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Upbound (UPBD) Q3 Earnings call transcript Oct 31, 2024
AInvestFriday, Nov 1, 2024 10:17 am ET
1min read
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In Upbound Group's third-quarter earnings call for 2024, the company showcased a strong financial performance, with revenue reaching nearly $1.1 billion and adjusted EBITDA approximating $117 million. The call, led by Mitch Fadel, CEO, and Fahmi Karam, CFO, highlighted several key themes and trends that are worth examining.

Strong Revenue Growth and Adjusted EBITDA

Upbound Group's revenue growth of nearly $1.1 billion in Q3 2024 is a significant achievement, especially considering the challenges faced by many businesses in the current economic climate. The company's adjusted EBITDA of approximately $117 million also indicates a robust financial health, underscoring its ability to manage costs and optimize its operations.

Acima's Growth and Challenges

Acima, the company's primary business segment, reported a 19% year-over-year revenue lift, driven by its proven algorithm that adds new merchants, expands productivity with existing retailers, and invites consumers to start their shopping journey through Acima's direct-to-consumer marketplace. Despite this growth, Acima faced challenges, including trade-down dynamics leading to lower margins and a slight decline in adjusted EBITDA margins. However, the company remains confident in its low- to mid-teens adjusted EBITDA margin range.

Rent-A-Center's Resilience and Growth

Rent-A-Center, another significant segment for Upbound Group, reported a 1.1% year-over-year revenue growth, with e-commerce activity accounting for over 26% of revenue. The company's ability to adapt to changing market conditions, including the sale of 55 stores to an existing franchisee and the optimization of digital customer experience, is noteworthy. Despite facing challenges in certain markets, Rent-A-Center's EBITDA margins remained above 16%, reflecting its resilience and strategic initiatives.

Strategic Initiatives and Future Outlook

Upbound Group's strategic initiatives, including the sale of 55 stores to a franchisee, the implementation of a generative AI leasability engine, and the expansion of its marketplace, highlight the company's proactive approach to addressing market challenges and capitalizing on opportunities. The company's guidance for the holiday season and its confidence in meeting full-year guidance are also positive signs for investors.

Key Takeaways

Upbound Group's Q3 2024 earnings call demonstrated a company that is navigating challenges and capitalizing on opportunities with strategic initiatives and operational efficiencies. The company's focus on growing its revenue, optimizing its EBITDA, and expanding its market reach through strategic partnerships and digital solutions positions it well for future growth. With a robust financial performance, a strong outlook for the holiday season, and a clear strategic vision, Upbound Group is poised to continue its momentum in the coming quarters.

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