Upbound Group, Inc. ((UPBD)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Upbound Group, Inc. presented a mixed sentiment, with notable growth in the Acima and Brigit segments driving overall revenue and EBITDA growth. However, challenges in the Rent-A-Center segment and ongoing legal issues somewhat dampened these positive outcomes. The company’s focus on digital transformation and strategic initiatives suggests a cautiously optimistic outlook for future growth.
Strong GMV Growth at Acima
Acima reported a robust 16% year-over-year growth in GMV, marking its seventh consecutive quarter of growth. This impressive performance was supported by a 20% increase in applications and a 12% rise in revenue, showcasing the segment’s strength and potential for continued expansion.
Brigit’s Revenue Surge
Brigit achieved an impressive 40% revenue growth, driven by a 24% increase in paid subscribers and a 12.5% rise in ARPU. The segment also reported a strong adjusted EBITDA margin of 28%, highlighting its profitability and growth potential.
Record Revenue and EBITDA
Upbound Group delivered a 7.5% increase in second-quarter revenue, reaching $1.16 billion, and a 7% lift in adjusted EBITDA to $133 million compared to the previous year. These figures underscore the company’s strong financial performance.
Improved Free Cash Flow
The year-to-date free cash flow was $117 million, representing an improvement of more than three times the prior year. This significant increase indicates enhanced financial health and operational efficiency.
Positive Outlook for Acima and Brigit
The company expressed optimism for continued momentum in the Acima and Brigit segments, with expectations for Acima to deliver low double-digit GMV and revenue growth, further solidifying its position in the market.
Rent-A-Center Same-Store Sales Decline
Rent-A-Center reported a 4% decline in same-store sales, attributed to underwriting tightening and softer demand for furniture. This decline highlights the challenges faced by the segment amid changing market conditions.
Legal and Regulatory Challenges
Upbound recorded an additional accrual of $31.7 million related to pending legal and regulatory matters, including the Multi-State AG matter and the McBurnie class action. These challenges could impact the company’s financials and strategic focus.
Sequential Increase in Rent-A-Center Lease Charge-Offs
Rent-A-Center’s lease charge-off rate increased to 4.7%, a 10 basis point rise sequentially, partly due to lower quarterly revenues. This trend suggests potential risks in credit management and customer retention.
Forward-Looking Guidance
Upbound Group’s forward-looking guidance remains positive, with strong financial performance in the second quarter of 2025. Revenue reached $1.16 billion, a 7.5% increase from the previous year, driven by Acima and Brigit segments. The company continues to focus on growth strategies, particularly in digital transformation, aiming to engage financially underserved consumers despite challenges in the Rent-A-Center segment.
In conclusion, Upbound Group’s earnings call reflected a generally positive sentiment, with significant growth in key segments like Acima and Brigit. Despite challenges in the Rent-A-Center segment and ongoing legal issues, the company’s strategic focus on digital transformation and growth initiatives suggests a promising outlook for future performance.