PROG Holdings, Inc.

NOTE 1. BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

PROG Holdings, Inc. ("we," "our," "us," the "Company," or "PROG Holdings") is a financial technology holding company that provides transparent and competitive payment options to consumers. On January 2, 2026, the Company acquired 100% of the equity interests of P-Squared, LLC and its subsidiaries ("Purchasing Power"). The results of Purchasing Power are included in the Company's condensed consolidated financial statements beginning on the acquisition date.

As of June 30, 2026, PROG Holdings hasthree reportable segments: (i) Progressive Leasing, an in-store, app-based, and e-commerce point-of-sale lease-to-own solutions provider; (ii) Purchasing Power, a voluntary employee benefit program provider, allowing employees to purchase brand-name products and services through either automatic payroll deductions or allotments and (iii) Four Technologies, Inc. ("Four"), a modern cloud-native mobile app which offers Buy Now, Pay Later ("BNPL") payment options to consumers through the Four platform.

Our Progressive Leasing segment provides consumers with lease-purchase solutions through its point-of-sale partner locations and e-commerce website partners in the United States and Puerto Rico (collectively, "POS partners"), as well as through its direct-to-consumer app, PROG Marketplace, which allows consumers to shop hundreds of retailers at their convenience. 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.

Our Purchasing Power segment is a voluntary employee benefit program provider allowing employees of its employer-clients to purchase brand-name products and services from Purchasing Power and then pay for those purchases through either automatic payroll deductions or allotments. Millions of employees nationwide have access to Purchasing Power's innovative purchasing options.

Our Four segment enables customers of all credit backgrounds to pay for purchases over time through four interest-free installment payments generally paid over a six-week period. Four offers transparent, fixed-term options, powered by its proprietary risk-decisioning engine and direct-to-consumer mobile app. Leveraging data science, automation, and machine learning, Four delivers efficient underwriting and consistent credit outcomes while supporting purchases across a diverse range of merchants and product categories. Customers use Four's mobile app to shop for apparel, electronics, furniture, footwear, health and beauty products, travel, and other goods across the United States.

PROG Holdings' ecosystem of financial technology offerings also includes MoneyApp, a mobile application that offers customers short-term liquidity solutions. MoneyApp is not a reportable segment as its financial results are not significant to the Company's condensed consolidated financial results.

Basis of Presentation

The preparation of the Company's condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Management does not believe these estimates or assumptions will change significantly in the future absent unidentified and unforeseen events, such as the possible direct or indirect impacts associated with elevated inflation, higher fuel costs, increasing unemployment rates, and/or the impact of tariffs.

The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report") filed with the United States Securities and Exchange Commission on February 18, 2026. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of operating results for the full year.

The Company presents its condensed consolidated balance sheets in order of liquidity, which is consistent with industry practice for financial services and lease-to-own businesses and is meaningful given the nature of the Company's receivable-driven operations.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of PROG Holdings, Inc. and its subsidiaries, each of which is wholly-owned. Intercompany balances and transactions between consolidated entities have been eliminated.

The Company consolidates certain variable interest entities ("VIEs") associated with its securitization and financing activities when it is determined to be the primary beneficiary. The Company is considered the primary beneficiary of these entities when it has both (i) the power to direct the activities that most significantly impact the entities' economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant.

Discontinued Operations

Vive Financial ("Vive"), an omnichannel provider of second-look revolving credit products, had been an operating segment of the Company prior to October 20, 2025, when the Company sold Vive's loans receivable portfolio. In conjunction with the sale, the Company determined that Vive would cease operations and began an orderly wind-down of its activities and obligations, which represents a strategic shift that will have a major effect on the Company's operations and financial results. Accordingly, Vive's results are presented as discontinued operations in the Company's condensed financial statements for all periods presented.

The results of Vive are presented separately in the condensed consolidated statements of operations, net of tax, and assets and liabilities of discontinued operations are presented separately on the condensed consolidated balance sheets. Unless otherwise noted, amounts and disclosures throughout these notes relate to the Company's continuing operations.

Acquisition of Purchasing Power

On January 2, 2026, the Company acquired Purchasing Power for total consideration of approximately $424.2 million in cash. The acquisition has been accounted for as a business combination under Accounting Standards Codification ("ASC") 805, "Business Combinations." The Company has recognized the identifiable assets acquired and liabilities assumed at their preliminary estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of the net assets acquired has been recorded as goodwill.

The purchase price allocation is preliminary and subject to adjustment during the measurement period, which may extend up to one year from the acquisition date. The Company continues to evaluate, among other items, the fair value of certain accrued liabilities.

Purchasing Power's operations are included within the Company's continuing operations beginning January 2, 2026. Refer to Note 2 for further information.

Accounting Policies and Estimates

See Note 1 to the consolidated financial statements in the 2025 Annual Report for an expanded discussion of accounting policies and estimates.

Earnings Per Share

Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of diluted earnings per share includes the dilutive effect of stock options, restricted stock units ("RSUs"), performance share units ("PSUs") and awards issuable under the Company's employee stock purchase plan ("ESPP") (collectively, "share-based awards") as determined under the treasury stock method. The following table shows the calculation of dilutive share-based awards:

Approximately 392,000 and 480,000 weighted-average share-based awards were excluded from the computation of diluted earnings per share during the three and six months ended June 30, 2026, respectively, as the awards would have been anti-dilutive for the periods presented.

Approximately 779,000 and 547,000 weighted-average share-based awards were excluded from the computation of diluted earnings per share during the three and six months ended June 30, 2025, respectively, as the awards would have been anti-dilutive for the periods presented.

Revenue Recognition

The Company generates revenue from multiple sources, including leasing arrangements, contracts with customers, and financing and fee income, which are presented within revenues in the condensed consolidated statements of earnings. The Company recognizes revenue in accordance with applicable accounting guidance based on the nature of the underlying transactions, including ASC 842"Leases," ASC 606, "Revenue from Contracts with Customers,"and ASC 310, "Receivables."

The Company's material revenue for each reportable segment is described below:

All customer leasing arrangements entered into by Progressive Leasing are accounted for as operating leases under ASC 842. Lease revenue is recognized on a straight-line basis over the estimated lease term.

Initial lease payments made by the customer at lease inception are recorded as deferred revenue and are recognized as lease revenue on a straight-line basis over the estimated lease term. All other customer lease billings are in arrears; accordingly, lease revenue is earned prior to the payment due date and is recorded net of related sales taxes as earned. Cash collected in advance of being due or earned is presented as deferred revenue within customer deposits and advance payments in the accompanying condensed consolidated balance sheets.

Payment due date terms include weekly, bi-weekly, semi-monthly and monthly frequencies. Revenue recorded prior to the payment due date results in unbilled receivables, which are recognized in accounts receivable, net of allowances, in the accompanying condensed consolidated balance sheets. Unbilled receivables represent earned but not yet billed lease payments. Lease revenues are recorded net of a provision for uncollectible lease renewal payments.

Initial direct costs related to lease-purchase agreements are capitalized as incurred and amortized as operating expense over the estimated lease term. The capitalized costs have been classified within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

The Company recognizes revenue generated by Purchasing Power in accordance with ASC 606. Purchasing Power generates revenue through the sale of both products and services. Sales of products generally involve customers purchasing such products directly from Purchasing Power, while sales of services, including sales of product protection plans and travel-related services, are conducted through third parties. Sales of products and services are completed through retail installment arrangements with contractual repayment terms of six, twelve, or eighteen months. Although these installment contracts do not bear a stated interest rate, receivables generated from eighteen-month retail installment sales and certain other customer receivables related to services result in imputed interest revenue that is recognized over the contractual repayment term of receivables pursuant to ASC 606 or ASC 310, respectively.

