Q1 2025 Upbound Group Inc Earnings Call

Operator: Thank you for standing by.

Thank you for attending by mining, which worked out and that will be a conference operator today at this time I would like to welcome everyone to the park and 125 Outbound Group Inc. Earnings Conference call. All lines have been placed on mute to prevent any background noise. After.

Rochelle: My name is Rochelle, and I will be your conference operator today.

Rochelle: At this time, I would like to welcome everyone to the quarter one 2025 Upbound Group Inc earnings conference call. All lines have been placed in mute to prevent any background noise.

Rochelle: After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Speaker Change: The speaker remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Brad Darwin again, I would now like to turn the call over to Mr. Jeff Chesnut.

Jeff Chesnut: I would now like to turn the call over to Mr. Jeff Chesnut. Please go ahead.

Jeff Chesnut: Please go ahead.

Mitch Fadel: Good morning, and thank you all for joining us to discuss We issued our earnings release this morning before the market opened and the release and all related materials, including the link to the live webcast, are available on our website at investor.upbound.com.

Jeff Chesnut: Good morning, and thank you all for joining us to discuss.

Jeff Chesnut: Hi.

Jeff Chesnut: Issued our earnings release this morning, before the market open and our release and all related materials, including a link to the live webcast are available on our website at Investor <unk> Dot com.

Mitch Fadel: On the call today from Upbound Group, we have Mitch Fadel, our CEO, and Fahmi Karam, our CFO. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's SEC file. Upbound Group undertakes no obligation to publicly update or revise any overlooking statements except as required by law.

Speaker Change: On the call today from our Bank group, we have Mr. <unk>, our CEO and Jamie Cullum, our CFO as a reminder, some of the statements provided on this call are forward looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's SEC filer.

Speaker Change: Those are bound group undertakes no obligation to publicly update or revise any forward looking statements, except as required by law.

Mitch Fadel: The call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures.

Speaker Change: This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures.

Mitch Fadel: Finally, Upbound Group is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties.

Speaker Change: Finally, our bank group is not responsible for and does not Edgar guarantee the accuracy of our earnings teleconference. Transcripts provided by third parties. Please refer to our website for the only authorized webcasts with that I'll turn the call over to Mitch.

Mitch Fadel: Please refer to our website for the only authorized web With that, I'll turn the call over to Mitch. Thank you, Jeff, and good morning, everyone.

Mitch: Thank you, Jeff and good morning, everyone.

Mitch Fadel: As I start my 30th and final earnings call as Upbound CEO, I'd like to share with you my perspective on the state of our When I started in this business over 40 years ago, the industry was just starting to transition from a highly fragmented and localized model to a more centralized and professionally run model. And that evolution delivered a host of benefits for our customers, including a consistent experience across all of our stores, as well as unlocking the benefits of our scale, which enabled lower prices and enhanced services across our growing national footprint. That's the playbook that ultimately led to our IPO and powered our success thereafter.

Speaker Change: As I start my 30, <unk> and final earnings call Us up bounds CEO I'd like to share with you my perspective on the state of our business.

Speaker Change: When I started in this business over 40 years ago. The industry was just starting to transition from a highly fragmented and localized model to a more centralized and professionally run model.

Speaker Change: That evolution delivered a host of benefits for our customers.

Speaker Change: <unk>, a consistent experience across all of our stores as well as unlocking the benefits of our scale, which enabled lower prices and enhanced services across our growing national footprint. That's the playbook that ultimately led to our IPO and powered our success thereafter.

Mitch Fadel: As the world changed, our customers changed, and we responded by changing our business as well.

Speaker Change: As the world changed our customer has changed and we responded by changing our business as well and today Upbound is committed to our mission of elevating financial opportunity for all with the with the goal of becoming the financial platform that meaningfully and seamlessly improves our customers' financial lives.

Mitch Fadel: And today, Upbound is committed to our mission of elevating financial opportunity for all with a goal of becoming the financial platform that meaningfully and seamlessly improves our customers' financial lives. And I'll start on slide four and talk just about how we're going to deliver and how we do deliver on that mission. We acquired Acima in 2021 to grow our ability to offer leases virtually, which dramatically expanded our TAM and enabled us to become a critical sales enablement partner for what's now over 35,000 retailer locations across the country. Since then, we've provided more than 14 million leases to over 6.5 million customers who do not typically have access to the traditional financial services ecosystem.

Speaker Change: I'll start on slide four and talk just about how we're going to deliver and how we do deliver on that mission.

Speaker Change: We acquired of Sema in 2021 to grow our ability to offer leases virtually which dramatically expanded our tam and enabled us to become a critical sales enablement partner for what is now over 35000 retailer locations across the country.

Speaker Change: Since then we've provided more than 14 million leases for over $6 5 million customers, who do not typically have access to the traditional financial services ecosystem, along the way we've developed a proprietary and differentiated view of the underserved population and we know we can leverage that knowledge base to responsibly help those customers with.

Mitch Fadel: Along the way, we've developed a proprietary and differentiated view of the underserved population, and we know we can leverage that knowledge base to responsibly help those customers with new products through our growing digital channels, while delivering that same superior level of customer service.

Speaker Change: New products through our growing digital channels, while delivering the same superior level of customer service.

Mitch Fadel: And that's why we had the Bridget business. Their team has developed an innovative set of products that help customers save money, avoid fees, learn to budget better, build credit, and with more offerings on the horizon. Those products are built upon a foundation of data elements and risk insights from banking connections and cash flow underwriting technology. Ultimately, what it means is Bridget has a real-time, robust view of its customers' financial needs and can continue to build new products that meet and exceed those needs to help those customers live a better life. Collectively, our brands have a wealth of consumer intelligence of unmatched quality, depth, and breadth covering the non-prime segment, and it makes for a really, really powerful combination that we can harness and unify the data between our businesses on an underserved population.

Speaker Change: And Thats why we added the bridge business third team has developed an innovative set of products that help customers save money avoid fees learned to budget better bill credit and with more offerings on the horizon.

Speaker Change: Those products are built upon the upon a foundation of data elements and risk insights from banking connections.

Speaker Change: Cash flow underwriting technology ultimately what it means is Bridget has a real time robust view of its customers financial needs and can continue to build new products that meet and exceed those needs to help those customers live better lives.

Speaker Change: Collectively our brands have a wealth of consumer intelligence of unmatched quality depth and breath covering the non prime segment and it makes for a really really powerful foundation that we can harness and unify the data between our businesses on an underserved population.

Mitch Fadel: As I mentioned, it doesn't participate in the traditional credit system and it's looking for options. And this all allows us to be a stronger and more holistic financial partner to them, and a more indispensable partner to our merchant roster.

Speaker Change: As I mentioned it doesn't participate in the traditional credit system and is looking for options and this all allows us to be a stronger and more holistic financial partner to them in a more indispensable partner to our merchant roster.

Mitch Fadel: You know, over my 40 years in the business, I've seen every cycle the market has experienced. And our business is what is them all and emerge stronger on the other side every single time. primarily because we kept it simple. We focus on doing what's best for our customers. When we do that, we earn their trust, their loyalty, and their future. Because of that commitment delivered each day by our team. Upbound is stronger today than it's ever been.

Speaker Change: Over my 40 years in the business I've seen every cycle the market has experienced.

Speaker Change: And our business is whether the mall and emerge stronger on the other side every single time.

Speaker Change: Primarily because we kept it simple we.

Speaker Change: We focus on doing what's best for our customers when we do that we earn their trust their loyalty and their future business.

Speaker Change: Because of that commitment delivered each day by our team.

Speaker Change: Upon the stronger today than it's ever been.

Mitch Fadel: With that background, I want to move to the key highlights from the first quarter of 2025, as well as a discussion on the progress we've made on our priorities for the year.

Speaker Change: And with that background I want to move to the key highlights from the first quarter of 2025 as well as a discussion on the progress we've made on our priorities for the year.

Mitch Fadel: And then Fahmi will share a more detailed review of our financial results and of course of our outlook.

Speaker Change: <unk> family will share a more detailed review of our financial results and of course of our outlook and after that we'll take some questions.

Mitch Fadel: And after that, we'll take some questions. Let's move to slide five and discuss some of the key drivers of our performance this quarter. At Acima, we carried last year's momentum into 2025 with GMV growth of nearly 9% year over year on higher applications and funded leases in this quarter relative to the first quarter of last year. As we mentioned before, Athema's growth comes from a highly diversified lineup of merchant relationships with the top 10 merchants representing about 30% of the total GMB. Assima achieved that growth, that 9%, roughly 9% year-over-year growth while improving its lease charge-offs by 70 basis points from last year, leading to a step-up in adjusted EBITDA margin of 170 basis points.

Speaker Change: Let's move to slide five and discuss some of the key drivers of our performance this quarter.

Speaker Change: At the Sema, we carried last year's momentum into 2025 with <unk> growth of nearly 9% year over year on higher applications and funded leases in this quarter relative to the first quarter of last year.

Speaker Change: As we mentioned before a seamless growth comes from our highly diversified lineup of merchant relationships with the top 10 merchants representing about 30% of the total GMB.

Speaker Change: <unk> achieved that growth now.

Speaker Change: <unk>, 9%, roughly 9% year over year growth, while improving its lease charge offs by 70 basis points from last year.

Speaker Change: To a step up in adjusted EBITDA margin of 170 basis points.

Mitch Fadel: I'm going to say it another way for emphasis and just to put it simply, the FEMA has been on a tear since late 2023. And it just booked its highest ever quarterly revenue figure while concurrently delivering year over year improvements and even on margins and lease charge offs. Without question, the world is changing, but we believe that SEMA's growing roster of over 35,000 merchant locations is a unique differentiator that enhances its presence wherever and whenever durable good transactions are occurring. On top of that, our direct-to-consumer marketplace and AI-powered leasability engine unlocks leasing opportunities with unintegrated retailers where we do not yet have a formal relationship.

Speaker Change: I'm going to say it another way for emphasis and just to put it simply the seamless been on a tear since late 2023 and.

Speaker Change: And it just booked its highest ever quarterly revenue figure, while concurrently delivering year over year improvements in EBITDA margins and lease charge off rate.

Speaker Change: Without question the World is changing but we believe the seamless growing roster of over 35000 merchant locations is a unique differentiator that enhances its presence wherever and whenever durable good transactions are occurring.

Speaker Change: On top of that our direct to consumer marketplace and AI powered lease ability engine unlocks leasing opportunities unintegrated retailers, where we do not yet have a formal relationship.

Mitch Fadel: These advantages are meaningful and sustainable, and it's why we expect to see low double-digit GMV growth across the balance of the year, and that's on top of 17% last year.

Speaker Change: These advantages are meaningful and sustainable and that's why we expect to see low double digit GMB growth across the balance of the year.

Speaker Change: On top of 17% last year.

Mitch Fadel: At Rent-A-Center, same-source sales were down 2%, mostly as a result of two adjustments we implemented in the second half of last year, and we previously mentioned. that we tighten our underwriting to protect our charge operate, knowing that it would also impact our innocential growth rate. Since that segment doesn't see the trade-down benefit as quickly as the CMA. In addition to tightening up the underwriting, we removed higher, certain higher loss products from our lineup to optimize efficiency and margins, which created a secondary headwind to top line growth. That's what drove the slightly negative minus 2% Sainstar sales.

Speaker Change: At rent a center same store sales were down 2%, mostly as a result of two adjustments we implemented in the second half of last year and we've previously mentioned that.

Speaker Change: We tightened our underwriting to protect our charge off rate knowing that it would also impact our <unk> growth rate.

Speaker Change: Since that segment doesn't see the trade down benefit as quickly as is seen with us.

Speaker Change: In addition to tightening up the underwriting we removed higher certain higher loss products for our lineup to optimize efficiency and margins, which created a secondary headwind to top line growth overall.

Speaker Change: That's what drove.

Speaker Change: The slightly negative minus 2% same store sales in these decisions. This year, the expected benefit and produce the lease charge off rate of four 6% for the first quarter down 10 basis points year over year, and 40 basis points sequentially.

Mitch Fadel: And these decisions did yield the expected benefit and produced a lease charge-off rate of 4.6% for the first quarter, down 10 basis points year-over-year and 40 basis points sequentially.

Mitch Fadel: In a couple of slides, I'll highlight some of the key digital initiatives that we're rolling out at RentCenter to drive even more customer engagement and activity.

Speaker Change: And a couple of slides I'll highlight some of the key digital initiatives that we're rolling out a rent a center to drive even more customer engagement and activity.

Mitch Fadel: Now Bridget joined Upbound on January 31st. and its financial wellness solutions continue to resonate with consumers as we book mid-20% growth in both subscribers and cash advances versus a year ago period. On a pro forma basis, revenue for the full three-month quarter was up 38% year-over-year.

Speaker Change: And bridgette joined up bombed on January 31.

Speaker Change: And this financial wellness solutions continue to resonate with consumers as we book mid 20% growth in both subscribers and cash advances versus the year ago period.

Speaker Change: On a pro forma basis revenue for the full three month quarter was up 38% year over year, we're very pleased with those results, especially when you think about fridges custom.

Mitch Fadel: We're very pleased with those results, especially when you think about Bridges customarily dials back its marketing spend in the first quarter due to the positive impact of tax refunds on consumer liquidity. That growth also preceded the trials of our cross-sell initiatives, which we purposely started as tax season was concluding. Bridges emphasis on sustainable growth resulted in customer acquisition costs and a net advance loss rate within our expectation.

Speaker Change: Customarily Dallas back its marketing spend in the first quarter due to the positive impact of tax refunds on consumer liquidity.

Speaker Change: That growth also preceded the trials of our cross sell initiatives, which we purposely started as tax season was concluded.

Speaker Change: Richard its emphasis on sustainable growth, resulting in customer acquisition costs and a net advance low loss rate within our expectations.

Mitch Fadel: So let's go to slide six and recap our consolidated financial results in Q1. First quarter revenue of nearly $1.2 billion was a 7.3% increase from a year ago period, mainly driven by strength of the SEMA, plus the addition of two months of risk. Upbound delivered 126 million of adjusted EBITDA, which was a lift of almost 16% against Q1 of 2024 and adjusted EBITDA margins of 10.7%, which was up 70 basis points from last year. Non-DF diluted EPS was $1, which was about 27% higher than a year ago. Upbound generated free cash flow of $127 million, which is nearly four times larger than last year's first quarter results.

