UPBD - Earnings call transcript Q3 2024

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Operator

Good day, and thank you for standing by. Welcome to the Q3 2024 Upbound Group Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jeff Chesnut, Head of IR. Please go ahead.

Jeff Chesnut

you for joining XXXX. the thank the to and performance company's third morning, all us for discuss Good quarter of issued investor.upbound.com. all this and release webcast are link our the our live We opened, website on market at to morning the the materials, related before and available including a release earnings

CEO; Karam, our CFO. On the Group, Upbound Fahmi from we have and call today Mitch Fadel, our

required could subject publicly are cause non-GAAP update expectations. on a As results non-GAAP which website a this the provided company's to financial by Upbound measures. undertakes reminder, factors and as references also description measures. and call financial forward-looking can These comparable our our SEC the the GAAP statements reconciliations materially or that some today's to include will differ be revise Group This any earnings the release call no as are actual our for to refer as and of except described of law. are to from Please to on in obligation release, well filings. most measures earnings found forward-looking the financial adversely to in factors statements,

not I'll the turn Group Please the call teleconference that, responsible does Upbound to or our and website guarantee to refer is Finally, provided by edit authorized only accuracy With webcast. not earnings our parties. of for transcripts third for Mitch. the over

Mitchell E. Fadel

against financial our was approximately $X.X I'm a To very with detailed billion. everyone. we'll Adjusted our afterwards, Street consensus begin midpoint and the $X.XX, a estimates. quarter. and morning, provided our with guidance pleased third and year way the a of XXX cents Rent-A-Center average the closures earnings couple financial of year-over-year our share $XXX above to revenue of you, Thank impact at delivering prior the the good revenue our led in results review last share was right store highlights more non-GAAP we the improvement was last I'll XX% million despite third questions. a the and of which quarter. was mentioned review Jeff, per XX outlook, Fahmi of up that will the on nearly with call of share and EBITDA Acima key we some revenue basis point from about quarter begin, take

charge-off stated strong of growth also the In successful lease XX rate shortly. the guidance an sale improved detail which accelerated New sequentially a start with and X.X%. low quarter stores Last GMV Metro the the franchisee outlook another line quarter, latter more that sale we we execution XX% for projections. York of addition our year-over-year lease our consistent the recent of area against and franchisee. in increase a growth in comp third double-digit with to those in to part XXXX. from And quarter I'll shared as of existing to year-over-year, performance also are Acima's to delivered Acima of discuss rates charge-off with was

we expected, remains -- sequential experience side, expectations challenging. did environment to above On the which the slightly seasonal consumers earlier our as X.X%, Rent-A-Center as we for expected increase was a our

I'll results. trade-down at And with the EBITDA target points environment to EBITDA to year-over-year, came in in reflects XXX dynamics speak of Acima and slight acceptable tick targets. margin XX.X% returns, remain we're an EBITDA our losses margins in the to at with Rent-A-Center's our in think line Rent-A-Center optimize increased and you at is at in decline about while margin margins up when segment adjusted in, low the despite they that level especially delivering EBITDA line Now basis risk-adjusted of mid-teens Acima's some while that also XX.X%. adjusted

visibility, full forecast of current guidance expect to our our achieve season on segments, larger we exercise the at levels the we Importantly, each to our year for holiday the based and provided operating ability our quarter. last

Now us, consumers selectively the mitigating see to we've trade across themes in results, we work and pending implemented higher activity. down credit quarter. flows benefit of before underwriting with we've business bottom, across credit our The this Acima, continued and to still past risk the actions strong review to and discuss let's key delinquencies portfolio, retailer certain above tightening to At areas even card quality better optimize in driving which late seen we one our of as better -- allows us. response segment changes we to above checkout down us our prospects coming have quality regulatory for fees, higher tighten at returns. adjust credit our enjoys that's trade But us as growth our risk-adjusted for the lenders

third-party more XX% over retail compared quarter, in pool higher overall Our year a increase applications its we're we're and to new selective scores. to grow Acima Acima with even number reach in applicant our decisioning. And customers business experienced continuing had to able our overall of as relationships, a ago more

that through our So delivered confident the that balance and times. performance us help these EPS. expectations our while guidance revenue non-GAAP with uncertain will the EBITDA adjusted context, that full their met on managing I'm of achieve year I'm team results and very pleased across

more X Acima, ago in achieved leader Slide we presentation, we'll with in a compared consecutive in industry our about a specifics to period. growth on XX% quarter to a results. continue and to we year through growth our fourth talk move as segment GMV let's lift our of be So At QX our

we quarter, year last elevated the growth the the start last we mentioned acceleration of our moderate really of that year. of in we and as half to began second comping expected in growth the against year-over-year performance September of the rate As

their consumers by is algorithm, with journey Acima and marketplace. really merchants start adding proven pillars: direct-to-consumer productivity Now Acima's powering to the is shopping which growth new retailers, Acima's expanding to through that supported our network, existing X inviting

XX% this year-over-year, while XX% with location Our lease retailers locations, working field productivity count growth increasing boost quarter, our to metrics. our in our again organization grew active

options store, their the for our things which several We marketplace events us had Days. marketing customers the We're customer contributing which purchase bps direct-to-consumer continuously underwriting driven the whether down due the consumers. customers like effort in and purchase earliest Prime margin also about outcome and sale these the trade-down higher in continues forward. e-com their profile upshot transaction, the loss through in promoting is other of retailers, scoring lift year-over-year. Segment Wayfair helped costs, bright XX yield the remain generally bit The point part Way opportunity and returning down and strategies own a traditional than dynamics. joint customers, we a at GMV of set campaigns our the than quarter, which them to pillars against margins residual lease risk Acima growth year-over-year, core tend XX in performance trade our by at The of than for will a option These level which of toward XX-day down our we've often performance what different heightened that elect management grow, the more year-over-year sequentially of recently bps account. translated means meeting charge-off gross partners sites to and universe. These impact sequential or welcome the marketplace our to but Amazon activity, We're lease this going EBITDA and our comps, promoting when the our option and to Days And retail value growth we're all were and charge-off are with our that customers proactive generally on the checkout marketplace. it's higher in on that focus lowest was XX% is the into available. broader a both lifetime and increase new lower of that for are the an stronger spot from X.X%, rate transition revenue is and represents, down helping experienced Acima profit was period, ANow less excited visitors

