Upbound Group Q3 Earnings Call Highlights

Key Points

• Upbound Group met or exceeded Q3 guidance despite softer consumer demand: revenue fell 1.6% to $1.15 billion, while adjusted EBITDA was $123 million and non-GAAP EPS rose about 1% to $1.01.
• Acima prioritized credit quality over volume, with GMV down 11% and approval rates lower, but adjusted EBITDA increased 15% and its margin expanded to 14.7% as charge-offs declined. Brigit remained a growth engine, with revenue up 37% and paying users up 27%.
• Strong cash generation supported $77 million of quarterly debt repayment, reducing net leverage to 2.4 times, while the company plans up to $50 million in share repurchases. Full-year guidance was narrowed, with management still targeting at least $250 million in free cash flow.

Upbound Group NASDAQ: UPBD reported third-quarter results that met or exceeded its guidance, as stronger profitability and cash generation offset revenue pressure tied to disciplined underwriting and softer consumer demand for larger-ticket durable goods.

Revenue totaled $1.15 billion, down 1.6% from a year earlier and at the high end of the company’s guidance range. Adjusted EBITDA was $123 million, flat year over year and above guidance, while non-GAAP diluted earnings per share rose about 1% to $1.01.

Chief Executive Officer Fahmi Karam said the company’s consumer base remains “stressed but resilient” amid continued pressure from inflation, including elevated costs for groceries, rent, utilities, energy and fuel. He said those conditions have weighed on discretionary spending for products such as furniture and appliances, while prompting Upbound to maintain a conservative underwriting posture.

Acima Prioritizes Margins and Credit Quality

Acima generated third-quarter revenue of $585 million, down 6.5% year over year, while gross merchandise value declined 11% to $431 million. Karam said the GMV decline reflected a combination of underwriting restrictions, reduced traffic at retail partners and e-commerce sites, and macroeconomic pressure in durable-goods categories.

The company estimated that roughly 55% to 60% of Acima’s GMV pressure stemmed from tighter underwriting, including a 300-basis-point year-over-year decline in approval rates and additional authentication measures designed to reduce fraud. The remaining decline was attributed to macroeconomic conditions and consumers reducing or abandoning planned purchases.

Despite lower volume, Acima adjusted EBITDA rose 15% from a year earlier to $86 million. Its adjusted EBITDA margin expanded about 270 basis points to 14.7%, supported by lower losses and improved gross margin. Lease charge-offs fell more than 100 basis points year over year to 8.7%, the company’s lowest level since 2021.

Upbound also announced an integration agreement with Boost Mobile that will make Acima a preferred lease-to-own solution across about 5,000 Boost Mobile stores. Acima will be integrated into Boost Elevate’s point-of-sale platform, allowing shoppers to apply for lease options through a QR code. Karam said the company hopes to launch the offering before Black Friday, subject to ongoing testing and merchant training.

For the fourth quarter, management expects Acima GMV to be relatively flat compared with the prior year, assuming a normal holiday shopping season. The company expects Acima’s full-year adjusted EBITDA margin to finish above its 2025 level.

Brigit Delivers User and Revenue Growth

Brigit remained a key growth driver, with revenue increasing 37% year over year to $79 million. Paying users rose 27% to approximately 1.84 million, while average monthly revenue per user increased 4.7% to $14.39, aided by a greater mix of premium-tier subscriptions and engagement with marketplace offers.

Brigit’s adjusted EBITDA climbed 59% to approximately $15 million, producing an 18.7% margin. The company increased advertising and marketing spending by about 18% from the prior-year period.

Its net advance loss rate increased to about 4.4%, which Chief Financial Officer Hal Khouri attributed to broader macroeconomic conditions and a 25% increase in advance originations. Khouri said management remains comfortable with Brigit’s underwriting and risk-management approach, adding that the company expects the loss rate to decline over time.

Upbound raised its outlook for Brigit, projecting annualized revenue growth of about 35% on a normalized full-year 2025 basis, with revenue expected to reach $290 million to $300 million and adjusted EBITDA of $55 million to $65 million. Management also said its multiyear agreement with Experian to offer Brigit’s earned wage access product to Experian Money Plus members has produced thousands of initial sign-ups, with a broader rollout expected to contribute more meaningfully in 2027.

Rent-A-Center Records Fourth Straight Quarter of Same-Store Growth

Rent-A-Center posted same-store sales growth of 1.8%, marking its fourth consecutive quarter of growth. Segment revenue was $459 million, essentially flat from a year earlier, while adjusted EBITDA increased 4.9% sequentially to $66 million.

Compared with the prior-year period, however, Rent-A-Center adjusted EBITDA declined 11.3%, as the company cycled a stronger third quarter in 2025. Its adjusted EBITDA margin improved sequentially to 14.4% from 13.5% in the second quarter. Lease charge-offs were approximately 5.4%.

Management said it continues to optimize the store base and consolidate locations where doing so improves market economics. The company is also evaluating its Amazon in-store pickup and drop-off partnership, now available at approximately 1,500 corporate-owned Rent-A-Center stores. Karam said the program has generated about 50 additional customer visits per store per week on average, although the company is still working to better track conversion from those visits.

Cash Flow Supports Debt Reduction and Share Repurchases

Upbound generated $163 million in operating cash flow and $121 million in free cash flow during the quarter, compared with $50 million in free cash flow a year earlier. Year-to-date free cash flow was approximately $340 million.

The company repaid about $77 million in debt during the quarter, bringing total debt reduction since year-end to more than $225 million. Net debt stood at approximately $1.2 billion, while net leverage declined to 2.4 times trailing 12-month adjusted EBITDA from 2.6 times in the prior quarter.

Upbound intends to repurchase up to $50 million of common stock under its existing authorization. It also paid a quarterly dividend of $0.39 per share, totaling about $23 million in the quarter. Khouri said the company is targeting leverage in the 2x range over the long term.

The company said it has reached a non-binding agreement in principle on primary terms of a potential settlement related to a multistate attorney general investigation involving 43 participating states. Expected legal settlement payments in the fourth quarter are included in its full-year free-cash-flow outlook.

For the fourth quarter, Upbound expects revenue of $1.15 billion to $1.25 billion, adjusted EBITDA of $125 million to $135 million, and non-GAAP diluted earnings per share of $1.00 to $1.10. Full-year guidance was narrowed to revenue of $4.68 billion to $4.78 billion, adjusted EBITDA of $510 million to $525 million, and non-GAAP diluted EPS of $4.15 to $4.30. The company continues to expect at least $250 million in full-year free cash flow.

About Upbound Group (NASDAQ:UPBD)

Upbound Group, Inc is a provider of consumer leasing and retail solutions, operating primarily through its Rent-A-Center and Acima brands. The company enables customers to obtain merchandise through flexible lease-to-own agreements and related payment options, serving consumers who may prefer alternatives to traditional retail financing.

Its Rent-A-Center business operates company-owned and franchised locations, as well as digital channels, offering furniture, appliances, electronics, computers, smartphones and other household goods.

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