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What changed in PROG Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PROG Holdings, Inc.'s 2022 and 2023 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 2023 report.

+334 added−361 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in PROG Holdings, Inc.'s 2023 10-K

334 paragraphs added · 361 removed · 251 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+9 added−7 removed52 unchanged
Biggest changeWe strive to achieve shared, meaningful goals and commit to open communication through which individuals have no fear of expressing themselves freely and respectfully where, for example, they in good faith believe they need to raise a concern regarding a potential violation of law or Company policies. 11 We offer our employees fair and competitive wages and benefits which include (i) health benefits consisting of medical, dental, vision, life insurance, short-term and long-term disability insurance; (ii) paid parental leave; (iii) Company matched 401(k); (iv) paid time off, paid holidays, and paid volunteer hours; (v) an employee stock purchase program; (vi) tuition reimbursement; and (vii) charitable gift matching.
Biggest changeWe offer our employees fair and competitive wages and benefits which include (i) health benefits consisting of medical, dental, vision, life insurance, short-term and long-term disability insurance; (ii) paid parental leave; (iii) Company matched 401(k); (iv) paid time off, paid holidays, and paid volunteer hours; (v) an employee stock purchase program; (vi) tuition reimbursement; and (vii) charitable gift matching.
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.
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.
Our customers benefit from Progressive Leasing's flexible payment alternatives, including early purchase options, reinstatement options, product replacement, discounts and other benefits. In addition, we offer payment deferral options and other payment adjustment options to customers who are experiencing financial difficulties, such as to those customers who have been adversely impacted by financial hardships and other qualifying events.
Our customers benefit from Progressive Leasing's flexible payment alternatives and other features, including early purchase options, reinstatement options, product replacement, discounts and other benefits. In addition, we offer payment deferral options and other payment adjustment options to customers who are experiencing financial difficulties, such as to those customers who have been adversely impacted by financial hardships and other qualifying events.
To accomplish these goals, we invest in digital, traditional, and in-store 9 marketing, and our internal marketing and data science teams continually evaluate and optimize this investment to maximize the benefit for our POS partners. Our robust digital media program is comprised of paid search, digital display, mobile, video, and paid social advertising.
To accomplish these goals, we invest in digital, traditional, and in-store marketing, and our internal marketing and data science teams continually evaluate and optimize this investment to maximize the benefit for our POS partners. Our robust digital media program is comprised of paid search, digital display, mobile, video, and paid social advertising.
Lease Agreement Customer Experience We offer simplified and transparent lease application and payment processes: 7 Lease Agreement Decisioning Process Progressive Leasing uses proprietary decisioning algorithms to determine which applicants meet our leasing qualifications and the lease amount for which customers are approved.
Lease Agreement Customer Experience We offer simplified and transparent lease application and payment processes: Lease Agreement Decisioning Process Progressive Leasing uses proprietary decisioning algorithms to determine which applicants meet our leasing qualifications and the lease amount for which customers are approved.
The more restrictive state lease purchase laws limit the retail price for an item, limit the total amount that a 12 customer may be charged for an item, or regulate the "cost-of-rental" amount that lease-to-own companies may charge on lease-to-own transactions.
The more restrictive state lease purchase laws limit the retail price for an item, limit the total amount that a customer may be charged for an item, or regulate the "cost-of-rental" amount that lease-to-own companies may charge on lease-to-own transactions.
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, 2022 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, 2023 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 principles, 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. 13
The industry is also experiencing an increase in new products and services designed to compete for the traditional lease-to-own consumer. The emergence of these new products and services has resulted in consumers having various payment alternatives for the goods and services they desire, resulting in a highly competitive environment.
The virtual lease-to-own market is highly competitive. The industry is also experiencing an increase in new products and services designed to compete for the traditional lease-to-own consumer. The emergence of these new products and services has resulted in consumers having various payment alternatives for the goods and services they desire, resulting in a highly competitive environment.
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, 2022.
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.
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, 2022, the Company has three operating segments: Progressive Leasing, Vive and Four.
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 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 are launching 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 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.
Progressive Leasing provides e-commerce, app-based, and in-store point-of-sale lease-to-own solutions through approximately 24,000 third-party POS partner locations and e-commerce websites in 46 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 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.
Vive's current network of over 6,500 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, 2022.
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.
For example, in April 2020, Progressive Leasing entered into the Federal Trade Commission ("FTC") Settlement in order 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 Leasing's advertising and marketing practices violated the FTC Act.
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 2022 2021 2020 Furniture, Appliances and Electronics 2 57 % 57 % 57 % Jewelry 17 % 17 % 14 % Mobile Phones and Accessories 14 % 12 % 13 % Mattresses 6 % 7 % 9 % Automobile Electronics and Accessories 3 % 4 % 5 % Other 3 % 3 % 2 % 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 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.
Human Capital Diversity, equity and inclusion ("DE&I") is integral to our ability to grow and thrive. We respect the dignity and diversity of all people. 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.
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.
Four Four provides consumers of all credit backgrounds with Buy Now, Pay Later ("BNPL") options through four interest-free installments. Four's proprietary platform capabilities provide our base of customers and POS partners with another payment solution as part of the PROG Holdings financial technology offerings.
Four Four provides consumers of all credit backgrounds with BNPL options through four interest-free installments. Four's proprietary platform capabilities provide our base of customers and POS partners with another payment solution as part of the PROG Holdings financial technology offerings.
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 2022 2021 2020 Furniture and Mattresses 55 % 48 % 41 % Medical and Dental 20 % 26 % 34 % Home Exercise and Home Improvement 11 % 8 % 9 % Other 14 % 18 % 16 % 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 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.
Loans receivable are unsecured, and collections on loans receivable are managed in-house through Vive's call center and proprietary loans receivable management system. Customer Service 8 A critical component of the success of our operations is the commitment to develop good relationships with our customers.
Loans receivable are unsecured, and collections on loans receivable are managed in-house through Vive's employees and proprietary loans receivable management system. Customer Service A critical component of the success of our operations is the commitment to develop good relationships with our customers.
The Progressive Leasing segment comprised approximately 97% of our consolidated revenues for the year ended December 31, 2022.
The Progressive Leasing segment comprised approximately 97% of our consolidated revenues for the year ended December 31, 2023.
For the years ended December 31, 2022, 2021, and 2020, personnel expenses were $194.2 million, $189.6 million, and $170.3 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, 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.
The BNPL industry is also under increasing scrutiny from federal regulators as the Consumer Financial Protection Bureau ("CFPB") is currently 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.
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.
If a payment is not made in a timely manner, collections are managed in-house through our call centers and proprietary lease management system. The call center contacts customers within a few days after the due date to encourage them to keep their agreement current.
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.
PROG Holdings' operating segments include Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider, Vive Financial ("Vive"), an omnichannel provider of second-look revolving credit products, and Four Technologies, Inc. ("Four"), which offers Buy Now, Pay Later payment options to consumers through the Four platform.
PROG Holdings' operating segments include Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider, Vive Financial ("Vive"), an omnichannel provider of second-look revolving credit products, and Four Technologies, Inc. ("Four"), which offers Buy Now, Pay Later ("BNPL") payment options to consumers through the Four platform. PROG Holdings also owns Build, a credit building financial management tool.
The tool will provide content on topics such as compliance and specific business-related needs, as well as assessments, videos and digital learning modules, which will be available live, in-person and online.
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.
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.
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.
In 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 we expect to implement during 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 resources to target donations from the PROG Foundation to non-profit organizations that support DE&I, the missions of the ERGs and the communities in which we serve our customers.
In 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.
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.
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.
During 2022, four 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 increase the purchasing power of its customers and drive new shoppers and incremental revenue for our POS partners.
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.
The information in the tables below summarizes our gender, ethnicity and race diversity metrics as of December 31, 2022: December 31, 2022 Male Female Vice Presidents and Above 76.3 % 23.7 % All Other Employees 47.0 % 53.0 % December 31, 2022 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 2.7 % 86.8 % 7.9 % — 2.6 % — — All Other Employees 27.1 % 53.9 % 9.3 % 1.4 % 4.4 % 1.0 % 2.9 % We foster a culture of learning that provides employees with development opportunities to support their unique career paths.
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.
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).
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).
Additionally, we utilize a third-party service provider in Cali, Colombia to assist us with our customer support efforts. Our call centers for Vive are located in Draper, Utah and Fayetteville, Arkansas. Since early 2020, substantially all call center representatives for Progressive Leasing and Vive have transitioned to working remotely. Our commitment to our customers is ongoing throughout their lease term.
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.
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 partners with multiple third-party vendors to sell its returned merchandise.
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.
Competition Our Progressive Leasing segment competes with other lease-to-own companies (virtual and traditional store based), and to a lesser extent, consumer finance companies, and traditional and online sellers of merchandise that provide customers with various types of payment options. The virtual lease-to-own market is highly competitive.
These efforts drive new and returning customers online and into retail locations, generating incremental sales for our POS partners. 9 Competition Our Progressive Leasing segment competes with other lease-to-own companies (virtual and traditional store based), and to a lesser extent, consumer finance companies, and traditional and online sellers of merchandise that provide customers with various types of payment options.
In addition, in cooperation with our POS partners, Progressive Leasing leverages a variety of in-store marketing materials to drive awareness at the point of sale. These efforts drive new and returning customers online and into retail locations, generating incremental sales for our POS partners.
In addition, in cooperation with our POS partners, Progressive Leasing leverages a variety of in-store marketing materials to drive awareness at the point of sale.
The provision for lease merchandise write-offs as a percentage of lease revenues was 7.7%, 4.8% and 5.4% for the years ended December 31, 2022, 2021, and 2020, respectively.