Speaker Change: So let's go to slide six and a recap of our consolidated financial results in Q1.

Speaker Change: First quarter revenue of nearly $1 2 billion was seven 3% increase from a year ago period, mainly driven by strength of the Zima plus. The addition of two months of risks.

Speaker Change: Our bond delivered $126 million of adjusted EBITDA, which was a lift of almost 16% against Q1 of 2024 and adjusted EBITDA margins of 10, 7%, which was up 70 basis points from last year.

Speaker Change: non-GAAP diluted EPS was $1, which was about 27% higher than a year ago quarter.

Speaker Change: Our bond generated free cash flow of $127 million, which is nearly four times larger than last year's first quarter results.

Mitch Fadel: Each of these figures, each of these really strong figures exceeds the midpoint or the high end of our guidance range that we provided on our last call. In terms of lease charge-offs, we finished the quarter at 8.9% for ASEMA and 4.6% for Rent-A-Center, representing improvements both year-over-year and sequentially. These are really strong results, and I'm pleased that Upbound delivered them during a period of macro uncertainty. And our customers, as you know, are seeing the same headlines as the market, whether it's tariff escalations or sticky inflation. You know, on the other hand, unemployment is around 4%, which is below the pre-COVID 10-year average, and the average tax refund has been ahead of the prior two years, slightly ahead at least, which affords our customers a boost to either their spending power or their savings .

Speaker Change: Each of these figures each of these really strong figures exceeds the midpoint or the high end of our guidance range that we provided on our last call.

Speaker Change: In terms of the lease charge offs, we finished the quarter at eight 9% for a steamer and.

Speaker Change: And four 6% for rent a center representing improvement both year over year and sequentially.

Speaker Change: These are really strong results and I'm pleased with upon deliver them during a period of macro uncertainty and are our customers. As you know are seeing the same headlines as the market, whether it's tariff escalations or or sticky installation.

Speaker Change: On the other hand, unemployment's around 4%, which is below the pre COVID-19 10 year average and the average tax refund has been ahead of the prior to year slightly ahead of lease which affords our customers have boosted their spending power or their savings cushion.

Mitch Fadel: Additionally, there's been a nice pullback in gas prices at the pump, which is meaningful for lower income consumers. Non-balancing. Our consumers are confronting that volatility with deliberate shopping and spending decisions. As I've seen quite a few times in the last 40 years, a tougher macro environment gives us as many tailwinds. As it does have Just look at the trade down impact that the SEMA is seeing right now. We've proven over the years that our business can be more and more relevant to consumers in times like these. Durable goods categories like furniture, appliances, and tires are often necessities that need to be addressed in the moment.

Speaker Change: Additionally, there has been a nice pull back in gas prices at the pump, which is meaningful for lower income consumers non balance.

Speaker Change: Our consumers are confronting that volatility with deliberate shopping and spending decisions.

Speaker Change: As I have seen quite a few times in the last 40 years, a tougher macro environment gives us many tailwind.

Speaker Change: As it does headwinds.

Speaker Change: Just look at the trade down impact of the Sema is seeing right now.

Speaker Change: We've proven over the years that our business can be more and more relevant to consumers in times like these.

Speaker Change: Durable goods categories like furniture appliances, and tires are often necessities that need to be addressed in a moment.

Mitch Fadel: and our value proposition of high-quality goods and low payments, no long-term financial commitment. And tremendous flexibility can attract even more new customers to LTO offerings during uncertain conditions.

Speaker Change: And our value proposition of high quality goods and low payments no long term financial commitment.

Speaker Change: And tremendous flexibility contract, even more new customers to LTE offerings.

Speaker Change: Uncertain conditions, just just to go back and look at our results during the great recession in 2008, where we outperformed the market grow our business and manage losses at our normal levels.

Mitch Fadel: Just go back and look at our results during the Great Recession in 2008, where we outperformed the market, grew our business. and Managed Losses at our Normal Level. Additionally, we have new products outside of Leastone with our new infant cash advances via bridges that can help customers manage their liquidity and avoid expensive bank loans. And this is how the full spectrum of upbound solutions can make a meaningful difference in people's lives, and the current economic climate really amplifies the value proposition we deliver for our customers. Convenient. Flexibility, access to name brand durable goods on the LTL side, and now liquidity solutions and financial literacy, smart alerts, credit billing, and the like, many financial wellness tools on the bridge.

Speaker Change: Additionally, we have new products outside of Leesville and with our new instant cash advances, we had bridges that can help customers manage their liquidity and avoid expensive bank fees.

Speaker Change: And this is how the full spectrum of upper <unk> solutions can make a meaningful difference in People's lives and the current economic climate really amplifies the value proposition, we deliver for our customers convenience.

Speaker Change: Flexibility access to name brand durable goods on the <unk> side, and now liquidity solutions and financial literacy smart alerts credit building into like many financial wellness tools on the bridge side.

Mitch Fadel: We're well prepared to support our existing customers while welcoming these new customers to our family of brands.

Speaker Change: We are well prepared to support our existing customers will.

Speaker Change: While wealthy while welcoming these new customers to our family of brands.

Mitch Fadel: with our existing offerings and a pipeline of new products coming this year, which is a good segue really to slide seven, which discusses our strategic priorities for 2025 that we outlined a few months ago. Across the first quarter, we've made great progress in our digital investment, so it's a stronger, more efficient, more unified customer experience, and we're continuing to build new connections between our segments towards our goal of providing a seamless set of financial solutions to our customers. At Acima, we debuted an upgraded product experience. The new design was informed by the latest intelligence and customer preferences and shopping habits, resulting in a more personalized and tailored experience for Acima's user community.

Speaker Change: With our existing offerings and our pipeline of new products coming this year, which is a good segue really to slide seven which discusses our strategic priorities for 2025, we outline a few months ago.

Speaker Change: Across the first quarter, we made great progress in our digital investments towards a stronger more efficient more unified customer experience and we're continuing to build new connections between our segments towards our goal of providing a seamless set of financial solutions to our customers.

Speaker Change: At Sema, we debuted and upgraded product experience. The new design was informed by the latest intelligence and customer preferences and shopping habits, resulting in a more personalized and tailored experience for a seamless user community.

Mitch Fadel: That personalization is unlocked by the product's ability to capture more insights about the customer, such as their shopping preferences, in-store or is it online? Their favorite categories, which the app can then feature. And their leasing history, so the Thema's recommendation engine can suggest related products. Collectively, it means we can communicate more effectively and more efficiently with our customers. They have them return for the next lease more quickly and drive the investment.

Speaker Change: That personalization is unlocked by this profitability to capture more insights about customer such as their shopping preferences in stores online their favorite categories, which they have can then feature and their leasing history. So it seems recommendation engine can suggest related products collectively it means we can communicate more.

Speaker Change: <unk> and more efficiently with our customers to have them returned for the next lease from our quickly and drive DMV growth.

Mitch Fadel: I'm also pleased to preview a new initiative for ASEMA, which is to launch a pilot in the Mexican market later this year or early next year, depending on regulatory approvals. And ASEMA's expansion in New Mexico is a natural extension of the success that is achieved here in the U.S. in a market where we already conduct business through a renaissance center with millions of target consumers who can benefit with a low-payment, flexible lease product to access durable The theme is Leveraging the Established Local Expertise of the Rent-A-Center Mexico Team for In-Depth Visibility in a Consumer Spending and Payment Pattern.

Speaker Change: I'm also pleased to preview a new initiative for a CMO, which is to launch a pilot in the Mexican market. Later this year or early next year, depending on regulatory approvals and the <unk> expansion in Mexico as a natural extension of the success. It has achieved here in the U S. In a market, where we already conduct business here in a scenario with millions of <unk>.

Speaker Change: Target consumers, who can benefit with a low payment flex.

Speaker Change: Flexible lease product to access durable goods.

Speaker Change: Seamless leveraging the established local expertise of the rent a center in Mexico team for in depth visibility and consumer spending and payment patterns.

Mitch Fadel: Decisioning Models, and Account Management Strategies, along with operational support tied to the 130-store footprint we already have down. A seamless, scalable platform combined with renaissance and Mexico's local infrastructure creates a strong foundation for cost-effective, accelerated growth, and we look forward to updating you on our progress across the balance of the years.

Speaker Change: Decisioning models and account management strategies, along with operational support tied to the 130 store footprint, we already have down there.

Speaker Change: <unk> scalable platform combined with rent a center Mexico's local infrastructure creates a strong foundation for cost effective accelerated growth and we look forward to updating you on our progress across the balance of the year.

Mitch Fadel: At Rent-A-Center, we are seeing promising early returns on our digital enhancements, which are designed to boost the conversions from shoppers to customers. These include the new Google AI search functionality on the core website, which is now returning search results more tightly aligned with our shoppers intent. We also rolled out a new online chatbot to more intelligently guide customers through the shopping journey towards the right leaseable item and, and for when they're ready to apply for a lease, they will really appreciate our streamlined application flow, which is designed to deliver a more frictionless experience and minimize abandonment.

Speaker Change: At rent a center, we are seeing promising early returns on our digital enhancements, which are designed to boost the conversions from shoppers to customers.

Speaker Change: These include the new Google AI search functionality on the Corps website, which is now returning search results more tightly aligned with our shoppers' intent.

Speaker Change: We also rolled out a new online chatbot to more intelligently guide customers through the shopping journey towards the right leasable item and and for when they are ready to apply for a lease they will really appreciate a streamlined application flow, which is designed to deliver a more frictionless experience and minimize abandoned.

Mitch Fadel: From an account management standpoint, we recently embedded cash app payment capabilities and we know Rent-A-Center customers will appreciate more ways to pay, especially considering it's already high penetration with our customers. So really happy about adding cash out payment capabilities.

Speaker Change: From an account management standpoint, we recently embedded cash app payment capabilities, whom we know rent a center customers will appreciate more ways to pay, especially considering it's already high penetration with our customer base.

Speaker Change: So really happy about adding cash app payment capabilities. In addition to our continuing digital investments enhanced collaboration is a paramount priority for this year, especially with the addition of Richard a.

Mitch Fadel: In addition to our continuing digital investments, enhanced collaboration is a paramount priority for this year, especially with the addition of Bridges. The key differentiator for Bridget is this cash flow underwriting platform, which Rent-A-Center and Acima will test into over time. We believe that real-time data will produce more approvals and fewer losses across the business. And right now, we're focused on introducing our Rent-A-Center and Acima customers to Bridget offerings through digital messaging and marketing collateral in our stores. We're just wrapping up that effort. But over time, we believe we can deliver new customers to Bridget at essentially no incremental cost, which will lower Bridget's customer acquisition costs and drive further growth.

Speaker Change: A key differentiator for bridges as quick cash flow underwriting platform, which rent a center and our CMO will test into overtime.

Speaker Change: We believe that real time data, we will produce more approvals and fewer losses across the business and right now we're focused on introducing our rent a center and assume a customers to bridget offerings through digital messaging and marketing collateral in our stores.

Speaker Change: We're just ramping up that effort, but over time, we believe we can deliver new customers to Bridget at essentially no incremental costs, which will lower bridges customer acquisition costs and drive further growth.

Mitch Fadel: As always, our teams will continue to develop collaborative approaches to support our customers and reinforce transaction volumes.

Speaker Change: As always our teams will continue to develop collaborative approach is to support our customers and reinforce transaction volumes and before <unk> takes you through our segment results in a little more detail I'd like to acknowledge.

Mitch Fadel: And before Fahmi takes you through our segment results in a little more detail, I'd like to acknowledge how talented and dedicated our team is, and they continue to turn our aspirations into reality. And every day our team's relentless focus on our customer helps bring our mission to life. And their commitment and motivation is second to none, and I'm really humbled each day to be a part of such a special group.

Speaker Change: Our talented and dedicated our team is and they continue to turn our aspirations into reality every day our teams relentless focus on our customer helps bring our mission of life and their commitment and motivation is second to none in them I'm really humbled each day to be a part of such a special group I know I know I am going to Miss.

Mitch Fadel: I know I'm going to miss being part of this group. They're doing such a great job, and I sure appreciate each and every one of them.

Amy: Prior to this group that are doing such a great job and I sure appreciate each and every one of them and with that I'll hand, it over to Amy.

Fahmi Karam: And with that, I'll hand it over to Fahmi. Thank you, Mitch, and good morning, everyone.

Amy: Thank you mentioned and good morning, everyone. Let's now turn to the segment results and then discuss our outlook for the balance of 2025, after which we will take questions.

Fahmi Karam: Let's now turn to the segment results and then discuss our outlook for the balance of 2025, after which we will take questions. SEMA recorded Q1 GMV growth of 8.8% year-over-year, in line with our expectations and an impressive print given we are comping nearly 20% growth in the same quarter of 2024, resulting in approximately 29% GMV growth on a stacked two-year basis. CIMA's GMV this quarter was the highest it's been in the first quarter since the pull forward in 2021 and it was driven by an increase in applications of more than 10% year over year.

Amy: Our CMO recorded Q1, GMB growth of eight 8% year over year in line with our expectation and an impressive print given we are comping nearly 20% growth in the same quarter of 2024, resulting in approximately 29% GMB growth on a stacked two year basis.

Amy: A seamless <unk> this quarter was the highest it's been in the first quarter since the pull forward in 2021, and it was driven by an increase in applications have more than 10% year over year.

Fahmi Karam: The quarter started off slowly with a delayed tax season that picked up meaningfully in March with double-digit growth year-over-year which continued into April. In the first quarter, the GMB growth was sourced from new merchants added during the quarter and also an impressive increase of nearly 80% year-over-year from our direct-to-consumer marketplace channel. Our sales team's success in onboarding new merchants reinforces our diversified lineup and minimizes concentration risk. In this quarter, our top 10 retailers represented just over 30% of GMV. Our largest product category, Furniture, only represented approximately 40% of GMB in the first quarter, compared to approximately 45% last year.

Amy: The quarter started off slowly with a delayed tax season that picked up meaningfully in March with double digit growth year over year, which continued into April.

Amy: In the first quarter. The GMB growth was sourced from new merchants added during the quarter and also an impressive increase of nearly 80% year over year from our direct to consumer marketplace channel.

Amy: Our sales team's success in Onboarding, new merchants reinforces our diversified lineup and minimize as concentration risk and this quarter. Our top 10 retailers represented just over 30% of <unk>.

