3,130 74,041 Total Revenues $ 2,333,588 $ 68,912 $ 5,764 $ 2,408,264 $ 2,523,785 $ 70,911 $ 3,130 $ 2,597,826 The decrease in Progressive Leasing revenues was primarily the result of having a smaller lease portfolio at the beginning of and throughout 2023, as compared to the same periods in the prior year.
The income tax benefit and negative effective tax rate in 2024 was primarily due to a $51.4 million non-cash reversal of the uncertain tax position related to Progressive Leasing and a $27.6 million deferred tax benefit related to an election which resulted in the deemed liquidation of a wholly-owned partnership for tax purposes. 41 Results of Operations – Years Ended December 31, 2023 and 2022 Change Year Ended December 31, 2023 vs. 2022 (In Thousands) 2023 2022 $ % REVENUES: Lease Revenues and Fees $ 2,333,588 $ 2,523,785 $ (190,197) (7.5) % Interest and Fees on Loans Receivable 74,676 74,041 635 0.9 2,408,264 2,597,826 (189,562) (7.3) COSTS AND EXPENSES: Depreciation of Lease Merchandise 1,576,303 1,757,730 (181,427) (10.3) Provision for Lease Merchandise Write-offs 155,250 193,926 (38,676) (19.9) Operating Expenses 451,084 450,374 710 0.2 Impairment of Goodwill — 10,151 (10,151) nmf 2,182,637 2,412,181 (229,544) (9.5) OPERATING PROFIT 225,627 185,645 39,982 21.5 Interest Expense, Net (29,406) (37,401) 7,995 21.4 EARNINGS BEFORE INCOME TAX EXPENSE 196,221 148,244 47,977 32.4 INCOME TAX EXPENSE 57,383 49,535 7,848 15.8 NET EARNINGS $ 138,838 $ 98,709 $ 40,129 40.7 % nmf—Calculation is not meaningful Revenues Information about our revenues by source and reportable segment is as follows: Year Ended December 31, 2023 Year Ended December 31, 2022 (In Thousands) Progressive Leasing Vive Other Total Progressive Leasing Vive Other Total Lease Revenues and Fees $ 2,333,588 $ — $ — $ 2,333,588 $ 2,523,785 $ — $ — $ 2,523,785 Interest and Fees on Loans Receivable — 68,912 5,764 74,676 — 70,911 3,130 74,041 Total Revenues $ 2,333,588 $ 68,912 $ 5,764 $ 2,408,264 $ 2,523,785 $ 70,911 $ 3,130 $ 2,597,826 The decrease in Progressive Leasing revenues was primarily the result of having a smaller lease portfolio at the beginning of and throughout 2023, as compared to the same periods in 2022.
Cash Provided by Operating Activities Cash provided by operating activities was $204.2 million and $242.5 million during the years ended December 31, 2023 and 2022, respectively.
Cash Provided by Operating Activities Cash provided by operating activities was $138.5 million and $204.2 million during the years ended December 31, 2024 and 2023, respectively.
Vive's current network of POS partner locations and e-commerce websites includes furniture, mattresses, home exercise equipment, and home improvement retailers, as well as medical and dental service providers. The Vive segment comprised approximately 3% of our consolidated revenues for the year ended December 31, 2023. On June 25, 2021, the Company completed the acquisition of Four Technologies, Inc.
Vive's current network of POS partner locations and e-commerce websites includes furniture, mattresses, home exercise equipment, and home improvement retailers, as well as medical and dental service providers. The Vive segment comprised approximately 3% of our consolidated revenues for the year ended December 31, 2024. Four Technologies, Inc.
At December 31, 2023 and 2022, we had deferred revenue representing cash collected in advance of being due or earned totaling $35.7 million and $37.1 million, respectively, and accounts receivable, net of an allowance for doubtful accounts based on historical collection rates, of $67.9 million and $64.5 million, respectively.
At December 31, 2024 and 2023, we had deferred revenue representing cash collected in advance of being due or earned totaling $40.9 million and $35.7 million, respectively, and accounts receivable, net of an allowance for doubtful accounts based on historical collection rates, of $80.2 million and $67.9 million, respectively.
