UPBD Q2 Earnings Call Highlights Brigit Growth & Portfolio Discipline

UPBD Focuses on Customer and Data Strategy

Upbound reported second-quarter non-GAAP earnings per share of $1.07, matching the Zacks Consensus Estimate. Revenues of $1.16 billion surpassed the consensus estimate of $1.15 billion by 0.70%.

CEO Fahmi Karam said the quarter reflected continued execution across the company’s three complementary brands, with management prioritizing customer relationships, shared capabilities and long-term operating efficiency.

Karam highlighted investments in AI, shared data platforms and personalized customer experiences. The company is applying AI across underwriting, customer communications, account management, collections and marketing initiatives.

Upbound Advances Brigit Expansion

Brigit remained a major growth driver, with second-quarter revenues increasing 37% year over year to $71.1 million. Paying users reached 1.72 million, up 30.2% year over year, while average monthly revenue per user increased 6.3% to $14.30.

Management said Brigit’s growth was supported by subscription expansion, stronger engagement and higher expedited transfer revenues. Adjusted EBITDA reached $11.8 million, representing a 16.6% margin.

During Q&A, a Raymond James analyst asked about marketing investments and expected returns. Karam said the company was pleased with subscriber growth and viewed marketing spending as supportive of customer lifetime value. CFO Hal Khouri added that strong product demand could lead to additional marketing investment later in the year.

UPBD Tightens Acima Risk Management

Acima faced pressure from underwriting actions, cybersecurity-related losses and weaker discretionary consumer demand. Revenues declined 2.5% year over year to $603.5 million, while gross merchandise volume declined 10.7%.

Karam said certain customer information obtained without authorization contributed to approximately $13 million in fraudulent lease-to-own contract losses during the quarter. The company implemented enhanced authentication controls, fraud monitoring and other security measures.

Despite lower volume, Acima improved portfolio quality. Lease charge-offs declined 50 basis points year over year to 8.8%, while adjusted EBITDA increased 5.1% to $98 million and adjusted EBITDA margin expanded to 16.2%.

Rent-A-Center Shows Stability

Rent-A-Center delivered its third consecutive quarter of positive same-store sales growth, with company-owned same-store sales increasing 1.6% year over year.

The segment continued optimizing its footprint, closing 69 underperforming stores during the quarter while consolidating customer accounts into nearby locations. Management said additional evaluations of the store network will continue.

The company also expanded its Amazon partnership, deploying package pickup and return capabilities across approximately 1,500 corporate-owned stores. Karam said the initiative has increased store traffic and improved brand awareness.

Upbound Updates Outlook and Cash Priorities

UPBD reaffirmed full-year adjusted EBITDA guidance of $500 million to $535 million, and non-GAAP EPS guidance of $4.00 to $4.35. The company narrowed full-year revenue guidance to $4.70 billion to $4.85 billion.

For the third quarter, management expects revenues of $1.05 billion to $1.15 billion, adjusted EBITDA of $105 million to $115 million, and non-GAAP EPS of $0.85 to $0.95.

CFO Hal Khouri said free cash flow expectations were raised to approximately $250 million for the year. The company generated $123 million in operating cash flow and $84 million in free cash flow during the quarter while continuing to reduce leverage.

UPBD Balances Growth and Consumer Pressure

A KeyBanc analyst questioned whether continued consumer pressure could require additional underwriting tightening. Karam said the company already maintains a conservative posture and remains focused on balancing margin, risk and volume.

Management said discretionary spending remains pressured, particularly for larger durable goods, while need-based categories have shown more resilience. CFO Khouri noted increased demand shifts toward computers, electronics and tablets within Rent-A-Center.

UPBD continues working toward greater integration among Acima, Brigit and Rent-A-Center, using shared customer data and analytics to improve personalization, underwriting and customer lifetime value.

UPBD’s Zacks Rank and Style Scores

UPBD carries a Zacks Rank #3 (Hold), indicating that the stock currently has a neutral ranking based on earnings estimate revisions. The Zacks Rank can change as analysts update their estimates following the latest results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has a Value Score of A, Growth Score of A, Momentum Score of D and VGM Score of A. Zacks Style Scores complement the Zacks Rank by evaluating characteristics such as value, growth and momentum, with higher scores reflecting stronger traits within each investment style.

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