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 Company leverages a large decisioning data set with mature lease performance data and other information provided from third party sources. 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.
The Company leverages a large decisioning data set with mature lease performance data and other information provided from third party sources.
We foster relationships with POS partners to better serve new and existing customers. Our Progressive Leasing segment offers centralized customer and retailer support through call centers located in Draper, Utah; Glendale, Arizona; and virtual servicing operations in El Paso and San Antonio, Texas.
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.
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. The customer may cancel the agreement at any time without penalty by returning the merchandise to Progressive Leasing.
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.
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. For customer agreements that are past due, the Company's policy is to write off lease merchandise after 120 days.
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 leases the item through the completion of the full term, ownership of the item transfers to the customer. The customer may also purchase the item at any time by making the contractually specified payment. Contractual payments are usually based on a customer's pay frequency and are typically processed through automated clearing house payments.
The customer may cancel the agreement at any time without penalty by returning the merchandise to Progressive Leasing. If the customer leases the item through the completion of the full term, ownership of the item transfers to the customer. The customer may also purchase the item at any time by making the contractually specified payment.
By supporting a diverse and inclusive workplace, our employee resource groups help to ensure the many experiences of our diverse employees, customers and communities are reflected in our decisions and actions. We continue to focus on hiring, retention and advancement of women and underrepresented groups.
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.
As of December 31, 2022, our employee count was 1,491 for Progressive Leasing, 184 for Vive, and 17 for Four, 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.
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.
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Our vision is to cultivate a welcoming and nurturing workplace that will activate the next generation of innovators. One of the ways we strive to achieve these goals is by providing executive, monetary and other support to our Employee Resource Groups ("ERGs"), all of which encourage and welcome participation from all employees in all positions and locations.
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Contractual payments are usually based on a customer's pay frequency and are typically processed through automated clearing house payments. 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.
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Our ERGs work to ensure their members have a voice in the Company’s on-going conversations about DE&I matters, including strategy.
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Progressive Leasing partners with multiple third-party vendors to sell its returned merchandise.
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Currently, our ERGs include: • The Black Inclusion Group ("BIG") , whose mission is to enrich the experience of our African American employees by providing professional and leadership development, networking, mentoring and social opportunities, while also promoting understanding of their concerns and views among all of our employees.
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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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BIG is focused on inclusion, engagement, learning and advancement initiatives intended to foster recruitment, development, advancement and retention of African American employees. • Women In Leadership ("WIL") , is an organization created to inspire female employees to develop their leadership abilities, prepare for and take advantage of career growth opportunities, and increase their knowledge of the Company for organizational and personal success.
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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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This organization is focused on fostering the recruitment, development, advancement and retention of female employees, and helping all employees gain an appreciation of issues and topics of importance to our female employees. 10 • Adelante! provides a platform for highlighting and celebrating the richness of the Hispanic and Latino communities’ heritages to promote cultural and issue awareness among all of our employees.
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We strive to achieve shared, meaningful goals and commit to open communication through which individuals have no fear of expressing themselves freely and respectfully where, for example, they in good faith believe they need to raise a concern regarding a potential violation of law or Company policies.
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This organization also facilitates professional and leadership development, networking, mentoring and social opportunities for Hispanic and Latino employees, with the aim of fostering recruitment, development, advancement and retention of those employees. • PROGPeople Respecting Individuality, Diversity and Equality ("PRIDE") seeks to foster a culture of understanding, diversity, inclusion and equality with our LGBTQ+ employees and allies, and encourages individuality, respect, professional development, and awareness of the challenges faced by, and issues that are important to, the LGBTQ+ community. • Veterans and Allies Leading the Organization Responsibly ("VALOR") has developed a mission that embraces the proud military community of employee veterans and brings together the unique background of military service to harness their strengths to better serve the company, community and customers.
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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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Although the Company believes the Pennsylvania Attorney General’s claims are without merit and intends to vigorously defend itself, we may incur substantial costs, including legal fees, penalties, and remediation expenses in the matter. Intellectual Property Intellectual property and proprietary rights are important to the success of our business.
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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.
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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.
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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 changeAs described above, there is risk of fraudulent activity associated with Progressive Leasing’s, Vive’s and Four’s virtual platforms. The technologies and fraud prevention tools employed by Progressive Leasing, Vive and Four may be insufficient to accurately detect and prevent fraud.
Biggest changeWhile Progressive Leasing, Vive and Four take precautions to prevent consumer identity fraud, it is possible that identity fraud may still occur or has occurred, which may adversely affect the performance of Progressive Leasing's, Vive's and Four's lease and loan portfolios. As described above, there is risk of fraudulent activity associated with Progressive Leasing's, Vive's and Four's virtual platforms.
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 15 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: 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.
If Progressive Leasing is unable to attract new consumers and retain and grow its relationships with its existing consumers, several aspects of our performance would be materially and adversely affected. Our continued success depends on the ability of Progressive Leasing to generate repeat use and increased GMV from existing customers and to attract new consumers to its platform.
If Progressive Leasing is unable to attract new consumers and retain and grow its relationships with its existing customers, several aspects of our performance would be materially and adversely affected. Our continued success depends on the ability of Progressive Leasing to generate repeat use and increased GMV from existing customers and to attract new consumers to its platform.
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 17 perception of the value it provides; technological innovation; and the services, products and customer decisioning standards 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 17 offered by its competitors.
Our capital allocation strategy and financial policies, including our current stock repurchase program, as well as any potential debt repurchase or dividend programs may not be effective at enhancing shareholder value, or providing other benefits we expect.
Our capital allocation strategy and financial policies, including our current stock repurchase and dividend programs, as well as any potential debt repurchase program may not be effective at enhancing shareholder value, or providing other benefits we expect.
If the Spin-Off, together with certain related transactions, fails to qualify as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code, in general, we would recognize taxable gain as if we had sold the The Aaron’s Company common stock in a taxable sale for its fair market value and our shareholders who received Aaron’s shares in the Spin-Off would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.
If the Spin-Off, together with certain related transactions, fails to qualify as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code, in general, we would recognize taxable gain as if we had sold The Aaron's Company common stock in a taxable sale for its fair market value and our shareholders who received Aaron's shares in the Spin-Off would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.
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.
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.
If those agreements both were terminated or otherwise disrupted, there is a risk that Vive would not be able to replace those banks with an alternative bank provider on terms that Vive would consider favorable or in a timely manner without disruption of its business. • Vive has significantly different regulatory risks as compared to Progressive Leasing, including those applicable to consumer credit card transactions.
If those agreements were terminated or otherwise disrupted, there is a risk that Vive would not be able to replace those banks with an alternative bank provider on terms that Vive would consider favorable or in a timely manner without disruption of its business. • Vive has significantly different regulatory risks as compared to Progressive Leasing, including those applicable to consumer credit card transactions.
Although we strongly disagree with these characterizations, if the negative characterization of these types of lease-to-own transactions becomes increasingly accepted by consumers or Progressive Leasing’s POS partners and others with whom it does business, demand for its products and services may significantly decrease, which may have a material adverse effect on several 21 aspects of our performance.
Although we strongly disagree with these characterizations, if the negative characterization of these types of lease-to-own transactions becomes increasingly accepted by consumers or Progressive Leasing's POS partners and others with whom it does business, demand for its products and services may significantly decrease, which may have a material adverse effect on several aspects of our performance.
If security measures are breached because of employee theft, exfiltration, misuse or malfeasance, Progressive Leasing’s, Vive’s or Four’s own actions, omissions, or errors, third-party actions, omissions, or errors, unintentional events, deliberate attacks by cyber criminals or otherwise, or if design flaws in their software or systems are exposed and exploited, Progressive Leasing’s, Vive’s and Four’s relationships with their customers may be damaged, and they and/or us may incur significant liability.
If security measures are breached because of employee theft, exfiltration, misuse or malfeasance, Progressive Leasing's, Vive's or Four's own actions, omissions, or errors, third-party 18 actions, omissions, or errors, unintentional events, deliberate attacks by cyber criminals or otherwise, or if design flaws in their software or systems are exposed and exploited, Progressive Leasing's, Vive's and Four's relationships with their customers may be damaged, and they and/or us may incur significant liability.
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 28 us) to claims for breach of contract or intellectual property infringement, misappropriation, or other violation.
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.
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.
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.
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.
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.
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.
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.
In many cases, these systems are developed by internal 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 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.
The automated nature of their businesses and their reliance on digital technologies may make them an attractive target for, and potentially vulnerable to, cyber-attacks, computer malware, computer viruses, social engineering (including phishing and ransomware attacks), general hacking, physical or electronic break-ins, or similar 23 disruptions.
The automated nature of their businesses and their reliance on digital technologies may make them an attractive target for, and potentially vulnerable to, cyber-attacks, computer malware, computer viruses, social engineering (including phishing and ransomware attacks), general hacking, physical or electronic break-ins, or similar disruptions.
Any such loss of existing POS partners or customers, or inability to attract new POS partners or customers, may have an adverse effect on several aspects of our performance. 25 Progressive Leasing, Vive and Four may improve their products and services in ways that forego short-term gains.
Any such loss of existing POS partners or customers, or inability to attract new POS partners or customers, may have an adverse effect on several aspects of our performance. Progressive Leasing, Vive and Four may improve their products and services in ways that forego short-term gains.
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, 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 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.
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.
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.
The measure of insolvency and applicable legal capital requirements will vary depending upon the jurisdiction whose law is being applied. General Risk Factors Our stock price is volatile, and you may not be able to recover your investment if our stock price declines.
The measure of insolvency and applicable legal capital requirements will vary depending upon the jurisdiction whose law is being applied. 31 General Risk Factors Our stock price is volatile, and you may not be able to recover your investment if our stock price declines.