Amy: Our largest product category furniture, only represented approximately 40% of GNP and the first quarter compared to approximately 45% last year.

Fahmi Karam: SEMA revenues grew 13.5% year-over-year, which was the fifth consecutive quarter of double-digit growth, and adjusted EBITDA was up 31% from a year ago. Adjusted EBITDA margins were up 170 basis points from Q1 of 2024, driven by three main factors. First is the multi-quarter run of strong GMP growth that is now producing higher returns as more of those customers are staying on rent longer and driving a larger portfolio. Second is that a seamless loss rate of 8.9% for the first quarter declined 70 basis points year-over-year and 10 basis points sequentially, which aligns with our expectations as trade down has given us the ability to tighten underwriting in certain high-risk sectors.

Amy: Our CMO revenue grew 13, 5% year over year, which was the fifth consecutive quarter of double digit growth in.

Amy: And adjusted EBITDA was up 31% from a year ago adjust.

Amy: Adjusted EBITDA margins were up 170 basis points from Q1 of 2024, driven by three main factors.

Amy: First is the multi quarter run of strong GNP growth that is now producing higher returns as more of those customers are staying on rent longer and driving a larger portfolio.

Amy: Second is that a seamless loss rate of eight 9% for the first quarter declined 70 basis points year over year, and 10 basis points sequentially, which aligns with our expectations as trade down has given us the ability to tightened underwriting in certain high risk segments.

Fahmi Karam: And the third element also ties back to the elevated trade down levels that FEMA saw across 2024 and into 2025. We have highlighted that while those customers more often elect the earliest purchase option, which is a lower margin result for a CMO, they also often come back for a second or And those repeat leases are more profitable than the first lease, even if the customer elects the 90-day early purchase option each time. Despite that short-term impact to gross margins, we were able to expand our EBITDA margins again this quarter, consistent with our guide for the EBITDA.

Amy: And the third element also ties back to the elevated trade down levels of FEMA saw across 2024 and into 2025.

Amy: We have highlighted that while those customers more often elected earliest purchase option, which is a lower margin result for a CMO. They also often come back for a second or third lease and those repeat leases are more profitable than the first lease even if the customer elects to 90 day early purchased option each time.

Amy: Despite that short term impact to gross margins, we were able to expand our EBITDA margins again this quarter consistent with our guide for the year.

Fahmi Karam: On page 9, let's discuss our first quarter with Bridget. Since closing the deal on January 31st, the Bridges team has maintained their momentum and ended the first quarter with over 1.2 million subscribers, which is up more than 26% year-over-year and up over 2% sequentially.

Speaker Change: On page nine, let's discuss our first quarter with Bridget.

Bridget: Since closing the deal on January 31, the <unk> team has maintained their momentum and ended the first quarter with over $1 2 million subscribers, which is up more than 26% year over year and up over 2% sequentially.

Fahmi Karam: Consistent with our expectations given the seasonal impacts of tax refund which reduced the need for liquidity solutions in Q1. ARPU, or Average Revenue Per User, was $12.88 on a monthly basis during the two months following the acquisition, up nearly 6% from the corresponding period a year ago from a combination of user mix shift between Bridges Plus and Premium plans, improved revenue collection models, and a contribution from expedited transfer. The subscription income made up about three-quarters of Bridget's revenue, with the balance coming from the expedited transfer fees and the marketplace through which Bridget receives affiliate At quarter end, Bridget finished with approximately $49 million of cash advance volume on the balance sheet after making over $335 million in advances from the start of the year, a 27% increase from Q1 of 2024.

Bridget: Instant with our expectations given the seasonal impacts of tax refund receipts, which reduced the need for liquidity solutions in Q1.

Bridget: Our <unk> our average revenue per user was $12 88 on a monthly basis. During the two months following the acquisition up nearly 6% from the corresponding period a year ago from a combination of user mix shift between Richards, plus and premium plans improved revenue collection models and.

Bridget: The contribution from expedited transfer fees.

Bridget: The subscription income made up about three quarters of bridges revenue with the balance coming from the expedited transfer fees in the marketplace through which Brigitte receives affiliate income.

Bridget: At quarter end, Richard finished with approximately $49 million of cash advance volume on the balance sheet after making over $335 million in advances from the start of the year at 27% increase from Q1 of 2024.

Fahmi Karam: The shorter duration advances result in capital efficiency while enabling the team to quickly adjust underwriting and turn over the book within two or three weeks, rather than months or quarters, to manage risk in response to changing market conditions. For the two months following the acquisition, Bridget's cash advance loss rate was 2.4%, defined as cash advance losses divided by total originations in the period.

Bridget: The shorter duration advances, resulting capital efficiency, while enabling the team to quickly adjust underwriting and turn it over the book within two or three weeks rather than months or quarters to manage risk in response to changing market conditions.

Bridget: For the two months following the acquisition Richard cash advanced loss rate was two 4% defined as cash advanced losses divided by total originations in the period.

Fahmi Karam: In terms of financial metrics, Bridget recorded $32 million of revenue and $11 million of adjusted EBITDA for the February and March ownership period, with top-line results representing an increase of about 35% against Bridget's performance from the corresponding period a year ago.

Bridget: In terms of financial metrics, Richard recorded $32 million of revenue and $11 million of adjusted EBITDA for the February and March ownership period, with topline result, representing an increase of about 35% against British performance from the corresponding period a year ago.

Fahmi Karam: Let's move to the Renner Center results starting on page 10. Beginning this quarter, we combined our Rent-A-Center segment and the Franchising segment to align with our organizational structure and how this segment will be managed. Their results will be presented on a combined basis going forward. From a mapping standpoint, franchise merchandise sales will now be reflected in merchandise sales, and royalty income will now be presented in other revenues.

Bridget: Let's move to the rent a center results starting on page 10.

Bridget: Beginning this quarter, we combined our rent a center segment and the franchising segment to align with our organizational structure and how this segment will be managed.

Bridget: The results will be presented on a combined basis going forward.

Bridget: From a mapping standpoint franchise merchandize sales will now be reflected in merchandize sales and royalty income will now be presented in other revenues.

Fahmi Karam: There was no change to the bulk of Rent-A-Center's revenue, which is rentals and With that context, Rent-A-Center delivered revenue of $489 million, down 4.9% from the year-ago quarter, due to 110 fewer company-owned stores after the consolidation and franchising efforts in the second half of 2024. This outcome was consistent with a mid-single-digit setback we highlighted on our last call. Same-store sales were down 2% year-over-year, reflecting fewer deliveries in the first quarter relative to the prior year period, due primarily to our decision to exit certain product categories and tighten underwriters. Streamlining our lineup of lower profitability items will impact demand in the near term but protect our margins in the longer term.

Bridget: There was no change to the bulk of rent, a center's revenue, which as rentals and fees.

Bridget: With that context rent a center delivered revenue of 489 billion down four 9% from the year ago quarter due to a 110 fewer company owned stores after the consolidation and franchising efforts in the second half of 2024.

Bridget: This outcome was consistent with our mid single digit setback, we highlighted on our last call.

Bridget: Same store sales were down 2% year over year, reflecting fewer deliveries in the first quarter relative to the prior year period.

Bridget: Primarily to our decision to exit certain product categories and tightened underwriting.

Bridget: Streamlining our lineup of lower profitability items will impact demand in the near term, but protect our margins in the longer term.

Fahmi Karam: In terms of the product mix, furniture and appliances represented approximately 66% of revenue, which was consistent with the year ago and sequential period.

Bridget: In terms of the product mix furniture, and appliances represented approximately 66% of revenue, which was consistent with a year ago and sequential periods.

Fahmi Karam: Rent-A-Center's adjusted EBITDA was $72 million, down 14% from the first quarter of 2024, due to less rental income, as I mentioned. As our digital efforts continue to transform our service model, we expect to operate more efficiently and over time reduce the fixed cost infrastructure. The first quarter, e-commerce represented approximately 27% of total lease-to-own revenue, up slightly from both the year-ago period and sequential. Bennett Center's loss rate finished at 4.6% for the first quarter, an improvement of 10 basis points year-over-year and 40 basis points sequentially. Our targeted tightening in the back half of 2024 is benefiting the health of the portfolio, but in contrast to Acima, it has a bigger impact to the size of Rent-A-Center's portfolio.

Bridget: Rent a center's adjusted EBITDA was $72 million down 14% from the first quarter of 2024 due to less rental income as I mentioned.

Bridget: As our digital efforts continue to transform our service model, we expect to operate more efficiently and over time reduce the fixed cost infrastructure for.

Bridget: For the first quarter E. Commerce represented approximately 27% of total Lisa on revenue up slightly from both a year ago period and sequentially.

Bridget: Rent a center's loss rate finished at four 6% for the first quarter, an improvement of 10 basis points year over year, and 40 basis points sequentially.

Bridget: Our targeted tightening in the back half of 2024 is benefiting the health of the portfolio, but in contrast to a schema it had a bigger impact to the size of rent a center's portfolio.

Fahmi Karam: HEMA benefits from trade down in real time at the point of sale, whereas Rent-A-Center has not realized this benefit yet.

Bridget: <unk> benefits from trade down in real time at the point of sale, whereas rent a center is not realize this benefit yet.

Fahmi Karam: If the macro backdrop does deteriorate, Rent-A-Center could also see a trade-down impact and an uptick in demand.

Bridget: If the macro backdrop does deteriorate rent a center could also see a trade down impact and an uptick in demand.

Fahmi Karam: Let's cover our liquidity and capital allocation policies on slide 11. When the market is characterized by heightened volatility and uncertainty, it is reassuring to have a durable business model, strong balance sheet, reliable access to funding, and bedrock principles for allocating capital. Coming off the holiday shopping season and supported by tax refund payments, our business generated over $127 million of free cash flow in the first quarter, up substantially from $34 million in the prior year.

Bridget: Let's cover our liquidity and capital allocation policy is on slide 11.

Bridget: When the market is characterized by heightened volatility and uncertainty. It is reassuring to have a durable business model strong balance sheet reliable access to funding and bedrock principles for allocating capital.

Bridget: Coming off the holiday shopping season, and supported by tax refund payments, our business generated over $127 billion of free cash flow in the first quarter up substantially from $34 million in the prior year.

Fahmi Karam: We are committed to investing for the future, but we are reassured that if we choose to moderate our growth, the business can generate meaningful cash flow. We finished the first quarter with $312 million in liquidity, between cash on hand and our revolver availability. Despite the expectation for continued growth at Acima and Bridges, we expect liquidity to improve across the course of the year thanks to the cash generated from the Rent-A-Center segment. And while it is not expected to be needed in the near term, Bridges instant cash advance receivable balance can be leveraged opportunistically in the future to potentially upside the company's revolver capacity.

Bridget: We are committed to investing for the future, but we are reassured that if we choose to moderate our growth the business can generate meaningful cash flow.

Bridget: We finished the first quarter with $312 million in liquidity between cash on hand, and our revolver availability.

Bridget: <unk> the expectation for continued growth at Sema, and Bridget we expect liquidity to improve across the course of the year. Thanks to the cash generated from the rent a center segment.

Bridget: And while it is not expected to be needed in the near term Richard instant cash advance receivable balance can deleverage opportunistically in the future to potentially upsize the company's revolver capacity.

Fahmi Karam: With the profile of our existing balance sheet, we are confident that Upbound can support our capital allocation priorities, which continue to focus on investments in the business, supporting the dividend, and delivering.

Bridget: With the profile of our existing balance sheet. We are confident that outbound can support our capital allocation priorities, which continue to focus on investments in the business supporting the dividend and Delever.

Fahmi Karam: As for leverage, our net leverage ratio was approximately 2.9 times on March 31st, up slightly from 2.7 times at year-end, reflecting the closure of the Bridget transaction.

Bridget: As for leverage our net leverage ratio was approximately two nine times on March 31.

Bridget: Slightly from two seven times at year end, reflecting the closure of the Bridger transaction.

Fahmi Karam: Let's shift to our financial outlook, beginning with the potential impacts of tariffs. The introduction of the new tariff schedule did not directly impact our first quarter results. The turbulence associated with the implementation and the response by other countries has impacted market expectations and consumer confidence, with potential implications for lower investment, limited hiring, and higher inflation in the broader economy. In response, many of Renaissance's suppliers, which are the same for Acima's merchants, have diversified or are diversifying their global supply lines by shifting manufacturing to low cost, low tariff regions, or even nearshoring their operations to Central America so they are better prepared for however the final trade deal is lanced.

Bridget: Let's shift to our financial outlook, beginning with the potential impact of tariff changes the.

Bridget: The introduction of the new tariff schedule did not directly impact our first quarter results the turbulence associated with the implementation and the response by other countries has impacted market expectations and consumer confidence with potential implications for lower investment limited hiring and higher inflation in the broader economy.

Bridget: In response, many of rent a center suppliers, which are the same for a seamless merchants have diversified or are diversifying their global supply lines by shifting manufacturing to low cost low tariff regions or even near shoring their operations in Central America. So they are better prepared for however, the final trade deals land.

Fahmi Karam: We are also assessing alternative suppliers who may be less impacted by potential tariffs based on their manufacturing and sourcing footprint. Overall, we believe Rent-A-Center direct tariff exposure is modest. Furniture and Appliances, our two largest categories at Rent-A-Center, over 70% of the expected 2025 purchase volume is assembled in the U.S., with much of the balance sourced from Vietnam, Taiwan, India, and Mexico. Our direct-from-China exposure is less than 20% of the year-to-date orders, and that volume is nearly all computers and gaming consoles where certain exemptions currently apply. Rent-A-Center's top suppliers in those categories are actively adjusting their supply chains in response to the targeted tariffs, which we expect will help offset any exposure to possible pricing actions.

Bridget: We are also assessing alternative suppliers, who may be less impacted by potential tariffs based on their manufacturing and sourcing footprint.

Bridget: Overall, we believe rent a center direct tariff exposure is modest.

Bridget: Furniture and appliances are two largest category that rent a center over 70% of the expected 2025 purchase volume has assembled in the U S with much of the balance sourced from Vietnam, Taiwan, India and Mexico.

Bridget: Our direct from China exposure is less than 20% of the year to date orders and that volume is nearly all computers and gaming consoles, where certain exemptions currently apply.

Bridget: Venice Centers' top suppliers in those categories are actively adjusting their supply chains in response to the targeted tariffs, which we expect will help offset any exposure to possible pricing actions.

