Upbound Group's Q3 2025: Contradictions Emerge on Acima's Growth, Rent-A-Center's Strategy, and Consumer Behavior

Date of Call: October 30, 2025

Financials Results

• Revenue: $1.16B, up 9% YOY
• EPS: $1.00 non-GAAP diluted EPS, up 5.3% YOY
• Operating Margin: Adjusted EBITDA margin 10.6%, down 30 bps YOY

Guidance:

• Full-year revenue $4.6B–$4.75B; adjusted EBITDA $500M–$510M; non-GAAP EPS $4.05–$4.15.
• Acima: Q4 GMV mid-single-digits; full-year GMV high-single to low-double digits; top line up low double-digits; loss rates peak ~10% in Q4 and improve in Q1 2026; EBITDA margins slightly below prior year.
• Rent-A-Center: Q4 revenue down low-to-mid single-digits YOY; charge-off rate better YOY and flat sequentially; comps expected to approach flat to positive.
• Brigit: Q4 revenue up high single-digits sequentially; adjusted EBITDA margins low double-digits; tax rate ~26%; avg diluted shares ~58.8M.

Business Commentary:

* Revenue and Earnings Growth: - Upbound Group reported revenue of $1.16 billion for Q3 2025, representing a 9% year-over-year increase. - The growth was driven by strong performance at Acima and the addition of Brigit to the business.

• Acima's Market Performance:
• Acima achieved 8 consecutive quarters of GMV growth, with a 11% increase in GMV for Q3 2025.

• The growth was supported by adding new merchants and managing a conservative risk posture amid macroeconomic uncertainties.

• Brigit's Customer Expansion:

• Brigit's subscriber growth reached 27% year-over-year and 9.4% sequentially, with revenue up 40% year-on-year.

• The growth was fueled by new product offerings, enhanced marketing strategies, and increased customer engagement.

• Rent-A-Center Stabilization:

• Rent-A-Center improved same-store sales, showing a 40 basis point sequential improvement, reaching 3.6% below the previous year.
• This improvement is attributed to operational efficiencies, digital enhancements, and effective customer management strategies.

Sentiment Analysis:

Overall Tone: Positive

• Management described a "strong quarter" with revenue up 9% YOY to $1.16B and adjusted EBITDA up 5.7% to $123.6M; free cash flow exceeded $50M in Q3 and YTD free cash flow is $167M. The team reiterated full-year guidance ranges and outlined actions (underwriting tightening, merchant additions, product launches) to restore targeted growth and margins.

Q&A:

• Question from Kyle Joseph (Stephens Inc., Research Division): Fahmi, I just want to get a sense for the underwriting changes at Acima. Obviously, you guys talked about GMV in, I think, the mid-single digits in the fourth quarter. But how do we think about growth in that segment given the underwriting changes? Should we think about that being a little bit suppressed, call it, for the next 12 months until we lap those underwriting changes?
  Response: Tightening will suppress Acima GMV in Q4 to mid-single digits and likely into early 2026, but management expects a return to high-single to low-double-digit GMV growth in 2026 driven by merchant additions.

• Question from Kyle Joseph (Stephens Inc., Research Division): And yes, kind of on the macro uncertainty, kind of seeing different loss trends across your segments. So I mean, just -- yes, I would love to get kind of how you're thinking about the consumer? And is it so specific that the Acima consumer is seeing different trends than the RAC consumer? Or just -- I want to get your sense for how the consumer is doing given all the uncertainty.
  Response: Consumers remain stressed; Acima serves a somewhat higher-income and more diversified merchant mix than Rent-A-Center, prompting targeted tightening at Acima while Rent-A-Center's losses are more stable.

• Question from Kyle Joseph (Stephens Inc., Research Division): One last one for me. On the RAC segment, it seems like some positive developments there guiding towards comps trending towards flat or positive. What's driving that? Is it a function of lapping underwriting? Is it e-com growth? Just what's the reason for the outlook for improvement there?
  Response: Improvement is driven by operational execution—Refer-a-Friend, revamped loyalty, better inventory and online-to-store flows—helping conversion and deliveries and enabling comps to approach flat/positive.

• Question from John Hecht (Jefferies LLC, Research Division): Really focusing on Brigit, good ARPU growth year-over-year and quarter-to-quarter. I mean, I guess, what are you learning about that customer, the customer acquisition opportunities, the cross-sell opportunities? Maybe you did provide some detail on this in the prepared remarks, but I'm wondering if you can give us a little bit more about what you're learning and the opportunity that presents.
  Response: Brigit's cash-flow underwriting and product mix (subscriptions, expedited transfers, marketplace, line-of-credit beta) drive strong subscriber and ARPU growth; new marketing channels are expanding acquisition while maintaining mid-teens EBITDA margins.