We believe our proprietary lease and loan decisioning processes to be a key to the success of our Progressive Leasing and Vive 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 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.
The errors or inaccuracies in Progressive Leasing’s and Vive’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 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.
Progressive Leasing and Vive rely extensively on models in managing many aspects of their businesses, and if those models are not accurate or are misinterpreted, such errors may have a material adverse effect on several aspects of our performance.
Progressive Leasing, Vive and Four rely extensively on models in managing many aspects of their businesses, and if those models are not accurate or are misinterpreted, such errors may have a material adverse effect on several aspects of our performance.
If we fail to integrate acquisitions or 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 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.
Our efforts to enforce our intellectual property and other 27 proprietary rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property and other proprietary rights, and if such defenses, counterclaims, or countersuits are successful, it may diminish or we may otherwise lose valuable intellectual property and other proprietary rights.
Our efforts to enforce our intellectual property and other proprietary rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property and other proprietary rights, and if such defenses, counterclaims, or countersuits are successful, it may diminish or we may otherwise lose valuable intellectual property and other proprietary rights.
The opinion of counsel was based upon and relied on, among other things, certain facts and 31 assumptions, as well as certain representations, statements and undertakings of us and Aaron’s, including those relating to the past and future conduct of us and The Aaron’s Company.
The opinion of counsel was based upon and relied on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of us and Aaron's, including those relating to the past and future conduct of us and The Aaron's Company.
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.
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.
Any failure to maintain a consistently high level of customer service, including as a result of actions or events beyond our control relating to the third-party call centers we utilize, or a market perception that it does not maintain high-quality customer service, would adversely affect its reputation and the number of positive customer referrals that it receives.
Any failure to consistently cultivate high-quality customer service, including as a result of actions or events beyond our control relating to the third-party call centers we utilize, or a market perception that it does not maintain high-quality customer service, would adversely affect its reputation and the number of positive customer referrals that it receives.
Progressive Leasing and Vive rely extensively on models in managing many aspects of their businesses, including loan and lease decisioning, pricing, and collections management.
Progressive Leasing, Vive and Four rely extensively on models in managing many aspects of their businesses, including loan and lease decisioning, pricing, and collections management.
In recent years, state regulatory authorities have been increasingly focused on the subprime financial marketplace, including the lease-to-own industry.
In recent years, state regulatory authorities have also been increasingly focused on the subprime financial marketplace, including the lease-to-own industry.
Following the tender offer, we have resumed purchases under our share repurchase program. Under the program, we may repurchase shares in open market transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Exchange Act.
Since the tender offer, we have resumed purchases under our share repurchase program. Under the program, we may repurchase shares in open market transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Exchange Act.
Its ability to retain and grow its relationships with its consumers depends on the willingness of consumers to use its products and services.
Its ability to retain and grow its relationships with its customers depends on the willingness of consumers to use its products and services.
As of December 31, 2022, 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, 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.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, may adversely affect our business.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, may adversely affect our businesses.
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, 2022.
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.
We may not be able to identify suitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary regulatory approvals or complete the transactions on terms that are favorable to us.
If we are unable to identify suitable acquisition or investment candidates, or even if we do identify suitable candidates, they may be difficult to finance, expensive to fund and there is no guarantee that we can obtain any necessary regulatory approvals or complete the transactions on terms that are favorable to us.
In addition, through its BNPL offerings, Four allows shoppers to pay for merchandise through four interest-free installments, which enables its customers to purchase furniture, clothing, electronics, health and beauty, footwear, jewelry, and other consumer goods from retailers across the United States.
In addition, through its BNPL offerings, Four's business model allows shoppers to pay for merchandise through four interest-free installments, which enables its customers to purchase furniture, clothing, electronics, health and beauty, footwear, jewelry, and other consumer goods from retailers across the United States.
In addition, we believe that deteriorating macroeconomic conditions such as these lead to general declines in discretionary spending levels and disproportionately negatively impact the customers we serve.
In addition, we believe that uncertain macroeconomic conditions such as these lead to general declines in discretionary spending levels and disproportionately negatively impact the customers we serve.
Promptly thereafter, we commenced a modified “Dutch Auction” tender offer to repurchase up to $425 million of our common stock, funded largely from the proceeds of a $600 million senior notes issuance that was undertaken in connection with the tender offer. The tender offer resulted in the Company repurchasing approximately 13% of its outstanding shares, at $49.00 per share.
Promptly thereafter, we commenced a modified "Dutch Auction" tender offer to repurchase up to $425 million of our common stock, funded largely from the proceeds of a $600 million senior notes issuance that was undertaken in connection with the tender offer. The tender offer resulted in the Company repurchasing approximately 13% of its outstanding shares, at $49.00 per share.
We believe the CFPB’s review is illustrative of the greater focus federal regulatory authorities are putting on alternative consumer financial services products, including within the industries in which our businesses operate, which may result in increased compliance costs and the possibility of significant monetary penalties, remediation expenses and costly changes to the manner in which we conduct our businesses.
We believe the CFPB's review is illustrative of the greater focus federal regulatory authorities have put on alternative consumer financial services products, including within the industries in which our businesses operate, which may result in increased compliance costs and the possibility of significant monetary penalties, remediation expenses and costly changes to the manner in which we conduct our businesses.
If we cannot effectively manage leadership transitions and management changes in the future, our reputation and future business prospects could be adversely affected. Our businesses operate in a highly competitive industry, and their inability to compete successfully would materially and adversely affect several aspects of our performance.
If we cannot effectively manage leadership transitions and management changes in the future, our reputation and future business prospects could be adversely affected. Our businesses operate in highly and increasingly competitive industries, and their inability to compete successfully would materially and adversely affect several aspects of our performance.
For example, in August 2022, a complaint was filed by the Pennsylvania Attorney General against the Company's Progressive Leasing business alleging, among other things, that Progressive Leasing was operating in the Commonwealth of Pennsylvania in violation of the Pennsylvania Rental Purchase Agreement Act by failing to disclose certain terms and conditions of rent-to-own ("RTO") transactions on "hang tags" physically attached to RTO merchandise.
For example, in August 2022, a complaint was filed by the Pennsylvania Attorney General against the Company's Progressive Leasing business alleging, among other things, that Progressive Leasing had violated the Pennsylvania Rental Purchase Agreement Act by failing to disclose certain terms and conditions of rent-to-own ("RTO") transactions on "hang tags" physically attached to RTO merchandise.
Future share repurchases (or any potential debt repurchases or dividend programs) will also diminish our cash reserves, which may impact our ability to pursue organic growth and attractive strategic opportunities.
Future share repurchases, dividend payments or any potential debt repurchases may also diminish our cash reserves, which may impact our ability to pursue organic growth and attractive strategic opportunities.
Consumer protection within the subprime financial marketplace in which our Progressive Leasing and, to some extent, Vive and Four businesses operate is increasingly garnering the attention of federal, state and local government officials as well as consumer advocacy groups and the media.
Consumer protection within the subprime financial marketplace in which our Progressive Leasing and, to some extent, Vive and Four businesses operate has increasingly garnered the attention of federal, state and local government officials as well as consumer advocacy groups and the media.
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 unpredictable macro-economic conditions, in particular those relating to the COVID-19 pandemic, rapidly increasing inflation and higher 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; • continuing uncertain macroeconomic conditions, in particular those relating to inflationary pressures and elevated interest rates.
Federal regulatory authorities are 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 Progressive Leasing, Vive and Four businesses operate.
Given the deteriorating macro-economic environment, our proprietary algorithms and decisioning tools used in approving Progressive Leasing and Vive customers may no longer be indicative of their ability to perform, which in turn may limit the ability of our Progressive Leasing, Vive and Four businesses to manage risk, avoid lease and loan charge-offs and may result in insufficient reserves to cover actual losses.
In an uncertain macroeconomic environment, our proprietary algorithms and decisioning tools used in approving Progressive Leasing, Vive and Four customers may no longer be indicative of their ability to perform, which in turn may limit the ability of our Progressive Leasing, Vive and Four businesses to manage risk, avoid lease and loan charge-offs and may result in insufficient reserves to cover actual losses.
As a result, our decisioning process has required, and will likely continue to require, frequent adjustments (including tightening) and the application of greater management judgment in the interpretation of the results produced by our decisioning tools, which could have an unfavorable impact on our GMV, margins and earnings.
As a result, our decisioning process has required, and may in the future require, frequent adjustments (including tightening) and the application of greater management judgment in the interpretation of the results produced by our decisioning tools, which could have an unfavorable impact on our GMV, margins and earnings.
For example, the California Consumer Privacy Act of 2018 (the "CCPA"), which became effective on January 1, 2020, gives residents of California expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used, and also provides for civil penalties for violations and private rights of action for data breaches.
For example, the California Consumer Privacy Act of 2018 (the "CCPA") gives residents of California expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used, and also provides for civil penalties for violations and private rights of action for data breaches.
Additionally, as we execute on our strategic plans, we may continue to expand into complementary businesses that engage in financial, consumer credit transactions or lending services, or lease-to-own or rent-to-rent transactions involving products that we do not currently offer our customers, all of which may be subject to a variety of statutes and regulatory requirements in addition to those regulations currently applicable to our operations, which may impose significant costs, limitations or prohibitions on the manner in which we currently conduct our businesses as well as those we may acquire in the future.