will up headwinds option Acima mid-teens more our execute came EBITDA transactions, lower-margin our across in with we that at retailers in while takes the said, remaining All with purchase through the legacy that range the typically that even consumer EBITDA to encourage them our as to low really board. our the with increase believe still and exercise repeat partners. ANow our back strong strong our long-term business, growth value all activity, a a margin that the through customers XX.X%, we being enhance we'll drive for since GMV work quarter third-party to which to sales in marketplace, within Acima So and visit an early lifetime the catch book purchase

long-time the and update. where has saw our Rent-A-Center, some go competitors RAC to reorganizations private, of Let's some shift over notably liquidations. since landscape its changed last competitive even

even the and Rent-A-Center quality may be like lines, customers We're neighborhood them improve help and geographic of their moment the alternatives. Between to to they the those behavioral they data to increase we're top Our brand customers partnership AI digital overlays customers or strength also on Rent-A-Center year-over-year things experience that's targeting marketing in Rent-A-Center day. our options our who to Along achieved our we're with a may the our third ready the connections count, recent in new their third Rent-A-Center's channel website and adjusted to store growth even that contextual same-store of of year's growth and X the against to shutting activity in XX%. sharpen last even their need sales that AI Others XX% strength highlight Rent-A-Center's people finish approximately of with and X.X% efforts same-store the of From life segment represented the effectiveness that team's experience. efforts enhance foundational customer with performance those line campaign. life. with Google And focus and store improvements, XX% our prior support and gross guide with to to leverage geofencing, XXXX potential that Even brand in in down future. products and those marketing revenue the proposition strong margins We've business over looking launched on associates, along our personalized a Really the Rent-A-Center's leadership operational of seeking with to pleased to margin our that using better quarters. every bring the even be thousands for and now helped driven brand the communities. X.X% of actively increase quarter to third should reentacenter.com e-commerce with levers, we above struggling, generative consecutive on through from Rent-A-Center of well. quarter yet efficiency quarter, And the our are online results continued adjustments as access of EBITDA of of in sales coworkers profit store an do revenue our a perspective, value everyday quarters to of a has those efforts and growth marketing the drive optimize performance the due with QX.

As due to traditional stress was partially expected, rate year, at charge-off X.X% X.X% the prior seasonality, landing compared due on Rent-A-Center the Rent-A-Center's QX, elevated also in lease to customer. in at to but

As margin closely adjustments profile. and time that I've monitoring we're mentioned, to real performance in making protect

the transaction to us a EBITDA-enhancing to reacting while across partner franchise of opportunity to wrapping XXXX. year. Acima to busy the one successful The strategic an have will meet status help finish competitive On on believe start Rent-A-Center developments. these review of with let's quarter performing team start year that added emphasize on achievements moment number capitalize of X, numerous the a to related model the strong in I'd initiatives sustain So the stronger Slide clients year. in we we to Collectively, staff for our key of generation slide, and market new the building XXXX GMV a executed the provided outlined portfolio. flight a the go-forward track guidance to priorities next the up was a and us the strategic have this growth course position we this a with

we add These retail and out share our a the of customers. been than leasing market a customers. points targeted reimagining the to in ongoing continues the wholesale, returning focus be customers currently discrete removing application way friction the customer modernize our new importantly, for and for in For flow nameplates Acima know out and and Acima us. perspective, opportunities highlighted changes business, merchants believe we and Acima, check retention area From capabilities and We they'll will streamline in marketplace. there and our expedite and processes, as our while are most rather process the our benefit Acima XXXX, customers build we're working to with we've shop to additional apply,

our growth attention on Now to And growth the Acima outgrow year-over-year, was numbers future the prospect of we for but regional of it themselves. and of given locations felt one wins, don't and mention over we often GMV the opportunities. all recently doors. level in account, we we've important around set is speak it our all competitors XX% up new of comes our to when course, consistently achieved

mix service verticals Our current existing largest furniture add approximately double were to merchants our amplify retailer In GMV fourth years we're third quarter, smaller-sized digits. inflects help to forward. of continuing of of industry, pulled and top larger, total clients. segment, lineup transition quarter will to maintain low of of well-diversified back X% we'll so largest the growth XX%. Despite demand represented working new superior to of positive being continue and the X that to the across retailers our view medium our collectively growing provide trends key a our approximately Until and that diverse partners account, all GMV while raising the one the our of as our after then, we

in period. business, a speaks in continuing in the in we've quarter marketplace, our trajectory growth third of merchants increase confidence the categories. which compared grow XX% capabilities the excited strong the diversity digital with over Acima We're year to of the to about built Our particularly its elevating prior GMV XXXX to continued in and product diversity

implementation merchants for and our the technology. of simplify have onboarding eBay that own. been Our durable unavailable that focused brands leasability our marketplace, helped on engine enabled This have experience AI-powered search This including the us Target been additions unintegrated teams to added that for the leasability also the particular categories which the the recent such to proprietary of as new infrastructure, previously and to and existing to new remain good enhance Amazon, enhancing marketplace Walmart, recently lease will AI-powered allows also added marketplace upgrade of with just merchants. has our process national engine, expand

now remarkable website If proprietary in also on help you team we all you And like Amazon. this its think about it, us will channel find our out grow Acima. customers lease started building even which they're safe toward to our to incredibly tool, doing can. and to Google, built through and this the facilitate fraud to which cannot simple we simply a at without shopping sift losses profitable October, rolling with products users card earlier allow updated in-store leases. further leasable And minimize capabilities for are returning updated designed retailer card maximize just to a and We're lease choosing lease experience This virtual protocols advanced eligible this any virtual goods from program, shop with will exciting.

