Q2 2025 Upbound Group Inc Earnings Call

Fahmi Karam: Good day, and thank you for standing by. Welcome to the Upbound Group's second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 11 on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I will now like to hand the conference over to your first speaker today.

Good day, and thank you for standing by. Welcome to the Upbound Group second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *1, 1 on your telephone, and you will then hear an automated message advising that your hand is raised.

To withdraw your question. Please press star 1 1 again, please be advised. That today's conference is being recorded.

I will now like to hand the conference over to your first Speaker today.

Jeff Chesnut: Good morning, and thank you all for joining us to discuss Upbound Group's performance for the second quarter of 2025. We issued our earnings release this morning before the market opened, and the release and all related materials, including a link to the live webcast, are available on our website at investor.upbound.com. On the call today, we have Fahmi Karam, our CEO. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that can 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 filings. Upbound Group undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. This call will also include references to non-GAAP financial measures.

Good morning and thank you all for joining us to discuss a bound group's performance for the second quarter of 2025. We issued our earnings release this morning before the market open and the release and all related materials including a link to the live webcast are available on our website at investor.gov.

On the call today, we have Pam and cut them. Our CEO 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, filings upbound group undertakes, no obligation to publicly update, or revise, any forward-looking statements except as required by law.

Jeff Chesnut: 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. Finally, Upbound Group is not responsible for and does not edit or 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 Fahmi.

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.

finally upbound group is not responsible for and does not edit or 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 fammy.

Operator: Thank you, Jeff, and good morning, everyone. Before we review the results of another strong quarter, I'd like to lead off by emphasizing our excitement as we continue to implement our growth strategies and the digital transformation of our company, which will fulfill our mission to elevate financial opportunity for all. As we always have, we will relentlessly work each day to turn our mission into a reality by capitalizing on our unique strengths, including our differentiated insights into a large and growing consumer segment, our industry-leading capabilities, and our team of dedicated, passionate coworkers across the enterprise. We're focused on helping financially underserved consumers with the financial solutions they rely on, building off our lease-to-own foundation while adding new products and services like earned wage access and credit building that strengthen our relationship with our customers and enhance the value we deliver to them.

Thank you, Jeff and good morning, everyone.

Before we review the results of another strong quarter, I'd like to lead off by emphasizing our excitement as we continue to implement our growth strategies and a digital transformation of our company, which will fulfill our mission to elevate Financial opportunity for all.

As we always have, we will relentlessly work each day to turn our mission into a reality.

by capitalizing on our unique strengths, including our differentiated insights into a large and growing consumer segment, our industry-leading capabilities and our team of dedicated passionate co-workers across the Enterprise

We're focused on helping financially underserved, consumers with the Financial Solutions. They rely on.

Building off our lease to own Foundation while adding new products and services like earned wage access and credit building, that strengthen our relationship with our customers and enhance the value, we deliver to them.

Operator: Let's move to slide four and talk about how those goals translate to our business. Today, we serve our customers by leveraging a platform that generated approximately $4.5 billion in revenue and roughly $500 million in adjusted EBITDA over the last 12 months. Upbound's size and scale provide a stable base for growth and a durable competitive position supported by a vast number of consumer data points that we accumulate each day when serving our millions of customers. That's the common thread that connects each of our segments, and we're leveraging that data to deepen our understanding of our customers' needs and guide the evolution of our business.

Let's move to slide 4 and talk about how those goals translate to our business.

today, we serve our customers by leveraging, a platform that generated approximately 4 and a half billion in revenue and roughly 500 million in adjusted evaa over the last 12 months,

A bounce size and scale provide a stable base for growth in a durable, competitive position supported by a vast number of consumer data points that we accumulate each day, when serving our millions of customers.

Operator: As we capture, catalog, and unify the data across the organization, we will draw out new insights that inform our strategy, shape our product roadmap, sharpen our marketing efforts, refine our underwriting decisioning, and ultimately best position the business for sustained growth and success across economic cycles. With that background, let's move to the key highlights from the second quarter of 2025, as well as a discussion of the progress we've made on our priorities for the year. Then I will share a more detailed review of our financial results and our outlook. Slide five shows some of the key drivers of our performance in Q2, which I'm pleased to report led to another strong quarter for the company. These results demonstrated our discipline in protecting our balance sheet with prudent risk management decisions while growing our digital assets at industry-leading levels and expanding margins.

That's the Common Thread that connects each of our segments and we're leveraging that data to deepen, our understanding of our customers needs and guide the evolution of our business.

Growth and success across economic Cycles.

With that background. Let's move to the key highlights from the second quarter of 2025, as well. As a discussion of the progress we've made on our priorities for the year. Then I will share a more detailed review of our financial results and our Outlook

55 shows some of the key drivers of our performance in Q2 which I'm pleased to report led to another strong quarter for the company.

These results, demonstrated our discipline and protecting our balance sheet with prudent, risk management decisions. While growing, our digital assets at industry-leading, levels and expanding margins,

Operator: Asima's strong run of GMV performance continued this quarter, with GMV up 16% year over year, representing its seventh consecutive quarter of GMV growth. Its convenient and flexible platform continues to outperform with both of its main stakeholders. Merchants know Asima as a trusted partner whose API-first integration, real-time underwriting, and embedded sales enablement lift conversion rates. Consumers appreciate Asima's easy process and strong customer service, which is why our rate of returning customer transactions continues to rise as they leverage the Asima marketplace for their future shopping needs. Compared to the second quarter of 2024, applications were up nearly 20%, and the approval rate was down more than 300 basis points. The growth in GMV and applications was distributed across Asima's broad set of retailer relationships and product categories. The top 10 merchants represented about 31% of total GMV, consistent with the prior quarter.

A seamless strong run of gmv performance continued. This quarter with gmv up 16% year-over-year. Representing its seventh consecutive quarter of DMV growth.

Its convenient and flexible platform continues to outperform with both of its main stakeholders.

Merchants know, Asthma as a trusted partner, whose API, first integration, real time underwriting and embedded sales, enablement lift conversion rates.