Additionally, as we execute on our strategic plans, we may continue to expand into complementary businesses that engage in financial, consumer credit transactions or lending services, or lease-to-own or rent-to-rent transactions involving products that we do not currently offer our customers, or implement the use of new technologies in our existing businesses and products, such as machine learning and artificial intelligence-based technologies, all of which may be subject to a variety of statutes, laws and regulatory requirements in addition to those regulations currently applicable to our operations, which may impose significant costs, limitations or prohibitions on the manner in which we currently conduct our businesses as well as those we may acquire in the future.
The indenture that governs the Senior Notes and the Revolving Facility contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit the extent to which, or our ability to, engage in acts that may be in our long-term best interest, including restrictions on our ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions or repurchase or redeem capital stock; • prepay, redeem or repurchase certain debt; • issue certain preferred stock or similar equity securities; • make loans and investments; • sell assets; • incur liens; • enter into transactions with affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • consolidate, merge or sell all or substantially all of our assets. 30 In addition, the restrictive covenants in the Revolving Facility require us to maintain specified financial ratios, such as a consolidated interest coverage ratio and a total net debt to EBITDA ratio, and satisfy other financial condition tests.
The indenture that governs the Senior Notes and the Revolving Facility contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit the extent to which, or our ability to, engage in acts that may be in our long-term best interest, including restrictions on our ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions or repurchase or redeem capital stock; • prepay, redeem or repurchase certain debt; • issue certain preferred stock or similar equity securities; • make loans and investments; • sell assets; • incur liens; • enter into transactions with affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries' ability to pay dividends; and • consolidate, merge or sell all or substantially all of our assets.
From time to time, we issue guidance in our quarterly earnings conference calls, or otherwise, regarding our future performance that represents our management’s estimates as of the date of release.
Our actual operating results may differ significantly from our guidance. From time to time, we issue guidance in our quarterly earnings conference calls, or otherwise, regarding our future performance that represents our management's estimates as of the date of release.
These risks, which may have a material and adverse effect on several aspects of our performance in the future, are described further below. Inflation, rising interest rates, and other adverse macro-economic conditions, including a prolonged recession, may adversely affect consumer confidence and demand for the products and services offered by our Progressive Leasing, Vive and Four businesses.
These risks, which may have a material and adverse effect on several aspects of our performance in the future, are described further below. Inflation, elevated interest rates for extended periods, and other adverse macroeconomic conditions may adversely affect consumer confidence and demand for the products and services offered by our Progressive Leasing, Vive and Four businesses.
We derive our revenue from the products and services offered by our Progressive Leasing, Vive and Four businesses. Consumer confidence is affected by inflation, rising interest rates, and other macro-economic conditions, including a prolonged recession. A deterioration in consumer confidence could adversely affect our business in many ways, including reducing demand for our products and services.
We derive our revenue from the products and services offered by our Progressive Leasing, Vive and Four businesses. Consumer confidence is affected by inflation, elevated interest rates for extended periods, and other macroeconomic conditions. A deterioration in consumer confidence could adversely affect our business in many ways, including reducing demand for our products and services.
If we cannot make scheduled payments on our debt, we will be in default and holders of the Senior Notes may declare all outstanding principal and interest to be due and payable, the lenders under the Revolving Facility may terminate their commitments to loan money and we may be forced into bankruptcy or liquidation.
If we cannot make scheduled payments on our debt, we will be in default and holders of the Senior Notes may declare all outstanding principal and interest to be due and payable, the lenders under the Revolving Facility may terminate their commitments to loan money and we may be forced into bankruptcy or liquidation. 29 Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt.
They rely on these vendors to protect their systems and facilities against damage or service interruptions from natural disasters, power or telecommunications failures, computer viruses or attempts to harm these systems, criminal acts, and similar events.
They rely on these vendors to protect their systems and facilities against damage or service interruptions from natural disasters, power or telecommunications failures, computer viruses or attempts to harm these systems, criminal acts, and similar events, and also rely upon them to adhere to their information technology policies and procedures.
If an arrangement with a vendor is terminated or if there is a lapse of service or damage to Progressive Leasing’s, Vive’s or Four’s systems or facilities, they may experience interruptions in their ability to operate their platforms.
If an arrangement with a vendor is terminated, there is a lapse of service or damage to Progressive Leasing's, Vive's or Four's systems or facilities, or the vendor fails to comply with Progressive Leasing's, Vive's or Four's information technology policies and procedures, they may experience interruptions in their ability to operate their platforms.
In addition, the business models and practices of companies offering BNPL services have recently become the subject of information requests and related inquiries by the CFPB and related media coverage.
In addition, the business models and practices of other companies offering lease-to-own services have become the subject of investigations and litigation by the CFPB. BNPL services have also recently become the subject of information requests and related inquiries by the CFPB and related media coverage.
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.
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.
As a result, a sustained decline in macro-economic conditions could result in lower revenue and negatively impact our businesses and the Company's overall financial results.
As a result, a sustained decline or continued uncertainty in macroeconomic conditions could result in lower revenue and negatively impact our businesses and the Company's overall financial results.
Progressive Leasing, Vive and Four use vendors, such as cloud computing web services providers and third-party software providers, in the operation of their businesses.
Progressive Leasing, Vive and Four use vendors, such as cloud computing web services providers, third-party software providers, and other vendors who provide information technology functional support, in the operation of their businesses.
These e-commerce-based processes entail additional risks relative to in-store-based underwriting processes and procedures, including risks regarding the sufficiency of notice for compliance with consumer protection laws, increased risks and occurrences of fraud, risks that customers may challenge the authenticity of their lease or loan documents, or the validity of electronic signatures and records, and risks that, despite internal controls, unauthorized changes are made to their electronic documents.
These e-commerce-based processes entail additional risks relative to in-store-based underwriting processes and procedures, including risks regarding the sufficiency of notice for compliance with consumer protection laws, increased risks and occurrences of fraud, risks that customers may challenge the authenticity of their lease or loan documents, or the validity of electronic signatures and records, and risks that, despite internal controls, unauthorized changes are made to their electronic documents. 24 The geographic concentration of Progressive Leasing's POS partners may magnify the impact of conditions in a particular region, including economic downturns and other occurrences.
Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This may further exacerbate the risks to our financial condition described above. We and our subsidiaries may be able to incur significant additional indebtedness in the future.
This may further exacerbate the risks to our financial condition described above. We and our subsidiaries may be able to incur significant additional indebtedness in the future.
These decisioning tools may be unable to accurately predict and respond to the impact of a prolonged economic downturn or changes to customer behaviors, which in turn may limit the ability of our Progressive Leasing and Vive businesses to manage risk, avoid lease and loan charge-offs and may result in insufficient reserves to cover actual losses (which Progressive Leasing records as accounts receivable allowance and allowance for lease merchandise write-offs and Vive and Four record as provision for loan losses). 16 A large percentage of Progressive Leasing’s revenue is concentrated with several key POS partners, and the loss of any of these POS partner relationships would materially and adversely affect several aspects of our performance.
These decisioning tools may be unable to accurately predict and respond to the impact of a prolonged economic downturn or changes to customer behaviors, which in turn may limit the ability of our Progressive Leasing, Vive and Four businesses to manage risk, avoid lease and loan charge-offs and may result in insufficient reserves to cover actual losses 16 (which Progressive Leasing records as accounts receivable allowance and allowance for lease merchandise write-offs and Vive and Four record as provision for loan losses).
The unexpected or abrupt departure of one or more of our key personnel 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.
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.
If our risk management framework does not effectively identify, manage and control our risks, both those we are aware of and those we do not anticipate, including as a result of changes in economic conditions, we may suffer unexpected losses that may have a material and adverse effect on several aspects of our performance.
If our risk management framework does not effectively identify, manage and control our risks, both those we are aware of and those we do not anticipate, including as a result of changes in economic conditions, we may suffer unexpected losses that may have a material and adverse effect on several aspects of our performance. 32 If securities or industry analysts publish research that is unfavorable about our business, our stock price and trading volume may decline.
The geographic concentration of Progressive Leasing’s POS partners may magnify the impact of conditions in a particular region, including economic downturns and other occurrences. The concentration of our POS partners in one region or a limited number of markets may expose us to risks of adverse economic developments that are greater than if our POS partners were more geographically diverse.
The concentration of our POS partners in one region or a limited number of markets may expose us to risks of adverse economic developments that are greater than if our POS partners were more geographically diverse.
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. 22 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.
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.
In addition, the FTC Settlement may lead to investigations and enforcement actions by, and/or consent orders with, state Attorneys General or other state regulatory agencies. 14 Furthermore, in November 2021, Rent-A-Center, Inc. announced that its Acima division ("Acima"), which is a large virtual lease-to-own business that competes with Progressive Leasing, had received a letter from the Nebraska Attorney General’s office stating that the Attorney General of Nebraska, along with a coalition of thirty-eight state Attorneys General, had initiated a multistate investigation into the business acts and practices of Acima.
Furthermore, in November 2021, Upbound Group, Inc. announced that its Acima division ("Acima"), which is a large virtual lease-to-own business that competes with Progressive Leasing, had received a letter from the Nebraska Attorney General's office stating that the Attorney General of Nebraska, along with a coalition of thirty-eight state Attorneys General, had initiated a multistate investigation into the business acts and practices of Acima.
While the Company intends to preserve defenses surrounding the jurisdiction of DFPI in this matter, the Company has fully cooperated and anticipates that it will continue cooperating with the DFPI in responding to its inquiry.
While the Company intends to preserve defenses surrounding the jurisdiction of DFPI in this matter, the Company has fully cooperated and anticipates that it will continue cooperating with the DFPI in responding to its inquiry. We are currently unable to predict the ultimate timing or outcome of the investigation undertaken by the DFPI.
For the fiscal year ended December 31, 2022, we purchased an additional $223.6 million of our common stock, representing 15.5% of our outstanding shares, with remaining authority to purchase additional shares up to our remaining authorization limit of $337.3 million.