of stores. a very QX, with successful those reputation business add growth New of delivering customers new our current years the At business a the experiences Our this Rent-A-Center LTO meaningful City many Along Acima's premier those and processes has for XX these progress for to opportunistic better mentioned the track customers. come. area customers is for serve York goal reinforce continue make we metro and lines, earlier, franchisee sale win owner our for that value we I deal as our more the as investments stores shopping destination us. can in engines completed Rent-A-Center, to because is and to to to This a an optimize in record for

revenue and unique will of believe country. From revenue. a environment standpoint, sales from operating much City, so we than one can business processes York a pretty be that run we'll royalty locally benefit local with implement tailored course, different of conditions replacing the rest the the readily of that a more there to some New are is address financial

So XXXX. based wasn't we operating fit market a it effort you, also stores, accretive many for for will market In been actually is those our royalties EBITDA from this years, operate us, operating modestly the but City, because can tell to we've market will profitable we impacted best Rent-A-Center's way stores. expect be that the of model the results I wasn't the franchisee be top New enhancing York with on words, same normal that all a other for the of franchising and when looking franchise to EBITDA by loss to line us. in California did the back the thing for

I'm future to company. Earlier absorb similar able renewals stores this could for franchisee thrilled really where nearby partner market this and and very in our when franchisee recall, the with base. make this of you'll the that Rent-A-Center I'm that we upcoming number excited we're stores had So year, happen, to lease we consolidated about customers, of customer existing our in that

a retain well. to to of healthy early and efforts our activity our that expect point We indications working customer proportion

seen a Over stores X natural our country. the managing optimize and to the we've changes quarters, across to count. X,XXX nearly reaction past responsible store That's

in Even synergies enhance footprint to platform. with our corporate-owned We'll in with digital to neutral while as Acima's store general, relationships going footprint, our on-the-ground gravity dynamics remain forward remain X,XXX-plus needs store be as our and our net our center optimize our current we continue neighborhood stores our virtual customers' of to customers adding philosophy change. the count. But will

really its the the we believe provide that trying outcomes rentacenter.com about going other as well-balanced about good leverages done done we've into to supplier models count, far team any experience a with find for we the Now for In technology and store X the feel New deal, as words, to customer reduced been key somebody now This business website that and past York market. lifts we're stronger rates. for footprint and conversion visibility mentioned we've Rent-A-Center availability, also I drive we deepened customers. years our which improve integration quarter, and helps and the product better The forward. to store

underwriting Acima's strengthened which while to for a also more for its online We losses. customers right the customers assess better utilizes potential outcomes drives It approve tools Rent-A-Center lease, that fraud shoppers. minimizing to creates opportunities

be continue in we of positioning economy business work both towards Additionally, the and to today our the future. to successful

our cards. going course, private to deployed credit accepted, search and capacity, a has streamline map the margins customer can specific make leasing merchant the sign-ups road I to third-party card to and From from promising enhance of purpose offers growth level, properties as on as consumers be websites. solutions be well digital mentioned used things for measurable Google, is credit AI, seen global respond benefits, the should As across is outcomes Acima we've particular, partnership I as The deliver acquisition to more our developed different and like app mobile progress Gen in and with running invitations the account featured leader processes at current experience, and continue our couple a desktop powerful anywhere up issued we've outbound across and Acima on and we've Acima's and with an our roster. business At got earlier, Brandzstorm.com general offering of and and these our we through used and full card launching onboarding incremental Mastercard partner retailers. the can the significant customer our standpoint, Acima personalization in mentioned. recommendation customer engine conversion. a key transactions drive and when for provide initiatives, retailers, a In

contributing will the Rent-A-Center's campaigns interests next and and contributing understanding direct customers' it's and bottom initiative broader modestly importantly, our and holiday and line, This of more of learning Our digital mail but properties. credit to to landscape. the our media include across social our stage is desires of consumer testing dynamics

opportunities low-risk this today, While for helps to scale and partnership balance in grow. prepare it enables environment to future us a learn also us sheet-light

final to couple hand off of before I'd I thoughts. it Now share like to Fahmi, a

is so first and The to the to practical industry generation support durable find is solutions find even ready to I stakeholders. and being each helping talented our for decades Whether And this to know it of solutions sales. delivers tireless how that retailers. and our team Acima, we're or forth, as our And shopping dedication seeing being our I thank of because in next to committed things evolve consumers. change, our X committed inclusive their to efforts a as to underserved and and lastly, and of merchants the deliver customers veteran want customers incremental team Rent-A-Center solutions value model and our our experienced industry

and As Their always, financial to dedication for we're customers every day, commitment appreciate opportunity it. ongoing our our all. core of evident is grateful their for mission to sincerely elevating we

I'll to So turn that, with it over Fahmi.

Fahmi Karam

which everyone. and Mitch, of results, I'll take quarter rest the outlook our morning, start year, questions. good today will Thank for then discuss with the review third we of you, a after the

Let's begin on Page presentation. X of the

decrease year. non-GAAP year-over-year margin exercising a in was at basis We savings. with the to increased up line due increased the decrease charge-off rate XXX growth the point a XX adjusted in Acima very Rent-A-Center margin depreciation Acima basis at low and over with basis initiatives XX XX Rent-A-Center Consolidated period million a Adjusted more X.X%. promotional basis from the of combined compared excluding year-over-year reflecting Consolidated basis the period, in Rent-A-Center points in and approximately a customers corporate overhead XX-day to the consolidated up approximately the nonlabor cost. compared revenues purchase XXX a of XX.X% part point into XX points Consolidated sales driven $XXX.X sequential and charge-off to prior balance last and higher XX lower segment. adjusted in addition rate up XX XX.X% XX.X%, basis decrease Consolidated Rent-A-Center. was segment expenses, basis, to and basis approximately lease single to to larger points by another labor point were EBITDA points EBITDA a due a our The efficiencies On charge-offs moment. third operational revenues as provide decreased and amortization, approximately strong points of operating Acima sales, of offset due quarter, of consolidated Rent-A-Center down fees basis and and year-over-year X.X%, segment XXX XX.X% with Rent-A-Center EBITDA digits coming XX.X% point for costs X.X%, segment XXX percent at increase the option, gross basis margin and lease addition Acima portfolio a with increased were of pleased was partially at in at revenue lease Rentals increase detail quarter at I'll broadly merchandise in of up which was year basis points sequential prior Rent-A-Center. X%, to results was contraction growth Acima. and expansion growth expectations. revenue while in corporate more up year by a to EBITDA are of quarter on X.X% EPS with report XX% XX%