Consumers appreciate an easy process and strong customer service, which is why our rate of returning customer transactions continues to rise as they leverage The Asthma Marketplace for their future shopping needs.

Compared to the second quarter of 2024 applications were up, nearly 20% and the approval rate was down more than 300 basis points.

The growth in gmv and applications was a distributed across. The seas broad set of retailer relationships and product categories.

Operator: Segment revenue grew 12% and adjusted EBITDA grew 15%, in part due to operational leverage as we continue to scale the business. Asima's lease charge-off rate improved 30 basis points from the year-ago quarter, which also contributed to the 40 basis point lift in EBITDA margin. Moving to our new fast-growing segment, Bridget. Bridget continues to thrive with nearly 40% revenue growth, powered by another quarter of over 20% growth in subscribers versus the second quarter of 2024. The net advanced loss rate of 2.6% came in relatively flat sequentially from 2.5% from the first full quarter and 20 basis points higher from a year-ago period. Bridget's second quarter customer acquisition costs were in line with expectations as the team tested marketing investments across new channels with new messaging.

The top 10 Merchants represented about 31% of total gmv consistent with the prior quarter.

Segment, Revenue, grew 12% and adjusted Eva dog group, 15%, in part due to operational leverage, as we continue to scale the business.

Sema's least charge off rate improved 30 basis points from the year ago quarter, which also contributed to the 40 basis. Point lift in ibid do margin

moving to our new fast growing segment Bridges.

Bridget continues to thrive with nearly 40% Revenue growth, powered by another quarter of over 20% growth in subscribers versus the second quarter of 2024.

The net advanced loss rate of 2.6% came in relatively flat sequentially from 2.5% in the first full quarter and is 20 basis points higher than the year-ago period.

Operator: Bridget's adjusted EBITDA margin was nearly 28%, above our expectations due to the timing of marketing spend and other cost efficiencies in the quarter. Our customer acquisition efforts will significantly expand across the balance of the year as we look to further increase subscribers heading into the holiday season. As we make our planned investments in our marketing and customer acquisition efforts in the second half, we expect EBITDA margins will decrease to the low teens range. Overall, we are extremely pleased with Bridget's performance from a top-line growth perspective, as well as its ability to generate meaningful EBITDA margins and free cash flow. Integration is on track, with cross-selling efforts improving and gaining traction every day while we begin integration plans on data sharing and utilizing cash flow underwriting in our lease-to-own segments.

Bridgette's second quarter customer acquisition costs were in line with expectations as the team tested marketing Investments, across new channels, with new messaging.

Bridges, adjusted ibaon margin was nearly 28% above our expectations, due to the timing of marketing, spend, and other cost efficiencies in the quarter.

Our customer acquisition efforts will significantly expand across the balance of the year as we look to further increase subscribers heading into the holiday season.

As we make our planned investments in our marketing and customer acquisition efforts in the second half, we expect Ibadan margins will decrease to the low teens range.

Overall we are extremely pleased with Bridges performance from a Topline growth perspective, as well as its ability to generate meaningful. EBA margins and free cash flow.

Integration is on track with cross-selling efforts, improving and gaining traction every day. While we begin integration plans on data sharing and utilizing cash flow underwriting in our lease-to-own segments.

Operator: At Rent-A-Center, Same Source sales declined by 4% in the quarter, consistent with our expectations as a result of tactical decisions we made in the fourth quarter that we discussed on our last call. The intentional adjustments to our product lineup, combined with the impact of our underwriting tightening efforts, limited top-line growth in the second quarter. Rent-A-Center's lease charge-off rate of 4.7% was 10 basis points higher sequentially, partly as a result of the denominator effect from lower quarterly revenues. These impacts collectively produced a 1.7 percentage point decline in adjusted EBITDA margin compared to last year. One of the operational metrics we do monitor is the number of deliveries, which ultimately underpins the overall lease portfolio value.

At Rena Center same store sales declined by 4% in the quarter consistent with our expectations as a result of tactical decisions we made in the fourth quarter that we discussed on our last call.

The intentional adjustments to our product lineup. Combined with the impact of our underwriting. Tightening efforts limited Topline growth in the second quarter.

Rena Center's lease charge-off rate of 4.7% was 10 basis points higher sequentially, partly as a result of the denominator effect from lower quarterly revenues.

These impacts collectively produced a 1.7 percentage point decline in adjusted IBA margin compared to last year.

Operator: I'm pleased to share that our delivery trends have stabilized across the quarter compared to the prior year, providing a level of foundation that we will build upon moving into the second half of the year. As we roll out new initiatives to spur customer engagement at Rent-A-Center, with a focus on our digital and online capabilities, we will continue to prudently manage our risk profile to deliver responsible and sustainable results. Even with the operational and underwriting changes, the Rent-A-Center segment remains a cash generator, funding our reinvestment in our businesses and deleveraging, with year-to-date free cash flow conversion up year over year compared to the first half of 2024 and in line with last year on a dollar basis due to improved account and expense management. Let's move to slide six and recap our consolidated financial results in Q2.

1 of the operational, metrics we do monitor the number of deliveries, which ultimately underpins the overall lease portfolio value.

I'm pleased to share that our delivery trends that have stabilized across the quarter. Compared to the prior year, providing a level of foundation that we will build upon moving into the second half of the year.

As we roll out, new initiatives to Spur customer engagement at Rena center with a focus on our digital and online capabilities. We will continue to prudently manage our risk profile to the deliver responsible and sustainable results.

Even with the operational and underwriting, changes the Renaissance Center segment remains a Cash Generator funding our reinvestment, in our businesses and deleveraging.

Due to improved account and expense management.

Let's move to slide 6 and recap. Our consolidated financial results in Q2.