Fahmi Karam: Let's spend a moment on the unique element of Rent-A-Center's model and how we are different than a traditional retailer. In this environment, inventory is critical, and Rent-A-Center has a natural buffer to potential tariff impacts through the floor inventory and any merchandise that is returned to be re-rented. It allows us to meet demand and manage our margins without raising prices on most items. From a consumer behavior standpoint, Venice Center's customers have historically returned rented merchandise at a higher rate in difficult times. mainly to protect the relationship they have with the brand. Rent-A-Center expects that will be a key factor towards mitigating its charge-off rate while also maintaining inventory levels and creating new opportunities for re-rentals.

Bridget: Let's spend a moment on the unique element of rent a center's model and how we are different than a traditional retail.

Bridget: In this environment inventory is critical and rent a center has a natural buffered a potential tariff impacts through the floor inventory and any merchandise that has returned to be re rented.

Bridget: It allows us to meet demand and manage our margins without raising prices on most items from a consumer behavior standpoint rent a center's customers have historically returned rented merchandise at a higher rate in difficult times.

Bridget: Mainly to protect their relationship they have with the brand.

Bridget: Rent a center expects that will be a key factor towards mitigating its charge off rate, while also maintaining inventory levels and creating new opportunities for re rentals.

Fahmi Karam: On the go-to-market side, we have two primary levers when originating a lease-to-own agreement. which are the weekly payment and the term to achieve full ownership. Each of these can be adjusted on the margin, meaning by $1 or $2 per week, or by adding an extra few weeks to the end of the term to preserve the affordable access and price points that our customers prioritize while passing on any price increases. We believe these efforts will limit any potential pricing shocks and minimize the impact on consumer demand while also still supporting our sales enablement efforts at our merchants during such an uncertain time.

Bridget: On the go to market side, we have two primary levers when originating a lease to own agreement.

Bridget: Which are the weekly payment and the term to achieve full ownership.

Bridget: Each of these can be adjusted on the margin, meaning by one or $2 per week or by adding an extra few weeks at the end of the term to preserve the affordable access and price points that our customers prioritize while passing on any price increases.

Bridget: We believe these efforts will limit any potential pricing shocks and minimize the impact on consumer demand. While also still supporting our sales enablement efforts at our merchants during such an uncertain time.

Fahmi Karam: Our team has seen a version of this environment before during the post COVID supply chain bottlenecks in 2021. Because of that experience, and our long-time relationships with our vendors, we are reacting with speed and precision to protect our customers, our merchants, and our business during this period.

Bridget: Our team has seen a version of this environment before during the post COVID-19 supply chain bottlenecks in 2021.

Bridget: Cause of that experience and our long time relationships with our vendors, we are reacting with speed and precision to protect our customers our merchants and our business during this period.

Fahmi Karam: Beyond our operational levers, we're also sensitive to potential changes in consumer behavior. We have not seen any slowdown in purchasing or payment behavior yet. The momentum we experienced in March continued in April with another strong GMV month. We will continue to monitor the environment and we will carefully adapt our value proposition, our sourcing strategies and our underwriting accordingly.

Bridget: Beyond our operational levers, we're also sensitive to potential changes in consumer behavior. We.

Bridget: We have not seen any slowdown in purchasing or payment behavior, yet the momentum we experienced in March continued in April with another strong GM demos.

Bridget: We will continue to monitor the environment, and we will carefully adapt our value proposition, our sourcing strategies and our underwriting accordingly.

Fahmi Karam: Just to be clear, we see this as an opportunity in the months ahead. If the trade policies result in real or perceived pressure on non- and near-prime household liquidity, which causes the lenders above us to tighten further, we expect to benefit from further trade downs. Our Bridget business, which should also benefit from more consumers looking for liquidity or looking for ways to save money and or for budgeting insight.

Bridget: Just to be clear, we see this as an opportunity in the months ahead. If the trade policies result in real or perceived pressure on non and near Prime household liquidity, which causes the lenders above us a tightened further we expect to benefit from further trade down.

Bridget: Our bridge business, which should also benefit from more consumers looking for liquidity, we're looking for ways to save money and or for budgeting insights.

Fahmi Karam: In terms of how it affects our guidance, these currents and countercurrents mean less visibility into the quarterly cadence of our results for the year. However, ASEMA's momentum reinforces the resilience of our model and gives us the confidence that Upbound is well-positioned to achieve the guidance for 2025 that we shared on our prior call. We had a very strong first quarter and are confident in our ability to successfully manage through uncertain economic times as we have demonstrated over the years.

Bridget: In terms of how it affects our guidance these currents and kind of counter currency being less visibility into the quarterly cadence of our results for the year.

Bridget: Seamless momentum reinforces the resilience of our model and gives us the confidence to outbound is well positioned to achieve the guidance for 2025 that we shared on our prior call.

Bridget: We had a very strong first quarter and are confident in our ability to successfully manage through uncertain economic times as we have demonstrated over the years.

Fahmi Karam: As a result, we are pleased to tighten our ranges and raise the midpoint of our full year 2025 targets for revenue, adjusted EBITDA, and non-gas diluted EPS. As we build towards the full year, we are sharing our initial view on the second quarter, with revenues ranging from $1.05 billion to $1.15 billion. Adjusted EBITDA of $125,000,000 to $135,000,000 Non-Gap GPS from $1 to $1.10 for the quarter. At the segment level, we expect Acima to deliver low double-digit GMV and revenue growth, with EBITDA margins slightly better than the year-ago period. These charge-offs are expected to remain stable as the quenching...

Bridget: As a result, we are pleased to tightened our ranges and raised the midpoint of our full year 2025 targets for revenue adjusted EBITDA and non-GAAP diluted EPS.

Bridget: As we build towards the full year, we are sharing our initial view on the second quarter with revenues ranging from 1.05 billion to $1. One 5 billion adjusted EBITDA of $125 million to 135 million and non-GAAP EPS from $1 to $1 10 for the quarter.

Bridget: At the segment level, we expect the sema to deliver low double digit GNP and revenue growth with EBITDA margins slightly better than the year ago period.

Bridget: These charge offs are expected to remain stable sequentially.

Fahmi Karam: Rent-A-Center's revenue should follow the same seasonal sequential path as 2024, with a mid-single digit step back in Q2 compared to Q1, with EBITDA margins down slightly sequentially despite an improvement in loss Bridges Q2 revenue will reflect a full quarter of ownership with expected mid-teens evens on margins and a net advance loss rate similar to Q1.

Bridget: Rent a center's revenue should follow the same seasonal sequential path is 2024 with a mid single digit step back in Q2 compared to Q1 with EBITDA margins down slightly sequentially. Despite an improvement in loss rates.

Bridget: <unk> Q2 revenue will reflect a full quarter of ownership with expected mid teens EBITDA margins and our net advanced loss rate similar to Q1.

Fahmi Karam: For Bridget, let me highlight a classification item. Their administrative costs will be reported in Upbound's corporate segment, which elevates Bridget's segment-reported EBITDA results compared to the original guide, which at the time represented the business results on a standalone basis. We implemented this reporting element for consistency with our other business segments, but these expenses will be counted as a deduction to Bridget's results when calculating the 2026 performance-based earn. Upbound's original guide for bridges this year was 25 to 30 million of EBITDA. But with the reclass of certain expenses to corporate, the segment results should be $35 to $40 million.

Bridget: For Bridget, let me highlight a classification item.

Bridget: Their administrative costs will be reported in outbound corporate segment, which elevates Bridget segment reported EBITDA results compared to the original guide, which at the time represented the business results on a standalone basis.

Bridget: We implemented this reporting element for consistency with our other business segments, but these expenses will be counted as a deduction to bridge its results when calculating the 2026 performance based earn out.

Bridget: Upbound original guide for Bridget this year was 25% to $30 million of EBITDA, but with the re class of certain expenses. The corporate segment results should be $35 million to $40 million.

Fahmi Karam: Again, this change is net neutral on a consolidated basis. As a result, our corporate costs will be slightly higher in 2025 than 2024, in the mid-to-high single-digit area. Also, at the corporate level, we are modeling one interest rate reduction in September. We expect the tax rate to be consistent with 2024 at approximately 26% and steady across the quarters, with an average diluted share count for the year of approximately 58.9 million shares, which includes the shares issued for the Bridget acquisition. For the year, we are revising revenues up to be in the $4.6 billion to $4.75 billion range, adjusted EBITDA to be $510 million to $540 million, and we're tightening our full year guide of non-GAAP EPS to a range of $4.00 per share to $4.40 per share.

Bridget: Again this change is net neutral on a consolidated basis.

Bridget: As a result, our corporate costs will be slightly higher in 2025 and 2024 in the mid to high single digit area.

Bridget: Also at the corporate level, we are modeling one interest rate reduction in September we expect the tax rate to be consistent with 2024 at approximately 26% and steady across the quarters with an average diluted share count for the year of approximately $58 9 million shares which includes the shares issued for the Bridger acquisition.

Bridget: For the year, we are revising revenues up to be in the $4 6 billion to $4 $75 billion range adjusted EBITDA to be 510 million to $540 million and we're tightening our full year guide of non-GAAP EPS to a range of $4 per share to $4 40 per share.

Fahmi Karam: The midpoint of our revised guidance compared to 2024 represents an increase in revenue of more than 8%, an increase in adjusted EBITDA of nearly 11%, and an increase in non-GAAP EPS of about 10%, with no share repurchases assumed.

Bridget: The midpoint of our revised guidance compared to 2024 represents an increase in revenue of more than 8% an increase in adjusted EBITDA of nearly 11% and an increase in non-GAAP EPS of about 10% with no share repurchases assumed.

Fahmi Karam: We feel very well-positioned today, given our experienced team, a resilient business model, our underwriting expertise, diversified product offerings, a strong balance sheet, and long experience serving the non-prime consumers.

Bridget: We feel very well positioned today, given our experienced team our resilient business model, our underwriting expertise diversified product offerings, a strong balance sheet and long experience serving the non prime consumer.

Fahmi Karam: Let's wrap up with some key takeaways.

Bridget: Let's wrap up with some key takeaways for our stakeholders. It is critical to recognize that this was a milestone quarter for our business.

Fahmi Karam: For our stakeholders, it is critical to recognize that this was a milestone quarter for our business. On the operational and strategic growth side, we close on the Bridget acquisition and welcome their team to the Upbound family. We added a sixth quarter to Estima's run of strong GMB growth, and we took targeted actions to spur Renna Center's growth while delivering P&L results ahead of our guidance.

Bridget: On the operational and strategic growth side, we closed on the Bridger acquisition and welcome their team to the outbound family.

Bridget: We added a six quarter to a seamless run of strong <unk> growth and we took targeted actions to spur rent a center's growth while delivering P&L results ahead of our guidance.

Fahmi Karam: At the outbound level, as previously disclosed, we successfully resolved the CFPB matter after their voluntary dismissal with prejudice. This was a long-standing regulatory matter involving ASEMA that we are pleased is behind us, with no changes to our business or financial penalties.

Bridget: At the outbound level as previously disclosed we successfully resolved the CFPB matter after their voluntary dismissal with prejudice.

Bridget: This was a long standing regulatory matter involving a CMO that we're pleased is behind us with no changes to our business or financial penalty.

Mitch Fadel: As I shift into the CEO role next month, I want to emphasize that our team is committed to staying on our strategic course, which is to be the holistic financial platform dedicated to the underserved consumer that seamlessly improves our users' financial lives and reduces their financial stress. Our fundamental priorities will remain hyper-focused on delivering consolidated top-line growth through combining our broad set of capabilities with our unwavering commitment to our customers and our merchants.

Speaker Change: As I shift into the CEO role next month I want to emphasize that our team is committed to staying on our strategic course, which is to meet the holistic financial platform dedicated to the underserved consumer that seamlessly improves our users' financial lives and reduces their financial stress.

Speaker Change: Our fundamental priorities will remain hyper focused on delivering consolidated topline growth through combining our broad set of capabilities with our unwavering commitment to our customers and our merchants.

Mitch Fadel: We will also elevate our operational performance and our collaboration across segments to drive innovation and efficiencies in our products and processes.

Speaker Change: We will also elevate our operational performance and our collaboration across segments to drive innovation and efficiencies in our products and processes.

Mitch Fadel: And finally, we will deploy capital effectively towards those goals and towards shareholder returns. Together we believe we are well positioned to achieve sustainable value creation for all of our stakeholders.

And finally, we will deploy capital effectively towards those goals and towards shareholder returns.

Speaker Change: Together, we believe we are well positioned to achieve sustainable value creation for all of our stakeholders.

Rochelle: Thank you all for your time this morning. Operator, you may now open the line for...

Speaker Change: Thank you all for your time. This morning, operator, you May now open the line for questions.

Rochelle: At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 in your telephone key. We will pause for just a moment to compile the Q&A roster.

Speaker Change: I would like to remind everyone wonders.

Paul: Thanks, Paul.

Speaker Change: Well number one on your telephone keypad.

Speaker Change: Okay. Thank you Ross.

Brad Thomas: Your first question comes from the line of Brad Thomas with Cayman Capital Markets. Please go ahead.

Speaker Change: Your first question comes from the line.

Speaker Change: Right.

Speaker Change: The bank capital markets. Please go ahead.

Brad Thomas: Hi, good morning, and Mitch, thanks for all the help. It's been a pleasure working with you all the years and Fahmi, congratulations on the new opportunity. Thanks bro. Thank you, Brad.

Speaker Change: Hi, good morning.

Speaker Change: Thanks for all the help it's been a pleasure working with you all the years and Tom and congratulations on the new opportunity.

Thanks, Brian Thank you Brad.

Fahmi Karam: I wanted to start with a tariff question, and you gave some very helpful commentary there about your exposure and levers that you can pull, but I was wondering if you could just give us a little bit more color in terms of what, if anything, you're seeing in terms of price increases from suppliers to the rent-to-censor stores and what you're expecting going forward. Good morning, Brad. Thanks for the question. So, yeah, a lot of uncertainty right now and a lot of headlines around around tariffs. And, you know, to date, we have not encountered any price changes at all across the board.

Speaker Change: I wanted to start with a tariff question.

Speaker Change: And.