a prior year quarter. XX the non-GAAP the the we stock year Acima acquisition. was prior $X.XX shares $X.XX was do the items not in share period, the in per driven was net of to representing with quarterly in non-GAAP GAAP compared $XX Looking XXXX After million, revolver share, and to third adjusting was We of we believe the the paying $X.XX with the year $X.XX after restricted our a The business, underlying third slight expense of count earnings in quarter connection third-quarter third quarter issued of XX% share prior tax per for million the diluted was X.Xx growth quarter. earnings tax finished ratio to on $X.XX period. period. our the that impact effective decrease associated XX.X% line, quarter down period, EPS reflect of which below a approximately by The year the rate per performance net distributed diluted for with a of which compared average in prior prior XX.X% year awards dividend was interest basis vesting the year-over-year. in was from share compared the leverage in approximately the special

segment Page Let's X. the to move starting on results

GMV For growth the double-digit year-over-year quarter. Acima, consecutive continued fourth for

prior of to year-over-year by of the more Acima XX%. the underwriting lease GMV XX points approval up sequentially. growth Those as lease wind-down Non-GAAP third approximately excluding a revenue dollar key points XX% of to continued third percentage option The up due XXX larger lease which year-over-year, purchase in over approximately last year-over-year margin of asset approximately was more early discipline, were few margin basis was impact contraction sales approximately was points operating XX% basis points by conversion XX.X% charge-offs approach up quarter segment portfolio Adjusted quarter, to year-over-year. of to value driven $XX.X per in in compared sequentially year-over-year our in our year-over-year, the The points increase compared was of a inflation basis Revenue elections, which basis electing decrease The X.X% growth a including increase that in the on year-over-year gross increased purchase increase of lower grew XX percentage compared recent decreased year-over-year, approximately the our a increase option lower merchandise sales, and revenue the tailwinds due base. in by under in to third costs, to disciplined fees partially due in offset lift XXXX. the down. $X.X merchant, merchant year-over-year, XX% locations up was XX.X% point trade and of decreased the sold. as book. EBITDA consumers of prior the in core goods of basis, million and increase XX.X% underwriting inventory in were Following rentals with the quarter. a factors, active million XXX rates the Anow was Adjusted lower were net charge-offs platform. underlying quarters, X XX.X% XX The approximately productivity back larger to represented revenue the remain GMV charge-offs, in Lease AcceptanceNOW margin X.X%, locations we consumer gross merchandise driven basis decrease and a due drivers and partially year an for applications basis as continues of period the Acima of of to XXX Acima's lower primarily to XX% an EBITDA and in XX-day a uptick revenue. increase and result in quarter the of to was a revenue XX.X% in year-over-year, at including the the a year cost primarily offset year a and compared XX.X% beginning by the prior third impact

points segment, quarter, of increase portfolio quarter quarter revenues and to partially the XXXX. the charge-offs year-over-year compared year-over-year maintaining as was our quarter, the points the lease at basis and revenue consumers. For roughly the revenues basis prior-year from reflection XX Total by X.X% the in fee well consecutive quarter, sequentially, XXXX. The flat third Rent-A-Center offset year second for third sales of XX-day year-over-year third year-over-year, basis increase X.X% to the X% for conditions increased for in prior up segment Lease quarter. of rates averaged value momentum challenging third year-over-year, the same-store in year-over-year sales remain past expected driven from revenue, period. basis rentals XX due a compared seasonal were points by the as XX trends of increasing a in revenue point grew X.X% primarily X.X% same-store quarter increase in higher XX while the a X.X% decrease end, merchandise the higher was that

a margins. to uptick range in slight delinquencies, EBITDA in us for an losses was both produce there remain they Although and strong acceptable

we expenses, a points point expenses. in basis basis is lease XX.X%, ratio operating non-GAAP XXX by segment quarter to This quarter, the for During adjustments decisioning help area EBITDA target in made full-year to the achieve well the tactical lower operating for to the nonlabor to increased our our rate position primarily third us X.X% Adjusted revenue. due year-over-year very and XXXX. margin LCO XXX of decrease charge-offs to excluding year-over-year reflected

For The year-over-year, corporate increased constant basis, were segment, a year. lower decreased segment-adjusted compared EBITDA Non-GAAP the franchise to segment expenses the while on relatively year increased revenue to X.X% prior currency while compared remained adjusted flat. the approximately revenue EBITDA Mexico prior period. year-over-year,

our shift financial to Let's outlook.

goods external backdrop current recovering, macro a stable season not demand and conditions, consistent a that's assumes disrupted by durable with outlook holiday still Our factors.

As Mitch full raised that quarter year, expect we call. guidance the midpoint second the the the for noted to earlier, we of achieve on

million around $XXX in midpoint We full million $X.XX be EBITDA Revenue are range in the ranges the of tightening $XXX $X.XX. the $X.X range, non-GAAP billion year. of EPS $X.X and to range to for the in the billion, to adjusted the should

year-over-year For strong pleased the quarter towards growth the our finish GMV expected higher and which now in coming XX% expect fourth quarter, guidance. of Acima, GMV we're translate posted outcome higher-than-expected a with at and through at also the which to October expected the we double-digit That growth end to year's into the that cash GMV low it is growth growth will start fourth this means XXXX. than Acima given funds the lower free flow, of quarter is

similar due charge-offs in measures grow proactive option. the the than towards part be certain ago we've year-over-year the fourth margins in to to gross mid-teens our quarter relatively should XXXX earliest lower quarter third shift revenue and the Acima's due with the sequentially the quarter underwriting the fine-tune to the digits to in taken flat the to to purchase losses, Lease of segments. Rent-A-Center's expect year Corporate risk We mix lower, due expected similar up lease quarter Acima revenues should are down to be third to outlook higher resulting the see single adjusted third to costs with low adjusted in EBITDA third slightly year-over-year. compared margins charge-offs and franchise fourth low digits quarter. in excluding sale Expenses, be single margins quarter. EBITDA should quarter,