Operator: Second quarter revenue of $1.16 billion was a 7.5% increase from the year-ago period, mainly driven by strength at Asima, plus the addition of Bridget. Upbound delivered $133 million of adjusted EBITDA, which was a lift of 7% against Q2 2024, an adjusted EBITDA margin of 11.5%, which was roughly flat in the prior year quarter, but up 80 basis points sequentially. Non-GAAP diluted EPS was $1.12, which is 7.7% higher than a year-ago quarter. Our non-GAAP EPS included a 2.5% benefit related to stock-based comp and the associated tax impact tied to our recent CEO transition and certain open executive roles that we are actively working to fill in the near term, which will normalize stock-based compensation in future periods. The second quarter results exceeded the midpoint or high end across every guided metric.

second quarter revenue of 1.16 billion was a 7.5% increase from the year ago, period. Mainly driven by strength at a SEMA. Plus the addition of bridges

A bound delivered, 133 million of adjusted evida, which was a list of 7% against Q2 2024 and adjusted, Eva do margin of 11 and a half percent, which was roughly flat to the prior year quarter but up 80 basis points sequentially.

Non-gaap diluted EPS was 1.12, Which is 7.7% higher than a year ago quarter.

Our non-gaap EPS included, a 2 and a half cent benefit related to stock-based comp and the Associated Tax impact tied to our recent CEO transition and certain open executive roles that we are actively working to fill in the near term, which will normalize stock-based compensation in future periods.

Operator: Upbound also recorded a net usage of free cash flow of $10 million in the second quarter as we continue to support the growth initiatives at Asima and Bridget. Year-to-date free cash flow is $117 million, representing an improvement of more than three times the prior year. In terms of lease charge-offs, our disciplined underwriting has enabled the company to serve additional customers profitably while achieving lease charge-offs within our target range. On a consolidated basis, Upbound grew year-over-year second quarter revenue, adjusted EBITDA, and non-GAAP diluted EPS by at least 7% each, while delivering a lease charge-off rate that appropriately balances our risk and return objectives. Our growth businesses in Asima and Bridget continue to outperform our expectations. Asima is growing mid-teens and expanding margins. Bridget is growing its top line nearly 40% this quarter while introducing new products to our customers and testing new marketing channels.

the second quarter results, exceeded the midpoint or high-end across every guided ventric

A bound also recorded a Net usage of free, cash flow of 10 million in the second quarter as we continue to support the growth initiatives at a SEMA and Bridgette.

Year to date, free cash flow is 117 million. Representing an improvement of more than 3 times the prior year.

In terms of lease charge-offs, disciplined underwriting has enabled the company to serve additional customers profitably while achieving lease charge-offs within our target range.

On a Consolidated basis upon group year-over-year. Second quarter Revenue. Adjusted. EBA and non-gaap diluted EPS by at least 7% each.

While delivering at least charge operate that appropriately, balances our risk and return objectives.

Operator: We're really proud of these results and our ability to operate successfully despite a difficult market backdrop. Our cash flow engine, Rent-A-Center, is under top-line pressure due in large part to our underwriting tightening as our core consumer continues to be under pressure, fighting against the accumulation of higher prices for the past couple of years. These actions reduced deliveries, but we were still able to produce mid-teens EBITDA margins and generate significant free cash flow. Across the quarter, we did not see a direct impact to our business from the recent federal economic policy changes, but we're ready for that change if and when it starts to ripple through the economy. For our consumers, we expect there to be some puts and takes.

Our growth businesses in a SEMA and Bridget continue to outperform our expectations as Sima is growing mid, teens and expanding margins. Bridgette is growing, its top top, top line nearly 40% this quarter, while introducing new products to our customers and testing new marketing channels.

We're really proud of these results, and our ability to operate successfully, despite a difficult Market backdrop.

Our cash flow engine Rena. Center is under Topline pressure due in large part to our underwriting tightening as our core consumer continues to be under pressure fighting against the accumulation of higher prices for the past couple of years. These actions reduce deliveries but we were still able to produce mid-teens Eva dot margins and generate significant free. Cash flow.

The quarter. We did not see a direct impact to our business from the recent Federal economic policy changes. But we're ready for that change. If and when it starts to Ripple through the economy

Operator: Considerations like higher prices and enhanced requirements for certain governmental assistance programs like SNAP and Medicaid, in addition to the resumption of student loan payments, may have a more pronounced impact on lower-income consumers. But unemployment and gas prices remain low, and recent legislation may put more money in our consumers' pockets through new tax policies covering tips and overtime. Overall, our core consumers remain resilient and have grown accustomed to a volatile market over the past couple of years. They are constantly evaluating spending priorities and recalibrating their spending behavior. We see it every day, and they're still spending, but being cautious on bigger ticket items, managing bills to align with their cash flows, looking for discounted deals, and focusing on making their dollar deliver more value than ever before.

For our consumers. We expect there to be some puts and takes considerations like higher prices and enhanced requirements for certain governmental assistance programs like Snap and Medicaid. In addition to the resumption of student loan payments, may have a more pronounced impact on lower-income consumers.

But unemployment and gas prices, remain low. And recent legislation may put more money in our consumers. Pockets through new tax policies, covering tips and overtime.

Overall our core consumers remain resilient and have grown accustomed to a volatile Market over the past couple of years.

They are constantly evaluating spending priorities and recalibrating their spending Behavior. We see it every day and they're still spending but being cautious on bigger ticket items managing bills to align with their cash flows. Looking for discounted deals and focusing on making their dollars deliver more value than ever before.

Operator: We are being equally as vigilant, and we continue to refine our decisioning across the enterprise based on early performance indicators. We're confident that our model and our consumer solutions will help us succeed no matter the economic backdrop. We're ready to help our customers navigate the shifting consumer landscape with our new liquidity solutions and our flexible lease-to-own solutions that provide customers with access to products they want and need through low payment structures with no long-term financial commitment. We are ready to welcome new customers as we grow our reach, and we will continue to support our current customers as their needs evolve. On slide seven, I will share an update on the strategic priorities for 2025 that we outlined at the beginning of the year.

We are being equally as Vigilant. And we continue to refine our decisioning across the Enterprise based on early performance indicators.

We're confident that our models and our consumer Solutions will help us succeed. No matter the economic backdrop.

