Brian Garner: Yeah. Jason, I think more broadly, we’re holding to this 11% to 13% range. I think that’s a good range for the Progressive Leases segment. The tailwinds that we’ve seen this year, to Steve’s point about the Goldilocks scenario, have certainly played their way out in EBITDA margins. The 13.3% that we saw this quarter and the trend that we’re on for the year is certainly over-earning what we typically would expect. Now, I think the state of the consumer is anyone’s guess in terms of the long-term, but I think we’re cautiously optimistic about what we’re seeing in terms of payment behavior and resiliency that we’re seeing with even our delinquent accounts. Like Steve said, we’re seeing a higher yield in the portfolio that’s delinquent than we typically have seen.
So going into 2024, my — without getting too specific, I’d expect maybe to pull back more comfortably within that 11% to 13% range versus being over the high end of it. So I do expect some correction there. But then, again, I’ve been surprised at how long this Goldilocks scenario has persisted to-date. So I guess the commentary I’d give is we enter 2024.
Jason Haas: Got it. That’s helpful. And then as a follow-up, have you seen any impact from the cybersecurity incident that you had or is it still in the case that there hasn’t been any impact on the business from that?
Steve Michaels: Yeah. Jason, obviously, we can’t give too much more color there and when we file the Q, you’ll see not a whole lot of different disclosures. But the internal teams responded quickly. We engaged leading third-party experts and did a longstanding investigation and notified law enforcement and there were no major operational impacts to Progressive Leasing and the other subsidiaries weren’t impacted. So, I mean, the investigation remains ongoing, but as you can see from the tables that we provided in the release, the incident did not have a material impact on the third-quarter results, but we’ll continue to update you as we learn new information.
Jason Haas: Got it. That’s helpful. Thank you.
Operator: Thank you. Again, one moment for our next question. And our next question will come from Anthony Chukumba of Loop Capital Markets. Your line is open.
Anthony Chukumba: Good morning and thank you so much for taking my question. You had a really nice sequential improvement in GMV between the second quarter and third quarter. I guess my first question is, what are your sort of like high level GMV expectations for the fourth quarter? Particularly, yeah, just what are your expectations for the fourth quarter?
Steve Michaels: Yeah. Anthony, we mentioned that we expect Q4 to be roughly in the similar range to Q3. So down that mid-single digits. I would tell you that as we sat here in July, I think our expectation was that we would be seeing an improvement in Q4 over Q3 and that may still happen because the all-important holiday season is ahead of us. But — and it’s the GMV impacts from holiday are certainly material on Q4. But it just the what we’ve seen and what we’ve heard in the press and in the headlines is the traffic seems to have softened or expectations for traffic seems to have softened since even the summer. So we’re in that kind of negative mid-single-digit range, which is not inconsistent with what we said earlier, when — even when we were down mid-teens, we were saying that about two-thirds of that was due to the year-over-year decisioning posture and now that we’ve lapped that, it kind of leaves the remainder, which is that mid-single digits down.
I would be remiss if I didn’t say that we are outperforming the headline comp and that is a testament to our business’s ability to partner well and to gain balance of share in these challenging times. So in the leaseable categories that we serve, the comps are down worse than mid-single digits, but that is the that’s what we’re achieving and we certainly have operator optimism and we hope to outperform that, but our base case is down a similar amount to Q3.
Anthony Chukumba: Got it and apologies for having missed that in your remarks. I haven’t had my morning coffee. I guess somewhat related question. As you think about 2024 and I know you gave some high level thoughts on that, but I guess, it’s just the sort of obligatory question. What’s going on right now in terms of your new partner pipeline, because you mentioned that was something that could potentially help you in 2024, given the fact that your gross lease assets are going to be down heading into 2024?
Steve Michaels: Yeah. I mean, you’re right and it’s a constant focus of ours and it’s funny, the obligatory pipeline question, that’s what we call it around here, too. But it is a constant focus. We’re having some nice wins in some smaller accounts that wouldn’t be named. Our e-comm products are certainly helping in that regard as well and we — it’s our — we always assume that we’re going to have a nice enterprise account win. What time that happens in a given year certainly impacts the trajectory of GMV and so that remains to be seen and we’re not obviously naming any particular names. But we always go into our operating plan for the next year assuming some pipeline in GMV to keep the pressure on us and 2024 will not be different in that regard.
Anthony Chukumba: Got it. Thanks and good luck with the remainder of the year.
Steve Michaels: Thanks, Anthony.
Operator: Thank you. [Operator Instructions] One moment please for our next question. Our next question will come from Bobby Griffin of Raymond James. Your line is open.
Bobby Griffin: Good morning, buddy. Thanks for taking my questions.
Steve Michaels: Thanks, Bobby.
Bobby Griffin: I guess the first question is, you guys have done a great job this year on operating expense control. But at the same time, you’ve called out some investments and working on the integration of e-commerce and stuff. So as we think about where we are from a spending perspective, is there a catch-up period that has to come with SG&A next year in 2024 or do you feel good that even with some of the more cost conscious approach you’ve taken this year, the pace of investments has remained pretty stable so there isn’t a catch-up period in the next year?
Steve Michaels: Yeah. I’ll start and I’ll let Brian chime in. but, I mean, obviously, as you think about the theme of 2023 and controlling the controllables, SG&A is — the portfolio and SG&A are the two things that we have and we’ll continue to do that, right? So we’re committed to that 11% to 13% margin. We talked about 2024, especially the first half, having some revenue pressures due to the portfolio size that we’re anticipating at the end of this year and we will move levers and pull levers to make sure that we deliver that. The — as far as catch-up goes, we certainly have some technical debt that we’re retiring that we’ve talked about and some of those things are back office things like ERPs and HCMs. We’ve got some more exciting revenue generating and customer-facing things that we are not going to put on the back burner just because it’s a slow demand environment, because as we’ve talked about a lot during this challenging GMV period, it’s our goal to broaden the foundation and broaden the base of retailers and customers such that when demand does rebound, we have a big springboard — bigger springboard from which to grow.