compared are at normalized margins. elevated lease segment, slightly and EBITDA for our but to Our grow ranges each target acceptable for levels target us our to remain continue charge-offs long-term to achieve

at business few confident prudently data-driven to despite our losses seen decision our our the remain continuously to manage based the on past make and real-time improves. acceptable approach approval We engines approvals and disciplined consistently our until in and We in decisioning operating are adjusting portfolio tools environment an difficult years. our the mitigation. are towards amounts we've and competitive to macro range targets the We're our in loss reviewing data guide performance

down portfolio. continues, In becomes trade of as if improve a mix the should charge-offs GMV that addition, larger

it While eventually early through near that lower-margin loss in revenue and losses outcomes, trade term, higher gross the volume it margins growth, down but as the has benefit contributed purchase proportion the will rates to Acima's will EBITDA to P&L. Acima's impact flows continue and adjusted of given

Interest we EBITDA of rate quarter, to In from is third non-GAAP XX%. per to the $XXX range the in quarter, $X.XX at consistent with compared be while to $XXX EPS tax should range the adjusted share. non-GAAP the terms around million to expect be million, $X.XX of lower expected modestly fourth to expense

of we range flow, Rent-A-Center. at Acima still the cash we within as to cash GMV for be our the at growth guidance. offset terms free the expect full In more expect year than But noted, will flow generated cash

in building pleased started we've backdrop, macro our consumers, to we average the a of We continued uneven this the XXXX. see ongoing share diluted shares progress the for I'm our on for momentum XX quarter with the durables very half across started million guide with We for very are a back of given our demand in and softness our the assumed Despite consumer XXXX, performance year count assuming strong goals. guidance. an towards achieving stress fully repurchases share made no in

finish and meeting on Our into focus the move year. continue as will XXXX team and expectations exceeding to new we

Let's strategic our move our allocation supports to Slide imperatives. XX discuss capital and how process

through process that the continues initiatives are our new capabilities be and to the growth our across the accessible. company seeking make merchandise priority consumers supporting seamless more both Our and fundamental that

Beyond for that, XX which periods. our running now dividend to program, been committed pre-pandemic has going we're supporting to back quarters consecutive

free under to as at area. We X.Xx. of deploy targeted should towards We liquidity digits approaching quarter the third with the year our third the our second pay we growth were XX% be moderated well those million. of expect to as share revolver those the go GMV advance We or seize we M&A, whether down double at towards to $XXX of able long-term ended opportunities can priorities, progress quarter X.Xx end of ratio our recurring shifting with flow available outside capital will balance core target of goals. working strength the quarter leverage towards cash a ended deleveraging Thanks repurchases this Xx fully sheet, to and our the of liquidity we balance net positioned needs and from our the to potential X.Xx, low down Acima's assessing from

As I'd mentioned Slide that the Mitch we emphasize XX, wrap on like earlier. to of points up a couple

inclusive managing EBITDA segments delivers merchants. experience seamless quarters. for to past their sales and elevate service risk offer Our goods. financial Across and and several opportunity top the options. who are are mission over durable our to all a shopping that by growing line, underserved we in-store right find they're to we've the our customers or our growth. incremental help creating larger what And them Whether Both done consumers online, and top-tier to for also accessible traditional our for business, is third-party that's of fit EPS committed solutions we're when driving thoughtfully

this our sustainable, it Thank our now confident do your you and line may continue drive questions. open As growth meaningful stakeholders, enables profitable model long-term for for we continue that our the will horizons. the for morning. and to us to we're and across value create to mission you well, time Operator, that near-

Operator

much. BTIG. question Caintic very first comes from [Operator you Our Vincent with today Instructions] Thank

Vincent Caintic

on question activity. first trade-down Acima, the the So

seems So see up, being and nice merchandise it incremental. was it that's all to the sales like

that about gross of business fall the out? will if that losses kind the to I in talk with And trade expecting, where the rest could economics talk mean detail, business lower losses? that, business about the you of could that account so does down margins trade-down similar once And economics you model lower the you're more lease of the you the is guess that the of if you for expect

Fahmi Karam

activity keep the trade really allows to purchase also So GMV especially in at selective associated it us a us uncertain, core trade XX-day our comes to generally allows kind and that's the macro down up lower speaking, backdrop to end us it consumer. us down little and But of margin. allows bit with this so the of what more bottom of be to usually do, being a on

points. most the points. rates approval platform, our staffed But moved XXX applications that from actually up Approval basis were exclude XX of to XX%. As we of if rate Acima the you closer mentioned, about was moved, down basis some that ANow down the were to business

that exercise does lease a the allow business I we more and ability they into give gross onto Acima it third typically XX-day lease. you sheet new come has that to. do down typically than that quarter. trade and who we this that in platform. do to as us through with and mentioned, prepared it us get first So repeat to also margins the saw selective be a us us it leases second customers customers balance really buyout come, does who lower the the have quarter, in and but our better give we to to But Those into at allows fourth they remarks, margin option, and as the our in that expect margin, said continue to we reflected But

continued the opportunity seeing improvement So good rolls it's it's start We're mentioned, P&L. delinquency trend for it as up some the business the excited year. and to of into us. you that through as about as having And loss through you

the associated with profit You because haven't you really just the takes a while P&L, yet are of some seeing just seen headwinds gross it but margin. through the that go to

Vincent Caintic

that consumer. was to it actually that interesting the year-over-year. then And of over RAC due were that just helpful. margins points super see switching the part last question, That's to the part Rent-A-Center that Understanding seasonality, to Great. up, XXX also due charge-offs up But were business. Okay. is to was basis of

there's sort perhaps how higher if higher is in managing loss about wondering business I'm thinking you're there, maybe that the content profitability So of that business. but