We're ready to help our customers navigate, the shifting consumer landscape with our new liquidity Solutions. And our flexible leads to own solutions that provide customers with access to products, they want and need through low payment structures with no long-term Financial commitment.

We are ready to welcome new customers as we grow our reach, and we will continue to support our current customers as their needs evolve.

On slide 7, I will share an update on the strategic priorities for 2025 that we outlined at the beginning of the year.

Operator: At Asima, our ongoing digital investments passed a major milestone in the second quarter with the debut of Asima's new website, which features an updated look and feel with more streamlined navigation to make the customer experience more enjoyable and efficient. During the development phase, we also migrated the site to a new e-comm platform, offering more scalability and flexibility for future enhancements. And that scalability is especially important as we began to pilot Asima's in-store virtual lease card in the quarter, which really opens up a universe of opportunities for consumers and retailers. Now, a consumer with the Asima app can walk into any retailer selling durable goods and choose an item, and the leasability engine in the app will confirm whether it's a lease-eligible item or not in real time in the cart.

At a SEMA, our ongoing digital Investments, passed a major milestone in the second quarter with the debut of a seamless new website, which features an updated look, and feel with more streamlined, navigation, to make the customer experience, more enjoyable and efficient.

In store virtual lease card in the quarter, which really opens up a universe of opportunities for consumers and retailers.

Now, consumer with the asthma app, can walk into any retailer selling durable goods and choose an item.

Operator: The shopper can then tap to pay with Asima's virtual lease card while bypassing the usual waterfall of credit options, making leasing universally accessible on a foundation of safety, speed, and privacy. We believe initiatives like these will create more scale and efficiency, driving margin improvements in future quarters. In addition, these investments will keep existing customers and merchants engaged and returning, as we will be able to send more and more customers back to our merchants, reinforcing Asima's value to our retailers. Merchant growth is also part of Asima's growth strategy, and I'm pleased to share that in the quarter, we were able to extend one of our largest accounts to a new five-year agreement with a deeper mutual commitment that now gives Asima LTO exclusivity in all states that allow lease to own.

in the lease ability engine in the app will confirm, whether it's lease whether it's a lease eligible item or not in real time in the cards,

The Shopper can tap to pay with a seamless virtual lease card while bypassing the usual waterfall of credit options.

Making leasing universally accessible on a foundation of safety, speed, and privacy.

We Believe initiatives like these will create more scale inefficiency driving margin improvements in future quarters.

In addition, these investments will keep existing customers and Merchants engaged and returning. As we will be able to send more and more customers back to our Merchants reinforcing. A seamless value to our retailers.

Operator: Our technology and commitment to innovation have positioned Asima to continue increasing its market share and showcasing Asima's growing capabilities while serving as a marquee to attract new merchants of all sizes. Let's shift to Bridget, where our focus on innovation continues to power subscriber growth. To accelerate our momentum, Bridget is expanding its marketing efforts into additional customer acquisition channels using a test-and-learn approach. We expect to amplify our marketing efforts across the balance of the year as the cash-advanced product is expected to be more relevant than ever for our core consumers, especially if the macro environment worsens. Bridget is also innovating on the product side and is currently piloting a line of credit offering with a loan size ranging of up to $500, which is twice the current $250 top end of the instant cash product.

Merchant growth is also part of a seamless growth strategy and I'm pleased to share that in the quarter. We were able to extend 1 of our largest accounts to a new 5 year agreement, with a deeper Mutual commitment that now gives us SEMA lto, exclusivity in all states that allow lease to own.

Our technology and commitment to Innovation have positioned to Seema to continue increasing its market share and showcasing as seen as growing capabilities while serving it as a marquee to attract new merchants of all sizes.

Let's shift to Bridges where our focus on Innovation continues to power subscriber growth.

To accelerate our momentum, Bridges expanding, its marketing, efforts, into additional customer acquisition channels, using a test and learn approach.

We expect to amplify our marketing efforts at the balance of the year. As a cash advance product is expected to be more relevant than ever for our core consumers. Especially if the macro environment worsens,

Operator: It's an efficient alternative for consumers carrying a variety of debt, including BNPL loans, since this is a single product with a payment plan option up to nine months. As we continue to cross-sell Bridget's solutions to our Asima and Rent-A-Center customers, we're excited to feature another product that addresses our consumers' needs for liquidity and financial flexibility. Across the balance of the year, Bridget's priorities will continue to focus on growing the subscriber base by leveraging new acquisition channels and new products while increasing retention and managing losses. We believe the investments we're making this year in innovation and cross-company collaboration will accelerate Bridget's near and long-term growth curve. At Rent-A-Center, we are targeting our investments towards near-term sales enablement efforts to better leverage our existing scale and return to growth.

Bridget is also innovating on the product side and is currently piloting. A a line of credit offering with a loan size raging about the $500 which is twice. The current $50 top end of the Instant Cash product.

It's an efficient alternative for for consumers, carrying a variety of debt, including bnpl loans.

since this is a single product with a payment plan option up to 9 months,

As we continue to cross-sell Bridges solutions to our Seema and Rena Center customers, we're excited to feature another product that addresses our consumers' needs for liquidity and financial flexibility.

Across the balance of the Year. Bridges priorities will continue to focus on growing, the subscriber Base by leveraging. New acquisition channels and new products while increasing retention and managing losses.

We believe the Investments, we're making this year in Innovation, and cross company collaboration will accelerate Bridget's near and long-term growth curve.

Operator: As an example, to offset underwriting tightening on the web, we've recently introduced preliminary approvals whereby select shoppers are invited to finish their application in-store, which helps us lift approvals and create store-based relationships while managing our risk profile. In addition, we're piloting Agentic AI to deliver real-time sales coaching and context-aware suggestions aimed at higher conversion and improved store productivity. The tool keys on contextual markers like shoppers' browsing history to deliver a more personalized interaction, and it leverages those outcomes to improve future suggestions, which we believe will drive higher lease volume. I'm also pleased to share that last month marked the national launch of Rent-A-Center's Refer a Friend program, which enables our customers who already appreciate the value and flexibility we deliver to become trusted ambassadors who can introduce new consumers to our brand. In return, they'll earn rewards that can be redeemed towards future rental payments.

