Upbound Group Q1 Earnings Call Highlights

Key Points

• Q1 results: Consolidated revenue was $1.2 billion (+3.7% YoY), Adjusted EBITDA rose to $136 million (+~8%) and non-GAAP EPS was $1.08, with operating cash flow of about $171 million helping reduce leverage to 2.6x.
• Segment dynamics: Brigit delivered rapid growth (Q1 revenue ~$68M, paying users ~1.6M, ARPU +12%) and doubled EBITDA contribution; Acima showed modest revenue growth but GMV decline due to underwriting tightening with improved loss metrics; Rent‑A‑Center showed signs of stabilization and cost optimization.
• Outlook and strategic moves: Management reiterated 2026 guidance (revenue ~$4.7–4.95B, Adjusted EBITDA $500–535M, EPS $4.00–4.35), noted a new Amazon pickup/returns rollout at ~1,700 stores, and secured an enhanced checkout placement with a leading e‑commerce furniture retailer.

Upbound Group NASDAQ: UPBD reported first-quarter 2026 results it said were in line with expectations despite what executives described as a “difficult operating environment” for non-prime consumers. Management highlighted strong cash generation, balance sheet deleveraging, and continued progress integrating and scaling its three-brand portfolio of financial solutions: Brigit, Acima, and Rent-A-Center.

Q1 results: revenue up 3.7% and cash flow strength

Chief Executive Officer Fahmi Karam said the company “executed well in a difficult operating environment” and delivered results “in line with our financial targets,” while generating “robust cash flow” and de-leveraging the balance sheet.

On a consolidated basis, Karam said revenue was $1.2 billion, up 3.7% year-over-year. Adjusted EBITDA rose nearly 8% to $136 million, and non-GAAP diluted EPS was $1.08, up 8% from the prior year.

Chief Financial Officer Hal Khouri said net cash provided by operating activities was approximately $171 million, up from $148 million a year ago, and free cash flow was approximately $136 million compared with $127 million in the prior-year quarter. Khouri noted the first quarter is typically seasonally stronger for cash flow, but said results “reflect solid underlying performance” and did not yet include “all of the anticipated cash tax benefits” discussed on the prior call.

Operating backdrop: tax refunds helped, fuel prices pressured consumers

Management repeatedly pointed to pressure on discretionary spending for the company’s core non-prime consumer. Karam cited elevated costs for essentials such as “groceries, rent, utilities, and energy,” which weighed on larger-ticket purchases. He also said the quarter featured a “stronger than normal tax refund season,” but that benefit was “partially offset by higher energy prices.”

In response to an analyst question about the interplay between tax refunds and March fuel price increases, Karam said tax refunds were “about 10% on average, a little higher than year past,” but were a “mixed bag” because “by the time some of the money started to hit, you started having some of the fuel price implications.” He added that customers used refunds to “clean up delinquencies and losses,” but “definitely didn’t exercise the payout options as much as they had in years past,” which affected revenue and gross margin dynamics, especially at Acima.

Segment performance: Brigit growth, Acima underwriting trade-offs, and Rent-A-Center stabilization

Brigit: Khouri said Brigit delivered strong growth and profitability in the quarter. Revenue was $68 million, more than double its contribution to consolidated results in the first quarter of 2025, reflecting that Upbound acquired Brigit at the end of January 2025 and did not include Brigit revenue for the first month of last year in reporting. Excluding acquisition timing, Khouri said comparative revenue increased more than 40%.

Khouri said monthly ARPU increased nearly 12% year-over-year to $14.41, supported by “increased shift towards Brigit’s premium tier,” deeper engagement with marketplace offers, and higher optional expedited transfer revenue. Paying users were approximately 1.6 million at quarter end, up about 27% year-over-year. Net advance loss rate was about 3.5%, “consistent with recent quarters,” and Adjusted EBITDA contribution was approximately $22.9 million, more than doubling year-over-year.

Karam said Brigit is advancing a line-of-credit pilot and is preparing for a broader rollout later in the year, taking a “measured approach that prioritizes unit economics.” In Q&A, he said the line-of-credit rollout is “more of a 2027 story than a 2026 story,” citing macro uncertainty and the longer duration and higher exposure relative to earned wage access advances. He also said Upbound plans to “lean into” Brigit marketing spend in the second quarter, expecting EBITDA margin to move from mid-30% levels in Q1 to “low teens to mid-teens” in Q2.

Acima: Khouri said first-quarter revenue was $649 million, up about 2% year-over-year, while GMV was approximately $427 million, down about 6%. Management attributed the GMV decline to a combination of consumer pressure—particularly for durable goods—and deliberate underwriting tightening implemented in 2025 to improve long-term portfolio economics.