If you about manage talk how that. you can

Mitchell E. Fadel

EBITDA this Vincent, the pretty are Rent-A-Center. question. Mitch. thanks for strong the good No, It's is at question. a margins Because

brick-and-mortar balancing to happy line, volume forth. how unlike the -- business with to total the always costs bottom cover the you're we're losses enough of running so you balancing let all But much get margins. the so with and So Acima through the a to

didn't us. losses We are surprise tightening. The

uptick. have same last in is quarter you, year line at the When in at we the front talking been X year, year. going the range the to you But if just year. basically at as is losses October the last we forward-looking like year doing all delinquency expected the in that. and in the the the a quarter. way We When Page year as we're look expect The numbers bit, up look range the forward, of of we've up at in presentation. in But they they we've went that rates, for did do almost quarter. but be on last the it about exact tighten third fourth you off we is looking X.X% a identical. We're seen went to prudent. have leveling saw you which little that exactly The know in being time, same don't And third more I still what

peak, and forth. expected so So the X.X% our that's

We are need certain that we volume those right, XX% in to tightening. EBITDA keep a margins of you're range. amount But

margin. losses or We So the I year. and just overall just off usually leveled did the it's those comes like rates, mentioned, when always a to We're really with the balance, summer peak it the delinquency is. it, they with really especially comfortable have happy like in last

we that overall volume. not So happy EBITDA the in we're where margins. we'll and And year still comfortable mention very be for and still the to are with range the

too. how on that but names little not Certainly, subprime competitors know comment competitors, at a we that of in are quarters those of my mentioned I are, and comments down. subprime geographic prepared quasi got same-store of getting Rent-A-Center, business, Probably competitors, didn't this, out stores a in but after X you competitors business. row the of the with necessarily about well. shutting stores some the I'll really more at and business, ask lease-own doing is But where that You sales Rent-A-Center competitors, we're going least, anyhow. that's closing going of

a tailwind So picking up it's for customers. really those Rent-A-Center

the down. of about weren't that but any competitors we any closing stores. that that are or Fortunately, competitors big in in even the on be to we of are were fortunate have closing just closing ones enough the not whole a We've that, worry stores, to the portion business got side, Acima closing those of

is a in, tailwind that downside primarily up customers. on other pick maybe but the a yet business that those for no side, Acima up retailers it's subprime Rent-A-Center Rent-A-Center So little as too, tailwind especially picking Acima, for

original back We an need as do it's there. good basis. where going things to. know So on well that in question off as much leveled on about tighten are the feel fourth we we to we're are and the it your And losses, hourly pretty can comfortable of we quarter and here course, could

we're pretty our but it's in act, balancing it's where a we control, are. comfortable So and

Operator

Our next James. Griffin question comes from with Bobby Raymond

Robert Griffin

GMV touch Fahmi, customer wanted gross dynamic it's maybe good on flow-through. just dollar this to Acima first, growing on timing? the stronger less faster matter then if with on skips growth margin and You guess, see stays, with you margin a just that the I relief Is the segment and Congrats I the the it a or get EBITDA upside. pressure, bit quarter. but another of stolens? Or later business little a

we're importantly, the and flow-through? just parts that see pressuring moving could just there the the seeing in margins dynamic a 'XX timing. accelerate asking really Just I'm growth context, that's And help if in think I timing EBITDA it guess about we us and more is

Fahmi Karam

the question. for thanks Bobby,

would your question XX-day with this seeing and specifically comment some of trade-down yes, about is buyout when you activity timing, the higher your agree and regarding So I activity. think

You'll the sales quarter. we this which seeing up, start merchandise go saw

from pressure portion puts a a probably couple see the and be Eventually, quality you'll portfolio, credit that quarter, on bigger quarters now. expect into of fourth improvement We did that continue better from consumer profit to the a and that that loss come will of GMV the margin. gross your

around we gross see going some but profit today. for XXXX, think start we expectation we're you'll better in margin to And into as right about a to to you'll from right that to rate EBITDA XXXX, then number that be, little see an number. of low start So it Acima where not loss we to want get are our guidance margin hopefully or bit is from where into normalization right, loss And of mid-teens XXXX. -- that kind that standpoint, specifics puts

from just also EBITDA relatively a Acima flat charge-off business. have QX But the guided the but uptick the reminder, a at in be a we trade-off. basis, as that's margin slight So to

to us grow allow You GMV.

a but benefit of should definitely near in from see bit You'll couple headwinds term in a some profit, little quarters. the have you in of gross losses a

Mitchell E. Fadel

in you EBITDA we expect even fourth as margin. quarter, Fahmi, the slight And a see in increase mentioned, at least to

already in just your So versus was waiting Bobby. question, which would it 'XX, 'XX until starting be

on The of don't retailer if out a and or you other some the of repeat more their he through and the so at retailer, retailer marketplace something our phone that the And like that of and don't own our or The the they Target business and up actually on they're same I'd lower said to kind their are from it's to pay aware Through higher Actually, costs for a Best the are their aware early Acima of and a to we the business, go on as account, than the things direct little that making with at goes their they've side of do lifetime on lot about retailer to marketplace, Fahmi Buy when margins we our talk add repeat or second app repeat they app repeat forth, a account marketplace, same Acima, people than pay customers, got have that. once But the first pay cost on mentioned, even going same are rate product on business little is different so what like thing the where we're payments of lot customers, the lower. forth. a higher these those business a are they're they ends through Amazon that are of the that. value. times, margin. of of marketplace need get something might They the business, some because once furniture. lot or a people underwriting Acima

is time first So profitable through more the repeat business too. than

EBITDA So customers that's get value when the and more margins other of go lifetime reason up it. the you

Robert Griffin

me, business, helpful. of I then guess, some lastly That's more the areas And appreciate at different you are guys mean, stores. franchise I that. for clearly I looking

what So you talk standpoint think -- bit capital a just kind same been how of but around Business that really view focus really of size, kind the profitable, of in the been a context has notâ€”not the in opportunity things, from a investment Mexico? is and little hasn't you maybe about point.

there opportunity kind So and of to the see what anything you long-term be? just

Mitchell E. Fadel

Good Yes. question.