Speaker Change: You gave some very helpful commentary there about your exposure in some levers that you can pull but I was wondering if you can just give us a little bit more color in terms of what if anything youre seeing in terms of price increases from suppliers to the rent a center stores.

Speaker Change: What you're expecting going forward.

Speaker Change: Okay.

Speaker Change: Good morning, Brad Thanks for the question so.

Speaker Change: Yes, there's a lot of uncertainty right now and a lot of headlines around around tariffs and to date, we have not encountered any price changes at all across the board and in certain segments or certain categories, Tvs and and even in certain appliances, we've actually seen a reduction, but we're buying today versus versus same time lag.

Fahmi Karam: And in certain segments or certain categories, TVs, and, and even in certain appliances, we've actually seen a reduction of what we're buying today versus the same time last year. So to date, no price increases, of course, that can change relatively quickly. But as of as of this morning, no changes to any of our prices. But I think also, and just as important, we mentioned it in the prepared remarks is our ability and demonstrated track record of being able to adjust our pricing by, you know, the weekly payment $1 to a week or even adding just a few weeks to the end of the term can make up for any price increases that we've seen or in the past.

Speaker Change: Last year, so to date no price increases of course that can change relatively quickly but as of.

Speaker Change: As of this morning, no changes to any of our prices, but I think also.

Speaker Change: Just as important we mentioned in the prepared.

Speaker Change: Remarks is our ability and demonstrated track record of being able to adjust our pricing by the weekly payment of $1 two a week or even adding just a few weeks at the end of the term can make up for any price increases that we've seen in the past and we're confident we can pass that on again.

Mitch Fadel: And we're confident we can pass that on again, if need be. And also, you know, also want to keep in mind that if it does happen, and inflation does tick up, you know, the benefits of our of the business model itself, and some of the upside we'll see from more folks choosing lease to own, whether it's through RAC or ASEMA, as we said, we view it as potential upside to the to the story and to the guide this year. So we'll watch it very closely, we'll monitor it, and we'll be able to adapt as we see things kind of get finalized, hopefully over the next few weeks.

Speaker Change: Need be.

Speaker Change: And also I also want to keep in mind that if it does happen and inflation does tick up the benefits of our of the business model itself and some of the upside we'll see from more folks choosing lease to own whether it's through rack or a FEMA as we said we view it as potential upside to the story into the guide this year.

Speaker Change: So we will watch it very closely we will monitor it and we'll be able to adapt as we see things kind of get finalized hopefully over the next few weeks.

Mitch Fadel: Yeah, good morning, Brad. This is Mitch. I just add to some Fahmi's comments there. As he said in the prepared comments, You know, we expect any price increase to be pretty modest because Something like 75% of the furniture and appliances we get today are made in the USA anyhow. Very little exposure really to China, that's mostly the game consoles, I think you said in your prepared comments, Fahmi, game consoles and computers, which at this point are tariff exempt. And we and our suppliers are looking, you know, to put them together in the U.S. versus getting them from China and all those kind of things.

Speaker Change: Yes. Good morning, Brad This is Mitch just to add some families comments there as he said in the prepared comments.

Speaker Change: We expect any price increase that would be pretty modest because.

Speaker Change: Something like 75% of the furniture and appliances, we get today are made in the USA anyhow very little exposure really to China. That's mostly the game counsels I think you said in your prepared comments game consoles and computers, which at this point our tariff exempt.

Speaker Change: And we and our suppliers are looking to put them together in the U S versus getting them from China and all those kind of things. So it's pretty modest although on the other hand as family mentioned.

Mitch Fadel: So it's pretty modest, although on the other hand, as Fahmi mentioned, you know. Keep in mind that when the dollar or two a week, that Fahmi was mentioning, if we have to add a dollar a week to our rates, on average, that's a 4% price increase, and it's only a dollar to the customer, yet that covers 4%. If we add a month to our average term of about. 15 months with that 7%, 1 over 15. So if you had a month, it's 7%, you had a dollar, it's 4%. And, And also when you think about the fact that our margins on the Rent-A-Center side are pretty high, if you have You know, if you have $100 price increase somewhere cost increase in our average margin, you know, you know, our, you know, our pricing model, Brad, more like about two times cost is our cash price, and two times cash price is our rental amount, at least contractually for someone to take ownership.

Speaker Change: Keep in mind that when the dollar to a weakness family was mentioning if we have to add a dollar a week to our rates on average that's a 4% price increase since only a dollar to the customer yet that covers 4%.

Speaker Change: We had a month to our average term of about.

Speaker Change: 15 months was at 7% and one over <unk>. So if you had a month at 7% yet $1, 4% in.

Speaker Change: And also when you think about the fact that our margins on the rent a center side are pretty high if you have.

Speaker Change: If you have $100 price increase somewhere cost increase in our average margin.

Speaker Change: You know our pricing model Grad more like about two times cost as our cash price and two times cash prices a rent to own amount at least contractually for somebody to take ownership so youre talking about.

Mitch Fadel: So you're talking about, you know, if you get $100 cost, you know, you're going to have about $400 worth of revenue against it. So, you know, what we saw during COVID, when supply chain got tight, and we had to raise prices, as costs went up, it actually helped same source sales and so forth. So you get, you get trade down the families point, plus, actually, some higher prices don't don't hurt. And you don't eliminate people's affordability, because it's adding a dollar or two or a month. So we're not, it's not going to affect us the way it would affect maybe traditional retail.

Speaker Change: You get $100 cost youre going to have about $400 worth of revenue against it so.

Speaker Change: What we saw during Covid when supply chain got tight and we had to raise prices.

Speaker Change: As costs went up it actually help same store sales and so forth. So.

Speaker Change: Get you get trade down the families point plus actually some higher prices don't don't hurt and you don't eliminate people's affordability, because it's adding $1 two or a month. So we're not.

Speaker Change: It's not going to affect us the way it would affect maybe traditional retail and I guess the last point.

Mitch Fadel: And I guess the last point, you got to remember in this environment, our inventory, we have a lot of inventory, and about half the inventory that we run on the Rent-A-Center site gets returned. So it's in our system about 15 months on average. So all the inventory we have now really becomes our friend in this case. And, and you know, the cost is already there. And it's going to be in our system about 15 months. So our current inventory is is our friend, as I said, so lots of lots of reasons not to be near as concerned as maybe traditional retail.

Speaker Change: You got to remember in this environment, our inventory, we have a lot of inventory in about half the inventory.

Speaker Change: We run on the rent a center side gets returned.

Speaker Change: So it's in our system about 15 months on average so all the inventory we have now really becomes our friend in this case.

Speaker Change: And.

Speaker Change: The cost is already there and it's going to be in our system about 15 months. So our current inventory.

Speaker Change: As is our friend as I said, so lots of lots of reasons not to.

Speaker Change: Be near as concerned as maybe traditional retail.

Brad Thomas: That's very helpful.

Speaker Change: Okay, that's very helpful.

Brad Thomas: For my follow up question, I wanted to ask about Bridget. Seems like it has a very exciting outlook just on a standalone basis and again, lots to be excited about there. How are you thinking about the roadmap for potentially integrating it more across the business and synergies that you might be able to have from owning it and the timeline? Yeah, Brad, I would say, yeah, to your point, the results have been really good, better than even we expected to start out for the first couple months of ownership with revenue up, you know, over 35%, you know, subscribers up, you know, 26%.

For my follow up question I wanted to ask about Bridget.

Speaker Change: It seems like it has a very exciting outlook just on a standalone basis and.

Speaker Change: Again lots to be excited about there how are you thinking about the roadmap for potentially integrating it more across the business and synergies that you might be able to have from owning it and the timeline for that.

Speaker Change: Okay.

Speaker Change: Yes, Brian I would say, yes to your point the results have been really good.

Speaker Change: Better than even we expected to start off with the first couple months of ownership with revenue up over 35%.

Speaker Change: Subscribers up.

Speaker Change: 26%.

Brad Thomas: And that is actually, as we said, in the prepared comments, we have started email campaigns of introducing Rent-A-Center and Acima customers to the Bridget brand, but we kind of waited till after tax season had kind of gotten underway and almost finished up just to hopefully be more well-timed as far as our reaching out to those customers. So good progress there on track. As we said, we're going to start with, you know, marketing collaboration. And then we've also started down the path of, you know, some of the data collaboration and sharing data, especially around some of the cash flow insights that we've highlighted with Bridget and some of that proprietary modeling and just consumer transparency in their data and their information.

Speaker Change: And that is actually as we said in the prepared comments, we have started a E mail campaigns of introducing rent a center and our CMO customers to the Bridget brand, but we kind of waited till after tax season had kind of gotten underway and almost finished up just to hopefully be more well timed as far as our reaching out to those customers. So good.

Speaker Change: Progress there on track as we said we're going to start with.

Speaker Change: Marketing collaboration and then we've also started down the path of some of the data.

Speaker Change: <unk> and sharing data, especially around some of the cash flow insights that we've we've highlighted with Bridget.

Speaker Change: Some of that proprietary modeling and then just consumer transparency in their in their data and their information. So that's on the come.

Brad Thomas: So that's on the come. I do think you'll start seeing that maybe later in the year being something that we utilize across all of our brands to not only approve more customers, but also mitigate losses as well. So I would say we're on track from kind of the integration plan and still super excited about having them part of the Upbound Very helpful.

Speaker Change: Do you think youll start seeing that maybe later in the year being something that we utilize across all of our brands to not only approve more customers, but also mitigate losses as well. So I would say we're on track from kind of the integration plan and still super excited about having them.

Speaker Change: Part of the outbound group.

Speaker Change: Very helpful. Thank you so much.

Brad Thomas: Thank you so much. Thanks, Brad.

Brad Darwin: Thanks, Brad.

Bobby Griffin: Your next question comes from the line of Bobby Griffin with Raymond James. Please go ahead. Good morning, everybody. Thanks for taking my questions and congrats on a good start to the year. Thanks Fahmi. I guess firstly I want to go back to Bridget. It looks like the business as you guys were talking about is off to a great start. Can you help us understand a little bit of the seasonality of this business? You know you mentioned tax refunds need less liquidity but the EBITDA for two months was pretty good. I'm just kind of asking in the context if we take this two-month rate and even look at it at the changes and guide to account for the accounting differences, it still looks like the business is off to a very good start.

Brad Darwin: Your next question comes from the line of Matthew.

Speaker Change: With Raymond James Please go ahead.

Matthew: Good morning, Bonnie Thanks for taking my questions and congrats on a good start to the year.

Speaker Change: Thanks, Bob.

Speaker Change: First of all I want to go back to bridge it looks like the business. As you guys were talking about is off to a great start can you help us understand a little bit of the seasonality of this business.

Speaker Change: You mentioned tax and funds need less liquidity with EBITDA for two months was pretty good just kind of asking in the context. We take these two months right and even look at it at the changes in <unk>.

Guide to account for the accounting differences it still looks like the business is off to a very good start. So is there is there some seasonality we need to keep in mind as tax refunds roll off for different things like that.

Bobby Griffin: So is there some seasonality we need to keep in mind as tax refunds roll off or different things like that?

Fahmi Karam: Yeah, Bobby, good morning. There is some seasonality, especially when it comes to the margin profile. Q1 is going to be the highest margin profile for the year. As we mentioned, you have a little bit less marketing spend, given liquidity is pretty flush during tax season. So we pull back a little bit on the marketing side, you also have seasonally low losses. So from a margin standpoint, you know, that 35 percentage margin that we posted for the two months of ownership, that will come down. And we said that in the guide to call it mid-teens in the second quarter.

Speaker Change: Yeah, Bob Good morning, there is some seasonality, especially when it comes to the margin profile Q1 is going to be the highest margin profile for the year.

Speaker Change: As we mentioned you have a little bit less marketing spend given the liquidity is pretty flush during tax season. So we pulled back a little bit on the marketing side you also have.

Speaker Change: Seasonally low losses, so from a margin standpoint, the 35% ish margins that we posted for the two months of ownership that will come down and we said that in the guide to call. It mid teens in the second quarter. So there is some seasonality when it relates to kind of marketing spend and.

Fahmi Karam: So there is some seasonality when it relates to, you know, kind of marketing spend and margins, adding subscribers as well. It's pretty flat, you know, Q4 to Q1. That's been the trend over the last few years that continued this year. But then you should start seeing it pick up post-tax season. Collections is strong. And the collections have been good. Yeah, in the first quarter. Yeah, low single digits. And so, so margins are good in the first quarter. We'll start spending a little bit more on the marketing side, you should see an uptick in the number of subscribers in Q2 and Q3.

Speaker Change: And margins.

Speaker Change: Adding subscribers as well, it's pretty flat Q4 to Q1, that's been the trend over the last few years that continued this year, but then you should start seeing it pick up post tax season. So collections are strong and our collections have been good orders quarter, the up low single digits and so so margins are good in the first quarter.

Speaker Change: I'll start spending a little bit more on the marketing side is you'll see an uptick in the number of subscribers in Q2 and Q3.

Bobby Griffin: Okay, that's helpful. I appreciate that.

Speaker Change: Okay. That's helpful. I appreciate that and then maybe secondly kind of different topic, but just to call out of the test or the expansion of <unk> in Mexico can you unpack that aspect a little bit more just kind of how you feel about that balancing the upside scenarios, obviously, but with the risk.

Fahmi Karam: And then maybe secondly, kind of different topic, but just the call out of the test or the expansion of a SEMA in Mexico. Can you unpack that aspect a little bit more just kind of how you go about that balancing, you know, the upset scenarios, obviously, but with the risk of, you know, from the loss ratios are kind of going into a new market with a new product? Yeah, good question, Bob. We were pretty excited about taking a SEMA to Mexico. I know the team is as well. And, you know, The risk of going into a new market certainly would be much, much higher had we not had Rent-A-Center down there since 2010.

Speaker Change: From the loss ratios are kind of going into a new market with the new product.

Bob: Yes. Good question, Bob we were pretty excited about taken seem to.

Speaker Change: Mexico, I know the team as well.

Bob: Yeah.

Bob: The risk of going into new markets, certainly would be much much higher had we not had run the center down there since 2010. So the 130, some rent a center stores down there and performing well.

Fahmi Karam: So with 130 some Rent-A-Center stores down there and performing well, you know, with the dollar, the currency stuff, you don't see as much EBITDA as maybe would warrant. But in pesos, they continue to grow their profit year over year. And, you know, some of it gets lost in that currency translation, like I said, but we're doing very well down there in the Rent-A-Center store. So we've learned a lot from a decisioning standpoint, collection standpoint, and all those kinds of things that it seemed was going to piggyback. So I don't think there's the normal risk of going into a new market the way there would be if we hadn't already been down there with Rent-A-Center.