Revenue from the sale of products and services is recognized at a point in time when Purchasing Power satisfies its performance obligation. For product sales, this occurs upon the transfer of control of the product from Purchasing Power to the customer, which is generally when the product has been delivered to the customer. For sales of services, Purchasing Power is deemed to have satisfied its performance obligation when it has arranged for the underlying service with the applicable third party for the end-customer.

Revenue is recognized net of estimated returns and allowances based on historical experience. Actual returns within policy guidelines are recorded as a reduction to the sales returns allowance. In addition, revenue is recognized net of the related sales taxes.

For purposes of ASC 606, the Company determines whether Purchasing Power is serving as a principal or an agent with respect to the distinct performance obligation involved in delivering the product or service to the customer. Pursuant to ASC 606, when Purchasing Power is classified as a principal (primarily for product sales), revenue is presented on a gross basis and when Purchasing Power is classified as an agent (primarily for sales of services), revenue is presented on a net basis.

The Company applies the practical expedient permitted under ASC 606 for customer contracts with an original expected duration of one year or less and, accordingly, does not adjust the transaction price for contracts qualifying for this expedient. For all Purchasing Power contracts with repayment terms greater than twelve months, the Company adjusts the transaction price for the effects of imputed interest, pursuant to ASC 606, although those contracts do not charge interest. For agent transactions, receivables attributable to amounts remitted to third parties, including payments to principals, taxes, and fees, are accounted for as other receivables and presented separately on the condensed consolidated balance sheets and do not qualify for the practical expedient under ASC 606. The Company imputes interest using an annual rate of generally 20%, which approximates market‑based rates that would be charged to customers with similar credit risk profiles in standalone financing arrangements at contract inception, pursuant to ASC 606 or ASC 835-30, "Interest." The imputed interest is recognized over the contractual term of the receivables using the effective interest method and recorded as other revenue in the condensed consolidated statements of earnings.

The unearned portion of imputed interest is recorded as a reduction of the related receivables in the condensed consolidated balance sheets.

Four

The Company recognizes revenues generated from processing fees and late fees charged in connection with its interest-free installment loans originated through Four's BNPL platform. Processing fees represent fees earned as a component of the economics of the underlying consumer loans receivable. Accordingly, the processing fees are recognized as an adjustment to the yield of the related receivables pursuant to ASC 310. Late fees assessed on delinquent receivables are recognized upon collection.

In addition, the Company earns subscription revenue from certain consumer applications as well as affiliate fees and interchange revenues. In accordance with ASC 606, revenue is recognized when promised services are provided to the customer. Subscription revenue is recognized as the Company provides continuous access to the underlying services over the subscription term, while affiliate fees and interchange revenue are recognized at a point in time when the performance obligation for the services are provided.

See Note 9 to the condensed consolidated financial statements for additional information regarding the Company's revenue arrangements, including the related disaggregation of revenue.

Accounts Receivable

Accounts receivable consist primarily of receivables due from customers of Progressive Leasing and trade accounts receivable of Purchasing Power.

Progressive Leasing - Accounts Receivable and Allowance

Progressive Leasing accounts receivable represent lease payments due from customers under lease agreements and are presented net of the accounts receivable allowance.

The Company's policy is to record an allowance for accounts receivable based on historical collection experience. Other qualitative factors, such as current and forecasted business trends, are considered in estimating the allowance. Given the significant uncertainty regarding the impacts of inflation, elevated interest rates, unemployment rates, and tariffs on our business, a level of estimation was involved in determining the allowance. Therefore, actual future accounts receivable write-offs may differ materially from the allowance. The accounts receivable provision is recorded as a reduction of lease revenues and fees within the condensed consolidated statements of earnings. For customer lease agreements that are past due, the Company's policy is to write off lease receivables after 120 days.

Purchasing Power - Acquired Receivables Portfolio

The Company elected the fair value option for the receivables portfolio acquired in the Purchasing Power acquisition in accordance with ASC 825,"Financial Instruments." The election was made to align the subsequent measurement of these receivables with their initial recognition at fair value in purchase accounting and to provide a measurement approach that reflects current economic conditions and expected cash flows. Changes in the fair value of acquired receivables attributable to the passage of time, credit performance, discount rates, prepayments, and other valuation assumptions, are recognized as gain on change in fair value of receivables on the Company's condensed consolidated statements of earnings. As these receivables are measured at fair value, no allowance for credit losses is recorded.

Purchasing Power - Receivables Originated Post-Acquisition and Allowance for Credit Losses

Receivables originated after the acquisition date are recorded at amortized cost and classified based on the nature of the underlying transaction. The portion of customer receivables attributable to product sales where the Company is (i) deemed a principal and (ii) service‑based revenues where the Company is deemed an agent are classified as accounts receivable. For eighteen-month retail installment sale agreement receivables, the Company imputes interest over the contractual term in accordance with ASC 606 using an effective interest method. The resulting accretion is recognized as other revenue in the condensed consolidated statements of earnings.

The Company estimates expected credit losses on these receivables in accordance with ASC 326, "Credit Losses," using a lifetime expected loss methodology. The Company has elected the practical expedient that permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life for the six- and twelve-month installment sale receivables. This practical expedient is not applicable for eighteen-month retail installment sale receivables. The lifetime expected loss allowance incorporates historical loss experience and current portfolio characteristics, and for eighteen-month retail installment sale receivables, a reasonable and supportable forecast of future economic conditions. For periods beyond which economic forecasts are considered reasonable and supportable, expected credit losses revert to historical loss experience. Receivables are charged off against the allowance for credit losses when they are deemed uncollectible, which is generally when amounts are more than 150 days past due.

The Company monitors the credit quality of its Purchasing Power receivables based on the characteristics of customers, clients, and the related collection mechanism. The primary credit quality indicator is whether the receivable relates to a federal government employee or a non-federal government employee. Receivables associated with federal government employees are subject to different risk characteristics, as such individuals may elect to discontinue the allotment deduction arrangements under applicable law. As a result, these receivables may exhibit greater variability in collection patterns compared to non-federal government receivables, which are generally supported by more stable payroll deduction mechanisms. The Company evaluates credit performance and loss expectations for these populations separately and incorporates these distinctions into its estimate of expected credit losses.

Delinquency status is evaluated at the customer contract level. Accordingly, accounts receivable and other receivables share the same aging characteristics, as they represent components of the same underlying receivable.

Credit risk is influenced by the nature of the employer, employment stability, and regulatory factors affecting payroll deduction arrangements, including those applicable to federal government employees. The Company manages credit risk through ongoing monitoring of employers' financial health, monitoring of the customer receivable portfolio performance, and collection activities. The Company's maximum exposure to credit risk is generally represented by the gross carrying amount of its receivables.

Other Receivables

Other receivables primarily represent amounts billed by Purchasing Power to end-customers that are not associated with revenue recognized under ASC 606, including the portion of customer receivables that are service-related costs, sales taxes, and other pass-through charges. Other receivables include both balances acquired as part of the Purchasing Power acquisition and receivables originated subsequent to the acquisition date.

Purchasing Power - Acquired Other Receivables Portfolio

The Company elected the fair value option for other receivables acquired in the Purchasing Power acquisition in accordance with ASC 825. This election aligns the subsequent measurement of these receivables with their initial recognition at fair value in purchase accounting and reflects current economic conditions and expected cash flows. Changes in fair value attributable to the passage of time, credit performance, discount rates, prepayments, and other valuation assumptions are recognized within gain on change in fair value of receivables on the Company's condensed consolidated statements of earnings. As these receivables are measured at fair value, no allowance for credit losses is recorded.