comments, and we much done standpoint of the how the the prepared my far store from pretty in and Bob, we've revenue store year keep into sale We're did mentioned we count. the corporate about the accounts as I able excited of those really stores. reducing nearby this earlier being closed As we stores see well count those as the about as excited we been to also franchise put

So been that's for positive all Rent-A-Center.

quarter. Acima bit as we're as flat for the year. year. talk at business is being was We a and there for expanding for a It's against year Mexico, about against up They're currency was the being strong, the It down there pretty think us peso with They're year. you dollar not when last year. But has good next think the good little a the bit the there. having down gone valuation year. I The little it about fat being as relatively relatively the excited. overall, down we're EBITDA looking well up this

down from Acima So good million take I huge, year, isn't is great million, could really which when the EBITDA very in Obviously, know, $X $X you yes, needle. I mean, Mexico that, standpoint standpoint, but million appreciate $X doesn't Rent-A-Center a so something well needle we're difference million good could $X or that $X EBITDA a it's about a that do country expanding But of down said, to a the something had it's going if opportunity Acima and adding Mexico as though large of than Fahmi, excited Rent-A-Center that us it road they a of are there. a make least that's as they year add a million. there. there. or and platform there move exciting And to year, at forth.Â So year But not be we move U.S. doing don't we on our of million a to if top everything a really virtual more like for pretty even well like from stores I that's, much down down $X

Fahmi Karam

And basis a started what The Acima Mexico down our Rent-A-Center we've next reason fully with decision Bobby, under build on be the why the now has functional great platform. up control. we're to because and us year for is engine It more paves there. in out. that to losses we've is done, job side this year centralized on down aggressive a year-to-date rolling the really there in team really We a gotten the is way done

Mitchell E. Fadel

and business decisioning is and Acima right allow getting to then forth. Rent-A-Center them the It's to the doing so it for use precursor -- the tweak it

that. like I about pretty excited we're So said,

Operator

Our next Hoang with Nguyen question from Cowen. TD comes

Hoang Nguyen

guess, and there's down up and delinquency loss benefits a granted, of delinquency on a you said trade credit, the But in mean quarter. to losses lag I road. So tick still the down the on this that you're on be I going seeing

group talk have you follow-up. segment a to that this about of contributing I maybe of is can And maybe taking what So actions higher-risk now And manage customers your to you're what this? customers?

Mitchell E. Fadel

there of talking at still though, closing, trade Acima they're -- is Remember, sequentially Rent-A-Center partners early much of so the down, a question. retailers and do trade to see losses down some Good up is year, as is Hong. waterfalls positive sure, primarily option no about Rent-A-Center so And -- forth. in down in impact where the down very Rent-A-Center subprime on or went within the there's similar not not to year-over-year. and same Acima retail from Yes, delinquency purchase different. if being the they're positive not other It's there to down trade we're last trade and are level impact forth. apt doesn't

So Acima. the it is than -- at

trade and is significant down loss Acima trending pretty are most down way So is sequentially we're the from up about our will, losses a year-over-year. lenders, Acima really and down a when are of trending if going their talking at -- standpoint, in most you

the more and question, losses standpoint underwriting we're certainly forth. there's be answer at we Montrone, that look at good part people at need weekly Acima for last look -- from that. So that. To I of our certainly able to and feel daily. mean, it look your Fami I are capabilities about We to actually runs comfortable it an trends certainly way and because us control But with that real the so with Tyler their we make on to person tweaks any the the there down. who

Hoang Nguyen

And Got this for maybe Fahmi. is it. one

the AG $X.X and you currently CFPB, estimate? for is your legal an that expenses, give matters all AG. outstanding X So for issues? million color with little that guys this estimated York settlement X around saw estimate New incurred more Can you I all I a mean bit Multistate

Fahmi Karam

where look, for and the this probable board, the mean the comment can't going that's on that out, an the in our books. came shake that to And the too was tend standpoint, up how an necessarily Thanks across XX-Q from some estimate at quarter. It much we disclosures but number something and I just to I of given -- we're facts doesn't and open settlement put best reasonable, accrual this estimable, you accounting the question. on we of we're us accrual Yes, would litigation investigations But becomes open litigations talks. once we file. going that the that time. those with that's as front but the have or point go, updated We'll as far to we to have

Operator

Thomas Our next from question Markets. comes Brad Capital KeyBanc with

Bradley Thomas

just by that. bit here. quarter plan add you on to A ago, multi-year its be to congratulations nice year look in about on XXXX? you through GMV up I a XXXX growth. well been hoping for talk the revenue laid a in GMV even out to as and me was the you just my growing follow Mitch, outlook Acima be XX%. segment XX% stronger has a out the as that can Can little you to in Clearly, than recent quarters your range that confidence Let

Mitchell E. Fadel

Brad, fourth space to digit, white forward. pointed your just see there's a love -- double-digit still quarter. really of of quarter we're double we Acima's been fourth raised to off in coming in strong, last growth double-digit there. low we comp our going low think about XX% it's year I'd lot We point. -- -- see -- out Acima the years awful to We're many guidance as growth We out, coming that's an talk Sure. to because

talk lost, wins competitor at little regional it's about talked lot down, Yet lot over a had I we've So when retailer lot. Brad, awful else, Furniture, years, things from a lot an likes accounts retailer last double the going frustrated Sleep of honestly, Furniture, when furniture they taken about low retailer, XXX that off the it. awful confidence years Slumberland, the did interesting, on there. top of about least lost couple last because last talk about and competitor the it an X City side, write a ours win of and same regional retailers. one you wins X forward that lot Outfitters, digits taken talking of Ashley quite a from that taken we at press of a digits, some to for And that's the are even We've lot, We been a all Levin and whole numerous pretty of retail years, competitor had Wayfair lot that come years. positive furniture we've side, in the one gives what and over retail analysts it a release in a on there's -- wants those from but going get the about many double on of of we number trade and us the is that competition, fact, we've that X our some

and had wins awful couple more industry than continue. GMV lot you now, we've to So going very we're in know, of for from the We've confident growth an a years that's losses. side, as led the

is the for whether else's, retailers sales volume a they anybody support our on integration best just like want our is the to it got the more simplest the marketplace largest out have knocking nobody we've retailers else, there, is model, say little results. -- of I for based model Our our from industry, team adds in a team out dare quasi-staff options than our the or and of the staff bit sales park, a

up look growth, excited pretty our said, about loss upped we've all and about other GMV frustrated has or So just for when these the had coming than we I like the have wasn't one -- of from for and had been. be get we wouldn't But wins there. we're a at fourth big quarter. reading a more I we where GMV And lot what a wouldn't that it little making it, we the our loss -- some are obviously, there's wins more