The Company discontinues accruing interest and fees and amortizing merchant fee discounts and promotional fee discounts for loans receivable in nonaccrual status. Loans receivable are removed from nonaccrual status when cardholder payments resume, the loan becomes 90 days or less past due and collection of the remaining amounts outstanding is deemed probable.
Vive discontinues recognizing interest and fee revenue and amortizing merchant fee discounts and promotional fee discounts for loans receivable in nonaccrual status. Loans receivable are removed from nonaccrual status when the loan becomes 90 days or less past due and collection of the remaining amounts outstanding is deemed probable.
Progressive Leasing believes the allegations made in this lawsuit are without merit and intends to vigorously defend itself against the lawsuit; however, at this time, the Company is unable to determine or predict the outcome of this lawsuit or reasonably provide an estimate or range of the possible losses, if any.
Progressive Leasing intends to vigorously defend itself against the lawsuit; however, at this time, the Company is unable to determine or predict the outcome of this lawsuit or reasonably provide an estimate or range of the possible losses, if any.
The Company purchased 4,691,274 shares of its common stock for $139.6 million during the year ended December 31, 2023, 8,720,223 shares for $223.6 million during the year ended December 31, 2022, and 11,611,178 shares for $567.4 million during the year ended December 31, 2021. These amounts do not include any excise tax that may be assessed on those repurchases.
The Company purchased 3,480,871 shares of its common stock for $138.7 million during the year ended December 31, 2024, 4,691,274 shares for $139.6 million during the year ended December 31, 2023, and 8,720,223 shares for $223.6 million during the year ended December 31, 2022. These amounts do not include any excise tax that may be assessed on those repurchases.
The provision for lease merchandise write-offs was $155.3 million and $193.9 million for the years ended December 31, 2023 and 2022, respectively.
The provision for lease merchandise write-offs was $178.3 million and $155.3 million for the years ended December 31, 2024 and 2023, respectively.
We believe the significant increase in inflation, elevated interest rates for extended periods, and fears of a possible recession have also unfavorably impacted consumer confidence within our customer base, resulting in a decrease in demand for the types of merchandise offered by many of our key national and regional POS partners.
We believe the persistent inflationary pressures, the cost of living and elevated interest rates for extended periods have also unfavorably impacted consumer confidence within our customer base, resulting in a decrease in demand for the types of merchandise offered by many of our key national and regional POS partners.
During the year ended December 31, 2024 we anticipate making estimated cash payments of $49.0 million for United States federal and state income taxes. Leases . We lease management and information technology space for corporate functions as well as storage space for our hub facilities under operating leases expiring at various times through 2027.
During the year ended December 31, 2025 we anticipate making estimated cash payments of $67.0 million for United States federal and state income taxes. Leases . We lease management and information technology space for corporate functions under operating leases expiring at various times through 2028.
As of December 31, 2023, we had the authority to purchase additional shares up to our remaining authorization limit of $197.7 million.
As of December 31, 2024, we had the authority to purchase additional shares up to our remaining authorization limit of $361.3 million.
Our capital requirements have been financed through: • cash flows from operations; • private debt offerings; • bank debt; and • stock offerings. As of December 31, 2023, the Company had $155.4 million of cash, $350.0 million of availability under the Revolving Facility, and $600.0 million of indebtedness.
Our capital requirements have been financed through: • cash flows from operations; • private debt offerings; • bank debt; and • stock offerings. As of December 31, 2024, the Company had $95.7 million of cash, $300.0 million of availability under the Revolving Facility, and $650.0 million of gross indebtedness.
E-commerce channels generated 16.9% of Progressive Leasing's GMV in 2023 compared to 17.2% in 2022. The decrease in total GMV was partially offset by an increase in GMV from our other operations, primarily due to an increase in loan originations by our Four business. Active Customer Count.
E-commerce channels generated 17.0% of Progressive Leasing's GMV in 2024 compared to 16.9% in 2023. The increase in GMV from our other operations was primarily due to an increase in loan originations by our Four business. GMV for Vive remained consistent year over year. Active Customer Count.
Debt Financing On November 24, 2020, the Company entered into a credit agreement with a consortium of lenders providing for a $350 million senior revolving credit facility, under which all borrowings and commitments will mature or terminate on November 24, 2025.
Debt Financing On November 24, 2020, the Company entered into a credit agreement with a consortium of lenders providing for a $350 million senior revolving credit facility (the "Revolving Facility").
