Upbound Group’s Earnings Call Highlights Growth and Expansion

Upbound Group, Inc. ((UPBD)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call of Upbound Group, Inc. painted a picture of robust growth and strategic expansion, particularly highlighting the strong performances by Acima and Brigit. Despite a slight decline in Rent-A-Center’s same-store sales, the company showcased resilience through significant free cash flow generation and improved financial results, projecting a positive outlook for the future.

Acima’s Strong Performance

Acima reported an impressive growth in Gross Merchandise Volume (GMV) of 8.8% year-over-year, with a remarkable 29% growth on a stacked two-year basis. This growth was driven by a more than 10% increase in applications year-over-year, underscoring the brand’s expanding reach and customer base.

Brigit’s Robust Growth

Brigit, acquired earlier this year, demonstrated substantial growth with $32 million in revenue and $11 million in adjusted EBITDA for the two months of ownership. This represents a 35% increase in revenue compared to the same period last year, alongside a 26% rise in subscribers year-over-year.

Improved Financial Results

Upbound reported $126 million in adjusted EBITDA, marking an almost 16% increase compared to the first quarter of 2024. The adjusted EBITDA margins improved by 70 basis points from the previous year, reflecting enhanced operational efficiency.

Expansion into Mexican Market

Upbound announced plans to launch Acima in Mexico, leveraging Rent-A-Center’s existing infrastructure and local expertise. This strategic move aims to capitalize on new market opportunities and drive further growth.

Significant Free Cash Flow Generation

The company generated $127 million in free cash flow, nearly quadrupling the amount from the previous year’s first quarter. This significant increase highlights Upbound’s strong cash management and operational efficiency.

Rent-A-Center’s Same-Store Sales Decline

Rent-A-Center experienced a 2% decline in same-store sales, attributed mainly to underwriting adjustments and the removal of higher-loss products. Despite this, the segment showed improved credit performance with a reduced lease charge-off rate.

Impact of Tariffs and Economic Uncertainty

The earnings call also addressed concerns over ongoing tariff changes and macroeconomic uncertainty, which could potentially impact consumer confidence and spending in the future.

Forward-Looking Guidance

Upbound Group Inc. provided promising forward-looking guidance, exceeding prior expectations. Acima’s GMV grew nearly 9% year-over-year, with a significant reduction in lease charge-offs. Brigit saw mid-20% growth in subscribers and cash advances, with a 38% rise in pro forma revenue. Despite a 2% decline in Rent-A-Center’s same-store sales, the segment improved its lease charge-off rate, indicating better credit performance. Overall, Upbound delivered a 7.3% increase in revenue to nearly $1.2 billion, with adjusted EBITDA reaching $126 million, a 16% increase from the previous year. The company tightened its full-year revenue guidance to $4.6 billion-$4.75 billion and adjusted EBITDA to $510 million-$540 million, reflecting confidence in continued growth despite macroeconomic uncertainties.

In summary, Upbound Group, Inc.’s earnings call highlighted a strong performance across its key segments, with Acima and Brigit leading the charge in revenue growth and strategic expansion. Despite challenges faced by Rent-A-Center, the company’s significant free cash flow generation and improved financial results underscore a positive outlook for the future. The forward-looking guidance further reinforces Upbound’s confidence in sustaining its growth trajectory amidst economic uncertainties.