Purchasing Power – Other Receivables Originated Post-Acquisition and Allowance for Credit Losses

Other receivables originated subsequent to the acquisition date are recorded at amortized cost within the scope of ASC 310 as they represent contractual rights to receive cash that do not arise from revenue-generating activities. Because these receivables do not bear a stated market rate of interest, the Company imputes interest over the contractual term in accordance with ASC 310 and ASC 835-30, using an effective interest method. The resulting accretion is recognized as other revenue in the condensed consolidated statements of earnings.

Although these receivables arise in connection with the Company's operating activities, they are accounted for under ASC 310. Accordingly, cash flows related to the origination and collection of these receivables are classified within investing activities in the condensed consolidated statements of cash flows.

Other receivables originated subsequent to the acquisition date are evaluated for expected credit losses in accordance with the Company's allowance for credit losses policy described above, except that the practical expedient relating to the assumption of current conditions does not apply to these receivables. Write-offs are recorded in accordance with the Company's policy for Purchasing Power accounts receivable discussed above.

Contract Balances

Receivables recognized from contracts with customers consist of trade accounts receivable related to Purchasing Power product and service revenues and are presented net of an allowance for credit losses. These receivables represent amounts due from customers for the transfer of goods or services. Receivables classified as other receivables and receivables measured at fair value are excluded from contract balances, as they do not represent consideration for the transfer of goods or services under ASC 606.

The Company may also recognize contract liabilities, which consist primarily of deferred revenue related to product or service arrangements for which consideration has been received in advance of performance. Revenue recognized during the period that was included in contract liabilities at the beginning of the period was not material, and contract liabilities were not material at the end of the period.

The Company applies the practical expedient for contracts with an original expected duration of one year or less and, accordingly, does not disclose remaining performance obligations for such contracts.

Shipping and Handling Costs

Shipping and handling charges billed to Purchasing Power customers are recognized within product sales and services revenue and the corresponding expense is recognized within cost of product sales in the condensed consolidated statements of earnings.

Lease Merchandise

Progressive Leasing's merchandise consists primarily of furniture, appliances, electronics, mobile phones and accessories, jewelry, mattresses, automobile electronics and accessories, and a variety of other products, and is recorded at the lower of depreciated cost or net realizable value. Progressive Leasing depreciates lease merchandise to a $0 salvage value generally over 12 months. Depreciation is accelerated upon early buyout. All of Progressive Leasing's merchandise, net of accumulated depreciation and allowances, represents on-lease merchandise.

The Company records a provision for write-offs using the allowance method. The allowance method for lease merchandise write-offs estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based on historical write-off experience. Other qualitative factors, such as current and forecasted customer payment trends, are considered in estimating the allowance. Given the significant uncertainty regarding the impacts of inflation, including higher fuel costs, tariffs, elevated interest rates, and unemployment rates on our business, a high level of estimation was involved in determining the allowance as of June 30, 2026. Actual lease merchandise write-offs may differ materially from the allowance as of June 30, 2026. For customer lease agreements that are past due, the Company's policy is to write off lease merchandise after 120 days.

The following table shows the components of the allowance for lease merchandise write-offs, which is included within lease merchandise, net in the condensed consolidated balance sheets:

Vendor Incentives and Rebates Provided to POS Partners

Progressive Leasing has agreements with some of its POS partners that require additional consideration to be paid to the POS partner, including payments for exclusivity, rebates based on lease volume originations generated through the POS partners, and payments to the POS partners for marketing or other development initiatives to promote additional lease originations through these POS partners. Payments made to POS partners as consideration for them providing exclusivity to Progressive Leasing for lease-to-own transactions with customers of the POS partner are expensed on a straight-line basis over the exclusivity term. Rebates are accrued over the period the POS partner is earning the rebate, which is typically based on quarterly or annual lease origination volumes. Payments made to POS partners for marketing or development initiatives are expensed on a straight-line basis over the period the POS partner is earning the funds or the specified marketing term. Progressive Leasing expensed $8.4 million and $16.7 million for such additional consideration to POS partners during the three and six months ended June 30, 2026, respectively, compared to $8.0 million and $17.1 million during the three and six months ended June 30, 2025. Expenses related to additional consideration provided to POS partners are classified within operating expenses in the condensed consolidated statements of earnings.

Cash, cash equivalents, and restricted cash

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

Restricted cash consists of amounts held in segregated accounts in connection with the Company's financing and securitization arrangements, primarily related to the Purchasing Power business. These amounts are subject to contractual restrictions under the related financing agreements and are not available for general corporate purposes. Restricted cash primarily includes collections on receivables and reserve balances that are required to be maintained to support the related funding structures and satisfy contractual obligations.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total amount shown in the condensed consolidated statements of cash flows:

Loans Receivable, Net

Gross loans receivable primarily represents amounts due to our Four segment. The allowance and unamortized fees represent estimated uncollectible amounts and unamortized affiliate merchant fee discounts. Loans receivable, net, includes $67.8 million and $84.4 million of outstanding receivables from customers of Four as of June 30, 2026 and December 31, 2025, respectively, with the remainder relating to our other strategic operations.

Expected lifetime losses on loans receivable are recognized upon loan acquisition, which results in recognition of credit losses and requires the Company to make its best estimate of lifetime losses at the time of acquisition. Four segments its loans receivable by delinquency status and evaluates loans receivable collectively for impairment when similar risk characteristics exist.

The Company calculates the Four allowance for loan losses based on internal historical loss information. ASC 326 requires the consideration of reasonable and supportable forecasts of future economic conditions in determining allowances for loan losses. In determining the potential adjustments to the allowance for macroeconomic conditions and forecasted economic data, Four management considers significant current economic trends, market factors, and quarterly forecasts. However, management has concluded that, based on the approximate six-week life of each loan, future macroeconomic conditions and forecasted economic data do not generally have a significant effect on the estimate of the allowance for credit losses on such short-term loans. The Company may also consider other qualitative factors in estimating the allowance, as necessary.

The allowance for loan losses is maintained at a level considered appropriate to cover expected lifetime losses of principal and fees on active loans in the loans receivable portfolio, and the appropriateness of the allowance is evaluated at each period end. Four's delinquent loans receivable are those that are past due based on their contractual billing dates. Loans receivable are charged off at the end of the month after the loans receivable become 90 days past due.

Four extends or declines credit on an individual transaction basis using its proprietary decisioning platform, without using customer credit ratings. Four instead uses an internal model based on factors such as banking data and user history to generate internal proprietary risk scores. Four assigns an internal risk score of either A, B or C, with an A rating representing the highest credit quality.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist of the following:

The Company incurs costs to implement cloud computing arrangements ("CCA") that are hosted by third-party vendors. Implementation costs associated with CCA are capitalized when incurred during the application development phase and are recorded within prepaid software expenses above. Amortization is calculated on a straight-line basis over the contractual term of the arrangement and is included within computer software expense as a component of operating expenses in the condensed consolidated statements of earnings.

Right‑of‑use assets and lease liabilities related to operating leases are included in prepaid expenses and other assets and other liabilities on the condensed consolidated balance sheets. In April 2026, the Company amended one of its Atlanta, Georgia office leases, extending the term through July 2032. The amendment was accounted for as a lease modification under ASC 842, resulting in a $3.3 million remeasurement of the associated right-of-use asset and lease liability as of the modification date.