Other changes in cash provided by operating activities are discussed above in our discussion of results for the year ended December 31, 2023. Cash provided by operating activities was $242.5 million and $246.0 million during the years ended December 31, 2022 and 2021, respectively.
Other changes in cash provided by operating activities are discussed above in our discussion of results for the year ended December 31, 2023. Cash Used in Investing Activities Cash used in investing activities was $79.2 million and $38.8 million during the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, the Company had no outstanding balance and $350 million remaining available for borrowings on the Revolving Facility. The Revolving Facility contains certain financial covenants, which include requirements that the Company maintain ratios of (i) total net debt to EBITDA of no more than 2.50:1.00 and (ii) consolidated interest coverage of no less than 3.00:1.00.
The Revolving Facility is fully secured and contains certain financial covenants, which include requirements that the Company maintain ratios of (i) total net debt to EBITDA of no more than 2.50:1.00 and (ii) consolidated interest coverage of no less than 3.00:1.00.
Vive revenues declined due to a 19.4% decrease in GMV as compared to 2022, resulting in a smaller loan portfolio throughout 2023.
The decline in revenues was partially offset by improved customer payment activity in 2023, as compared to 2022. Vive revenues declined due to a 19.4% decrease in GMV as compared to 2022, resulting in a smaller loan portfolio throughout 2023.
These changes were partially offset by a $21.4 million increase in cash outflows for investments in loans receivables in 2022 as compared to 2021. Cash Used In Financing Activities Cash used in financing activities was $141.9 million during the year ended December 31, 2023 compared to $227.2 million during the year ended December 31, 2022, a decrease of $85.3 million.
This decrease in cash used was partially offset by a $20.4 million increase in cash paid for dividends, as the Company began paying dividends during 2024. Cash used in financing activities was $141.9 million during the year ended December 31, 2023 compared to $227.2 million during the year ended December 31, 2022, a decrease of $85.3 million.
Depreciation of Lease Merchandise . Depreciation of lease merchandise reflects the expense associated with depreciating merchandise leased to customers by Progressive Leasing. Provision for Lease Merchandise Write-offs . The provision for lease merchandise write-offs represents the estimated merchandise losses incurred but not yet identified by management and adjustments for changes in estimates for the allowance for lease merchandise write-offs.
Provision for Lease Merchandise Write-offs . The provision for lease merchandise write-offs represents the estimated merchandise losses incurred but not yet identified by management and adjustments for changes in estimates for the allowance for lease merchandise write-offs. Operating Expenses .
Key Operating Metrics Gross Merchandise Volume. We believe GMV is a key performance indicator of our Progressive Leasing and Vive segments, as it provides the total value of new leases and loans written into our portfolio over a specified time period.
We believe GMV is a key performance indicator of our Progressive Leasing and Vive segments, as it provides the total value of new leases and loans written into our portfolio over a specified time period. GMV does not represent revenues earned by the Company, but rather is a leading indicator we use in forecasting revenues the Company may earn.
The decrease in the effective tax rate was primarily 44 driven by the non-deductible goodwill impairment loss for Four of $10.2 million that occurred in 2022, and the increase in the valuation allowance related to certain deferred tax assets that occurred in 2022.
The decrease in the effective tax rate was primarily driven by the non-deductible goodwill impairment loss for Four of $10.2 million that occurred in 2022, and the increase in the valuation allowance related to certain deferred tax assets that occurred in 2022. 44 Overview of Financial Position The major changes in the consolidated balance sheet from December 31, 2023 to December 31, 2024 include: • Cash and cash equivalents decreased $59.7 million to $95.7 million for the year ended December 31, 2024.
During the year ended December 31, 2023, the Company incurred $2.8 million for actual and anticipated costs related to the cybersecurity incident.
During the years ended December 31, 2024 and 2023, the Company incurred $0.3 million and $2.8 million, respectively, for costs related to the cybersecurity incident, net of insurance proceeds.
However, any meaningful increase in unemployment rates, any further increase in inflation and/or the possibility of a recession in the United States may result in increasing levels of customer payment delinquencies and related write-offs, which would result in an unfavorable impact on our performance.