Bob: With the.

Dollar the currency stuff you don't see as much EBITDA as maybe would warrant.

Bob: But in pesos they continue to grow their profit year over year.

Bob: Some of it gets lost in the currency translation like I said, but we're doing very well down there in the rent a center stores. So we've learned a lot.

Bob: From a decisioning standpoint collection standpoint, and all those kinds of things that it seemed was going to piggyback. So I don't think I know.

Bob: I think there is the normal risk of going into a new market. The way there would be if we hadn't already been down there with rent a center and obviously.

Fahmi Karam: And obviously, a lot of the Rent-A-Center infrastructure is going to support the Acima team as they expand down there. So we're excited about it. There's millions and millions of customers down there, as you probably realize. And it just seems like a great extension, a great growth vehicle for Acima without a lot of risk, because we already know the market with Rent-A-Center stores down there. Without a lot of capital spend either. Yeah, without building store. We just can't grow Rent-A-Center fast enough down there, really. Who wants to open another 500 brick and mortar stores today, whether it's in the U.S.

Bob: Some a lot of the rent a center infrastructure is going to support the <unk> team as they as they expand down there. So we're excited about it there's millions and millions of customers.

Bob: Down there as you probably realize.

Bob: And it just seems like a great extension a great growth vehicle for sema without a lot of risk because we already know the market with a run the same stores down there without a lot of capital spend either yes without without building. So we can't we just can't grow rent a center fast enough down there really.

Bob: Who wants to open another 500 brick and mortar stores today, whether it's in the U S.

Fahmi Karam: or Mexico, for that matter, and the capital expense. You'd wonder about the investment. It's a market that from a US standpoint, makes $7 or $8 million of EBITDA, and how much you're gonna, how much you're going to put into it by opening a whole lot more rent-a-centers to take advantage of all the demand.

Bob: For Mexico for that matter in the capital expense.

Bob: You'd wonder about the investment it's a market that from a U S standpoint makes $708 million of EBITDA and how much you're going to how much you're going to put into it by opening a whole lot more rent a center's to take advantage of all the demand but at sema.

Fahmi Karam: But a SEMA, you know, with a with a low capital model, obviously, is the way we believe we should we should grow down. Very good.

Bob: With a low capital model, obviously is the way we believe we should we should grow down there.

Speaker Change: Okay, Good and I'll add my congrats Mitch best of luck in retirement, it's been great working with you going all way back to my research Associate days and Sami look forward to continue to work with you in your new role.

Bobby Griffin: And I'll add my congrats, Mitch. Best of luck in retirement. It's been great working with you going all the way back to my research associate days and Fahmi, look forward to continue to work with you in your new role. Thanks. Thanks a lot, Bobby. Appreciate it.

Speaker Change: Thanks, Bobby.

Bob: Appreciate it.

Hoang Nguyen: Your next question comes from the line of Hoang Nguyen with Ido Cohen. Please go ahead.

Bob: Your next question comes from the line.

Bob: Homeaway will keep calling please go ahead.

Hoang Nguyen: Hi, guys, and best of luck to your retirement, Mitch, and congrats on the new role, Fahmi. I just want to touch a little bit on Bridget. So it looks like revenue growth in 1Q was about 35%. I think in the original plan that you guys laid out that calls for acceleration in revenue growth, maybe towards the later part of this year and next year, now that you have had two months of I mean, can you give us a little bit more color on the plan, you know, how you guys are going to accelerate growth in Bridget going forward?

Speaker Change: Hi, guys and best of luck to you over time and.

Speaker Change: Congrats on the new role.

Speaker Change: I just wanted to touch a little bit on Richard So it looks like revenue growth in <unk> was about 35% I think in the original plan that you guys laid out.

Speaker Change: Coastal acceleration in revenue growth maybe towards.

Speaker Change: Later this year next year now that you have had two months of looking into this.

Speaker Change: Can you give us a bit more color on how are you.

Speaker Change: Go ahead and break it going forward.

Hoang Nguyen: Yeah, Hoang, I would say the, you know, what we've experienced over the last two months, three months, since we announced the deal has been pretty much in line with what we expected. And we're on track to hit the numbers that we outlined in the initial guide for 2025 and on track to hit what we predicted for 2026. So nothing really has surprised us, nothing has really changed. I think the macro backdrop is very conducive for people to need liquidity and need the products that Bridget offers, not just the instant cash, but the credit building and all the financial literacy tools.

Speaker Change: Yes, I would say the <unk>.

Speaker Change: Spirit over the last two months three months since we announced the deal has been pretty much in line with what we expected and we're on track to hit the numbers that we outlined in the initial guide for 2025 and on track to hit what we predicted for 2026. So so nothing really has surprised us nothing is.

Speaker Change: Really changed I think.

Speaker Change: The the macro backdrop is very conducive for people to need liquidity and need the <unk>.

Speaker Change: <unk> that.

Bridget offers not just the instant cash, but the credit building and all the financial literacy tools. So so we're just as excited and feel like the growth is on track based on everything that we're seeing the pipeline of new products that we're piloting now that Wil will also add more to the bundle would actually have.

Hoang Nguyen: So we're just as excited and feel like, you know, the growth is on track based on everything that we're seeing. The pipeline of new products that we're piloting now that will also add more to the bundle and actually have new bundles on the way, all of those things are going to contribute to the revenue growth, as well as the EBITDA expansion that we expect from 2025 to 2026. So I would say everything that we expected is on track. Nothing has slowed us down. If anything, we're more positive on the story and the integration possibilities between the three brands.

Speaker Change: New bundles are on the way all of those things are kind of going to contribute to the revenue growth as well as the EBITDA expansion that we expect from 25 to 26. So I would say everything that we expected is on track nothing has slowed us down if anything we're more positive on the story in the integration possibilities.

Speaker Change: Between between the three brands.

Hoang Nguyen: Yeah, the cross selling is really, you know, even though we waited until the tech season was winding down, they're putting a lot of good stuff together. The marketing teams are working great together, very collaboratively on the cross selling started, as I mentioned, and, you know, working with Zubin, Hamill, Farah, Arvind, and those folks at Bridget has gone really smoothly with our marketing folks here to get that cross selling going. So yeah, if anything, we're more excited than we were a few months ago when we closed. Got it. And, I mean, as you guys cross sell more between Bridget and I guess the lease to own business, I mean, is there an argument to be made that, you know, it's gonna, I guess, reduce the cyclicality of your overall business?

Speaker Change: Cross selling is really.

Speaker Change: Even though we waited till up tax season was winding down they can put in a lot of good stuff together. The marketing teams are working great together very collaboratively on.

Speaker Change: The cross selling start as I mentioned in working with <unk> Hamel, Farah Arvind and those folks at Bridget.

Speaker Change: Gone really smoothly with our with our with our marketing folks here to get take cross selling gone. So yeah. If anything we're more excited than we were a few months ago when we close.

Speaker Change: Got it and.

Speaker Change: As you guys cross sell more between Bridget.

Speaker Change: I guess the lease to own business.

Speaker Change: Arguably arguments to be made that is going on.

Speaker Change: Is the cyclicality of the overall business and can you give us some.

Hoang Nguyen: And, you know, can you give us some of the, you know, timeline of that cross selling efforts that you guys are going to roll out? Well, the cross-selling efforts have already begun, and we've seen some good response rates from some of the email campaigns that we've done for both Rent-A-Center and Acima customers, but again, still very early stages. You know, as far as the business itself, I mean, I think all of our businesses today are conducive to being recession-proof or counter-cyclical, meaning when times get tough, the demand for those products should go up. If you think about the lease-to-own product, what it offers from a low-payment, low-entry point to the flexibility with no financial commitment going forward, you know, again, the low payment and flexibility really should drive demand in tough times.

Speaker Change: No.

Speaker Change: Timeline of that cross selling efforts you guys are going to rollout.

Speaker Change: Well the cross selling efforts have already begun and we've seen some good response rates from some of the email campaigns that we've done for both rent a center and as Sema.

Speaker Change: Customers, but again still very.

Early stages as far as the the business itself and we think both of our all of our businesses today are.

Speaker Change: Conducive to being recession proof of counter cyclical, meaning when times get tough the the demand for those products should go up if you think about the lease to own product. What it offers from a low payment low entry point to the flexibility with no financial commitment going forward.

Speaker Change: Again, the low payment.

Speaker Change: And flexibility really should drive demand in tough times, and with Bridget thinking about liquidity solutions getting up to $250 in between paychex.

Hoang Nguyen: And with Bridget, you know, thinking about liquidity solutions, getting up to $250 in between paychecks, helping you understand how to save your money and maybe earn more along the way, all of those things are, you know, will help keep the business resilient and counter-cyclical. Got it.

Speaker Change: Helping you understand how to save your money and maybe earn more along the way all of those things are.

Speaker Change: Will help keep the business resilience and countercyclical.

Speaker Change: Got it thank you and best of luck to you both.

Hoang Nguyen: Thank you and best of luck to you both. Thanks all.

Speaker Change: Thanks, Paul Thanks, Tom.

Anthony Chukumba: Your next question comes from the line of Anthony Chukumba with Loop Capital. Please go ahead. Good morning. And Mitch, thanks for all your help over the years. It's been great working with you through good times and bad. And Fahmi, you know, congrats on the promotion, and look forward to continuing to work with you. And also congrats on the strong start to the year.

Speaker Change: Your next question comes from the line.

Speaker Change: Anthony <unk> with.

Speaker Change: Got it.

Speaker Change: Please go ahead.

Speaker Change: Okay.

Speaker Change: Good morning.

Speaker Change: Mitch Thanks for all your help.

Speaker Change: Over the years, it's been great working with you.

Speaker Change: Through good times and bad.

Speaker Change: Fahmi.

Congrats on the promotion and look forward to continuing to work with you.

Speaker Change: And also congrats on the strong start to the year. So my question.

Anthony Chukumba: So my question, first Yeah, so first question, you mentioned in the Rent-A-Center business, you know, sort of exiting or cutting back on some lower margin, you know, products. What specifically were those products and why were they lower margin? I'm assuming it's like just higher or least charge-off rates, but if you could just give a little bit of color on that. Sure, Anthony. Good morning. So, on the Rent-A-Center side, those products mostly were mobile phones, handheld devices, but mostly mobile phones. Yeah, to your point, we just weren't seeing the loss performance, the profitability wasn't there. A lot of demand for those types of products, obviously, but, you know, we just have to filter that demand into, you know, hopefully furniture and appliances, which have better losses and better profitability.

Speaker Change: Yes.

Speaker Change: Yeah. So first question you mentioned in.

Speaker Change: In the rent a center business sort of exiting or cutting back on some lower margin.

Speaker Change: Products.

Speaker Change: Whats typically where those products and why are they lower margin I'm, assuming it's just higher lease charge off rates, but if you could just give a little bit of color on that.

Anthony: Sure Anthony good morning.

Speaker Change: So on the rent a center side those products, mostly with mobile phones of the handheld devices, but mostly mobile phones.

Speaker Change: Yeah to your point, we just weren't seeing the loss performance the profitability wasn't there a lot of demand for those types of products, obviously, but.

Speaker Change: We just have to have to filter that demand into hopefully furniture, and appliances, which have better losses and better profitability. So we thought it was good use of trimming the product line.

Fahmi Karam: So, we thought it was good use of trimming the product line. It does have a little bit of a near-term headwind as far as deliveries go and maybe gross profit, but longer term, we think it will be EBITDA positive for us to eliminate those kind of low profitability type products. Yeah, I think the other thing I'd add to that is it was an easier decision to, Anthony, when you think about the two kind of self-induced reasons we've gone from slightly positive to slightly, you know, slightly negative, same-store sales for Rent-A-Center at minus two. the underwriting, tightening the underwriting, and then the products, as you tighten the underwriting, we're gonna approve a whole lot less of those phones, anyhow, because they're at a high loss rate.

Speaker Change: It does have a little bit of a near term headwind as far as deliveries go and maybe gross profit but longer term. We think it will be EBITDA positive for us to eliminate those kind of low profitability type products. Yes, I think the other thing I would add to that is it was it was an easier decision to Anthony when you think about that too.

Speaker Change: Self induced reasons, we've gone from slightly positive to slightly slightly.

Speaker Change: Slightly negative same store sales around sooner.

Speaker Change: And minus two.

Speaker Change: The underwriting tightening the underwriting and then the products as you tighten your underwriting we're going to approve a whole lot less of those phones anyhow because they are at a high loss rate. So they kind of go together tightening the underwriting and getting rid of those and the other the other thing that made it easier.

Fahmi Karam: So they kind of go together, tightening the underwriting and getting rid of those. And the other thing that made it easier was that mobile phones and mobile devices are really an important product for Acima, and they do well with them. They don't have that loss problem. You need that difference in the customer, the rental center customer is a step below mobile phones. income level wise and even credit score wise than the ACIMA customer, right? So you need that step up. And so basically, we're we're putting that business over in a Asima. And at this point, when someone at Rent-A-Center, you know, wants a mobile phone, we're trying to get them over to Asima to get their mobile phone, where they're used to underwriting for that particular product.

Speaker Change: That mobile phones.

Speaker Change: Mobile devices are really an important product for sema and they do well with them. They don't have that loss probably need that difference in the customer.

Speaker Change: The rent a center customers is step below.

Speaker Change: Income level wise.

Speaker Change: <unk>.

Speaker Change: Even credit score.

Speaker Change: Score wise there.

Speaker Change: And then the Athima customer right. So you need that step up.

Speaker Change: So basically we are.

Speaker Change: Putting that business over in the Sema and at this point when someone at <unk>.

Speaker Change: Rent a center.

Speaker Change: Once a mobile phone, where we're trying to get them over to <unk> to get their mobile phone.

Speaker Change: Whether they are used to underwriting for that particular product and that many of the rent a center customers will get approved for mobile phone through the sema, but if you will but we really need that customer would be a little a little higher up and I guess my point is it's not like you can't lease.