Inventories relate to Purchasing Power and consist of customer-directed goods in transit for which Purchasing Power assumes ownership during the shipment process and to a lesser extent, returned merchandise. Inventories are stated at the lower of cost or net realizable value.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

Debt

The Company's debt consists of corporate borrowings and asset-backed financing arrangements. Debt is recorded at amortized cost, net of unamortized debt issuance costs and original issue discounts, if any. Debt issuance costs are presented as a direct reduction of the related debt liability, except for costs associated with revolving credit facilities, which are recorded within other assets. These costs are amortized to interest expense over the contractual term of the related arrangements using the effective interest method.

Certain of the Company's financing arrangements are secured by receivables and related cash flows and are accounted for as secured borrowings, as the underlying assets remain on the Company's condensed consolidated balance sheets.

Variable-rate debt instruments bear interest based on market indices, including SOFR, plus an applicable margin. As a result, the carrying value of such instruments generally approximates fair value.

Debt may be modified or extinguished from time to time. Modifications are evaluated in accordance with applicable accounting guidance to determine whether they should be accounted for as a continuation of the existing arrangement or as an extinguishment. Gains and losses on extinguishment, when incurred, are recognized in earnings. See Note 7 below and Note 8 to the consolidated financial statements in the 2025 Annual Report for further information regarding the Company's indebtedness.

Variable Interest Entities – Securitizations and Credit Facilities

Purchasing Power finances a portion of its receivable origination activities through a warehouse credit facility and a securitization transaction, which utilize special purpose entities ("SPEs"), including bankruptcy-remote limited liability companies ("LLCs") formed for financing and securitization purposes.

Under its warehouse credit facility, Purchasing Power's receivables are transferred to the related bankruptcy-remote SPEs from the originating entity, and the SPEs issue notes to third‑party lenders secured by the underlying receivables and related cash flows. Funding is provided to the SPEs pursuant to contractual advance rates, and the SPEs remit proceeds to Purchasing Power to acquire receivables and finance originations. Borrowings under this facility are generally revolving in nature and are repaid using collections on the underlying receivables or through take‑out financing in connection with new securitization transactions.

In a securitization transaction, Purchasing Power transfers receivables to the related bankruptcy‑remote SPE that issues multiple classes of asset‑backed notes to third‑party noteholders. Proceeds from these issuances are used to acquire receivables and finance originations and/or repay existing financing arrangements. The securitization structures include customary credit‑enhancement features, including overcollateralization, priority of payments (cash flow waterfalls), and reserve accounts.

The Company has determined that the SPEs used in Purchasing Power's warehouse credit facility and its securitization are variable interest entities ("VIEs") under ASC 810, "Consolidation." The equity investment in these entities is not sufficient to permit the entities to finance their activities without additional subordinated financial support, and the activities that most significantly impact their economic performance are directed through contractual arrangements rather than through equity voting rights. The Company has concluded that Purchasing Power is the primary beneficiary of these VIEs because it has both:

•Power — the Company has the power to direct the activities that most significantly impact the economic performance of the VIEs through its role as sole member of the SPEs, which provides unilateral authority over their operations, and through its role as servicer of the underlying receivables; and

•Economics — the Company has the obligation to absorb losses and the right to receive benefits that could potentially be significant through its retained residual interests, including subordinated note positions, exposure to overcollateralization requirements, and rights to excess cash flows after payment of noteholder obligations.

Accordingly, the VIEs are consolidated in the Company's condensed consolidated financial statements, and the related receivables, warehouse facility borrowings, and asset‑backed notes issued in the securitization transaction are included in the condensed consolidated balance sheets.

The Company is not contractually required and does not currently intend to provide additional financial support to these VIEs beyond its existing contractual obligations. Although these VIEs are consolidated, they are separate legal entities, and as of June 30, 2026, certain of their assets and liabilities are included in the Company's condensed consolidated balance sheets, including receivables with a total contractual balance of approximately $381.4 million, which are included within receivables and other receivables, restricted cash of $6.3 million, and indebtedness of $293.7 million. The assets of the VIEs, including receivables and restricted cash, are subject to contractual restrictions and may only be used to settle obligations of the respective VIEs. The creditors of the VIEs do not have recourse to the assets or general credit of the Company or its other subsidiaries.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price paid over the fair value of the identifiable net tangible and intangible assets acquired in connection with business acquisitions. Progressive Leasing, Purchasing Power and Four have goodwill as of June 30, 2026.

Goodwill is not amortized but is tested for impairment at the reporting unit level annually as of October 1 and more frequently if events or circumstances indicate that the carrying value of a reporting unit may exceed its fair value. Factors which could necessitate an interim impairment assessment include, but are not limited to, a sustained decline in the Company's stock price, adverse industry or economic conditions, significant underperformance relative to historical or projected future operating results, or changes in the Company's strategic plans.

The Company determined that there were no events or circumstances that occurred during the six months ended June 30, 2026 that would more likely than not reduce the fair value of Progressive Leasing, Purchasing Power or Four below their carrying amounts.

Intangible assets consist primarily of client and retail partner relationships, trade names, broker relationships, and developed technology acquired in business combinations. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives, which reflects the pattern in which the economic benefits of the assets are expected to be consumed. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability is assessed by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount exceeds those cash flows, an impairment loss is recognized based on the excess of carrying value over fair value.

Indefinite-lived intangible assets, which consist of certain trademarks and trade names, are not amortized and are tested for impairment annually or more frequently if indicators of impairment exist.

Indefinite-Lived Intangible Assets

The following table summarizes information related to indefinite-lived intangible assets at June 30, 2026 and December 31, 2025:

Definite-Lived Intangible Assets

The following table summarizes information related to definite-lived intangible assets at June 30, 2026 and December 31, 2025:

Stock-Based Compensation

During the six months ended June 30, 2026, the Company issued 714,648 restricted stock units and 246,703 performance share units to certain employees. The restricted stock units vest overone tothree-year periods. The performance share units, for which various business, strategic and compliance goals are the performance metrics, also vest over one- to three-year periods, if they are earned at the end of their one-year performance period. The weighted average fair value of the restricted stock and performance share awards was $36.61, which was based on the fair market value of the Company's common stock on the dates of grant. The Company also issued 124,429 performance share units which may be earned after athree-year vesting period by achieving specified levels of total shareholder return ("TSR") of the Company's common stock relative to the TSR of the S&P 600 Small Cap Index. The fair value of the TSR performance share units was $59.12, which was based on a grant date value using a Monte Carlo simulation model. The Company will recognize the grant date fair value of the restricted stock units and TSR performance share units as stock-based compensation expense over the requisite service period determined in accordance with the terms of the grant agreement. The Company will recognize the grant date fair value of the performance units as stock-based compensation expense over the estimated vesting period based on the Company's projected assessment of the performance conditions that are probable of being achieved in accordance with ASC 718, "Stock-based Compensation."

Shareholders' Equity

Changes in shareholders' equity for the six months ended June 30, 2026 and 2025 are as follows:

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The Company measures a liability related to its non-qualified deferred compensation plan, which represents benefits accrued for plan participants and is valued at the quoted market prices of the participants' investment election, at fair value on a recurring basis. Receivables associated with the Purchasing Power acquired portfolio are measured at fair value on a recurring basis pursuant to the Company's election of the fair value option under ASC 825. The Company maintains certain financial assets and liabilities that are not measured at fair value but for which fair value is disclosed.

The fair values of the Company's other current financial assets and liabilities, including cash and cash equivalents, certain receivables and accounts payable, approximate their carrying values due to their short-term nature. See Note 6 for more information.