For the fiscal year ended December 31, 2023, we purchased an additional $139.6 million of our common stock, representing 9.8% of our outstanding shares, with remaining authority to purchase additional shares up to our remaining authorization limit of $197.7 million.
While we believe these initiatives have thus far 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.
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.
High profile fraudulent activity or significant increases in fraudulent activity may also lead to regulatory intervention, negative publicity, and the erosion of trust from Progressive Leasing’s, Vive’s and Four’s POS partners and may materially and adversely affect several aspects of our performance. E-commerce lease and loan origination processes may give rise to greater risks than in-store originations and processes.
Significant amounts of fraudulent transactions may adversely affect Progressive Leasing's, Vive's and Four's respective businesses. High profile fraudulent activity or significant increases in fraudulent activity may also lead to regulatory intervention, negative publicity, and the erosion of trust from Progressive Leasing's, Vive's and Four's POS partners and may materially and adversely affect several aspects of our performance.
Interruptions, inventory shortages and other factors affecting the supply chains of our retail partners may have a material and adverse effect on several aspects of our performance. The POS partners with whom our Progressive Leasing, Vive and Four businesses partner are critical to our success.
The POS partners with whom our Progressive Leasing, Vive and Four businesses partner are critical to our success. Any extended supply chain interruptions, inventory shortages or other operational disruptions affecting any of our POS partners may have a material adverse impact on our business.
Accordingly, it is important for our POS partners to maintain optimal levels of inventory and respond rapidly to shifting demands. For example, during the first half of 2022, global supply chain issues attributable to the COVID-19 pandemic negatively impacted inventory and stocking levels in the retail industry.
For example, during the first half of 2022, global supply chain issues attributable to the COVID-19 pandemic negatively impacted inventory and stocking levels in the retail industry.
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.
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.
Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release. Actual results will vary from our guidance, and the variations may be material. 33 We are not currently paying any dividends on our common stock.
Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release. Actual results will vary from our guidance, and the variations may be material. We are a holding company and are dependent on the operations and funds of our subsidiaries.
Any real or perceived errors, failures, bugs, or defects in the software they rely on may also subject us and them to liability claims, impair their ability to attract new customers, retain existing customers, or expand their use of their products and services, which may materially and adversely affect several aspects of our performance.
Any real or perceived errors, failures, bugs, or defects in the software they rely on may also subject us and them to liability claims, impair their ability to attract new customers, retain existing customers, or expand their use of their products and services, which may materially and adversely affect several aspects of our performance. 23 If Progressive Leasing fails to comply with the FTC settlement, it may be subject to additional injunctive and monetary remedies and be required to change its business practices in a manner materially adverse to our business.
Progressive Leasing, Vive and Four bear the risk of consumer fraud in their transactions and they generally have no recourse to the respective POS partner (as the case may be) to collect the amount owed by the customer. Significant amounts of fraudulent transactions may adversely affect Progressive Leasing’s, Vive’s and Four’s respective businesses.
The technologies and fraud prevention tools employed by Progressive Leasing, Vive and Four may be insufficient to accurately detect and prevent fraud. Progressive Leasing, Vive and Four bear the risk of consumer fraud in their transactions and they generally have no recourse to the respective POS partner (as the case may be) to collect the amount owed by the customer.
These factors could prevent them from processing transactions or posting payments on their platforms, damage their brands and reputations, divert the attention of their employees, reduce our revenue, subject us and them to liability, and cause consumers or merchants to abandon their platforms.
For example, they may be unable to process transactions or post payments on their platforms, which could damage their brands and reputations, divert the attention of their employees, reduce our revenue, subject us and them to liability, and cause consumers or merchants to abandon their platforms.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDraper, Utah Progressive Leasing and Vive—Corporate Management/Call Center – Leased 148,000 Glendale, Arizona 1 Progressive Leasing—Corporate Management/Call Center – Leased 69,000 Draper, Utah 2 Vive—Corporate Management/Call Center – Leased 25,000 1 During 2022, the call center 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.
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.
ITEM 2. PROPERTIES The Company leases call center space, and 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 2027. 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, and significant call center facilities as of December 31, 2022: 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, 2023: LOCATION SEGMENT, PRIMARY USE AND HOW HELD SQ. FT.
Removed
The existing lease agreement expires in March 2025. 2 Vive's corporate headquarters were relocated to the Company's corporate office building as part of the restructuring initiatives during 2022. The existing lease agreement expires in June 2023 and the associated right-of-use lease asset was fully impaired in 2022.
Added
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed2 unchanged
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 11 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.
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.
MINE SAFETY DISCLOSURES Not applicable. 34 PART II
MINE SAFETY DISCLOSURES Not applicable. 35 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+4 added−1 removed6 unchanged
Biggest changeIssuer Purchases of Equity Securities The following table presents our share repurchase activity for the three months ended December 31, 2022: 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, 2022 through October 31, 2022 125,000 16.55 125,000 $ 371,444,470 November 1, 2022 through November 30, 2022 1,882,976 17.92 1,882,976 337,707,705 December 1, 2022 through December 31, 2022 24,629 17.52 24,629 337,276,089 Total 2,032,605 2,032,605 1 Share repurchases are conducted under authorizations made from time to time by the Company’s Board of Directors.
Biggest changeIssuer 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.
Any declaration and payment of future dividends to holders of our common stock may be limited by the provisions of Georgia law, among other considerations.
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.
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. 35 Performance Graph Comparison of 5 Year Cumulative Total Return* Among PROG Holdings, Inc., the S&P Midcap 400 Index, S&P 400 Retailing Index, S&P North American Technology Sector Index, and S&P Smallcap 600 Index *$100 invested on 12/31/17 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. 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.
The line graph above and the table below compare, for the last five years, the yearly dollar change in the cumulative total shareholder returns (assuming reinvestment of dividends) on the Company's common stock with that of the S&P Midcap 400 Index, S&P North American Technology Sector Index, S&P 400 Retailing Index, and the S&P Smallcap 600 Index.
Fiscal year ending December 31. The line graph above and the table below compare, for the last five years, the yearly dollar change in the cumulative total shareholder returns (assuming reinvestment of dividends) on the Company's common stock with that of the S&P MidCap 400 Index, the S&P SmallCap 600 Index, and the S&P North American Technology Sector Index.
The number of shareholders of record of the Company's common stock at February 17, 2023 was 483. The closing price for the common stock at February 17, 2023 was $23.42. We do not currently anticipate paying any dividends on our common stock.
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.
Removed
December 31, 2017 2018 2019 2020 2021 2022 PROG Holdings, Inc. $ 100.00 $ 105.81 $ 144.06 $ 157.32 $ 131.74 $ 49.33 S&P Midcap 400 100.00 88.92 112.21 127.54 159.12 138.34 S&P 400 Retailing Index 100.00 93.05 104.12 160.25 195.30 145.42 S&P North American Technology Sector Index 100.00 102.88 146.79 213.07 269.33 174.09 S&P Smallcap 600 100.00 91.52 112.37 125.05 158.59 133.06 36 ITEM 6. [RESERVED] Not applicable.
Added
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.
Added
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.
Added
No share repurchases have been made under the reauthorized share repurchase program.
Added
December 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.

Item 7. Management's Discussion & Analysis

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

81 edited+47 added−80 removed47 unchanged
Biggest changeOperating Expenses Information about certain significant components of operating expenses is as follows: Change Year Ended December 31, 2021 vs. 2020 (In Thousands) 2021 2020 $ % Personnel Costs 1 $ 189,576 $ 170,285 $ 19,291 11.3 % Stock-Based Compensation 21,349 20,403 946 4.6 Occupancy Costs 6,633 6,545 88 1.3 Advertising 17,502 6,627 10,875 164.1 Professional Services 24,106 22,503 1,603 7.1 Sales Acquisition Expense 2 22,374 19,449 2,925 15.0 Computer Software Expense 3 20,674 13,260 7,414 55.9 Bank Service Charges 11,542 9,916 1,626 16.4 Other Sales, General and Administrative Expense 32,717 37,779 (5,062) (13.4) Sales, General and Administrative Expense 4 346,473 306,767 39,706 12.9 Provision for Loan Losses 17,668 34,038 (16,370) (48.1) Depreciation and Amortization 33,258 31,820 1,438 4.5 Operating Expenses $ 397,399 $ 372,625 $ 24,774 6.6 % 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 $316.3 million and $268.9 million during the years ended December 31, 2021 and 2020, respectively.
Biggest changeThe 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.
It does so by purchasing the merchandise from the POS partners desired by customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction. Progressive Leasing has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers.
It does so by purchasing merchandise from the POS partners desired by customers and, in turn, leasing that merchandise to the customers through a cancellable lease-to-own transaction. Progressive Leasing has no stores of its own, but rather offers lease-purchase solutions to the customers of traditional and e-commerce retailers.
Cash Used in Financing Activities Cash used in financing activities was $227.2 million during the year ended December 31, 2022 compared to $30.3 million during the year ended December 31, 2021, an increase of $196.9 million. Cash used in financing activities in 2022 was primarily due to the $223.6 million outflows for the acquisition of treasury stock.
Cash used in financing activities was $227.2 million during the year ended December 31, 2022 compared to $30.3 million during the year ended December 31, 2021, an increase of $196.9 million. Cash used in financing activities in 2022 was primarily due to the $223.6 million of outflows for the acquisition of treasury stock.
("Four"), an innovative Buy Now, Pay Later 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"), 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.
The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods. As a result, scheduling deferred income tax liabilities as payments due by period may be misleading, because this scheduling would not necessarily relate to liquidity needs. 48 Unfunded Lending Commitments.
