Upbound Q1 2025 slides: Revenue up 7.3%, adjusted EBITDA surges 15.6%

Upbound Group Inc (NASDAQ:UPBD) presented its first quarter 2025 earnings results on May 1, revealing revenue growth and improved adjusted metrics despite a slight decline in net income. The company, which recently acquired financial wellness platform Brigit, continues to focus on serving financially underserved consumers through its three core business segments.

Executive Summary

Upbound reported consolidated revenue of $1.2 billion for Q1 2025, representing a 7.3% year-over-year increase. While net income decreased slightly to $24.8 million (down $2.9 million year-over-year), adjusted EBITDA rose 15.6% to $126.1 million, and non-GAAP diluted earnings per share increased 26.6% to $1.00.

The company’s cash position strengthened significantly, with net cash provided by operating activities reaching $137.7 million, up $92.3 million from the same period last year.

As shown in the following consolidated financial highlights:

Upbound’s mission centers on "Elevating Financial Opportunity (SO:FTCE11B) for All" by providing financial tools to underserved consumers. The company currently serves 2.7 million active customers and offers a dividend yield of 7.8% as of April 30, 2025.

Quarterly Performance Highlights

Upbound operates through three main segments: Acima (virtual lease-to-own), Rent-A-Center (physical stores), and Brigit (financial wellness tools), which was acquired on January 31, 2025. Each segment showed distinct performance trends in Q1.

The quarter’s performance by segment reveals mixed results:

Acima demonstrated strong growth with an 8.8% year-over-year increase in GMV and improved margins. Applications increased by over 10% compared to the previous year, with e-commerce representing approximately 27% of revenue.

Rent-A-Center faced challenges with a 2.0% decline in same-store sales and a 4.5% reduction in store count year-over-year, though lease charge-offs improved by 10 basis points.

Brigit, the newest addition to Upbound’s portfolio, showed robust performance with a 26.1% increase in paying subscribers, over 35% revenue growth year-over-year, and a 23.3% increase in cash advance volume.

Detailed Financial Analysis

Acima Segment

Acima, Upbound’s virtual lease-to-own platform, continues to be a growth driver for the company. The segment’s revenue is diversified across multiple product categories, with furniture representing the largest share at 41.3%, followed by jewelry (22.5%) and wheel & tire (19.5%).

The segment’s performance metrics demonstrate consistent improvement:

GMV has shown steady growth from $348 million in Q1 2023 to $454 million in Q1 2025. The lease charge-off rate has stabilized around 9%, while the past due rate remains near 4%, indicating effective risk management despite expanding the customer base.

Brigit Segment

The newly acquired Brigit segment brings a digital-first approach to financial wellness. Subscription revenue accounts for 75.3% of Brigit’s revenue, with expedited transfers (18.0%) and marketplace offerings (6.7%) providing additional streams.

Brigit’s growth trajectory is impressive:

The number of paying users has nearly doubled from 665,000 in Q1 2023 to 1.23 million in Q1 2025, while average revenue per user (ARPU) has increased from $10 to $13 during the same period. Cash advance volume has grown from $161 million to $336 million, with a remarkably low net advance loss rate of approximately 1%.

Rent-A-Center Segment

Rent-A-Center, Upbound’s traditional store-based business, remains a significant contributor to overall revenue. The segment’s revenue is primarily derived from appliances (42.6%), personal electronics (23.3%), and furniture (20.0%).

Despite challenges, the segment maintains stable metrics:

While same-store sales have declined, the portfolio value per store has remained consistent at $78,000. The lease charge-off and past due rates have been maintained around 4%, reflecting disciplined risk management in a challenging retail environment.

Strategic Initiatives

Upbound has outlined specific strategic priorities for each business segment in 2025:

For Acima, the focus is on driving repeat business, expanding merchant relationships through digital advancements, and improving margins. Rent-A-Center is prioritizing digital evolution, capital efficiency, and risk management. The newly acquired Brigit will concentrate on maintaining growth momentum, developing new products, and collaborating with other Upbound segments.

These initiatives align with Upbound’s mission to serve financially underserved consumers, a market the company identifies as substantial:

Financial Position & Guidance

As of Q1 2025, Upbound reported liquidity of $311.8 million and net debt of $1.4 billion, resulting in a net leverage ratio of 2.9x against a target of 2.0x. Capital expenditures for the quarter were $10.6 million, while dividends paid totaled $21.4 million.

For the full year 2025, Upbound provided the following guidance:

The company expects consolidated revenues between $4.60-$4.75 billion, adjusted EBITDA of $510-$540 million, non-GAAP diluted EPS of $4.00-$4.40, and free cash flow of $150-$200 million. For Q2 2025, Upbound projects revenues of $1.05-$1.15 billion, adjusted EBITDA of $125-$135 million, and non-GAAP diluted EPS of $1.00-$1.10.

Upbound’s stock closed at $19.90 on April 30, 2025, near its 52-week low of $19.68, though premarket trading on May 1 showed a 6.53% increase to $21.20, suggesting positive market reaction to the Q1 results.

The company’s ability to generate strong cash flow while integrating the Brigit acquisition demonstrates operational resilience, though investors will likely monitor the elevated net leverage ratio and Rent-A-Center’s performance challenges in the coming quarters.

Full presentation:

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