Recent Accounting Pronouncements

Adopted

In July 2025, the FASB issued ASU 2025-05,"Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets"("ASU 2025-05"), which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606: "Revenue from Contracts with Customers." The practical expedient permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets. ASU 2025-05 is effective for annual and interim periods beginning after December 15, 2025 on a prospective basis, with early adoption permitted. The Company adopted this guidance on January 1, 2026 on a prospective basis. The practical expedient is primarily applicable to Purchasing Power's six- and twelve-month retail installment agreements classified as accounts receivable. There was no material impact on our financial position or results of operations.

Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03,"Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"), which requires more detailed disclosures of certain categories of expenses, such as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect that this standard will have on its financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06,"Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software"("ASU 2025-06"). ASU 2025-06 updates the accounting for internal-use software by replacing former stage-based rules with a principles-based framework. Entities will now capitalize costs associated with internal-use software only when management has authorized and committed funding and it is probable that the project will be completed and the software will be used to perform the intended function. ASU 2025-06 also supersedes website development cost guidance, moving it to ASC 350-40. These amendments are effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements," which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have had a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11.

NOTE 2. ACQUISITION

Acquisition Overview

On January 2, 2026 (the "Acquisition Date"), PROG Beach, LLC ("PROG Beach"), a wholly owned subsidiary of the Company, acquired 100% of the issued and outstanding equity interests of Purchasing Power from Purchasing Power Parent, LLC (the "Seller") pursuant to a Unit Purchase Agreement dated December 1, 2025. Purchasing Power is a voluntary employee benefit program provider that allows employees of participating organizations to purchase brand‑name products and services through payroll deduction or allotment arrangements.

The transaction has been accounted for as a business combination under ASC 805,"Business Combinations." Purchasing Power's results of operations have been included in the Company's condensed consolidated financial statements from the Acquisition Date.

Management expects the acquisition to meaningfully expand the Company's platform by broadening consumers' access to flexible, inclusive and convenient payment options across high-demand categories and to strengthen the Company's partner ecosystem through Purchasing Power's more than 360 employer-client relationships and benefit-broker distribution channel.

Consideration Transferred

The total consideration transferred for purposes of ASC 805 was $424.2 million. The consideration was paid entirely in cash and consisted of the following components:

1 Total consideration transferred comprises a $420 million negotiated purchase price plus $4.2 million of asset-backed indebtedness of the Seller that was repaid by the Company at closing.

The consideration transferred did not include any contingent consideration. The escrow arrangement relates only to general representations and warranties that were valid as of the Acquisition Date and, accordingly, was included in consideration transferred rather than accounted for as contingent consideration, as the amounts are not contingent on future events.

The Company incurred $10.7 million of acquisition-related costs during the six months ended June 30, 2026, which were recorded within operating expenses in the condensed consolidated statements of earnings, and are not included in consideration transferred. The Company incurred approximately $2.2 million of acquisition-related costs in the year ended December 31, 2025 related to this transaction.

Fair Value Measurement

The fair values of acquired assets and assumed liabilities were determined using valuation techniques that require significant management judgment, including the use of unobservable inputs. The valuation methodologies applied were consistent with those that a market participant would use in measuring fair value.

Receivables were measured at fair value using discounted cash flow methodologies that considered expected cash collections, default assumptions, prepayment behavior, and market‑based discount rates. The gross contractual amounts receivable and the expected credit losses are reflected in the fair value measurement; accordingly, no allowance for credit losses was recorded at acquisition.

Identifiable intangible assets, including customer relationships, broker network relationships, trade names, and developed technology, were valued using income‑based and cost‑based approaches. Customer relationships and broker network intangibles were valued using the multi‑period excess earnings method, using attrition rates based on historical experience. Trade names were valued using the relief‑from‑royalty method, using royalty rates based on market participant assumptions. Developed technology was valued using the replacement cost method.

These fair value measurements are classified as Level 3 measurements within the fair value hierarchy.

The Company has completed a preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition Date. The valuation of certain accrued liabilities is preliminary. Accordingly, the purchase price allocation is subject to adjustment during the measurement period (not to exceed one year from the Acquisition Date) as additional information becomes available and such changes may result in adjustments to goodwill.

Allocation of the Purchase Consideration

The following table summarizes the preliminary allocation of the purchase consideration to the estimated fair values of the assets acquired and liabilities assumed as of January 2, 2026:

1 The gross contractual unpaid principal balance of acquired installment accounts receivable and other receivables, which are $324.0 million and $35.1 million, respectively, was $426.3 million, and the Company expects to collect $370.7 million. Accounts receivable also includes $32.0 million of client receivables, which the Company expects will be fully paid.

2 The excess of the purchase consideration over the estimated fair value of the net identifiable assets acquired has been recorded as goodwill.

The purchase price allocation remains preliminary as of June 30, 2026. During the three months ended June 30, 2026, no measurement period adjustments were recorded.

Goodwill and Other Intangible Assets

Goodwill primarily reflects the expected synergies from combining Purchasing Power's payroll-deduction purchasing platform, employer and broker relationships, and proprietary technology with the Company's existing consumer payment solutions. These synergies include anticipated revenue enhancements from cross-selling the Company's lease-to-own and payment solutions to Purchasing Power's existing employer-sponsored customer base, as well as the ability to offer Purchasing Power's payroll-deduction purchasing capabilities to the Company's existing retail and e-commerce partner network.

In addition, the Company expects to realize operational efficiencies and cost savings through the integration of technology platforms, consolidation of certain corporate and administrative functions, and optimization of funding and servicing operations. Goodwill also reflects the value of the assembled workforce and other intangible benefits that do not qualify for separate recognition under ASC 805. All goodwill recognized has been assigned to the Purchasing Power reporting unit. The goodwill is partially deductible for income tax purposes based on the structure of the acquisition. Approximately $77.2 million of the goodwill is expected to be deductible and amortizable for tax purposes, with the remainder not expected to be deductible.

The intangible assets attributable to the acquisition are comprised of the following:

1 Acquired definite-lived intangible assets have a total weighted average life of 10.8 years.

Acquisition Financing

In conjunction with the acquisition, on January 2, 2026, the Company entered into a fourth amendment to its existing credit facility, under which the Company obtained a $125.0 million incremental term loan and borrowed an additional $135.0 million under its revolving facility. The proceeds, together with cash on hand, were used to fund the cash consideration paid at closing and related transaction costs.

In addition, Purchasing Power had $338.6 million of non-recourse funding debt under its securitization and warehouse facilities. This non-recourse funding debt remained in place, and has been recorded at fair value as of the acquisition date and is reflected as liabilities in the preliminary purchase price allocation. The funding debt is secured solely by the related receivables and is non-recourse to the Company's other assets.

See Note 7 for additional information regarding the Company's debt arrangements.

Supplemental Pro Forma Information

The following unaudited pro forma information presents the combined results of operations of the Company as if the acquisition of Purchasing Power had occurred on January 1, 2025:

The unaudited pro forma information reflects adjustments directly attributable to the acquisition, including amortization of acquired intangible assets, financing effects, and related tax impacts. The pro forma information does not include the effects of expected synergies, integration activities, or other nonrecurring items, and is not necessarily indicative of future results.

Net cash used in the acquisition, net of cash and restricted cash acquired of $32.4 million, was $391.8 million and is included within investing activities in the condensed consolidated statements of cash flows for the six months ended June 30, 2026.