• Question from John Hecht (Jefferies LLC, Research Division): And then the appointment of the Chief Revenue Officer with a focus on AI endeavors, maybe can you give us an update of what you're learning in terms of the application of AI and how that can benefit the business in the intermediate term?
  Response: New Chief Growth Officer will accelerate AI use cases to enhance customer experience, provide coworkers better tools, drive efficiencies and support growth while being mindful of costs.

• Question from Vincent Caintic (BTIG, LLC, Research Division): Thanks for all the detail this morning, particularly in that bonus depreciation, that's very interesting. If I could switch back to Acima and then another credit question. So first off, maybe a bit of a broader one. Looking back through that June and July impact or when there was perhaps a negative inflection, if you could talk in more detail about maybe what you were seeing at that time? Was it particular customers or particular categories that you had to tighten during that time? And then in terms of the GMV growth, so it's nice to see that you still had 11% GMV growth and still having mid-single digits for fourth quarter. Maybe if you could break out how much of that growth is coming from new merchants versus maybe some pressure in some of the existing customers and existing merchants, if you could break out where the continued growth is coming from?
  Response: June/July weakness stemmed from softer yields and underperformance in e‑commerce cohorts; summer tightening corrected August vintage; roughly 90% of GMV growth came from new merchants and ~10% from existing merchant productivity; D2C grew ~150% (~7% of GMV).

• Question from Vincent Caintic (BTIG, LLC, Research Division): That's super helpful detail. Switching to Brigit by kind of a similar question, since it's a new business for us, so trying to -- if you could help us on how to think about this environment and how the business operates in this environment of maybe some macro uncertainty. Would Acima headwinds be similar for Brigit? Or conversely, is this actually a time for Brigit to be leaning in and be growing when perhaps the consumer is stressed?
  Response: Management views this as an opportunity for Brigit—demand for liquidity and financial-wellness tools is strong, and new products have exceeded early adoption expectations.

• Question from Hoang Nguyen (TD Cowen, Research Division): I want to touch a little bit on Rent-A-Center. It looks like it's a very opposite performance versus Acima this quarter, impacting to the positive side. I guess my question is, I mean, is this it? Is there any other headwinds in the coming quarters for Rent-A-Center that we may want to take note? And what gives you the confidence from here that maybe Rent-A-Center is now past the hump and should return to somewhat the growth level that you indicated back in your Investor Day?
  Response: No major new headwinds beyond macro; Q3 trends improved, delinquencies down, and the team is positioned for holiday execution—management expects stabilization and further improvement.

• Question from Hoang Nguyen (TD Cowen, Research Division): And maybe another question on the Acima side. I think in the second half of last year, you also mentioned some sort of softening in, I guess, the lower end of your consumers there. I guess -- and then you tightened a little bit. I guess, versus last year, I mean, how should we think about the degree of tightening that you guys are doing this time or have done this time versus last time? And how serious a problem it is this time versus last year?
  Response: This year's deterioration was worse than last year, so summer cuts were broader and more aggressive; management prefers possibly being slightly over‑tight to re‑establish loss metrics and expects improvement into 2026.

• Question from Robert Griffin (Raymond James & Associates, Inc., Research Division): I guess, first, can you maybe talk about the pathway for seeing a return back to kind of that growth algo in '26 with the current credit environment? And I guess what I'm asking is, is the GMV growth picking up next year that you guys are kind of flagging that you think is a possibility, is that predicated on credit conditions changing? And it's more just on the function that we are going to -- you are tightening, so you're seeing that come down here in 4Q. So I would think that GMV growth would carry forward unless you see some opportunities for like new customer wins or further trade down or something. So maybe just help us connect those dots.
  Response: 2026 growth may start slowly and accelerate in H2; recovery relies on merchant additions, improved productivity and D2C expansion more than immediate credit improvement.

• Question from Robert Griffin (Raymond James & Associates, Inc., Research Division): Okay. And then maybe on just the tax benefits and the tax changes. I mean, I know you guys talked about your standard capital allocation policy, but leverage is still close to a turn above the target. You mentioned some more uncertainty out there today. So is the right way to think of that is first call really is plow back in deleverage? Or is there capital calls on the business outside of growth that you need from an investment in systems or something as we go into '26? Just trying to understand near-term capital needs and uses of cash a little bit better.
  Response: Priority remains reinvestment and deleveraging; tax savings provide flexibility but management will be conservative—pay down debt and selectively invest, with M&A or buybacks opportunistic.