The results of these calculations do not have a direct connection with the amount of cash taxes to be paid in any future periods. As a result, scheduling deferred income tax liabilities as payments due by period may be misleading, because this scheduling would not necessarily relate to liquidity needs. Unfunded Lending Commitments.
Given the significant economic uncertainty resulting from challenges in the macroeconomic environment, including high inflation, forecasted unemployment rates, and/or 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 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.
Other significant changes in operating cash outflows compared to the prior year include $35.6 million of interest paid on the Company's Senior Notes compared to $1.5 million in 2021, and an $8.6 million increase in net income tax payments for the year ended December 31, 2022.
Other significant changes in operating cash outflows for 2022 as compared to the prior year include $35.6 million of interest paid on the Company's Senior Notes compared to $1.5 million in 2021, and an $8.6 million increase in net income tax payments for the year ended December 31, 2022.
The Revolving Facility includes an uncommitted incremental facility increase option which, subject to certain terms and conditions, permits the Company at any time prior to the maturity date to request an increase in extensions of credit available thereunder by an aggregate additional principal amount of up to $300 million.
The Revolving Facility includes an uncommitted incremental facility increase option ("Incremental Facilities") which, subject to certain terms and conditions, permits the Company at any time prior to the maturity date to request an increase in extensions of credit available thereunder by an aggregate additional principal amount of up to $300 million.
The increase in personnel costs of $4.6 million was driven primarily by an increase of $2.9 million in personnel costs attributable to an increase in the number of employees resulting from the Four acquisition and other strategic initiatives started by the Company in 2021 that continued incurring costs during 2022.
The increase in personnel costs of $4.6 million was driven primarily by an increase of $2.9 million in personnel costs attributable to an increase in the number of employees resulting from the Four acquisition and other strategic initiatives started by the Company in 2021 that continued incurring costs in 2022.
Levels of customer payment delinquencies and uncollectible renewal payments for leases originated after Progressive Leasing further tightened its lease decisioning in mid-2022 improved to levels consistent with pre-pandemic lease portfolio performance.
Levels of customer payment delinquencies and uncollectible renewal payments for leases originated after Progressive Leasing further tightened its lease 38 decisioning in mid-2022 improved to levels consistent with pre-pandemic lease portfolio performance.
The Progressive Leasing segment comprised approximately 97% of our consolidated revenues for the year ended December 31, 2022. 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 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.
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, 2022. 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, 2023. On June 25, 2021, the Company completed the acquisition of Four Technologies, Inc.
Debt Financing On November 26, 2021, the Company entered into an indenture in connection with its offering of $600 million aggregate principal amount of its senior unsecured notes due 2029 (the "Senior Notes"). The Senior Notes were issued at 100.0% of their par value with a stated fixed annual interest rate of 6.00%.
On November 26, 2021, the Company entered into an indenture in connection with its offering of $600 million aggregate principal amount of its senior unsecured notes due 2029 (the "Senior Notes"). The Senior Notes were issued at 100.0% of their par value with a stated fixed annual interest rate of 6.00%.
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, 2022 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, 2023 as its financial results are not material to the Company's consolidated financial results.
Restructuring expense of $9.0 million is the result of a number of restructuring activities initiated by the Company during 2022 intended to reduce expenses, consolidate certain segment corporate headquarters and other office locations, and align the cost structure of the business with the Company's strategy and near-term revenue outlook.
Restructuring expense of $9.0 million was the result of a number of restructuring activities initiated by the Company during 2022 intended to reduce expenses, consolidate certain segment corporate headquarters and other office locations, and align the cost structure of the business with the Company's strategy and near-term revenue outlook.
Interest expense is presented net of interest income earned on the Company's deposits in cash and cash equivalents. 40 Results of Operations Results of Operations – Years Ended December 31, 2022 and 2021 Change Year Ended December 31, 2022 vs. 2021 (In Thousands) 2022 2021 $ % REVENUES: Lease Revenues and Fees $ 2,523,785 $ 2,619,005 $ (95,220) (3.6) % Interest and Fees on Loans Receivable 74,041 58,915 15,126 25.7 2,597,826 2,677,920 (80,094) (3.0) COSTS AND EXPENSES: Depreciation of Lease Merchandise 1,757,730 1,820,010 (62,280) (3.4) Provision for Lease Merchandise Write-offs 193,926 126,984 66,942 52.7 Operating Expenses 450,374 397,399 52,975 13.3 Impairment of Goodwill 10,151 — 10,151 nmf 2,412,181 2,344,393 67,788 2.9 OPERATING PROFIT 185,645 333,527 (147,882) (44.3) Interest Expense, Net (37,401) (5,323) (32,078) nmf EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE 148,244 328,204 (179,960) (54.8) INCOME TAX EXPENSE 49,535 84,647 (35,112) (41.5) NET EARNINGS $ 98,709 $ 243,557 $ (144,848) (59.5) % nmf—Calculation is not meaningful 41 Revenues Information about our revenues by source and reportable segment is as follows: Year Ended December 31, 2022 Year Ended December 31, 2021 (In Thousands) Progressive Leasing Vive Other Total Progressive Leasing Vive Other Total Lease Revenues and Fees $ 2,523,785 $ — $ — $ 2,523,785 $ 2,619,005 $ — $ — $ 2,619,005 Interest and Fees on Loans Receivable — 70,911 3,130 74,041 — 58,462 453 58,915 Total Revenues $ 2,523,785 $ 70,911 $ 3,130 $ 2,597,826 $ 2,619,005 $ 58,462 $ 453 $ 2,677,920 The decrease in Progressive Leasing revenues was primarily due to an increase in customer payment delinquencies and uncollectible renewal payments, as compared to the strong customer payment activity and low delinquencies it experienced in 2021.
Results of Operations – Years Ended December 31, 2022 and 2021 Change Year Ended December 31, 2022 vs. 2021 (In Thousands) 2022 2021 $ % REVENUES: Lease Revenues and Fees $ 2,523,785 $ 2,619,005 $ (95,220) (3.6) % Interest and Fees on Loans Receivable 74,041 58,915 15,126 25.7 2,597,826 2,677,920 (80,094) (3.0) COSTS AND EXPENSES: Depreciation of Lease Merchandise 1,757,730 1,820,010 (62,280) (3.4) Provision for Lease Merchandise Write-offs 193,926 126,984 66,942 52.7 Operating Expenses 450,374 397,399 52,975 13.3 Impairment of Goodwill 10,151 — 10,151 nmf 2,412,181 2,344,393 67,788 2.9 OPERATING PROFIT 185,645 333,527 (147,882) (44.3) Interest Expense, Net (37,401) (5,323) (32,078) nmf EARNINGS BEFORE INCOME TAX EXPENSE 148,244 328,204 (179,960) (54.8) INCOME TAX EXPENSE 49,535 84,647 (35,112) (41.5) NET EARNINGS $ 98,709 $ 243,557 $ (144,848) (59.5) % nmf—Calculation is not meaningful Revenues Information about our revenues by source and reportable segment is as follows: Year Ended December 31, 2022 Year Ended December 31, 2021 (In Thousands) Progressive Leasing Vive Other Total Progressive Leasing Vive Other Total Lease Revenues and Fees $ 2,523,785 $ — $ — $ 2,523,785 $ 2,619,005 $ — $ — $ 2,619,005 Interest and Fees on Loans Receivable — 70,911 3,130 74,041 — 58,462 453 58,915 Total Revenues $ 2,523,785 $ 70,911 $ 3,130 $ 2,597,826 $ 2,619,005 $ 58,462 $ 453 $ 2,677,920 The decrease in Progressive Leasing revenues was primarily due to an increase in customer payment delinquencies and uncollectible renewal payments, as compared to the strong customer payment activity and low delinquencies it experienced in 2021.
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 obligation.
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.
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. The Company calculates the Vive allowance for loan losses based on internal historical loss information and incorporates observable and forecasted macroeconomic data over a twelve-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. 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.
Because we believe Progressive Leasing will continue to grow over the long-term, we expect that the need for additional lease merchandise will remain a major capital requirement; • Making merger and acquisition investment(s) to further broaden our product offerings; and • Returning excess cash to shareholders through periodically repurchasing stock.
Because we believe Progressive Leasing will continue to grow over the long-term, we expect that the need for additional lease merchandise will remain a major capital requirement; • Making merger and acquisition investment(s) to further broaden our product offerings; and • Returning excess cash to shareholders through periodically repurchasing stock and/or paying dividends.
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 % 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.
The 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.
Refer to Note 1 for additional information regarding the details of the goodwill impairment loss. 43 Earnings from Continuing Operations Before Income Tax Expense Information about our earnings from continuing operations before income tax expense by reportable segment is as follows: Change Year Ended December 31, 2022 vs. 2021 (In Thousands) 2022 2021 $ % EARNINGS FROM CONTINUING OPERATIONS 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 from Continuing Operations 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 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.
Other factors impacting the change in earnings before income tax expense are discussed above. 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.
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.
Future interest payments on the Company's variable-rate debt are based on a rate per annum equal to, at our option, (i) the London Interbank Overnight Rate ("LIBOR") plus a margin within the range of 1.5% to 2.5% for revolving loans, based on total leverage, or (ii) the administrative agent's base rate plus a margin ranging from 0.5% to 1.5%, as specified in the agreement.
Future interest payments on the Company's variable-rate debt are based on a rate per annum equal to, at our option, (i) the Secured Overnight Financing Rate ("SOFR") plus a margin within the range of 1.5% to 2.5% for revolving loans, based on total leverage, or (ii) the administrative agent's base rate plus a margin ranging from 0.5% to 1.5%, as specified in the agreement.