Loss performance improved meaningfully. Khouri said Acima lease charge-offs were approximately 8.8%, about 130 basis points better sequentially and 10 basis points lower year-over-year. Adjusted EBITDA was $89 million, up about 4%, and Adjusted EBITDA margin was 13.7%, up 40 basis points year-over-year, aided by revenue growth, a 60 basis point gross margin increase, and improved loss outcomes.

In Q&A, Karam said the company began tightening underwriting in the “second quarter of last year” and continued into summer months, and expects to start “lapping” most changes “by Q3 in earnest.” Asked to apportion the GMV decline, he said “the majority” was driven by underwriting tightness, adding that jewelry—described as a higher-loss category—was down “low to mid-teens,” while most categories were down “low single-digit” amounts. He also said Acima’s direct-to-consumer marketplace grew about 9% year-over-year and is “mostly 99% returning customers,” which he said tends to perform better and be “buffered from the overall macro environment.”

Rent-A-Center: Management emphasized ongoing cost optimization and signs of stabilization. Khouri said same-store sales increased about 40 basis points in Q1 after returning to growth in the prior quarter. Segment revenue was $482 million, down about 2% year-over-year, driven by lower merchandise sales and lower franchise contribution, partially offset by improved rentals and fees revenue. Lease charge-offs were approximately 4.7%, down 20 basis points sequentially. Adjusted EBITDA was $67 million, down about 6%, which Khouri attributed to lower franchise profit contribution and inflationary margin pressure.

Partnership updates: Amazon pickup/returns and an enhanced e-commerce checkout placement

Karam discussed a recently announced partnership with Amazon that will enable “convenient Amazon order pickup and returns at more than 1,700 Rent-A-Center corporate-owned stores.” He said the company has been piloting the program for several months and expects stores to be “up and running” in June. In the pilot (around 20–25 stores), Karam said Rent-A-Center saw “a little over 50 customers” per store per week, with most being new to the brand. He also said that at launch, customers selecting Rent-A-Center for pickup or drop-off will receive a promotional item “in real time” through the Amazon app, though he cautioned it was “still early to kind of quantify the impacts.”

At Acima, Karam said the company signed a revised agreement with an existing merchant partner that provides enhanced integration and a more prominent placement at checkout. Responding to an analyst who asked if the retailer was Wayfair, Karam did not name the partner, but described it as “the largest e-commerce furniture retailer in the country.” He said the agreement provides a direct checkout option (“our own checkout button versus going through a waterfall”), giving Acima “first look” and potentially “better quality looks” by reducing competition and adverse selection. Karam said it should be live later in the quarter and could be a “tailwind for GMV into the second half of the year.” He later clarified that this is not sole-provider exclusivity—“just on the having the checkout button.”

Capital allocation, leadership additions, and 2026 guidance reiterated

Khouri said the company paid a quarterly dividend of $0.39 per share, totaling about $23 million in the quarter, which he said represents an “approximately 8% dividend yield.” He said quarter-end liquidity was about $465 million, net debt was about $1.4 billion, and leverage was 2.6x trailing 12-month Adjusted EBITDA, down from 2.9x at year-end 2025. Management reiterated a long-term target of leverage in the “2x range.”

On leadership and technology modernization, Karam said the company hired a new Chief Technology Officer, Balaji Kumar, who he said brings “more than 25 years” of leadership experience. He framed the hire as part of a broader effort to build a more connected and tech-enabled platform using “data, advanced analytics, and AI” to improve personalization, underwriting, and operating efficiency.

Regarding Brigit leadership transitions, Karam said both Brigit founders remain with the business but will transition into advisory and consulting roles in 2026. He said Brigit CTO Hamel transitioned into an advisory role in April and CEO Zuben will transition in the second half of the year, which he called a “natural evolution” post-transaction.

For outlook, Khouri said Upbound remains positioned to hit the previously shared full-year 2026 consolidated targets:

• Revenue: approximately $4.7 billion to $4.95 billion
• Adjusted EBITDA: $500 million to $535 million
• Non-GAAP diluted EPS: $4.00 to $4.35
• Free cash flow: approximately $200 million

Khouri said guidance includes an estimated $70 million payment outflow in 2026 for “non-ordinary course legal and regulatory settlements.” For the second quarter, he guided to consolidated revenue of $1.1 billion to $1.2 billion, Adjusted EBITDA of $120 million to $130 million, and non-GAAP diluted EPS of $1.00 to $1.10. He also said second-quarter GMV should improve sequentially but be down low-to-mid single digits year-over-year, with a return to year-over-year GMV growth expected in the second half.

About Upbound Group NASDAQ: UPBD

Upbound Group, Inc leases household durable goods to customers on a lease-to-own basis in the United States, Puerto Rico, and Mexico. It operates through four segments: Rent-A-Center, Acima, Mexico, and Franchising. The company's brands, such as Rent-A-Center and Acima that facilitate consumer transactions across a range of store-based and virtual channels. It offers furniture comprising mattresses, tires, consumer electronics, appliances, tools, handbags, computers, smartphones, and accessories.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.