• Question from William Reuter (BofA Securities, Research Division): I just have 2. You previously just mentioned opportunistic M&A. I would think, given all the uncertainty, the profitability of potential businesses may be difficult to get a good handle on and it might lead to a little more caution. However, you do have the $150 million coming in, as you just mentioned, or lower tax payments. Can you talk a little bit about how you're viewing M&A at this point?
  Response: Opportunistic M&A is considered but not imminent; current focus is on integrating Brigit, reinvesting in core brands and deleveraging.

• Question from William Reuter (BofA Securities, Research Division): And then just secondarily, you mentioned new merchant growth being probably a core part of trying to get to that low double-digit growth of Acima in the next year. Have there been -- I guess, how does the pipeline look for new potential customers versus maybe where that pipeline was a year ago? And that's all for me.
  Response: Pipeline is strong; long sales/integration timelines for large accounts persist, so management is also prioritizing non‑integration growth (D2C, returning customers) while the sales team focuses on merchant additions.

Contradiction Point 1

Acima's Growth and Underwriting Adjustments

It highlights differing expectations regarding Acima's growth trajectory and the impact of underwriting changes, which are crucial for assessing the company's financial health and strategic direction.

How should we assess Acima's growth with the underwriting changes? Will growth be suppressed for the next 12 months until we lap the changes? - Kyle Joseph (Stephens Inc., Research Division)

2025Q3: Acima's GMV increased by 11% in Q3, despite underwriting changes. The fourth quarter guidance is for mid-single-digit growth. - [Fahmi Karam](CFO)

What's driving Acima's GMV growth, and is it from trade-down or new consumers? - Robert Griffin (Raymond James)

2025Q2: Acima's growth is driven by new merchants and productivity gains, especially in the direct-to-consumer channel. - [Fahmi Karam](CEO)

Contradiction Point 2

Rent-A-Center's Growth and Strategic Initiatives

It involves differing expectations regarding Rent-A-Center's growth prospects and the timeline for strategic initiatives to take effect, which are critical for assessing the company's long-term growth strategy.

Is Rent-A-Center past the inflection point and poised for growth? Are there any near-term headwinds? - Hoang Nguyen (TD Cowen, Research Division)

2025Q3: Rent-A-Center performed well in Q3, with strong Q4 expectations due to improved execution and strategic initiatives. There are no major headwinds anticipated. - [Fahmi Karam](CEO)

When will EBITDA pressures ease and growth resume? - Bradley Thomas (KeyBanc Capital Markets)

2025Q2: By early 2026, the impact of past adjustments will be lapped, returning Rent-A-Center to growth with improved digital capabilities. - [Fahmi Karam](CEO)

Contradiction Point 3

Consumer Behavior and Economic Environment

It highlights differing perspectives on consumer behavior and the economic environment, which are crucial for understanding the company's growth strategy and risk assessment.

How are consumers performing amid macroeconomic uncertainty, specifically for Acima and Rent-A-Center? - Kyle Joseph (Stephens Inc., Research Division)

2025Q3: The consumer environment remains stressed, with inflation impacting disposable income. Rent-A-Center and Acima have different consumer segments, but both are affected by trade down opportunities. Acima's underwriting adjustments in Q2 affected losses, while Rent-A-Center improved its loss rate. - [Fahmi Karam](CFO)

Could tariffs lead customers to require financing again? - Bill Reuter (BofA Securities, Research Division)

2025Q1: We continue to see strong demand across both of our business segments, Rent-A-Center and Acima. At Rent-A-Center, we continue to see strong demand across most product categories, particularly in appliances and furniture. - [Mitch Fadel](CEO)

Contradiction Point 4

Rent-A-Center's Performance and Stability

It involves differing perspectives on Rent-A-Center's stability and performance, which impacts investor confidence.

Has Rent-A-Center overcome its challenges and is positioned for growth? Are there any potential challenges ahead? - Hoang Nguyen (TD Cowen, Research Division)

2025Q3: Rent-A-Center performed well in Q3, with strong Q4 expectations due to improved execution and strategic initiatives. There are no major headwinds anticipated. - [Fahmi Karam](CFO & Director)

How has your core customer's situation changed compared to a few months ago, considering the pressure on lower-income consumers? - Bobby Griffin (Raymond James)

2024Q4: Rent-A-Center has experienced some tightening but is stable with flat same store sales. - [Mitch Fadel](CEO)