Any meaningful increase in the unemployment rate or any further increase in inflation may result in increasing levels of customer payment delinquencies and related write-offs, which would result in an unfavorable impact on our performance. Cybersecurity Incident During the third quarter of 2023, Progressive Leasing experienced a cybersecurity incident affecting certain data and IT systems of Progressive Leasing.
Cybersecurity Incident As previously disclosed by the Company on September 21, 2023, Progressive Leasing experienced a cybersecurity incident affecting certain data and IT systems of Progressive Leasing. Promptly after detecting the incident, the Company engaged third-party cybersecurity experts and took immediate steps to respond to, remediate and investigate the incident. Law enforcement was also notified.
Promptly after detecting the incident, the Company engaged third-party cybersecurity experts and took immediate steps to respond to, remediate and investigate the incident. Law enforcement was also notified.
Lease revenues and fees include all revenues derived from lease agreements from our Progressive Leasing segment. Lease revenues are recorded net of a provision for uncollectible renewal payments. Interest and fees on loans receivable represents merchant fees, finance charges and annual and other fees earned on outstanding loans in our Vive segment and, to a lesser extent, from Four.
Lease revenues and fees include all revenues derived from lease agreements from our Progressive Leasing segment. Lease revenues are recorded net of a provision for uncollectible renewal payments.
Other factors impacting the change in earnings before income tax expense for each reporting segment are discussed above. 47 Income Tax Expense Income tax expense decreased to $49.5 million for the year ended December 31, 2022 compared to $84.6 million in 2021 primarily due to lower earnings before income tax expense.
Factors impacting the change in earnings before income tax (benefit) expense for each reporting segment are discussed above. Income Tax (Benefit) Expense Income tax (benefit) expense was a benefit of $33.6 million for the year ended December 31, 2024 compared to an expense of $57.4 million in 2023.
Given the significant economic uncertainty resulting from challenges in the macroeconomic environment, including high inflation, forecasted unemployment rates, and/or the possibility of a recession and the potential effects of such developments on our POS partners, customers, and business going forward, a high level of estimation was involved in determining the allowance as of December 31, 2022.
Given the significant economic uncertainty resulting from a higher cost of living, inflationary pressures, impact of tariffs, and increased interest rates for an extended period, and the potential effects of such developments on Progressive Leasing's POS partners, customers, and business going forward, a high level of estimation was involved in determining the allowance as of December 31, 2024.
Recent Accounting Pronouncements Refer to Note 1 to the Company's consolidated financial statements for a discussion of recently issued accounting pronouncements.
The allowance for loan losses was $47.8 million and $40.6 million as of December 31, 2024 and 2023, respectively. Recent Accounting Pronouncements Refer to Note 1 to the Company's consolidated financial statements for a discussion of recently issued accounting pronouncements.
The provision for lease merchandise write-offs as a percentage of lease revenues was 7.7% for the year ended December 31, 2022, compared to 4.8% for the year ended December 31, 2021.
The provision for lease merchandise write-offs increased by $23.1 million during the year ended December 31, 2024, as compared to 2023. The provision for lease merchandise write-offs as a percentage of lease revenues increased to 7.5% for the year ended December 31, 2024 from 6.7% for the prior year.
Personnel costs also increased by $2.2 million at Vive, primarily due to wage inflation. These increases were partially offset by a decrease of $0.8 million at Progressive Leasing, primarily due to its reduction in the number of employees during the second half of 2022 as part of its restructuring and cost cutting initiatives.
The $14.7 million decrease in personnel costs was due to a decrease of $13.3 million at Progressive Leasing attributable to its reduction in the number of employees during the second half of 2023 and first quarter of 2024 as part of its restructuring and cost cutting initiatives. Personnel costs at Vive also decreased by $1.4 million compared to 2023.
The effective tax rate was 33.4% for the year ended December 31, 2022 compared to 25.8% in 2021.
The effective tax rate was (20.6)% for the year ended December 31, 2024 compared to 29.2% in 2023.
The decrease in Vive customers was primarily due to a reduction in loan originations as the result of tightened decisioning in mid-2022. These decreases were partially offset by an increase in the number of customers for our other strategic businesses. Key Components of Earnings Before Income Tax Expense In this MD&A section, we review our consolidated results.