The significant increase in inflation and interest rates, 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 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.
Provision for loan losses increased $23.6 million due to unfavorable economic conditions present during 2022 and projected macroeconomic conditions, including a rapid increase in the rate of inflation, high unemployment rates, and the absence of government stimulus payments and enhanced unemployment benefits and child tax credits, as compared to 2021, at Vive.
Provision for loan losses increased $23.6 million, primarily in connection with our Vive business, due to unfavorable economic conditions present during 2022 and projected macroeconomic conditions, including a rapid increase in the rate of inflation, high unemployment rates, and the absence of government stimulus payments and enhanced unemployment benefits and child tax credits, as compared to 2021.
For any periods beyond the twelve-month reasonable and supportable forecast period described above, the Company reverts to using historical loss information on a straight-line basis over a period of six months and utilizes historical loss information for the remaining life of the portfolio. The Company may also consider other qualitative factors in estimating the allowance, as necessary.
Subsequent to the six-month reasonable and supportable forecast period described above, the Company reverts to using historical loss information on a straight-line basis over a period of three months. For the remaining life of the portfolio, the Company utilizes historical loss information. The Company may also consider other qualitative factors in estimating the allowance, as necessary.
The restructuring expense was 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 call center and 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 .
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 .
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.
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.
Our capital requirements have been financed through: • cash flows from operations; • private debt offerings; • bank debt; and • stock offerings. As of December 31, 2022, the Company had $131.9 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, 2023, the Company had $155.4 million of cash, $350.0 million of availability under the Revolving Facility, and $600.0 million of indebtedness.
For customer agreements that are past due, the Company's policy is to write off lease merchandise after 120 days. As of December 31, 2022 and 2021, the allowance for lease merchandise write-offs was $47.1 million and $54.4 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, 2023 and 2022, the allowance for lease merchandise write-offs was $44.2 million and $47.1 million, respectively.
The provision for loan losses was $41.2 million and $17.7 million for the years ended December 31, 2022 and 2021, respectively. The allowance for loan losses was $42.4 million and $40.8 million as of December 31, 2022 and 2021, respectively.
The provision for loan losses was $40.8 million and $41.2 million for the years ended December 31, 2023 and 2022, respectively. The allowance for loan losses was $40.6 million and $42.4 million as of December 31, 2023 and 2022, respectively.
At December 31, 2022 and 2021, we had deferred revenue representing cash collected in advance of being due or earned totaling $37.1 million and $45.1 million, respectively, and accounts receivable, net of an allowance for doubtful accounts based on historical collection rates, of $64.5 million and $66.3 million, respectively.
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.
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 the second and third quarters of 2022 to drive efficiencies and right-size variable costs, while attempting to minimize the negative impact on growth-related initiatives. COVID-19 Pandemic.
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.
Actual lease merchandise write-offs could differ materially from the allowance. 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 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 Company, through its Vive business, has unconditionally cancellable unfunded lending commitments totaling approximately $513.7 million and $467.6 million as of December 31, 2022 and 2021, 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 $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.
Operating expenses include personnel costs, stock-based compensation expense, occupancy costs, advertising, 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, among other expenses. Impairment of Goodwill. Impairment of goodwill is the partial write-off of the goodwill balance at the Four reporting unit.
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.
Deferred income tax liabilities as of December 31, 2022 were approximately $137.3 million. Deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis, which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts.
Deferred income tax liabilities are calculated based on temporary differences between the tax basis of assets and liabilities and their respective book basis, which will result in taxable amounts in future years when the liabilities are settled at their reported financial statement amounts.
On November 24, 2020, the Company entered into a credit agreement with a consortium of lenders providing for our $350 million senior unsecured Revolving Facility, under which revolving borrowings became available at the completion of the separation and distribution date and 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, under which all borrowings and commitments will mature or terminate on November 24, 2025.
Other changes in cash provided by operating activities are discussed above in our discussion of results for the year ended December 31, 2021. Cash Used in Investing Activities Cash used in investing activities was $53.5 million and $82.2 million during the year 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 provided by operating activities was $242.5 million and $246.0 million during the years ended December 31, 2022 and 2021, respectively.
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 Four.
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 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.
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.
Sales acquisition expense increased $6.5 million primarily due to increased incentives, sales commissions, and other expenses at Progressive Leasing to promote lease originations with its POS partners. 42 Computer software expense increased $7.0 million primarily due to an increase in non-capitalizable costs for software implementation projects by Progressive Leasing during 2022, other strategic initiatives started by the Company in 2021 that continued incurring costs in 2022, and increased software licensing costs.
Computer software expense increased $7.0 million primarily due to an increase in non-capitalizable costs for software implementation projects by Progressive Leasing during 2022, other strategic initiatives started by the Company in 2021 that continued incurring costs in 2022, and increased software licensing costs.
As of June 30, 2022, the Company exceeded the 1.25 total net debt to EBITDA ratio and the Revolving Facility became fully secured. At December 31, 2022, we were in compliance with the financial covenants set forth in the Revolving Facility and believe that we will continue to be in compliance in the future. Commitments Income Taxes.
During 2022, the Company exceeded the 1.25 total net debt to EBITDA ratio and the Revolving Facility became fully secured. As of December 31, 2023, 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.
Furthermore, increasing unemployment rates and/or a U.S. recession may result in increasing levels of customer payment delinquencies and related write-offs, which would result in an unfavorable impact on our performance.
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.
Overview of Financial Position The major changes in the consolidated balance sheet from December 31, 2021 to December 31, 2022, include: • Cash and cash equivalents decreased $38.3 million to $131.9 million for the year ended December 31, 2022.
Overview of Financial Position The major changes in the consolidated balance sheet from December 31, 2022 to December 31, 2023, include: • Cash and cash equivalents increased $23.5 million to $155.4 million for the year ended December 31, 2023.
Cash Provided by Operating Activities Cash provided by operating activities was $242.5 million and $246.0 million during the years ended December 31, 2022 and 2021, respectively. Cash provided by operating activities decreased by $3.5 million despite the $144.8 million decrease in net earnings from continuing operations as compared to 2021.
Cash provided by operating activities decreased by $3.5 million despite the $144.8 million decrease in net earnings from continuing operations as compared to 2021.
The rapid increase in the rate of inflation during 2022, particularly in gas, food, and housing costs, which we believe disproportionately negatively affects the customers we serve and therefore our customers' ability to make the payments they owe to the Company, has resulted in an unfavorable impact on our lease portfolio performance and Gross Merchandise Volume ("GMV") during 2022.
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.
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 investing activities was $82.2 million and $114.5 million during the years ended December 31, 2021 and 2020, respectively.
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.
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 .
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.
The decrease in total GMV was also partially offset by an increase in GMV from our other operations, primarily due to an increase in loan originations by our Four business. 39 Active Customer Count.
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.
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. In response to increasing customer delinquencies and higher write-offs, Progressive Leasing tightened its lease decisioning several times during 2022, resulting in fewer lease approvals and an adverse impact on GMV.
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.
Interest will accrue on the outstanding balance and will be payable semi-annually. The Senior Notes are general unsecured obligations of the Company and will be guaranteed by certain of the Company's existing and future domestic subsidiaries.
Interest accrues on the outstanding balance and is payable semi-annually. The Senior Notes are general unsecured obligations of the Company and are guaranteed by certain of the Company's existing and future domestic subsidiaries. The indenture discussed above contains various other covenants and obligations to which the Company and its subsidiaries are subject while the Senior Notes are outstanding.
The following table presents our consolidated active customer count, which includes an immaterial number of customers that have both an active lease agreement and loan agreement, for the Company for the years presented: As of December 31 (Unaudited) 2022 2021 2020 Active Customer Count: Progressive Leasing 943,000 1,044,000 970,000 Vive 92,000 88,000 66,000 Other 39,000 18,000 — Total Active Customer Count 1,074,000 1,150,000 1,036,000 The decrease in the number of Progressive Leasing customers in 2022 compared to 2021 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 to address the unfavorable economic conditions that were present during 2022.
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 indenture also contains customary events of default for transactions of this type and amount. We were in compliance with these covenants at December 31, 2022 and believe that we will continue to be in compliance in the future.
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 Company purchased 8,720,223 shares of its common stock 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. Dividends We paid no dividends during 2022 and 2021 and do not currently anticipate paying any dividends.
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.
For the purposes of determining the allowance as of December 31, 2022, management considered other qualitative factors such as the macroeconomic conditions associated with the impacts from the COVID-19 pandemic, increasing inflation, forecasted higher unemployment rates, and/or a prolonged recession in the United States, which was not fully factored into the macroeconomic forecasted data, and which likely contributed to unfavorable cardholder payment trends we experienced during these periods.
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.
We separate our total revenues into two components: (i) lease revenues and fees and (ii) interest and fees on loans receivable. 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.
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.
The decrease in Progressive Leasing revenues was also due to a 7.8% decline in its GMV during the year ended December 31, 2022, as compared to 2021, and fewer customers electing to exercise early lease buyouts during 2022, as compared to 2021.
The decrease in Progressive Leasing revenues was also the result of having a smaller lease portfolio at the beginning of and throughout 2022, as compared to 2021, and fewer customers electing to exercise early lease buyouts.
Key Components of Earnings from Continuing Operations Before Income Tax Expense In this MD&A section, we review our consolidated results. For the year ended December 31, 2022 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 .
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.
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, 2022. As discussed above, on November 26, 2021, the Company issued $600 million aggregate principal amount of Senior Notes that bear a fixed annual interest rate of 6.00%.