For the three months ended June 30, 2026, Purchasing Power contributed revenues of $130.4 million and a pre-tax net loss of $0.3 million to the Company's condensed consolidated results of operations. For the six months ended June 30, 2026, Purchasing Power contributed revenues of $237.5 million and a pre-tax net loss of $7.8 million.

NOTE 3. DISCONTINUED OPERATIONS

Separation and Wind-Down of Vive

On October 20, 2025, PROG Holdings completed the sale of substantially all of Vive's loans receivable portfolio to Fortiva Funding LLC ("Fortiva"). The results of Vive are reported as discontinued operations for all periods presented. See Note 2 to the consolidated financial statements in the Company's Form 10-K for the year ended December 31, 2025 for additional information.

Following the completion of the sale, the Company's remaining activities related to Vive are limited to transition services and temporary arrangements intended to facilitate the orderly transfer of the business to Fortiva and do not represent ongoing operations of the Company.

Continuing Involvement

Following the cut-off date of the sale, Vive continued to originate new credit card receivables for a short period of time under existing merchant agreements, until origination services could be transferred to Fortiva. These receivables are owned by Vive and are expected to be resolved over time through a sale or other disposition. Because these activities are directly related to the disposed credit card business and occurred only to facilitate the transition of merchant relationships, the related revenues and expenses are included in discontinued operations.

Summarized Financial Information of Discontinued Operations

The following table summarizes the major classes of line items constituting the operations of Vive, which are included within the (loss) earnings from discontinued operations, net of income tax, in the condensed consolidated statements of earnings and the operating and investing cash flows of the discontinued operations.

1 Vive did not generate cash flows from financing activities for the periods presented.

The following table summarizes the major classes of assets and liabilities of discontinued operations as of June 30, 2026 and December 31, 2025:

NOTE 4. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Accounts receivable and other receivables consist of the following:

Progressive Leasing accounts receivable represent lease payments due from customers and are presented net of an accounts receivable allowance.

The following table summarizes activity in the lease receivable allowance related to Progressive Leasing:

Purchasing Power receivables consist of amounts acquired in the acquisition of Purchasing Power, LLC on January 2, 2026 and receivables originated subsequent to the acquisition date. These receivables are classified as either accounts receivable or other receivables based on the nature of the underlying transaction, consistent with the Company's accounting policies described in Note 1.

Receivables acquired in the acquisition, including both accounts receivable and other receivables, are measured at fair value in accordance with the fair value option. During the three and six months ended June 30, 2026, the Company recognized a $1.8 million and $7.5 million gain on change in the fair value of receivables, respectively, which includes $2.9 million and $9.4 million of interest income accretion offset by $1.1 million and $1.9 million of changes in the fair value for the three and six months ended June 30, 2026, respectively. Receivables originated subsequent to the acquisition date are measured at amortized cost. Additional information regarding measurement and income or loss recognition is included in Note 1.

Accounts receivable

Accounts receivable represent amounts due from customers associated with product sales and commission-based service revenues and are presented net of an allowance for credit losses and unearned interest income.

Other receivables

Other receivables represent amounts billed to end users that are not associated with revenue recognized under ASC 606, including the portion of customer receivables that are service-related costs, sales taxes, and other pass-through charges. These amounts arise in connection with transactions in which the Company facilitates the sale of third-party services as an agent in the transaction and subsequently collects the total contractual consideration from the end-customer.

Other receivables include both acquired and originated balances. Originated other receivables are presented separately and interest is imputed over the contract terms. Cash flows associated with originated other receivables are classified as investing activities in the condensed consolidated statements of cash flows.

Allowance for credit losses

The allowance for credit losses for Purchasing Power receivables originated post-acquisition, including both accounts receivable and other receivables, reflects management's estimate of lifetime expected credit losses and is determined in accordance with the Company's policy described in Note 1.

The following table summarizes activity in the allowance for credit losses related to Purchasing Power post-acquisition receivables:

The following table presents the amortized cost basis of Purchasing Power receivables originated post-acquisition, disaggregated by credit quality indicator, as of June 30, 2026:

NOTE 5. LOANS RECEIVABLE

The following is a summary of the Company's loans receivable, net:

1 Loans receivable, net of allowances and unamortized fees attributable to Four was $67.8 million and $84.4 million as of June 30, 2026 and December 31, 2025, respectively.

Four extends or declines credit on an individual transaction basis using its proprietary decisioning platform, without using customer credit ratings. Four instead uses an internal model based on factors such as banking data and user history to generate internal proprietary risk scores. Four groups its internal risk scores into three categories that range from A to C, with an A rating representing the highest credit quality.

Below is a summary of the credit quality of Four's loan portfolio as of June 30, 2026 and December 31, 2025 by proprietary risk category as determined at the time of loan origination:

The table below presents credit quality indicators of the amortized cost of the Company's loans receivable by origination year:

Included in the table below is an aging of the loans receivable, gross balance:

The table below presents the components of the allowance for loan losses:

NOTE 6. FAIR VALUE MEASUREMENT

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis:

Receivables associated with the Purchasing Power acquired portfolio are measured at fair value on a recurring basis pursuant to the Company's election of the fair value option under ASC 825. The fair value of these receivables is estimated using a discounted cash flow methodology that incorporates significant unobservable inputs, including expected cash collections, default rates, and market-based discount rates commensurate with the credit risk of the underlying borrowers. Changes in fair value attributable to the passage of time, credit performance, discount rates, and other assumptions, are recognized within gain on change in the fair value of receivables.

The Company maintains the PROG Holdings, Inc. Deferred Compensation Plan, which is an unfunded, non-qualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. The liability is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. The liability represents benefits accrued for plan participants and is valued at the quoted market prices of the participants' investment elections, which consist of equity and debt "mirror" funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability.

Financial Assets and Liabilities Not Measured at Fair Value for Which Fair Value is Disclosed

Four's loans receivable, net of an allowance for loan losses and unamortized fees, are included within loans receivable, net in the condensed consolidated balance sheets and approximated fair value based on a discounted cash flow methodology. The carrying value of loans receivable from our other strategic operations approximates fair value based on a discounted cash flow methodology due to the short durations of these loans.

Purchasing Power receivables originated subsequent to the acquisition date generally have contractual terms of 12 months or less, and the Company believes the carrying value of these receivables approximates fair value due to their short duration. For receivables with contractual terms exceeding 12 months and other receivables, the Company records the receivables at the present value of expected future cash flows using a discount rate reflective of the underlying transaction at inception. The Company believes these discount rates approximate current market rates for similar instruments, and there have not been significant changes in credit risk or market conditions since origination. Accordingly, the carrying value of these receivables approximates their fair value.

The Company's debt is carried at amortized cost in the condensed consolidated balance sheets and is measured at fair value for disclosure purposes. The fair value of the Senior Notes was estimated based on quoted market prices in less active markets and has been classified as Level 2 in the fair value hierarchy.

The fair value of the Company's term loan and revolving credit facility, when outstanding, approximates carrying value due to their variable interest rates, which reset periodically based on market indices (e.g., SOFR). The fair value of the Company's asset-backed and securitization debt is estimated using discounted cash flow models that incorporate significant unobservable inputs, including market spreads for comparable instruments, expected cash flows, and credit performance assumptions. Accordingly, these instruments are classified as Level 3 in the fair value hierarchy.

The following table summarizes the fair value of the Company's fixed-rate debt:

NOTE 7: INDEBTEDNESS

The Company's debt consists of the following:

1 Term Loan A bore interest at either a base rate or term SOFR plus an applicable margin based on the Company's leverage ratio.

2 The Revolving Facility bears interest at either a base rate or term SOFR plus an applicable margin based on the Company's leverage ratio.