At Rena Center. We are targeting our investments towards near-term sales. Enablement efforts to better leverage our existing scale and return to growth.

As an example to offset underwriting tightening on the web. We've recently introduced preliminary approvals whereby, select Shoppers are invited to finish their application in store which helps us. Lift approvals and create store-based relationships while managing our risk profile.

In addition, we're piloting. Agentic AI to deliver real-time sales coaching and context aware of suggestions aimed at higher conversion and improved store productivity.

The tool keys, on contextual markers, like Shoppers browsing history. To deliver a more personalized interaction and it leverages those outcomes to improve future suggestions which we believe will drive higher lease volume.

I'm also pleased to share that last month marked a national launch of Rena, Cent's referral friend program, which enables our customers, who are already, appreciate the value and flexibility. We deliver to become trusted ambassadors. Who can introduce new consumers to our brand.

Operator: We look forward to seeing these initiatives make a meaningful contribution to Rent-A-Center's growth over the coming quarters. Collectively, these investments across all of our brands will support our strategic imperative to serve our customers whenever and however they prefer, and that preference continues to migrate to online channels. Today, over 50% of our revenue is through our virtual platforms, and we look forward to driving that even higher in the coming quarters. Let's now turn to the segment results and then discuss our outlook for the balance of 2025, after which I will take questions. Asima delivered 16% year-over-year GMV growth in the second quarter, another strong result since last year's second quarter GMV grew at 21%. Together, that's 37% GMV growth on a stacked two-year basis.

In returns they'll earn rewards that can be redeemed towards future rental payments.

We look forward to seeing these initiatives. Make a meaningful contribution to Rena, Cent's growth over the coming quarters.

Collectively, these Investments are cross. All of our Brands will support our strategic imperative to serve our customers, whenever, and however, they prefer and that preference continues to migrate to online channels,

Today over 50% of our revenues through our virtual platforms and we look forward to driving that even higher in the coming quarters.

Let's now turn to the segment results and then discuss our outlook for the balance of 2025. After that, I will take questions.

The SEMA delivered 16% year-over-year, gmbb growth in the second quarter. Another strong result since last year's second quarter gmv grew at 21%.

Operator: This quarter's GMV balance equaled Asima's stimulus-fueled high watermark in Q2 of 2021, but this result wasn't driven by an unprecedented macro backdrop. It was powered by Asima's methodical and multi-year effort to enroll new merchants while boosting productivity at existing retailers. Those efforts paid off with a record number of lease applications, which was nearly 20% higher than the year-ago period. And as more consumers discover Asima's convenience, service, and flexibility, we're seeing more returning customers visit Asima's marketplace, where they can start their shopping journey with a diverse lineup of leading national retailers. The Q2 GMV from Asima's marketplace was up over 130% year-over-year, and it was up more than 30% sequentially. Additionally, Asima's mix of returning customers increased from a year ago and now exceeds 40% of GMV.

Together. That's 37% gmv growth on a stacked 2 year basis.

2 of 2021, but this result wasn't driven by an unprecedented macro backdrop.

It was powered by a sema's methodical and multi-year effort to enroll new Merchants while boosting productivity at existing retailers.

Those efforts paid off with a record number of lease applications which was nearly 20% higher than the year ago period.

And as more consumers, discover a seamless convenience service and flexibility. We're seeing more returning. Customers visit a sema's marketplace where they can start their shopping Journey with a diverse line of those leading National retailers.

The Q2 gmv from a seamless Marketplace was up over 130% year-over-year. It was up more than 30% sequentially.

Operator: As we continue to grow our customer base, Asima remains well-diversified from a merchant standpoint, with just over 31% of the GMV this quarter coming from the top 10 retailers. Our largest product category, furniture, represented less than 40% of GMV in the second quarter, slightly less than last year. As that category continues to remain under pressure, the Asima team has done an amazing job diversifying our GMV into higher growth segments like wheel and tire, jewelry, and direct-to-consumer. When the cycle turns and demand for furniture, including mattresses, normalizes, Asima will be well-positioned to continue its trend of double-digit GMV growth. Asima revenues grew 12% year-over-year, which was the sixth consecutive quarter of double-digit growth, and adjusted EBITDA was up 15% from a year ago. Adjusted EBITDA margins were up 40 basis points from Q2 of 2024, driven by two primary factors.

Additionally, a seamless mix of returning customers increased from a year ago, and now exceeds 40% of gmv.

As we continue to grow our customer base. As Sima remains well, Diversified from a merchant standpoint with just over 31% of the gmv, this quarter coming from the top 10 retailers.

Our largest product category, Furniture represented, less than 40% of gmv in the second quarter slightly less than last year. As that category, continues to remain Under Pressure. The essay on the team has done an amazing job diversifying, our gmv into higher growth segments like Wheel and Tire jewelry and direct to consumer.

When the cycle turns and demand for furniture, including mattresses normalizes, a Seema will be well positioned to continue. Its trend of double-digit gmv growth.

A SEMA revenues grew, 12% year-over-year, which was the sixth consecutive quarter of double digit growth and adjusted Eva was up 15% from a year ago.

Operator: First is that Asima's sustained GMV growth is leveraging the platform's economies of scale to realize margin enhancement. That's supported by a 100 basis point improvement in the OpEx efficiency ratio in the segment. Second is Asima's lease charge-off rate of 9.3%, a 30 basis point improvement year-over-year as the growth in applications has enabled Asima to drive GMV while maintaining a disciplined underwriting posture. Let's move to slide nine and recap Bridget's performance in the second quarter. The Bridget team finished with more than 1.3 million paid subscribers at quarter end, which was a 24% increase from a year-ago period and a 7.3% increase sequentially. ARPU, or average revenue per user, was $13.45 on a monthly basis, a 12.5% increase from the second quarter of 2024 and a 4% lift sequentially. ARPU expansion reflects deeper marketplace engagement, expedited transfer revenue, and a mixed shift to the premium subscription tier.