Mitch Fadel: And not many of the Rent-A-Center customers will get approved for mobile phones at Asima, but a few will. But we really need that customer to be a little higher up. And I guess my point is, it's not like you can't leave. Mobile devices you can at the ASEMA level, but what we found is at the Rent-A-Center level it's not the best product. And for those few customers at the Rent-A-Center level that should get approved, we're trying to get them over to ASEMA. So that's that whole strategy. Got it. And just to confirm, so essentially what you're saying is, because that Acima customer is generally a higher income customer, then if they're approved for a mobile phone, there's probably going to be a lower lease charge-off rate because they are a more well-hosed customer.

Speaker Change: Mobile devices, you can at the CMO level.

Speaker Change: But what we found is that the run spend level level. It is not the best product and for those few customers at the rent a center level that.

Speaker Change: That should get approved we're trying to get them over to a seamless so.

Speaker Change: That whole strategy.

Speaker Change: Got it and just to confirm so essentially what youre, saying is because thats a CMO customers generally are higher income customer then and if they are approved for a mobile phone, there's probably going to have lower lease charge off rate because they are more wells customer is that the right way to kind of think about it at a high level.

Mitch Fadel: Is that the right way to kind of think about it at a high level? I don't mean to belabor the point. Yeah. No, you're right. Our mobile phone category at Acima performs. So you can rent them. You just need to be a little higher income level than the rental center customer. The approval rates that we have at the Acima for mobile devices is going to be pretty low because of that risk. But for those that we do approve and book, it performs in line with our expectations and we can make some money. Of course, on a phone, you can have a low approval rate and still do a lot of business because everybody always wants a new phone, whereas unlike furniture and a refrigerator, you can do so much more with phones.

Speaker Change: The labor the point, yes, no you're right.

Speaker Change: Our mobile phone category phone category at the Sema performs so you can rent them.

Speaker Change: Need you just need to be a little higher income level than the rent a center customer if the approval rates that we have on the sema for mobile devices is going to be pretty low.

Speaker Change: Because of that risk, but for those that we do approve and book it performs in line with our expectations and we can make some money and of course on a phone you can have a lower approval rate still do a lot of business because everybody has everybody always wants a new phone, whereas unlike furniture.

A refrigerator you can you can do so much more with one month you can have a little approval, where you can really filter through and still do a lot of business, but it's just a better business for sema than it is for rent a center.

Mitch Fadel: You can have a low approval rate. You can really filter through and still do a lot of business. But it's just a better business for Acima than it is for a rental center.

Anthony Chukumba: Well, for whatever it's worth, I'm sticking with my iPhone 14. But but thanks for that. I would have to and if mine didn't end up in the pool last year, so I would have stuck with my iPhone X. Got it. Thanks, guys. Thank you.

Speaker Change: Well for whatever it's worth I'm sticking with my iPhone 14, but thanks for that.

Speaker Change: Okay.

Yes.

Speaker Change: I would have to ambient mind and ended up in the pool last year. So.

Speaker Change: I would've stuck with my iPhone 10, but.

Speaker Change: Got it thanks guys.

Anthony: Thanks Anthony.

John Rowan: The next question comes from the line of John Rowan with Johnny. Please go ahead. Good morning.

Speaker Change: Next question comes from the line of John Your line.

Anthony: Please go ahead.

Speaker Change: Good morning.

Speaker Change: Good morning, John Mitchell offer my congratulations on a good career, it's certainly been quite a long time, that's been spent a lot of fun.

John Rowan: Mitch, I'll offer my congratulations on a good career. It's certainly been quite a long time. It's been a lot of fun. Thank you. It's been a lot of fun for me, for sure.

Speaker Change: Thank you and yes, it's been a lot of fun for me for sure. So just one I guess one housekeeping question first just looking at kind of the.

Fahmi Karam: So I just one, I guess one housekeeping question first, just looking at kind of the, you know, the non gap table and what goes back into it, where should we expect things to change going forward? I'm assuming with the CFPB matter settled, and obviously the Bridget transaction behind us, those two line items are significantly reduced or kind of go away entirely. It's one of the bigger chunks out of the, you know, the special items that were called out.

Speaker Change: The non-GAAP table in what goes back into it where should we expecting to change going forward I'm, assuming with the CFPB matter settled.

Speaker Change: Bridget transaction behind US those two line items are significantly reduced our kind of go away entirely it's one of the bigger chunks out of the.

Speaker Change: The special items that were called out.

Fahmi Karam: Yeah, you know, John, that legal matters line item that you're referring to in the table covers more than the CFPB matter, so you'll still see it there as we work through some of the other cases that that relates to, and yeah, you know, we're kind of winding down some of the adjustments related to the ACIMA acquisition just to ramp up some of the adjustments for the Bridget acquisition and that reconciliation, so that will take some time for us to work through, but as far as the legal matters go, we still are dealing with a couple other cases, and so you should see that accrual move as we progress on those claims. Okay, and then just maybe one other kind of slight angle change on the tariff question, you know, I've been around long enough to, you know, know that there has always been a waterline where, you know, an item requires financing, right?

Speaker Change: Yes.

John.

Speaker Change: Legal matters line item that you're referring to in the table covers more than the CFPB.

Speaker Change: Matter, so you'll still see it there as we work through some of the other cases that that that relates to and yes, we're kind of winding down some of the adjustments were related to the <unk> acquisition, just the ramp up some of the adjustments for the Bridger acquisition in that in that reconciliation. So that will take some time for us to work through but as far as illegal.

Speaker Change: <unk> go we still are dealing with a couple of other cases, and so you should see that.

Speaker Change: Accrual move as we progress on those on those claims.

Speaker Change: And then just maybe one other kind of slight angled change on the tariff question I've been around long enough to.

Speaker Change: No that there has always been a water lines, where an item requires financing right. It used to be $300 right, where anything below $300 was really more of a cash purchase for your customer above that really required. Some type of financing is there any possibility that tariffs whether or not they cause.

Mitch Fadel: It used to be $300, right? Where anything below $300 was really more of a cash purchase for your customer above that really required some type of financing. Is there, you know, any possibility that, you know, tariffs, whether or not they cause, you know, price inflation of goods can bring customers back into the fold because they require financing now? And maybe $300 numbers are really old numbers. They're kind of an updated number where, you know, that that cash purchase line. change that cash purchase line is for the consumer.

Speaker Change: Price inflation of goods can bring customers back into the fold because they require financing now maybe $300 numbers are really old number is there kind of an updated number where that cash purchase line.

Speaker Change: Jamie that cash purchase line is for the consumer.

Mitch Fadel: No, that's a good question, John. And $300 is still about the ballpark of where we do business at $300 and above. So you're still spot on with that. And I think you're spot on with the point that, especially on electronics, The deflation we've seen in TVs since they, well, we've always seen a lot of deflation in TVs, right? Then they went up with COVID supply chain problems, and now they've kind of cratered again on deflation. So any increases there, you know, I dare say would help us. And, you know, to rent more, again, you go back to we can add a dollar or two, we can add a month or two and easily still make it affordable for the consumer.

Speaker Change: No.

Speaker Change: It's a good question, John and $300 is still about the ballpark of where where we do business at 300 and above so youre still spot on.

Speaker Change: With that and I think youre spot on with the point that especially on electronics.

Speaker Change: The deflation we've seen in Tvs.

Speaker Change: Well, we've always seen a lot of deflation in Tvs right. Then they went up with Covid supply chain problems and now they have kind of created again.

Speaker Change: Deflation.

Speaker Change: So any any increases there.

Speaker Change: No.

Speaker Change: I Daresay it would help us.

Speaker Change: <unk>.

Speaker Change: And.

Speaker Change: To rent more again you go back to we can add a dollar or two we can in a month or two and easily still make it affordable for the consumer.

Mitch Fadel: So I think it's, I think it's a tailwind.

Speaker Change: So I think it's I think it's a tailwind in <unk>.

Mitch Fadel: And, you know, People hesitate to believe our recession resilient story. I think guys roll when we talk about it, but we have a 40-year track record, or maybe I have a 40-year track record, but Rent-A-Center has a 50-year track record through different economic times. And I mentioned in my prepared comments, look at 2008. I mean, this is a business that's not only resilient, but outperforms in tough times. And you're seeing it with trade down right now at ASEMA. Fahmi mentioned we expect the first quarter got stronger as it went on, as the economy weakened. And he talked about low double-digit growth as the quarter ended and then April performed the same.

Speaker Change: People don't.

Speaker Change: People hesitate to believe are recession resilient story.

Speaker Change: I think guys roll when we talk about it but we have a 40 year track record or maybe I am a 40 year track record, but rent a center has a 50 year track record through through different economic times and I mentioned in my prepared comments look at 2008.

Speaker Change: I mean this is a business that is not only resilient, but outperforms in tough times.

Speaker Change: Youre seeing it would trade down right now it does seem a family mentioned we expect.

Speaker Change: The first quarter got stronger as we went on as the economy weakened in and he talked about low double digit growth as the quarter ended.

Speaker Change: And then April performed the same so we're looking at low double digit growth.

Mitch Fadel: So we're looking at low double-digit growth, which is actually an acceleration from the beginning of the year at ASEMA. And Rent-A-Center being minus 2% is more self-induced than underwriting in those products we took out, like I mentioned. So in so many ways, this is a recession resilient story. And with all the things out there right now, including the uncertainty, there's a lot more tailwind there for us than headwinds. And even the uncertainty, can is a tailwind in that if the consumer is uncertain, well, why would you go take on debt? Why wouldn't you just lease it and see what happens?

Speaker Change: Which is actually an acceleration from the beginning of the year to sema. So.

Speaker Change: Rent a center being minus 2% is more self induced on underwriting in those in those in those product suite we.

Speaker Change: We took out like I mentioned so this is in so many ways. This is a recession resilient story and there is a lot more with all of the all the all of those things out there right now, including the uncertainty there is a lot more tailwind there for us and headwinds.

Speaker Change: Even the uncertainty.

Speaker Change: As a tailwind in that the consumer's uncertain well why would you go take on that why wouldn't you just lease it and see what happens and that's what we've seen in the past and I believe thats, what we will see again and we're already seeing it. So I think your question's a good one.

Mitch Fadel: And that's what we've seen in the past. And I believe that's what we'll see again. And we're already seeing it.

Mitch Fadel: So I think your question is a good one. It could benefit us a whole lot more than it could ever be at.

Speaker Change: There is.

Speaker Change: It could benefit us a whole lot more than it could ever be headwind.

Mitch: Great. Thank you Mitch.

Mitch Fadel: Great. Thank you, Mitch. Thanks, John.

Mitch: Thanks, John.

Bill Reuter: Your next question comes from the line of Bill Reuter with Bank of America. Please go ahead. Hi, good morning. Two hopefully quick ones. The first, the 70% to 75% of products assembled in the U.S., I was wondering if that was specific to Rent-A-Center or if that was across the industry and I was kind of wondering whether you had talked to your customers on the ASEMA side and knew whether some of them were manufacturing more in China and may have indicated that they will be pushing through pricing. The number I was referring to was a renaissance number of what we buy versus knowing everything that our partners buy, but I can tell you talking to some of our bigger partners that they seem to decide that there's not a lot of...

Speaker Change: Your next question comes from the line of Bill every day.

Speaker Change: Please go ahead.

Bill: Hi, good morning.

Speaker Change: Uh huh.

Speaker Change: Hopefully quick ones. The first the 70% to 75% of product assembled in the U S. I was wondering if that was specific to rent a center that was across the industry.

Speaker Change: Wondering whether you had talked to your customers on the Athena side and new whether some of them are manufacturing more in China.

Speaker Change: And they have indicated that they will be pushing through price increases.

Speaker Change: Yeah.

Speaker Change: The number I was referring to was a rent a center number of what we buy versus knowing everything that our that our partners.

Speaker Change: But but I can tell you talking to some of our bigger partners that they seem aside.

Speaker Change: That debt.

Speaker Change: Not a lot of a lot of people have gotten out of China over over the last few years anyhow.

Fahmi Karam: A lot of people have gotten out of China over the last few years anyhow. Vietnam's become the bigger place for getting furniture, kits made or different furniture. So I think... ACIMA, you know, it's going to be similar numbers without a lot of risk to tariffs, but the numbers I was I was quoting was around, and we think it's modest at ACIMA as well, and we're not hearing anything yet from any of our larger partners about any big scare on tariffs. It's certainly not the furniture guys. We just met with one of our, well, we met with two of our larger furniture partners in the last couple of weeks and not a whole lot of concern on their end, their prices are going to spike.

Speaker Change: We announced become the bigger the bigger place for getting furniture kits made or different furniture. So I think.

Speaker Change: Sema.

Speaker Change: <unk> is.

Speaker Change: It is going to be similar numbers.

Speaker Change: Without a lot of risk to tariffs, but the numbers I was quoting was around sooner maybe.

Speaker Change: And we think it's modest it is sema as well and we're not hearing anything yet from any of our larger partners about any big scare.

Speaker Change: On tariffs certainly not the furniture guys. We just met with one of our well we've met with two of our larger furniture.

Speaker Change: The partners in the last couple of weeks and not a hope not a whole lot of concern on there and the prices are going to spike.

Fahmi Karam: All great to hear.

Speaker Change: All great to hear and then secondly.

Fahmi Karam: And then secondly, given the integration of Bridget, would you say that you're currently kind of in, in a period where you're not looking at much M&A, as you kind of move towards that two times target? And that's all for me. And thanks for fitting in with the question. Sure, Bill. I think that's a fair way of looking at it. I think we got a lot of room to go between integrating Bridget, cross-collaborating with Rent-A-Center and Acima, a lot of different initiatives that we have in-house, whether it's on the Rent-A-Center.com and the digital channels and the consumer-driven approach at Acima.

Speaker Change: Given the integration of Bridget would you say that you are currently kind of.

Speaker Change: In a period, where we're not looking at much M&A.

Speaker Change: As you kind of move towards that two times target.

Speaker Change: That's all for me and thanks for fitting me in a quick question.

Speaker Change: Sure Bill I think I think that's a fair way of looking at it I think we've got a lot of room to go between integrating Bridget cross collaborating with rent a center and are seem a lot of different initiatives that we have in house.

Speaker Change: Whether it's on the rent a center dot com and the digital channels.

Speaker Change: And the consumer driven approach at <unk> I think we have plenty in front of us to hit our growth targets and plus some.

Fahmi Karam: I think we have plenty in front of us to hit our growth targets, plus some. And then with this level of uncertainty in the market, it definitely makes M&A even tougher. So I think that's a fair comment. Great, thanks again. Thanks, Bill.