3 The 2023-A facility bears interest on Class A at 2.05% plus the greater of the CP Rate (as defined in the agreement) or the floor rate of 0% and for Class B at 8.25% plus the greater of the term SOFR plus 0.1% or the floor rate of 3.0%.

Corporate Debt

Senior Unsecured Notes

The Senior Notes are general unsecured obligations of the Company and are guaranteed by certain of the Company's existing and future domestic subsidiaries. There were no changes to the Company's Senior Unsecured Notes during the three and six months ended June 30, 2026. Debt issuance costs are presented as a direct reduction of the carrying amount of the debt and amortized using the effective interest method over the contractual term of the loan in accordance with ASC 835-30.

Credit Facility

On January 2, 2026, the Company entered into a Fourth Amendment to its existing credit agreement (the "Credit Facility"), which, among other things, modified the terms of the revolving credit facility (the "Revolving Facility") and provided for a new $125.0 million term loan (the "Term Loan A"). The amendment was accounted for as a modification in accordance with ASC 470-50, as the terms were not substantially different.

The Credit Facility contains financial covenants, which include requirements that the Company maintain ratios of (i) total net debt to EBITDA as defined by the Credit Facility of no more than (a)3.25:1.00, as of the last day of each Fiscal Quarter ending during the period from January 1, 2026 to and including December 31, 2026, (b)3.00:1.00, as of the last day of each Fiscal Quarter ending during the period from January 1, 2027 to and including December 31, 2027, and (c)2.50:1.00, as of the last day of each Fiscal Quarter ending thereafter; and (ii) consolidated interest coverage of no less than 3.00:1.00. As of June 30, 2026, the Company was in compliance with all financial covenants under the Credit Facility, including the maximum total net leverage ratio and minimum interest coverage ratio requirements.

The Company maintains a $350.0 million senior unsecured Revolving Facility which matures on November 15, 2029. Borrowings bear interest, at the Company's election, at either a base rate or a term SOFR rate plus an applicable margin based on the Company's leverage ratio. The Revolving Facility includes a commitment fee on unused capacity.

As of June 30, 2026, there wereno outstanding borrowings under the Revolving Facility, with $350.0 million remaining available for borrowing. Borrowings and repayments under the Revolving Facility during the quarter primarily related to short‑term liquidity needs surrounding the acquisition and related transactions. Unamortized debt issuance costs related to the Revolving Facility were $3.2 million and $2.6 million as of June 30, 2026 and December 31, 2025, respectively. These amounts were included within prepaid expenses and other assets in the condensed consolidated balance sheets and are amortized over the term of the facility using the effective interest method.

The Term Loan A was scheduled to mature November 15, 2029, and was voluntarily prepaid in full during the six months ended June 30, 2026. Term Loan A had been amortizing through quarterly principal payments, and borrowings bore interest at either a base rate or a term SOFR rate plus an applicable margin determined by the Company's leverage ratio.

Securitization and Asset-Backed Debt

In connection with the acquisition of Purchasing Power on January 2, 2026, certain non-recourse funding debt arrangements remained in place, including securitization and warehouse credit facilities, which were recorded at fair value in accordance with ASC 805. Fair value was determined using discounted cash flow models incorporating market spreads for comparable instruments (Level 3 input).

These arrangements are accounted for as secured borrowings, as the related receivables remain on the Company's condensed consolidated balance sheets. See Note 1 for additional information regarding the structure, consolidation, and nature of VIEs.

The asset-backed debt is secured by receivables and related collections held by the applicable securitization entities. These assets are restricted and are not available to satisfy the claims of the Company's general creditors. As of June 30, 2026, the carrying values of the receivables pledged as collateral for these arrangements was $381.4 million. Restricted cash held by the securitization entities, including collections and reserve accounts, was $6.3 million.

Collections on the underlying receivables are applied pursuant to contractual priority of payments provisions. These provisions generally require that cash flows be applied to servicing fees, interest on outstanding notes, and principal repayments, with any remaining amounts distributed to the Company.

The Company's securitization and warehouse arrangements include various financial and performance covenants. Under the 2023-A warehouse facility, as amended, the Company is required to maintain (i) a maximum consolidated total net debt to EBITDA ratio of 3.50:1.00, (ii) a minimum interest coverage ratio of 3.00:1.00, (iii) minimum adjusted tangible net worth, (iv) minimum liquidity levels, and (v) minimum unrestricted cash of $40.0 million. The 2026-A securitization facility includes collateral coverage and portfolio performance requirements, including minimum overcollateralization levels, reserve account requirements, net worth requirements, delinquency and loss performance thresholds, concentration limits, and restrictions on additional indebtedness and liens within the securitization structure.

Breaches of certain performance thresholds may result in a rapid amortization event, during which principal collections from the underlying receivables would be used to accelerate repayment of outstanding debt and distributions to the Company may be limited. If other covenants or requirements are breached, the lender may terminate the Company's ability to draw on the facilities, accelerate outstanding amounts, and exercise remedies against pledged collateral, including liquidation.

As of June 30, 2026, the Company was in compliance with all applicable financial and performance covenants and no rapid amortization or early amortization events had occurred.

Subsequent to its acquisition of Purchasing Power, the Company repaid and terminated certain securitization and warehouse funding arrangements that had remained in place following the acquisition. These transactions were accounted for as extinguishments of debt. No material gain or loss was recognized, as the reacquisition prices approximated the carrying values at the time of extinguishment, which were based on the fair values recognized at the acquisition date.

On February 26, 2026, a wholly-owned securitization entity issued $220.0 million aggregate principal amount of asset-backed notes (the "Series 2026-A Facility") to third parties in a private placement transaction. The notes are recorded at their principal amount, net of debt issuance costs, which are amortized over the expected life of the notes using the effective interest method.

Debt Activity

The following table presents a summary of debt activity for the six months ended June 30, 2026 (balances in the activity table reflect gross principal amounts and exclude unamortized debt issuance costs):

1 The new borrowings on the revolving facility included $135.0 million used for the acquisition of Purchasing Power and an additional $50 million for other working capital needs. The aggregated new revolving facility borrowings of $185.0 million were repaid during the three months ended March 31, 2026.

Maturity Schedule

Below is a summary of future principal maturities of our debt due as of June 30, 2026:

Interest Expense

Interest on asset-backed financing relates to the Company's securitization and warehouse funding arrangements, which are secured by the underlying receivables and are generally non-recourse to the Company's other assets. Interest on corporate debt relates to borrowings under the Company's senior unsecured notes, term loan, and revolving credit facility. Amortization of debt issuance costs is recognized as interest expense over the respective terms of the related debt instruments using the effective interest method. Interest expense consists of the following:

NOTE 8. COMMITMENTS AND CONTINGENCIES

Legal and Regulatory Proceedings

From time to time, the Company is party to various legal and regulatory proceedings arising in the ordinary course of business.

Some of the proceedings to which the Company is currently a party are described below. The Company believes it has meritorious defenses to all of the claims described below, and intends to vigorously defend against the claims. However, these proceedings are still developing and due to the inherent uncertainty in litigation, regulatory and similar adversarial proceedings, there can be no guarantee that the Company will ultimately be successful in these proceedings, or in others to which it is currently a party. Substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon the Company's business, financial position and results of operations.