Adjusted ibaon. Margins were up 402%.

First is that a SEMA sustained? Gmv growth is leveraging. The platform's economies of scale to realize margin enhancement.

That supported by 100 basis. Point Improvement in the optex, efficiency ratio in the segment.

Second is a seamless lease charge offer rate of 9.3% at 30 basis point Improvement year-over-year, as the growth, in applications has enabled, the seamless to drive gmv while maintaining a disciplined underwriting posture.

Let's move to slide 9 and recap Bridges. Performance in the second quarter.

The bridging team finished with more than 1.3 million paid subscribers at quarter end, which was a 24% increase from a year ago, period and a 7.3% increase sequentially.

Arpu, or average revenue per user was $13.45 on a monthly basis at 12.5%, increase from the second quarter of 2024, and a 4% lift sequentially.

Operator: Bridget originated over 350 million in advances this quarter, up 21% year-over-year and a record high in both number of advances and total dollars advanced. This performance underscores the strong product-to-market fit we have achieved and emphasizes the relevance of Bridget's offering for today's financially constrained consumers. For the second quarter, Bridget's cash advance loss rate was 2.6%, defined as cash advance losses divided by total originations in the period. In terms of financial metrics, Bridget recorded 52 million of revenue and 14 million of adjusted EBITDA for the second quarter, with the top-line results representing an increase of nearly 40% against Bridget's performance from the corresponding period a year ago. Subscriptions made up 70% of the second quarter revenue, with EBITDA transfer fees and marketplace income representing the balance.

Rpu expansion, reflects deeper Marketplace engagement, expedited transfer revenue and a mixed shift to the premium subscription. Tier

Bridget originated over 350 million in advances this quarter of 21%, year-over-year and a record high in both number of advances and total dollars advance.

This performance underscores a strong product to Market fit, we have achieved and emphasizes the relevance of Bridget's offering for today's financially, constrained consumers.

For the second quarter of bridges cash. Advanced loss rate was 2.6% defined as cash advance. Losses divided by total originations in the period.

In terms of financial metrics, Bridget recorded 52 million of Revenue and 14 million of adjusted EAD off. For the second quarter with the Topline results representing an increase of nearly 40% against Bridges performance from the corresponding period, a year ago.

Operator: Adjusted EBITDA margin of 28% was driven by the timing of marketing investments originally planned for Q2 that will now be deployed in the second half of the year. As I mentioned earlier, we are pleased with Bridget's performance. On a standalone basis, it's our fastest growing and highest margin business, with future cross-selling opportunities that will supercharge growth in the future. Let's move to the Rent-A-Center results, starting on slide 10. As a reminder, last quarter we combined the Rent-A-Center and franchising segments into a single reporting unit. In the second quarter, the Rent-A-Center segment recorded 467 million of revenue, down 7.1% from the year-ago quarter, in part due to the sale and consolidation of 110 stores in 2024. This outcome was consistent with the mid-single-digit stepback we highlighted on our last call.

Subscription made up 70% of the second quarter revenue, with IBA dot transfer fees and Marketplace income representing the balance.

Justin ibaon margin of 28%, was driven by the timing of marketing Investments originally planned for Q2, that will now be deployed in the second half of the year.

As I mentioned earlier, we are pleased with Bridges performance on a standalone basis. It's our fastest growing and highest margin business. With future cross-selling opportunities that will supercharge growth in the future.

Let's move to the Rena Center results, starting on slide 10.

As a reminder, last quarter, we combined the Renaissance Center and Franchising segments into a single reporting unit.

In the second quarter, the Renaissance Center, segment, recorded 467, million of Revenue down 7.1% from the year ago quarter in part due to the sale and consolidation of 110 stores in 2024.

This outcome was consistent with the mid single digit. Step back, we highlighted on our last call.

Operator: Same Source sales were down 4% year-over-year, reflecting fewer deliveries in the second quarter relative to the prior year period. This resulted in part from our decision in late 2024 to tighten underwriting and exit certain merchandise categories, coupled with softer demand year-over-year for furniture, which is Rent-A-Center's largest category. Collectively, furniture and appliances represented approximately 67% of the mix, which is consistent with a year-ago and sequential periods. Rent-A-Center's adjusted EBITDA was 68 million, down 17% in the second quarter of 2024, due primarily to less rental income off a smaller lease portfolio value. Rent-A-Center is a business where scale matters, and we're focused on turning around the trends in the lease portfolio value while maintaining our disciplined approach to risk management.

Same Source, sales were down 4% year-over-year reflecting fewer deliveries. In the second quarter relative to the prior year period.

2024 to tighten underwriting and exit. Certain merchandise categories coupled with softer, demand year-over-year for furniture which is rent, Center's, largest category,

Collectively furniture and appliances represented approximately 67% of the mix, which is consistent with a year ago and sequential periods.

Venice centers. Adjusted Eva was 68 million down 17% from the second quarter of 2024, due primarily to less rental income off, a smaller lease, portfolio value.

Operator: As I mentioned earlier, I am pleased that Rent-A-Center deliveries, which are an early indicator of future lease portfolio value, have stabilized over the past couple of months. As we worked to better balance the portfolio size, the loss rate for the second quarter finished at 4.7%, which was up 50 basis points from the year-ago period and 10 basis points sequentially. Rent-A-Center's adjusted EBITDA margin was 14.6%, which was down 10 basis points sequentially and 1.7 percentage points from the year-ago period. As we manage through a difficult operating environment, we believe our investments in our digital capabilities will drive portfolio growth in a responsible way and will help drive sustainable margin improvements over the near and medium term. Let's cover our liquidity and capital allocation policies on slide 11. We finished the second quarter with 276 million in liquidity between cash on hand and our revolver availability.

Rent Center is a business where scale matters and we're focused on turning around the trends in the lease portfolio value. While maintaining our disciplined approach to risk management.

As I mentioned earlier, I am pleased that Rena Center deliveries, which are an early indicator of future. Lease portfolio value have stabilized over the past.

Couple months.