Speaker Change: And then with this level of uncertainty in the market and definitely makes M&A, even even even tougher so I think thats a fair comment.

Speaker Change: Great. Thanks again.

Bill: Thanks Bill.

Rochelle: Again, if you would like to ask a question, press star one on your telephone cable.

Speaker Change: Again, if you would.

Speaker Change: To ask a question press star one on your telephone keypad.

Rochelle: Your final question comes from the line of Carla Casella with JP Morgan. Please go ahead. Hi, thanks for taking the question. And I'm sorry if you answer this, I had to jump on a few minutes late. But my question is related to the early buyout, the trend in Q1 versus last year. And as we're starting to near the end of the tax refund season, any color you can give us on what you're seeing.

Speaker Change: Your final question comes from the line of Garlock together.

P. Morgan: P. Morgan. Please go ahead.

Speaker Change: Hi, Thanks for taking the question and I'm sorry, if you answered this I had to jump on a few minutes late but.

P. Morgan: My question is related to.

Speaker Change: The early buyout.

Speaker Change: <unk> trend in Q1 versus last year and.

Speaker Change: Starting to get near the end of the tax refund season any color you can give us on what youre seeing.

Carla Casella: Sure, good morning, Carla. So on really both segments on uptick in buyout activity year over year, it was it was more pronounced on the on the Rent-A-Center side than in the ACIMA side, at least compared to our expectations. But both of them, when you look at activity year over year, you know, tax season got off to a slow start, probably a week or so delayed. But by the end of March, we had caught up, we got caught up and I would say buyout activity was was higher year over year. And you can see that in our gross margins that really both segments.

Carla: Sure Good morning Carla.

Speaker Change: Really both segments saw an uptick and buyout activity year over year. It was it was more pronounced on the rent a center side then.

Carla: The sema side at least compared to our expectations.

But both of them when you look at activity year over year.

Carla: Tax season got off to a slow start probably a week or so delayed but by the end of March.

Carla: We had cotton up we got caught up in I would say buyout activity.

Carla: <unk> was higher year over year, and you can see that in our gross margins that are really both segments.

Carla Casella: Okay, great.

Speaker Change: Okay, Great and then just any additional consumer trends.

Fahmi Karam: And then just any additional consumer trends, either pre-tariff or are you seeing any major differences between your stores and your partner stores in terms of just traffic? I don't really notice anything on the traffic side. You know, I would characterize, you know, the state of the consumer is pretty stable. You know, we haven't, you know, despite all the other kind of headlines and noise that we've gone through, I would say it's been pretty stable over the last few quarters as far as their behavior, both on the demand side and on the payment side. And if you look at our numbers, you know, delinquencies are stable, you know, flat to down in both segments, losses improved sequentially and year-over-year in both segments, and still doing that with growing a seam at a double-digit clip.

Speaker Change: Either pre tariff or are you seeing any major differences between your stores and partner stores in terms of just traffic.

Speaker Change: Yeah.

Speaker Change: I haven't really noticed anything on the traffic side I would characterize the state of the consumer is pretty stable.

Speaker Change: Haven't despite all the all the other kind of headlines and noise that we've gone through.

Speaker Change: I would say, it's been pretty stable over the last few quarters as far as their behavior.

Speaker Change: On the demand side and on the payment side and if you look at our numbers delinquencies are stable flat to down in both segments losses.

Speaker Change: Proved sequentially and year over year in both segments.

Speaker Change: Still doing that with growing at a double digit clip so.

Fahmi Karam: So again, mixed signals on the macro and the consumer, you know, tariff and inflation is potentially there, but you still have low unemployment and some wage growth kind of offsetting some of those things. So I would say, you know, based on our underwriting, based on what we're seeing to date, I would say the consumer is relatively stable. And for us, I mean, with the benefit of trade-down, you know, we're in a... continue to see great traffic, especially the SEMA. And even from a rent-a-center standpoint, we haven't seen any change in consumer behavior. I mean, if we had not tightened underwriting and still were running mobile devices, we'd have had positive same-store sales again.

Speaker Change: Again mixed signals on the on the macro and the consumer tariff and inflation as is.

Speaker Change: Potentially there, but you still have low unemployment and some wage growth kind of offsetting some of those things. So I would say based on our underwriting based on what we're seeing to date I would say the consumers is relatively stable and for us I mean with the benefit of trade down.

Speaker Change: We're going to.

Speaker Change: We continue to see great great traffic, especially the sema.

Speaker Change: Even from <unk> standpoint, we haven't seen any any change in consumer behavior I mean, if we had.

Speaker Change: <unk> tightened underwriting and still we're running mobile devices, we to hit positive same store sales again.

Fahmi Karam: But we just thought it's more prudent to get rid of some of those high-loss items. So no change in consumer behavior at all, though we're seeing, if anything, it's positive from a trade-down standpoint.

Speaker Change: But we just thought it's more prudent to get rid of some of those high loss items. So.

Speaker Change: No change in consumer behavior at all that we're seeing if anything it's positive from a trade down standpoint.

Carla Casella: Okay, that's great. And if I could just, I want to follow up.

Tom: Okay, that's great and if I could just ask one follow up Tom.

Fahmi Karam: From Bill's question, it sounds like you've got a lot of internal opportunities, collaboration for growth. Any new wins or losses we should be watching for potential for 2025-2026 on the CIMA side in terms of customer wins or losses? Yeah, I think, you know, based on what the momentum that we saw throughout the quarter and into the second quarter results, I think that, you know, speaks for us taking more share as the as the as the year goes on. So I think no nice regional wins. We had a couple last quarter and expect a few more this year.

Speaker Change: On bills question, it sounds like you've done a lot of internal.

Tom: Opportunities collaboration for growth.

Tom: Any new wins or losses, we should be watching for potential for 'twenty five 'twenty six on the <unk> side in terms of customer wins or losses.

Tom: Yes, I think based on what the momentum that we saw throughout the quarter and into the second quarter results I think that speaks for us taking more share.

As the year goes on so I think.

Tom: No nice regional wins, we add a couple last quarter.

Tom: Expect a few more this year so no I think the.

Fahmi Karam: So no, I think the pipeline is still very strong. Still have a few of the enterprise accounts that we're talking to and still in RFPs. So nothing to announce formally. But, but yeah, you can say it in our in our GMV numbers and the trends that we highlighted that, you know, we are still taking share. Yeah, the regional wins have been strong and, and nothing to announce on the real big enterprise accounts, but continue to win regionally, obviously with the with the low double digit growth.

Tom: The pipeline is still very strong and we still have a few of the enterprise accounts that were talking to instill in rfps.

Tom: Nothing to announce formally today, but but yes, you can say it in our in our <unk> numbers and the trends that we highlighted that we are still taking share the regional wins have been strong in and nothing to announce on the real big enterprise accounts, but continue to win regionally, obviously with low double digit growth.

Fahmi Karam: Great, thank you. Thanks Carla.

Tom: Great. Thank you.

Harlan: Thanks, Harlan Thanks Carla.

Fahmi Karam: Your last question comes from the line of Kyle Joseph with Stephens. Please go ahead. Hey, good morning, guys. Thanks for taking my questions. Most have been answered. But just want to get your thoughts on underwriting. I know you addressed on the Rent-A-Center side, some tightening last year, or maybe in the 23 that seems to be having its desired effects. I know on a SEMA, I think you guys tightened all the way back to, was it 22? But just give us a sense for where you are on underwriting, given kind of some of the macro changes we've seen.

Speaker Change: Your last question comes from the line of Kyle Joseph.

Speaker Change: Please go ahead.

Kyle Joseph: Hey, good morning, guys. Thanks for taking my questions most have been answered but just.

Speaker Change: Wanted to get your.

Speaker Change: Thoughts on underwriting I know you addressed on the rent a center side, some tightening last year.

Maybe end of 'twenty.

Speaker Change: It seems to be having its desired effects I know on a semi I think you guys tightened all the way back 10, 22, but just give us a sense for where you are on.

Speaker Change: Underwriting given kind of some of the macro changes we've seen.

Kyle Joseph: Yeah, Kyle, good morning.

Speaker Change: Yes, good morning, and to your point I think we've been on the conservative side of underwriting in our posture has been relatively conservative now for a couple of years, which actually gives us even more confidence in the in the guide going forward because we look at our portfolio.

Kyle Joseph: To your point, I think we've been on the conservative side of underwriting, and our posture has been relatively conservative now for a couple years, which actually gives us even more confidence in the guide going forward, because we look at our portfolio and compare it to this time last year and even further back and feel really good about the metrics that we're seeing in the current portfolio because of our underwriting tightening that we're doing. So, as we mentioned, we're continuously looking at it and finding both areas of opportunities and areas of potential risk and continually to tweak it.

Speaker Change: Compared to this time last year and even further back and feel really good about the metrics that we're seeing in the in the current portfolio because of our underwriting tightening that we're doing so.

Speaker Change: As we mentioned we're continuously looking at it and finding both areas of opportunities and areas of potential risk and continually to tweak it.

Kyle Joseph: And I would say still being very conservative in our approach, we have a little bit more flexibility on the ASEMA side to be more conservative because of the trade down, you know, as we mentioned, applications are up 10% at ASEMA, you know, the approval rate overall is flat. But if you break it down, we're tighter on the higher risk segments, and probably slightly up on like furniture and appliances. So we are finding our spots to, we can be aggressive, and we're finding other spots where we can be conservative. So we feel like we're, you know, we're pretty well balanced, but taking a conservative approach in underwriting given the uncertainty in the market.

Speaker Change: And I would say still being very conservative in our approach we are a little bit more flexibility on the seamless side to be more conservative because of the trade down as we mentioned applications are up 10% at sema. The approval rate overall is flat, but if you break it down we're tighter on the higher risk segments in <unk>.

Speaker Change: It's slightly up on like furniture and appliances. So we are finding our spots to where we can be aggressive and we're finding other spots where we can be conservative. So we feel like we are.

Speaker Change: Pretty well balanced, but <unk> taken a conservative approach and underwriting given the uncertainty in the market, but we think we can hit our low double digit growth at sema and continue to bring our losses down and improve margins if.

Kyle Joseph: But we think we can hit our low double digit growth at ASEMA and continue to bring our losses down and improve margins. If you think about our margins for the first quarter, year over year, they're up 170 basis points. We expect that trend to continue really for the rest of the year, if not expand as the portfolio continues to grow. So look, if things get a little bit better, we can always relook at underwriting. But for now, we're going to keep it on the conservative side. Yeah, when you think about that low double digit growth on top of, on top of last year's growth, would you say the first quarter two year stack was 29% two years in lowering losses with 29% two year growth is, you know, that's some impressive work by the team.

Speaker Change: If you think about our margins for the first quarter year over year, they're up 170 basis points.

We expect that trend to continue really for the rest of the year, if not expand as the portfolio continues to grow.

Speaker Change: So look if things get a little bit better we can always if we look at underwriting but for now we're going to keep it on the conservative side.

Speaker Change: Do you think about that low double digit growth on top of on top of last year's growth would you say the first quarter two year stack listed in your preliminary comments 29, 29% two years and lowering losses with 29% two year growth is.

Kyle Joseph: That's all I'll say. And then on the running center side, lowering losses, and only sliding 2% on same source sales in this environment. And we'd expect that we'd expect the second quarter to be similar. By the latter half of the year, we'd expect that to improve the minus 2%. So, you know, that's some impressive stuff when you combine it. And I think trade down is one of the reasons we can do it. And the resiliency of our business model, we can do it because we're getting more of the, what you might call the top side customers coming into the category, especially the SEMA.

Speaker Change: That's some impressive work by the team that's all I'll say and then on the Renin center side lower than losses.

Speaker Change: And the only sliding 2% on same store sales in this environment.

Speaker Change: And we would expect.

Speaker Change: We would expect the second quarter to be similar by the latter half of the year, we'd expect that to improve the minus 2%. So.

Speaker Change: That's some impressive stuff when you combine it and I think trade down as one of the reasons, we can do it and the resiliency of our business model, we can do it because we're getting more of the.

Speaker Change: What you might call over the top side customers coming into the category, especially at the Sema. So.

Kyle Joseph: So, very positive stuff there, Kyle. Got it. Thanks for fitting me in.

Kyle Joseph: Very positive stuff there Kyle.

Speaker Change: Got it thanks for fitting me Ann mentioned, Julien retirement, and finally, I look forward to working to get well look forward to working together.

Kyle Joseph: Mitch, enjoy your retirement and Fahmi, look forward to working together still. Thanks, Kyle. Appreciate it.

Kyle Joseph: Thanks, Kyle appreciate it.

Mitch Fadel: I will now turn the call back over to Mitchell Fadel, Upbound CEO, for closing remarks. Please go ahead. Thank you, operator. And thank you to everyone who joined us today for our first quarter update and our outlook for the balance of 2025. And I want to thank everybody for everything over the years. And as I signed off, I'd like to thank all of you and all my colleagues and friends who have helped, really helped build Upbound into the leader that it is today. I think we're, this is a real high note. I knew the company was in great shape when I announced my retirement.

Kyle Joseph: I will now open the call back over to Mitch Fadel CEO for closing remarks. Please go ahead.

Kyle Joseph: Thank you operator, and thank you to everyone, who joined US today for our first quarter update and our outlook for the balance of 2025 and.

Kyle Joseph: Thank everybody.

Speaker Change: For everything over the years and as I sign off but I'd like to thank all of you and all my colleagues and friends will help really helped build up bond into the leader that it is today.

Kyle Joseph: I think we are.

Kyle Joseph: This is a real high note I knew the company is in great shape, when I announced my retirement, it's only gotten better since then and.

Mitch Fadel: It's only gotten better since then. And I know Fahmi and the team, I wish them the best of luck. I know they're going to take it to even a higher level than I was able to do. So I sure appreciate everybody. And I know I'm going to miss everybody, but I'll be watching from the sidelines. Thank you, everybody.

Kyle Joseph: No family and the team.

Speaker Change: I wish him the best of luck I know theyre going to take us even a higher level than than I was able to do so I sure appreciate everybody and I know I am going to Miss everybody, but I'll be watching from the sidelines. Thank you everybody.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Operator: Please wait, the conference will begin shortly.

Speaker Change: Please wait the conference will begin shortly.

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