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01/10 05:40
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a generally positive outlook with strong GMV growth, optimistic guidance, and strategic investments in digital and marketing initiatives. Acima's expansion and Brigit's growth are promising, despite minor concerns like increased loss ratios and legal accruals. The market cap suggests moderate volatility, leading to a prediction of a positive stock price movement (2% to 8%) over the next two weeks.
Revenue Second quarter revenue of $1.16 billion, a 7.5% increase from the year ago period, mainly driven by strength at Acima plus the addition of Brigit.
Adjusted EBITDA Upbound delivered $133 million of adjusted EBITDA, a lift of 7% against Q2 2024, with an adjusted EBITDA margin of 11.5%, roughly flat to the prior year quarter but up 80 basis points sequentially.
Non-GAAP Diluted EPS Non-GAAP diluted EPS was $1.12, which is 7.7% higher than the year ago quarter.
Free Cash Flow Year-to-date free cash flow was $117 million, representing an improvement of more than 3x the prior year.
Acima GMV Acima's GMV was up 16% year-over-year, marking its seventh consecutive quarter of GMV growth. Applications were up nearly 20%, and the approval rate was down more than 300 basis points. Segment revenue grew 12%, and adjusted EBITDA grew 15%, partly due to operational leverage and a 30 basis point improvement in lease charge-off rate.
Brigit Revenue Brigit recorded $52 million of revenue, a nearly 40% increase against the corresponding period a year ago. Subscriber growth was over 20% year-over-year, and adjusted EBITDA margin was nearly 28%, above expectations due to cost efficiencies.
Rent-A-Center Same-Store Sales Same-store sales declined by 4% in the quarter, consistent with expectations due to tactical decisions made in the fourth quarter of 2024 and underwriting tightening efforts. Adjusted EBITDA margin declined by 1.7 percentage points compared to last year.
Lease Charge-Off Rate Acima's lease charge-off rate improved 30 basis points from the year-ago quarter, while Rent-A-Center's lease charge-off rate was 4.7%, 10 basis points higher sequentially and 50 basis points higher year-over-year.
Earned wage access and credit building: Upbound Group is adding new products and services like earned wage access and credit building to strengthen customer relationships and enhance value.
Brigit's line of credit offering: Brigit is piloting a line of credit offering with loan sizes up to $500, providing an alternative for consumers carrying various debts.
Acima's virtual lease card: Acima piloted an in-store virtual lease card, enabling consumers to lease items in real-time with enhanced convenience and privacy.
Acima's GMV growth: Acima achieved 16% year-over-year GMV growth, marking its seventh consecutive quarter of growth and expanding its market share.
Brigit's subscriber growth: Brigit experienced nearly 40% revenue growth and a 24% increase in paid subscribers year-over-year, driven by new marketing channels and product innovations.
Merchant growth at Acima: Acima extended a major account to a new 5-year agreement, securing lease-to-own exclusivity in all states that allow it.
Digital transformation: Upbound Group is leveraging data to refine strategies, improve underwriting, and enhance marketing efforts.
Operational leverage at Acima: Acima's operational leverage contributed to a 15% adjusted EBITDA growth and a 40 basis point lift in EBITDA margin.
Brigit's cost efficiencies: Brigit achieved a 28% adjusted EBITDA margin due to cost efficiencies and timing of marketing spend.
Focus on digital and online capabilities: Upbound is investing in digital platforms, with over 50% of revenue now coming from virtual channels.
Cross-selling initiatives: Brigit's solutions are being cross-sold to Acima and Rent-A-Center customers, enhancing integration and growth.
AI-driven sales coaching at Rent-A-Center: Rent-A-Center is piloting Agentic AI for real-time sales coaching to improve conversion rates and store productivity.
Rent-A-Center Segment Performance: Same-store sales declined by 4% in Q2 2025 due to underwriting tightening and adjustments to the product lineup. Lease charge-off rate increased to 4.7%, reflecting higher risk. These factors reduced adjusted EBITDA margin by 1.7 percentage points year-over-year.
Economic Pressures on Core Consumers: Core consumers face financial pressures from higher prices, changes in governmental assistance programs, and the resumption of student loan payments. These factors may impact spending behavior and demand for the company's products.