As we worked, as we worked to better balance the portfolio size. The loss rate for the second quarter finished at 4.7% which was up 50 basis points from the year ago period and 10 basis points sequentially.

Rena centers adjusted. He was on margin was 14.6%, which was down 10 basis, points sequentially and 1.7 percentage points from the year ago. Period.

As we managed through a difficult operating environment, we believe our investments in our digital capabilities will drive portfolio growth in a responsible way and will help Drive sustainable margin improvements over the near and medium term.

Let's cover our liquidity and capital allegation policies on slide 11.

Operator: Our net leverage ratio was approximately three times on June 30th, generally consistent with the end of the first quarter. Our business has generated approximately 117 million of free cash flow year to date, up substantially from 34 million in the prior year. That cash flow supports our capital allocation priorities, which remain unchanged from our guidance across prior quarters. First, we will continue investing across our business by elevating our current capabilities and developing new digital-first products to better serve our customers and merchants while advancing our competitive position. We're also focused on strengthening our balance sheet with an ongoing focus on deleveraging as we continue to work towards our target leverage ratio of two times.

We finished the second quarter with 276 million in liquidity between cash on hand and our revolver, availability.

Our net leverage ratio was approximately 3 times on June 30th, generally, consistent with the end of the first quarter.

Our business has generated approximately 117 million of free cash flow year to date of substantially from 34 million in the prior year.

That cash flow supports our capital allocation priorities, which remain unchanged from our guidance across prior quarters.

First, we will continue to invest across our business by elevating our current capabilities and developing new digital-first products to better serve our customers and merchants while advancing our competitive position.

Operator: Finally, although we are going to be very intentional to drive further growth in all of our brands, we also remain committed to supporting our regular dividend, which is $1.56 per share annually for a yield of about 6% at current prices. We are confident that our disciplined capital allocation strategy will fund responsible and profitable growth while we create long-term shareholder value. Let's shift to our financial outlook, beginning with an update on tariffs and consumer behavior. While the timing and levels of the potential tariffs are uncertain, we can say two things with confidence. One is that the Rent-A-Center business has seen no tariff-driven merchandise price increases as of today, though some suppliers have signaled that pricing actions may follow depending on the final outcome of trade policy negotiations.

We're ALS focused on strengthening our balance sheet with an ongoing focus on deleveraging, as we continue to work towards our Target, leverage ratio of 2 times.

Finally, although we are going to be very intentional to drive further growth in all of our Brands, we also remain committed to supporting our regular dividend which is a156 per share annually for a yield of about 6% at current prices.

We are confident that our discipline Capital, allocation strategy will fund responsible and profitable growth while we create long-term shareholder value.

Let's shift to our financial outlook, beginning with an update on tariffs and consumer behavior.

While the timing and levels of the potential tariffs are uncertain. We can say 2 things with confidence.

Operator: The other is that both of our lease-to-own businesses are poised to protect their margins using the operational levers we discussed last quarter. With modest adjustments to the weekly payment rate or the overall term of the lease, Rent-A-Center and Asima can respond to cost increases at a level that protects both our volumes and maintains consumers' low weekly payments. To date, we have not seen any change in consumer behavior that we can pinpoint as being tariff-related, but we monitor our KPIs daily so that we can respond in real time. Additionally, it is possible that macro forces could result in higher prices for a period of time. If this dynamic puts pressure on consumer liquidity, it could make the value prop of our lease-to-own offerings more relevant to more people, creating another wave of trade down.

1 is that the Rena Center business has seen, no, tariff driven merchandise, price increases as of today though, some suppliers have signal that pricing actions may follow depending on the final outcome of trade policy negotiations.

The other is that both of our leads to own businesses are poised to protect their margins using the operational levers we discussed last quarter, with modest adjustments to the weekly payment rate, or the overall term of the lease. Rent-A-Center and SEMA can respond to cost increases at a level that protects both our volumes and maintains consumers' low weekly payments.

Today.

We have not seen any change in consumer behavior that we can pinpoint as being tariff related. But we monitor our kpis daily so that we can respond in real time.

Additionally, it is possible that macro forces could result in higher prices for a period of time.

Operator: Similarly, Bridget's instant cash and financial wellness offerings may see incremental demand against that backdrop. We are prepared to welcome new customers and merchants while supporting our current relationships with our expanding lineup of financial solutions. As we consider our guidance, we are aware that the impact of near-term tariff and trade developments are difficult to predict. However, we know that our business is durable and resilient, with growth opportunities available across all economic cycles. With our strong start to the year and with the continued momentum in Asima and the Bridget segments, we are tightening the range of adjusted EBITDA to $515 million to $535 million and raising the midpoint of our full-year non-GAAP diluted earnings per share guidance by tightening the range to $4.05 to $4.40 per share.

If this Dynamic puts pressure on consumer liquidity, it could make the value prop of our lease to own offerings. More relevant to more people creating another wave of trade Downs.

Similarly Bridget's instant cash and financial Wellness offerings may see incremental demand against that backdrop.

We are prepared to welcome new customers and Merchants. While supporting our current relationships with our expanding lineup of Financial Solutions,

As we consider our guidance, we are aware that the impact of your term, tariff, and trade developments. Are difficult to predict.

However, we know that our business is durable and resilient with growth opportunities available across all economic Cycles.

Operator: In terms of the third quarter, we expect revenues ranging from $1.05 billion to $1.15 billion, adjusted EBITDA of $120 million to $130 million, and non-GAAP EPS of $0.95 to $1.05. Rent-A-Center's revenue should follow the same seasonal sequential path as 2024, with a mid-single-digit stepback in Q3 compared to Q2, with EBITDA margins down slightly sequentially despite an improvement in loss rates. We expect Asima to deliver low double-digit GMV and revenue growth, with EBITDA margins slightly better than a year-ago period, and lease charge-offs are expected to remain stable year over year. Bridget's Q3 revenue should be slightly up sequentially, with expected low-teens EBITDA margins and a net advanced loss rate in the 3% area as new models are refined, new campaigns are run, and new products are tested. For corporate costs, we expect the impact to adjusted EBITDA in Q3 to be consistent with Q2.

in terms of the third quarter, we expect revenues ranging from 1.05 billion to 1.15 billion, adjusted eav, 120 million to 130 million

And non-gaap EPS of 95 cents to 1 and 5 cents.