The number of customers for Vive has remained essentially flat. The increase in the number of customers for Other was the result of continued growth in our other strategic businesses. 37 Key Components of Earnings Before Income Tax (Benefit) Expense In this MD&A section, we review our consolidated results.
The investigation is nearly complete and the Company believes it has a full view of the compromised data. As a result of this cybersecurity incident, Progressive Leasing has become subject to multiple lawsuits which allege, among other things, the incurrence of various types of damages arising out of the incident.
As a result of this cybersecurity incident, Progressive Leasing has become subject to multiple lawsuits which allege, among other things, the incurrence of various types of damages arising out of the incident. All of these lawsuits have been consolidated into a single action in the United States District Court for the District of Utah (the "District Court").
The Company will be in default under the Revolving Facility if it fails to comply with these covenants, and all borrowings outstanding may become due immediately. Additionally, under the Revolving Facility, if the total net debt to EBITDA, as defined by the Revolving Facility, exceeds 1.25, the revolver becomes fully secured for the remaining duration of the Revolving Facility term.
The Company will be in default under the Revolving Facility if it fails to comply with these covenants, and all borrowings outstanding may become due immediately. As of December 31, 2024, the Company was in compliance with the financial covenants set forth in the Revolving Facility and believes it will continue to be in compliance in the future.
The following table presents our GMV for the Company for the years presented: For the Year Ended December 31 (Unaudited and In Thousands) 2023 2022 2021 Progressive Leasing $ 1,796,647 $ 1,976,794 $ 2,143,948 Vive 143,541 178,002 199,139 Other 101,099 60,459 8,651 Total GMV $ 2,041,287 $ 2,215,255 $ 2,351,738 The decrease in Progressive Leasing's GMV was primarily due to a decrease in customer demand for many of the products offered by our POS partners, which is due in part to a shift in consumer spending from leasable categories to consumables and experiences.
The following table presents our GMV for the Company for the years presented: For the Year Ended December 31 (Unaudited and In Thousands) 2024 2023 2022 Progressive Leasing $ 1,927,164 $ 1,796,647 $ 1,976,794 Vive 141,093 143,541 178,002 Other 301,568 101,099 60,459 Total GMV $ 2,369,825 $ 2,041,287 $ 2,215,255 The increase in Progressive Leasing's GMV was primarily due to a combination of: (i) positive customer responses to our strategic initiatives, such as direct-to-consumer and other enhanced marketing initiatives, e-commerce integrations with our POS partners and customer experience technology improvements with certain POS partners, and (ii) increasing demand for our lease-to-own offering arising out of a tightening of the credit supply above Progressive Leasing, which resulted in an increase in lease applications when compared to 2023.
GMV does not represent revenues earned by the Company, but rather is a leading indicator we use in forecasting revenues the Company may earn in the short-term. Progressive Leasing's GMV is defined as the retail price of merchandise acquired by Progressive Leasing, which it then expects to lease to its customers.
Progressive Leasing's GMV is defined as the retail price of merchandise acquired by Progressive Leasing, which it then expects to lease to its customers. GMV for Vive and Other are defined as gross loan originations.
Depreciation of lease merchandise decreased by 3.4% due to fewer customers exercising early lease buyout elections during the year ended December 31, 2022 compared to 2021. As a percentage of total lease revenues and fees, depreciation of lease merchandise increased slightly compared to 2021, resulting from the decline in early buyout elections. Provision for lease merchandise write-offs .
As a percentage of lease revenues and fees, depreciation of lease merchandise increased to 68.5% from 67.5% in the prior year period, primarily due to a normalized level of early buyouts during 2024 as compared to a lower level of early buyouts during 2023. Provision for lease merchandise write-offs .
For the purposes of determining the allowance as of December 31, 2023, management considered other qualitative factors such as the tightening of Vive's loan decisioning in mid-2022 and more recent macroeconomic conditions associated with the impacts from increased inflation, unemployment rates, and/or the possibility of a recession in the United States, which were not fully factored into the macroeconomic forecasted data.
For the purposes of determining the allowance as of December 31, 2024, management considered qualitative factors such as the macroeconomic conditions associated with the impacts of stabilizing inflation and unemployment rates.
These decreases in operating cash flows were partially offset by a $165.3 million decrease in purchases of lease merchandise by Progressive Leasing during the year ended December 31, 2022 compared to 2021. Other changes in cash provided by operating activities are discussed above in our discussion of results for the year ended December 31, 2022.