Acima. for of the pretty we're about So growth excited future

Bradley Thomas

excited And I how share you That's big on could any much the want more Absolutely color next the you and follow-up a that could helpful, just to we on And from if results all. been. been to no have to question, Mitch. about the to year, you as growth? ask wondering be that's GMV marketplace how lot a look good. really think be contributing

Mitchell E. Fadel

It's only us like which not of X.X takes it generative leasability instead allows AI things it Well, comments, I our about touch in I'm did on product, leasability it to engine, really -- the exciting we so you think when months, new that. this AI prepared but days about XX is like much the on now touched you marketplace because faster the -- onboard marketplace. glad asked retailers on

tremendously. make the it's So get and the Amazon, leasability and through working is their sift slow had that you engine, an leasable, something the onboarding food leasing people to be just -- to figure So products it's you and add onto from hard to marketplace sure right? this can out new like aren't that or reason with what's and and used Amazon

I team Walmart first it Our And a and Amazon now the that job engine a leasability went Target October. live, great partner, of and we've tremendous went did week the together just really eBay. as with in putting and mentioned. live And added like people

XX% had that's quarter, not in So the third the the in growth even XX%. roughly marketplace we in like

excited really about it. So

as works could, -- think and because not double-digit doing well helping we to we we'll be over get it Amazon XX% that think far those helps year, the numbers, think about added comping much our next other details just growth adds -- if As it hand, it right growth. without year, -- we're adds even us if and Target double-digit next certainly you double-digit -- was low it's But on many we're too, I -- it that now, low it before as getting how too Walmart marketplace. into about as certainly, it and

So low double when of end I the guess low we're double-digit names adding already to digits, doing when about you'd think of in have numbers. spectrum the the kind you those -- when say the say it's you low

and of well. about excited future the really So as marketplace it the

Operator

Hecht question comes Jefferies. with John from next Our

John Hecht

consumer so the asked, any trade-down flows one the holiday happening through? momentum. in given questions real as have Congratulations just you on And are was guys in we that's or transaction of my expect type how differences one of that terms season, all there good Actually, the and time I'll mix just enter question. of the effect that

Fahmi Karam

holiday those flow that's weeks generate of would expect activity about to And Yes. purchase of season. over the Obviously, typically into think any a us if I very the important real lot the don't option tax first and quarter GMV. are then anyway. know you with kind if our highest X XX-day changes I season,

expecting activity So we with is GMV price that continue. to a expect I'm But of where shift see channel, as and coming probably from, far some as big the of customers, returning not down, trade kind year-over-year. new

Operator

Montgomery John with from Rowan Our Janney next Scott. question comes

John Rowan

for a question Just me. quick

So actually it of the that that difficulty regarding -- Acima the CFPB issue to cover settlement was that I nonrecourse. or and they the issue. specific make the covers raised with -- covers that want million, settlement $X.X not that leases that was, just the sure to specifically with returning it or whatever whether expects

Fahmi Karam

specifics. kind John, So disclose don't the we of

say So but that I will just it's one not -- issue.

one something we of do. we're So It's on something not which disclose it's not going to issues. typically the

Mitchell E. Fadel

estimate right? X an that's together. It's books issues now money settlement. at on our putting of not -- put settled. some estimate estimate it's So not it's like settlement It's what an point, the it's best And to settle those on on on right presumably

John Rowan

So in estimate? the included so issues outstanding are that the X all -- issues X

Mitchell E. Fadel

Correct.

Operator

Our next Markets. Anthony Capital from Loop comes with Chukumba question

Anthony Chukumba

into I'm between presidential guidance. we fewer that your that you election shopping you've I about, it's sure days So the laid mean, is X to next how this have do the factored Christmas? things, the be guess, X and this fact quarter Thanksgiving out guidance. think I But fourth going Tuesday fact and then do

Fahmi Karam

mean, have -- mean although as that up we for Black well. leading Yes. do strong is in, November Good I very us to question. factored I Friday the

where for less make had stuff depending days Thanksgiving. have -- shopping in little you years, the that going effect opposite certain Thursday So to a than the certainly and it year you're last falls that fourth when all

[Technical impact are we an a Anthony, to the off calendar probably the than Acima factored but impact, lot in up traditional of so big Thanksgiving a said, strong, lot do and it in. We're leading up because applications but or momentum that impact, XX% business really maybe the less much, doesn't they of have most little -- do least where quarter. but -- their third retail falls, even that just business -- their traditional just So so the have some way Difficulty] but at off we of of being probably conservative We retail. are a have like so of

right about that. You're exactly

Operator

Mitch back today. our for closing it to like to I conclude remarks. would now for turn does That Fadel Q&A

Mitchell E. Fadel

our everyone of joined were and of Thank and And our same-store impressive. quarter who you for quarter sales you, rest update thank deliver year. quarter fourth the an results the the impressive for partners on ways, a of really coworkers the efforts operator, third our who outlook us very merchant on for Rent-A-Center and thankful to helped also for and us different few the course, today I'm in especially GMV. the

for be all we're also our to our So got hard for coworkers really it everybody. and interest of the We shareholders, grateful hard their soon updating for shareholders of them We'll quarter continued our we're and you shows, our bunch working and work. on all people next of to and goals towards grateful a XXXX. our for it Thanks, and talking forward support about look in progress enough.

Operator

This today's does conclude program.

You now may disconnect.

Upbound (UPBD) 31 Oct 242024 Q3 Earnings call transcript