Upbound (US:UPBD)2025-07-31 14:00Financial Data and Key Metrics Changes - Upbound Group reported second quarter revenue of $1,160,000,000, a 7.5% increase year-over-year, driven by strength at Asima and the addition of Bridget [13][15] - Adjusted EBITDA for the quarter was $133,000,000, reflecting a 7% increase compared to the same period last year, with an adjusted EBITDA margin of 11.5% [13][14] - Non-GAAP diluted EPS was $1.12, a 7.7% increase from the previous year, including a $0.25 benefit related to stock-based compensation [14][15] Business Line Data and Key Metrics Changes - Asima's GMV grew 16% year-over-year, marking its seventh consecutive quarter of growth, with segment revenue increasing by 12% and adjusted EBITDA up 15% [8][9][28] - Bridget experienced nearly 40% revenue growth, with a 24% increase in paid subscribers and an adjusted EBITDA margin of nearly 28% [10][31][32] - Rent A Center's revenue declined by 7.1% year-over-year, with same-store sales down 4%, attributed to strategic adjustments made in the previous year [11][33] Market Data and Key Metrics Changes - Asima's GMV from its Marketplace was up over 130% year-over-year, with returning customers now exceeding 40% of GMV [26][27] - The top 10 merchants represented about 31% of total GMV, consistent with previous quarters, indicating a stable merchant base [9][27] - Bridget's cash advance loss rate was 2.6%, reflecting strong product-market fit amid a challenging economic environment [31][32] Company Strategy and Development Direction - The company is focused on digital transformation and expanding financial solutions for underserved consumers, including new products like earned wage access and credit building [5][6] - Investments in marketing and customer acquisition are expected to drive growth, particularly in Bridget, with a focus on innovative product offerings [21][22][59] - The strategic priority includes enhancing digital capabilities and cross-selling opportunities across segments to improve customer engagement and retention [25][37] Management's Comments on Operating Environment and Future Outlook - Management noted that while the core consumer remains resilient, they are facing pressures from inflation and higher prices, leading to a cautious approach in underwriting [16][17][68] - The company anticipates a gradual return to growth in Rent A Center by early 2026 as they lap previous adjustments and improve delivery initiatives [53][86] - Overall, management expressed confidence in the company's ability to navigate economic challenges and leverage growth opportunities across all segments [44][40] Other Important Information - The company recorded a net usage of free cash flow of $10,000,000 in the second quarter, with year-to-date free cash flow at $117,000,000, significantly up from the previous year [14][15] - The company is committed to maintaining a regular dividend of $1.56 per share annually, reflecting a yield of about 6% at current prices [37] - Legal and regulatory matters are being monitored, with an additional accrual of $31,700,000 recorded in the second quarter related to ongoing negotiations [42][43] Q&A Session Summary Question: Impact of adjustments on Rent A Center results - Management acknowledged that purposeful pullbacks in credit and underwriting have impacted revenue and EBITDA, with expectations of normalization in the second half of the year [49][50] Question: Long-term growth potential for Rent A Center - Management indicated that they aim to achieve positive same-store sales by the end of the year and expect low single-digit growth thereafter [53] Question: Marketing investments and new products for Bridget - Management highlighted plans for increased marketing investments and the introduction of a new line of credit product, reflecting consumer demand [58][59] Question: Stability of core customer segments - Management described the core customer base as stable but under pressure from inflation, with a cautious approach to underwriting [66][68] Question: Growth drivers for Asima - Management noted that new merchant onboarding has been a significant driver of growth, with a focus on expanding the direct-to-consumer channel [73][74]