As discussed above, on November 26, 2021, the Company issued $600 million aggregate principal amount of Senior Notes that bear a fixed annual interest rate of 6.00%. Interest will accrue on the outstanding balance and will be payable semi-annually. The Senior Notes will mature on November 15, 2029.
Refer to Note 2 of the accompanying consolidated financial statements for further discussion of the separation and distribution of the Aaron's Business segment. Interest Expense, Net . Interest expense, net consists of interest expense incurred on the Company's Senior Notes and senior secured revolving credit facility (the "Revolving Facility").
Interest expense, net consists of interest incurred on the Company's Senior Notes and senior secured revolving credit facility (the "Revolving Facility").
Interest will accrue on the outstanding balance and will be payable semi-annually. The Senior Notes will mature on November 15, 2029. 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.
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.
On November 3, 2021, the Company announced that its Board of Directors had authorized a new $1 billion share repurchase program that replaced the previous $300 million repurchase program. As of December 31, 2022, we had the authority to purchase additional shares up to our remaining authorization limit of $337.3 million.
Share Repurchases We purchase our stock in the market from time to time as authorized by our Board of Directors. Effective November 3, 2021, the Company announced that its Board of Directors had authorized a share repurchase program that provided the Company with the ability to repurchase shares up to a maximum amount of $1 billion.
As a percentage of total lease revenues and fees, depreciation of lease merchandise increased to 69.5% from 69.2% in 2020, primarily due to elevated early lease buyouts in 2021 as compared to 2020, partially offset by a decrease in the provision for uncollectible renewal payments. Provision for lease merchandise write-offs.
As a percentage of total lease revenues and fees, depreciation of lease merchandise decreased to 67.5% from 69.6% in the prior year period, primarily due to improved customer payment activity and lower early buyouts for the year ended December 31, 2023, as compared to the same period in 2022. Provision for lease merchandise write-offs .
The following table presents our GMV for the Company for the years presented: For the Year Ended December 31 (Unaudited and In Thousands) 2022 2021 2020 Progressive Leasing $ 1,976,794 $ 2,143,948 $ 1,851,308 Vive 178,002 199,139 130,751 Other 60,459 8,651 — Total GMV $ 2,215,255 $ 2,351,738 $ 1,982,059 The decrease in Progressive Leasing's and Vive's GMV was primarily due to our tighter lease and loan decisioning to address the unfavorable economic conditions that were present in 2022, resulting in fewer lease and loan approvals; the rapid increase in the rate of inflation, which eroded customers' disposable incomes and their demand for many of the goods sold by our POS partners; and the absence of government stimulus payments and enhanced unemployment benefits and child tax credits, which we believe benefited many of our customers in 2021.
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.
As of December 31, 2022, the Company concluded that there were no events or circumstances that would more likely than not reduce the fair value of the Progressive Leasing or Four reporting unit below its carrying amount. 51 Provision for Loan Losses and Loan Loss Allowance Effective January 1, 2020 with the adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("CECL") expected lifetime losses on loans receivable are recognized upon loan acquisition, which results in earlier recognition of credit losses and requires the Company to make its best estimate of probable lifetime losses at the time of acquisition.
Provision for Loan Losses and Loan Loss Allowance Expected lifetime losses on loans receivable are recognized upon loan acquisition, which results in earlier recognition of credit losses and requires the Company to make its best estimate of probable lifetime losses at the time of acquisition.
GMV from our other operations increased by $51.8 million resulting from the growth in loan originations by our Four business during 2022. • Earnings before income tax expense decreased to $148.2 million compared to $328.2 million in 2021. The decrease was primarily driven by an overall decline in revenues as discussed above.
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 provision for lease merchandise write-offs decreased $4.3 million primarily due to a $14.8 million decline in write-offs, compared to the year ended December 31, 2020, as a result of continued strong payment activity from customers, and changes to estimates in our allowance for lease merchandise write-offs.
The provision for lease merchandise write-offs decreased by $38.7 million due to a reduction in the size of Progressive Leasing's lease portfolio and improved customer payment activity during the year ended December 31, 2023, as compared to the same period in 2022.
The provision for lease merchandise write-offs as a percentage of lease revenues decreased to 4.8% for the year ended December 31, 2021 from 5.4% in 2020 due to improved customer payment activity, relatively low write-offs, and changes in estimates on the allowance as discussed above. Separation related charges.
The provision for lease merchandise write-offs as a percentage of lease revenues decreased to 6.7% for the year ended December 31, 2023 from 7.7% in the same period in 2022.
We lease management and information technology space for corporate functions as well as call center space and storage space for our hub facilities under operating leases expiring at various times through 2027. Our corporate and call center leases contain renewal options for additional periods ranging from three to five years.
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.
Refer to Note 1 of the accompanying consolidated financial statements for further discussion of the goodwill impairment assessment and resulting impairment charge. Separation Related Charges. Separation related charges include stock-based compensation expense and retirement charges associated with the separation of the Aaron's Business segment.
Impairment of goodwill is the partial write-off of the goodwill balance at the Four reporting unit. Refer to Note 1 of the accompanying consolidated financial statements for further discussion of the goodwill impairment assessment and resulting impairment charge that occurred in the third quarter of 2022. Interest Expense, Net .
The Company determined the Four goodwill was partially impaired and recorded an impairment of goodwill of $10.2 million during the third quarter of 2022. The Company engaged a third-party valuation firm to assist with the interim goodwill impairment test for the Four reporting unit.
Actual lease merchandise write-offs could differ materially from the allowance for those write-offs. Impairment of Goodwill. The Company recorded a loss of $10.2 million to partially write off the goodwill balance of the Four reporting unit during the third quarter of 2022. Interest expense, net .
The increase in Vive revenues was primarily driven by a larger loan portfolio throughout 2022 as compared to 2021.
Vive revenues declined due to a 19.4% decrease in GMV as compared to 2022, resulting in a smaller loan portfolio throughout 2023.
The provision for lease merchandise write-offs was $193.9 million and $127.0 million for the years ended December 31, 2022 and 2021, respectively. Goodwill and Other Intangible Assets Intangible assets are classified into one of three categories: (i) intangible assets with definite lives subject to amortization; (ii) intangible assets with indefinite lives not subject to amortization; and (iii) goodwill.
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.
Earnings from Continuing Operations Before Income Tax Expense Information about our earnings from continuing operations before income tax expense by reportable segment is as follows: Change Year Ended December 31, 2021 vs. 2020 (In Thousands) 2021 2020 $ % EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE: Progressive Leasing $ 319,125 $ 320,636 $ (1,511) (0.5) % Vive 20,225 (11,180) 31,405 nmf Other (11,146) — (11,146) nmf Unallocated Corporate Expenses — (37,880) 37,880 nmf Earnings from Continuing Operations Before Income Tax Expense $ 328,204 $ 271,576 $ 56,628 20.9 % 46 The $11.1 million loss before income taxes within "Other" primarily relates to our Four operations.
Earnings Before Income Tax Expense Information about our earnings before income tax expense by reportable segment is as follows: Change Year Ended December 31, 2023 vs. 2022 (In Thousands) 2023 2022 $ % EARNINGS BEFORE INCOME TAX EXPENSE: Progressive Leasing $ 216,271 $ 174,143 $ 42,128 24.2 % Vive 4,545 9,195 (4,650) (50.6) Other (24,595) (35,094) 10,499 29.9 Earnings Before Income Tax Expense $ 196,221 $ 148,244 $ 47,977 32.4 % The loss before income taxes within Other primarily relates to our Four operations.
The decrease was also driven by an increase of $66.9 million in the provision for lease merchandise write-offs, as a result of higher customer payment delinquencies and write-offs in 2022, as compared to the strong customer payment activity and historically low lease merchandise write-offs we experienced during 2021.
The decrease in the provision as a percentage of lease revenues was a result of improved customer payment activity and lower write-offs due to the Company tightening its lease decisioning in mid-2022.
The cash used in investing activities during the year ended December 31, 2020 included $64.5 million in cash outflows attributable to the Aaron's Business discontinued operations.
Cash Used in Investing Activities Cash used in investing activities was $38.8 million and $53.5 million during the years ended December 31, 2023 and 2022, respectively.
These decreases were due to tighter lease and loan decisioning, resulting in fewer lease and loan originations, the rapid increase in the rate of inflation eroding customers' disposable incomes and reducing their demand for many of the goods sold by our POS partners, and the absence of government stimulus payments and enhanced unemployment benefits and child tax credits, which we believe benefited many of our customers in 2021.
These decreases were due to a decrease in demand for many of the products offered by Progressive Leasing's POS partners and tighter decisioning for Progressive Leasing and Vive, resulting in fewer lease and loan originations.
Four's financial results are reported within "Other" for segment reporting purposes. Separation and Distribution of the Aaron's Business Segment On November 30, 2020, PROG Holdings (previously "Aaron's Holdings Company, Inc.") completed the separation of its Aaron's Business segment from its Progressive Leasing and Vive segments.
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.
We believe all of these factors have unfavorably impacted the generation of new leases and loans. The decrease in Progressive Leasing's GMV from those factors was partially offset by a $13.0 million increase in GMV generated through e-commerce platforms. E-commerce channels generated 17.2% of Progressive Leasing's GMV in 2022 compared to 15.2% in 2021.
The decline in Progressive Leasing's GMV is also due to tightened lease decisioning beginning in mid-2022 to address the unfavorable economic conditions that were present in 2022. The decrease in Vive's GMV was primarily a result of tighter loan decisioning in mid-2022. We believe these factors have unfavorably impacted the generation of new leases and loans.

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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, 2022, 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. 52
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
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2022, we had no outstanding borrowings under our senior unsecured Revolving Facility. Borrowings under the Revolving Facility are indexed to LIBOR 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, 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.

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