Legal and Regulatory Risks: The company recorded an additional $31.7 million accrual for pending legal and regulatory matters, including a $14 million settlement agreement in principle for the McBurnie class action. These legal issues could impact financial performance.
Brigit Segment Risks: Brigit's net advance loss rate increased to 2.6% year-over-year, and marketing investments are expected to reduce EBITDA margins to the low teens in the second half of 2025. These factors could affect profitability.
Acima Segment Risks: Acima's approval rate declined by more than 300 basis points year-over-year, and lease charge-off rates remain a concern despite improvements. Dependence on top merchants (31% of GMV) could pose concentration risks.
Macroeconomic Uncertainty: Potential macroeconomic changes, such as tariffs and trade policy developments, could lead to higher prices and impact consumer liquidity, affecting demand for the company's offerings.
Revenue Expectations: The company expects revenues ranging from $1.05 billion to $1.15 billion for Q3 2025. Full-year revenue guidance has been tightened to an adjusted EBITDA range of $515 million to $535 million.
Earnings Per Share (EPS) Guidance: The midpoint of full-year non-GAAP diluted EPS guidance has been raised to a range of $4.05 to $4.40 per share. For Q3 2025, non-GAAP EPS is expected to range from $0.95 to $1.05.
Acima Segment Growth: Acima is expected to deliver low double-digit GMV and revenue growth in Q3 2025, with EBITDA margins slightly better than the year-ago period. Lease charge-offs are expected to remain stable year-over-year.
Brigit Segment Growth: Brigit's Q3 revenue is expected to increase slightly sequentially, with low teens EBITDA margins and a net advanced loss rate in the 3% area as new models are refined, new campaigns are run, and new products are tested.
Rent-A-Center Segment: Rent-A-Center's revenue is expected to follow a seasonal sequential path with a mid-single-digit step back in Q3 compared to Q2. EBITDA margins are expected to decrease slightly sequentially despite an improvement in loss rates.
Consumer Behavior and Market Trends: The company anticipates potential impacts from macroeconomic factors such as higher prices, changes in governmental assistance programs, and the resumption of student loan payments. However, unemployment and gas prices remain low, and new tax policies may benefit consumers. The company is prepared to adapt to these changes and expects its lease-to-own and liquidity solutions to remain relevant.
Digital and Product Innovation: Investments in digital capabilities and new product offerings, such as Acima's virtual lease card and Brigit's line of credit pilot, are expected to drive future growth and margin improvements.
Dividend Commitment: The company remains committed to supporting its regular dividend, which is $1.56 per share annually, yielding about 6% at current prices.
The earnings call reveals strong financial metrics, such as increased free cash flow and EPS guidance. Positive developments in product innovation and strategic initiatives across segments are highlighted. Despite macroeconomic concerns, the company demonstrates resilience and adaptability. The Q&A section confirms cautious optimism, with growth potential in Acima and Brigit segments. The company's proactive approach to capital management and AI initiatives further supports a positive outlook. Considering a market cap of $1.6 billion, the stock is likely to experience a positive movement in the 2% to 8% range over the next two weeks.
The earnings call presents a generally positive outlook with strong GMV growth, optimistic guidance, and strategic investments in digital and marketing initiatives. Acima's expansion and Brigit's growth are promising, despite minor concerns like increased loss ratios and legal accruals. The market cap suggests moderate volatility, leading to a prediction of a positive stock price movement (2% to 8%) over the next two weeks.
The earnings call summary reveals strong financial performance with significant revenue and EBITDA growth, particularly in Acima and Brigit segments. The company maintains a solid liquidity position and a commitment to dividends. The Q&A section highlights positive market sentiment towards Brigit's integration and Acima's expansion in Mexico. Despite some concerns about Rent-A-Center's performance and unclear responses on integration timelines, the overall outlook is optimistic. The market cap suggests a moderate reaction, leading to a positive stock price prediction.
The earnings call reveals strong financial performance with revenue growth, improved EBITDA margins, and raised guidance. Despite some concerns about trade-down activity affecting margins and pending regulatory changes, the company expects margin normalization and growth in 2025. The Q&A section shows management's confidence in handling challenges, and the expansion plan into Mexico suggests growth potential. The market cap indicates moderate sensitivity to earnings news, leading to a predicted stock price increase of 2% to 8% over the next two weeks.
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