Upbound (UPBD) - 2026 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company is approaching $5 billion in revenues, indicating strong overall financial performance and a solid balance sheet [13] - The Rent-A-Center business has transformed into a digital e-commerce player, with approximately 27% of revenue now generated online, expected to grow further [5][9] Business Line Data and Key Metrics Changes - Rent-A-Center remains the legacy business, generating mature cash flow and focusing on digital transformation [5] - Acima has become the largest segment, growing approximately 17% last year and continuing to grow in the low teens through Q3 2025 [6] - Brigit, acquired in January 2025, has 1.5 million paying subscribers and offers various financial tools, contributing to the overall ecosystem [7] Market Data and Key Metrics Changes - The core consumer, identified as non-prime, has shown resilience despite economic pressures since 2022, adjusting spending habits due to inflation [25][26] - The company has maintained a conservative underwriting posture over the past year, ensuring the right consumer is placed in the right lease package [27] Company Strategy and Development Direction - The company aims to create a connected financial ecosystem focused on serving underserved consumers through its three brands: Rent-A-Center, Acima, and Brigit [4][8] - There is a strong emphasis on leveraging technology and data science to enhance customer experience and drive growth [14][16] - The strategy includes cross-selling opportunities among the three brands, with a focus on personalized offerings based on consumer data [30] Management's Comments on Operating Environment and Future Outlook - Management views the business model as resilient, having proven its strength through various economic cycles and the pandemic [36] - The integration of data from Brigit is expected to enhance decision-making and improve customer offerings across all brands [29] Other Important Information - The company is focused on capital allocation strategies that prioritize organic growth, technology investment, and shareholder returns through dividends and share repurchases [24] - The management team has been strengthened with new leadership to accelerate the digital transformation and overall vision [10][11] Q&A Session Summary Question: What stands out most at Upbound? - The company has a rock-solid foundation with strong financial performance and a supportive management team [13] Question: How do the three business units complement each other? - The businesses provide consumers with choices and access to products, meeting them where they want to shop [15][16] Question: What are the key drivers within each segment? - Rent-A-Center focuses on omnichannel experiences, Acima diversifies its retailer network, and Brigit aims to scale and innovate [17][18][21] Question: What is the strategy for capital allocation? - The focus is on driving shareholder returns, fueling organic growth, and investing in technology and data science [22][24] Question: What trends are observed in consumer spending? - The non-prime consumer is resilient but under pressure from inflation, leading to a demand for flexible financial solutions [25][26] Question: Is there a cross-selling motion happening now? - Yes, there are early stages of cross-selling among the brands, with plans to enhance integration and personalized offers [28][30]