These decreases in cash provided by operating activities were offset primarily by a decrease in cash paid for taxes of $50.6 million when compared to the prior year. Cash provided by operating activities was $204.2 million and $242.5 million during the years ended December 31, 2023 and 2022, respectively.
These negative impacts were partially offset by GMV from our other operations, which increased by 67.2% primarily due to an increase in loan originations for our Four business in 2023, compared to 2022. • Earnings before income tax expense increased to $196.2 million compared to $148.2 million in 2022.
The increase in revenues was primarily due to an increase in GMV at Four and Progressive Leasing in 2024 compared to the prior year. • GMV from our other operations increased by $200.5 million, or 198.3%, primarily due to an increase in loan originations for our Four business in 2024 compared to 2023.
The following table presents our active customer count for each segment: As of December 31 (Unaudited and In Thousands) 2023 2022 2021 Active Customer Count: Progressive Leasing 893 943 1,044 Vive 86 92 88 Other 113 39 18 40 The decrease in the number of Progressive Leasing customers was primarily due to a decrease in customer demand for the types of merchandise typically purchased through our lease-to-own solutions and the tightening of our lease decisioning in mid-2022 to address the unfavorable economic conditions that were driving higher customer payment delinquencies and uncollectible renewal payments during much of 2022.
The following table presents our active customer count for each segment and Other: As of December 31 (Unaudited and In Thousands) 2024 2023 2022 Active Customer Count: Progressive Leasing 934 893 943 Vive 90 86 92 Other 252 113 39 The number of customers for Progressive Leasing was higher in 2024, compared to the prior year, due to favorable customer responses to our strategic initiatives, including enhanced marketing, e-commerce integrations with POS partners, customer experience technology improvements with certain POS partners, and to a lesser extent, a tightening of the credit supply above Progressive Leasing.
The decrease in revenues was primarily due to a smaller lease portfolio, which was a result of decreased customer demand for many of the products offered by our POS partners and the tightened lease decisioning implemented by Progressive Leasing in mid-2022.
This increase was partially offset by having a smaller lease portfolio at the beginning of 2024 as compared to the beginning of 2023. Vive revenues declined primarily due to a smaller loan portfolio throughout 2024 as compared to 2023, as a result of lower demand for products offered by certain Vive POS partners.
Dividends We paid no dividends during 2023, 2022, and 2021. On February 21, 2024, our Board of Directors declared a quarterly cash dividend in the amount of $0.12 per share of outstanding common stock, payable on March 28, 2024 to shareholders of record as of March 14, 2024.
Dividends We declared and paid a dividend of $0.12 per share in each quarter of 2024, which resulted in aggregate dividend payments of $20.4 million. We paid no dividends during 2023 and 2022.
Earnings Before Income Tax Expense Information about our earnings before income tax expense by reportable segment is as follows: Change Year Ended December 31, 2022 vs. 2021 (In Thousands) 2022 2021 $ % EARNINGS BEFORE INCOME TAX EXPENSE: Progressive Leasing $ 174,143 $ 319,125 $ (144,982) (45.4) % Vive 9,195 20,225 (11,030) (54.5) Other (35,094) (11,146) (23,948) nmf Earnings Before Income Tax Expense $ 148,244 $ 328,204 $ (179,960) (54.8) % nmf—Calculation is not meaningful The $35.1 million loss before income taxes within Other primarily relates to our Four operations and includes a $10.2 million impairment loss related to the partial impairment of Four's goodwill.
Earnings Before Income Tax (Benefit) Expense Information about our earnings before income tax (benefit) expense by reportable segment is as follows: Change Year Ended December 31, 2024 vs. 2023 (In Thousands) 2024 2023 $ % EARNINGS BEFORE INCOME TAX (BENEFIT) EXPENSE: Progressive Leasing $ 184,782 $ 216,271 $ (31,489) (14.6) % Vive (848) 4,545 (5,393) nmf Other (20,326) (24,595) 4,269 17.4 Earnings Before Income Tax (Benefit) Expense $ 163,608 $ 196,221 $ (32,613) (16.6) % nmf—Calculation is not meaningful The loss before income tax (benefit) expense within Other primarily relates to losses from our other strategic operations.