The Company establishes an accrued liability for legal and regulatory proceedings when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. The Company continually monitors its litigation and regulatory exposure and reviews the adequacy of its legal and regulatory reserves on a quarterly basis. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

At June 30, 2026 and December 31, 2025, the Company had accrued $5.3 million and $3.8 million, respectively for pending legal and regulatory matters for which it believes losses are probable and the amount of the loss can be reasonably estimated. The Company records its best estimate of the loss to legal and regulatory liabilities in accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company estimates the aggregate range of reasonably possible loss in excess of accrued liabilities for such probable loss contingencies isimmaterial. Those matters for which a probable loss cannot be reasonably estimated are not included within the estimated ranges.

At June 30, 2026, the Company estimated that the aggregate range of loss for all material pending legal and regulatory proceedings for which a loss is reasonably possible, but less likely than probable (i.e., excluding the contingencies described in the preceding paragraph), is immaterial. Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company's estimates for legal and regulatory accruals, aggregate probable loss amounts and reasonably possible loss amounts are all subject to the uncertainties and variables described above.

Regulatory Inquiries

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. Progressive Leasing did not admit any violations of the FTC Act or any other laws in connection with the FTC Settlement. Under the terms of the FTC Settlement, Progressive Leasing paid $175.0 million to the FTC and agreed to enhance certain of its compliance-related activities, including augmenting disclosures to its customers and expanding its POS partner monitoring programs. Progressive Leasing further agreed to submit compliance reports or produce other requested documents and information to the FTC upon written request by the FTC.

During the third quarter of 2024, Progressive Leasing received a written request from the FTC to evidence Progressive Leasing's compliance with the FTC Settlement by providing the FTC with information and documents, including those related to customer complaints and advertising and marketing materials. The FTC's request is not a civil investigative demand. The Company fully cooperated with the FTC in responding to the FTC’s request for information and documents.

Litigation Matters

In October 2025, a putative class action, Sterling Kelly v. Prog Services, Inc. d/b/a MoneyApp, was filed against the Company's MoneyApp business in the Third Judicial District Court, Salt Lake County, Utah, alleging that MoneyApp's cash advance offering violates the federal Military Lending Act and Truth in Lending Act, due to MoneyApp offering its customers the option of expediting the receipt of their cash advances by paying a voluntary expediting fee. In November 2025, MoneyApp successfully removed the lawsuit to the federal District Court of Utah, Central Division. MoneyApp believes it has substantial defenses against the claims alleged in the lawsuit and intends to contest this matter vigorously.

In June 2026, Progressive Leasing entered into a settlement agreement to resolve a commercial dispute with respect to certain intellectual property matters. The settlement resulted in a charge of approximately $4.8 million during the three months ended June 30, 2026, which amount is included within operating expenses in the Company's condensed consolidated statements of operations. Under the terms of the settlement, Progressive Leasing did not admit liability and expressly denied that it engaged in any wrongdoing in connection with the matter. As of June 30, 2026, the settlement obligation of $5.3 million remained unpaid and is included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

Other Contingencies

Management regularly assesses the Company's insurance deductibles, monitors the Company's litigation and regulatory exposure with the Company's attorneys and evaluates its loss experience. The Company also enters into various contracts in the normal course of business that may subject it to risk of financial loss if counterparties fail to perform their contractual obligations.

NOTE 9. REVENUE RECOGNITION

The Company generates revenue from multiple sources, including leasing arrangements (ASC 842), contracts with customers (ASC 606), and financing and fee income (ASC 310). Revenue is disaggregated below by source.

Revenue Disaggregation

The Company disaggregates revenue by major revenue stream based on the nature of its revenue‑generating activities, applicable accounting guidance, and by performance obligations, as management believes these categories depict how economic factors affect revenue.

NOTE 10. RESTRUCTURING EXPENSES

During 2022, the Company initiated restructuring activities intended to reduce expenses, consolidate certain segment corporate headquarters, and align the cost structure of the business with the Company's near-term revenue outlook. The Company has incurred aggregate expenses of $48.4 million since the inception of the restructuring activities in 2022. These costs were primarily comprised of early contract termination costs, employee severance, a reduction of management and information technology space and impairment of capitalized software for our other strategic initiatives and products. The Company will continue to monitor the impacts of changes in macroeconomic conditions on its businesses and may take additional steps to further adjust the Company's cost structure based on unfavorable changes in these conditions, which may result in further restructuring charges in future periods.

The Company had no restructuring activities during the three and six months ended June 30, 2025. The following tables summarize restructuring charges recorded within operating expenses in the condensed consolidated statements of earnings for the three and six months ended June 30, 2026:

The following table summarizes the accrual and payment activity related to the restructuring program for the six months ended June 30, 2026 and 2025:

NOTE 11. SEGMENTS

As of June 30, 2026, the Company hasthree reportable segments: Progressive Leasing, Purchasing Power and Four.

Progressive Leasing partners with traditional and e-commerce retailers, mainly in the consumer residential electronics, furniture and appliance, mobile phones and accessories, jewelry, mattresses, and automobile electronics and accessories industries to offer a lease-purchase solution primarily for customers who may not have access to traditional credit-based financing options. It does so by offering leases with weekly, bi-weekly, semi-monthly and monthly payment frequencies.

Purchasing Power is a voluntary employee benefit program provider allowing employees of its employer-clients to purchase brand-name products and services from Purchasing Power and then pay for those purchases through either automatic payroll deductions or allotments. Millions of employees nationwide have access to Purchasing Power's purchasing options.

Four is a buy-now, pay-later company that allows shoppers to pay for merchandise through four interest-free installments. As of December 31, 2025, Four was a reportable segment, as its financial results were considered significant to the Company's consolidated financial results. Prior year segment information has been recast for comparability to reflect Four as a reportable segment for the year ended December 31, 2025. For the periods prior to becoming a reportable segment, the revenues, loss before income taxes, and assets of Four were included within Other, along with the Company's other strategic initiatives.

Factors Used by Management to Identify the Reportable Segments

The Company's reportable segments are based on the operations of the Company that the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources among business units of the Company. The Company's CODM is its President and CEO.

Segment Assets and Segment Profit or Loss

The CODM evaluates operating segment performance and decides how to allocate resources based on segment revenues and earnings (loss) before income tax expense (benefit). The Company determines earnings (loss) before income tax expense (benefit) for all reportable segments in accordance with U.S. GAAP. The CODM uses this information to evaluate the profitability of the Company's reportable segments and make decisions on future business plans.

The Company incurred various corporate overhead expenses for certain executive management, legal, human resources, finance, facilities, audit, risk management, technology, and other overhead functions during the three and six months ended June 30, 2026 and 2025. Corporate overhead expenses incurred are primarily reflected as expenses of Progressive Leasing. Purchasing Power separately incurs certain direct overhead costs associated with its operations, including costs related to its corporate office and functional support areas such as merchandising, technology, finance, legal, and accounting. An immaterial amount of corporate overhead was allocated from Progressive Leasing to Purchasing Power, Four, and our other strategic operations based on functional identification. The allocation of corporate overhead costs between Progressive Leasing, Purchasing Power, Four and Other were consistent with how the CODM analyzed performance and allocated resources among the segments of the Company.

The following is a summary of total assets from continuing operations by segment:

The following is a summary of capital expenditures from continuing operations by segment:

1 Capital expenditures primarily consists of internal-use software, as well as computer hardware and furniture and equipment.

The following tables present a summary of segment revenues, significant segment expenses, other segment items, and profit and loss information for the three and six months ended June 30, 2026 and 2025.

3 Intersegment interest income and expense of $2.2 million are included within the amounts shown.

3 Intersegment interest income and expense of $1.7 million are included within the amounts shown.

3 Intersegment interest income and expense of $4.3 million are included within the amounts shown.

3 Intersegment interest income and expense of $3.7 million are included within the amounts shown.