The restructuring expense was 46 primarily comprised of severance costs associated with a reduction in Progressive Leasing's workforce and operating lease right-of-use asset impairment charges related to a reduction in management and information technology office space and the relocation of the Vive corporate headquarters to the Company's corporate office building. Other Costs and Expenses Depreciation of lease merchandise .
In 2024, restructuring expense included $7.8 million associated with the early termination of an independent sales agent agreement for Progressive Leasing, $2.0 million associated with the early termination of a third party vendor agreement within other strategic operations, $6.0 million of operating lease right-of-use asset and other fixed asset impairment charges related to 40 the reduction of Progressive Leasing office space, and $6.8 million of employee severance for Progressive Leasing, Vive, and Other operations.
Four's financial results are reported within "Other" for segment reporting purposes. Macroeconomic and Business Environment The Company continues to operate in a challenging macroeconomic environment.
Four's financial results are reported within "Other" for segment reporting purposes. PROG Holdings also owns Build, a credit building financial management tool. Build is not a reportable segment in 2024 as its financial results are not significant to the Company's consolidated financial results. Build's financial results are reported within "Other" for segment reporting purposes.
Removed
We believe the rapid increase in the rate of inflation during 2022, and higher year-over-year inflation continuing in 2023, particularly in housing, food, and gas costs, has disproportionately negatively affected the customers we serve and has resulted in an unfavorable impact on our Gross Merchandise Volume ("GMV") during 2022 and 2023 and on our lease portfolio performance during much of 2022.
Added
Macroeconomic and Business Environment During 2024, the Company's lease application volume increased due to progress in executing our strategic growth initiatives, including direct-to-consumer and other enhanced marketing initiatives, e-commerce integrations with POS partners, customer experience technology improvements with certain POS partners, and also due to the tightening of the credit supply above Progressive Leasing.
Removed
While the rate of increase in inflation has since slowed, the cost of living remains significantly higher than it was prior to the COVID-19 pandemic, and we believe inflation continues to present a challenge to our customers.
Added
We believe these factors contributed to growth in Progressive Leasing's Gross Merchandise Volume ("GMV") in the year ended December 31, 2024 when compared to the prior year, and will continue to have a favorable impact in 2025. Despite the increase in demand for our lease-to-own offerings, the Company continues to operate in a challenging macroeconomic environment.
Removed
Customer payment delinquencies and uncollectible renewal payments experienced within our Progressive Leasing segment during much of 2022 significantly exceeded levels experienced during pre-pandemic periods.
Added
Due to inflationary pressures in recent years, the cost of living remains significantly higher than it was prior to 2020, particularly with respect to housing, food and gas costs.
Removed
In response to increasing customer delinquencies and higher write-offs, Progressive Leasing tightened its lease decisioning several times during the first half of 2022, resulting in fewer lease approvals and an adverse impact on GMV in 2022 and 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on the Company's variable-rate debt outstanding as of December 31, 2023, a hypothetical 1.0% increase or decrease in interest rates would not affect interest expense. We do not use any significant market risk sensitive instruments to hedge commodity, foreign currency or other risks, and hold no market risk sensitive instruments for trading or speculative purposes. 51
Biggest changeHowever, due to the uncertainty of the specific actions that would be taken and their possible effects, the analysis assumes no changes in our financial structure. We do not use any significant market risk sensitive instruments to hedge commodity, foreign currency or other risks, and hold no market risk sensitive instruments for trading or speculative purposes. 49
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2023, we had no outstanding borrowings under our senior unsecured Revolving Facility. Borrowings under the Revolving Facility are indexed to SOFR or the prime rate, which exposes us to the risk of increased interest costs if interest rates rise.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2024, we had $50.0 million of outstanding borrowings under our senior secured Revolving Facility. Borrowings under the Revolving Facility are indexed to SOFR or the prime rate, which exposes us to the risk of increased interest costs if interest rates rise.
Added
Based on the Company's variable-rate debt outstanding as of December 31, 2024, a hypothetical 1.0% increase or decrease in interest rates would increase or decrease interest expense and cash flows by approximately $0.5 million annually. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our Revolving Facility.
Added
These analyses do not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may take action to further mitigate our exposure to the change.

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