Rena Cent's Revenue should follow the same seasonal sequential path as 2024 with a mid single digit step back in Q3 compared to Q2 with ibaon margins down slightly sequentially, despite an improvement in loss rates.

We expect a SEMA to deliver low double digit gmv in Revenue growth.

With ibaon, margins. Slightly better than a year ago. Period and least charge offs are expected to remain stable year-over-year.

Revenue should be slightly up, sequentially, with expected low teens in Ibadan, and a net advanced loss rate in the 3% area as new models are refined. New campaigns are being run and new products are being tested.

Operator: Also, at the corporate level, our net interest expense in Q3 should be in line with Q2. 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 58.7 million shares, which includes the shares issued for the Bridget acquisition. During the second quarter, we continue to have discussions with counterparties related to the various pending legal and regulatory matters, including the previously disclosed multi-state AG matter and the McBurney California class action related to the Legacy Acceptance Now business. After evaluating the status of our negotiations under the relevant accounting guidance, we recorded an additional accrual of $31.7 million in the second quarter.

For corporate costs. We expect the impact to adjusted evidon Q3 to be consistent with Q2.

also, at the corporate level, our net interest expense in Q3 should be in line with Q2,

We expect that 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 58.7 million shares which includes the shares issued for the Bridgette acquisition.

During the second quarter, we continue to have discussions with counterparties related to the various pending legal and Regulatory matters, including the previously disclosed multi-state, AG matter and the MC Bernie. California class action related to the Legacy Acceptance Now business.

Operator: Last week, after the quarter closed, Upbound reached an agreement in principle for $14 million to settle the McBurney matter, which was substantially reserved for as of June 30th. The McBurney settlement in principle remains subject to finalizing a definitive settlement agreement and approval of the class settlement by the trial court. The balance of the accrual relates primarily to the multi-state AG matter, and we will continue to evaluate and update the accrual estimate each quarter based on the current status of the matter. Let's wrap up with some key takeaways. There is no shortage of data points about the economy and our consumers, but it is important to separate the headlines and general consumer sentiment from our portfolio and our core consumer. The macro environment is uneven with some mixed signals, but our business is fundamentally strong and built to succeed across cycles.

After evaluating the status of our negotiations under the relevant accounting guidance, we recorded an additional accrual of $31.7 million in the second quarter.

Last week after the quarter closed upbound, reached an agreement in principle for 14 million dollars to settle the mcburnie matter.

Which was substantially reserved for, as of June 30th.

The mcburnie settlement in principle remains subject to finalizing a definitive settlement agreement and approval of the class settlement by the trial court.

The balance of the approval relates primarily to the multi-state AG matter. And we will continue to evaluate and update the approval estimate each quarter based on the current status of the matter,

Let's wrap up with some key takeaways.

There is no shortage of data points about the economy and our consumers, but it is important to separate the headlines and general consumer sentiment from our portfolio and our core consumer.

Operator: Our customers are accustomed to financial pressures and are resilient and adept at seeking out solutions that reduce those pressures. That's where Upbound's products, which offer accessibility, flexibility, and convenience, can and do make such a difference. That's why Asima has logged seven consecutive quarters of impressive GMV growth with expanding margins, and it's why we continue to invest in new technologies and capabilities to sustain that growth as conditions change. The Rent-A-Center business is working through a purposeful pullback in underwriting and product categories, but maintaining mid-teens margins and producing reliable free cash flow. The Bridget platform continues to grow, and we believe its new marketing channels and innovative new products will position it for growth in subscribers, revenue, and earnings.

The macro environment is uneven with some mixed signals but our business is fundamentally strong and built to succeed across Cycles.

Our customers, our accustomed to financial pressures and our resilient and Adept at seeking out solutions that reduce those pressures, that's where upbound products, which offer accessibility flexibility and convenience can and do make such a difference.

That's why as Sima has logged 7, consecutive quarters of impressive, gmv growth with expanding margins. And it's why we continue to invest in new technologies and capabilities to sustain that growth as conditions change.

The Renaissance, our business is working through a purposeful pullback and underwriting and product categories, but maintaining mid teens margins and producing reliable free, cash flow.

Operator: Overall, I'm tremendously excited about the results we've achieved, and even more so about the opportunities ahead of us as the company continues to transform and focus on digital asset-like growth opportunities. Our business and our teams are fully aligned to our mission and strategy, which we know will help our consumers and our merchants be successful and will create sustainable value for our stakeholders. Thank you for your time this morning. Operator, you may now open the line for questions.

The Bridget platform continues to grow and we believe it's new marketing channels. And Innovative new products will position it for growth and subscribers revenue and earnings.

Overall, I'm tremendously excited about the results we've achieved and even more about the opportunities ahead of us as the company continues to transform and focus on digital asset-light growth opportunities.

Our business and our teams are fully aligned to our mission and strategy which we know will help our consumers and our Merchants be successful and will create sustainable value for our stakeholders.

Thank you for your time this morning. Operator, you may now open the line for questions.

Fahmi Karam: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Vincent Kantik at BPIG. Your line is open.

Thank you. At this time. We will conduct a question and answer session as a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced to withdraw your question. Please, press star, 1 1 1, again please, stand by while we compile the Q&A roster,

Our first question comes from Vincent kynetec.

Operator: Hi, good morning. Thanks for taking my questions. So, great results and nice to see the improvements continuing in Asima and Bridget. I wanted to talk about Rent-A-Center, and you described, you know, that there were adjustments made last last year, and those are still flowing through. So I was wondering if you could maybe first in the near term talk about if it's possible to describe the the drag to results from those adjustments and maybe also from the the product categories you have. So I know like there's still a lot of exposure to furniture and appliances. And then if you could talk about the long term of Rent-A-Center, what's your view of, you know, the long term growth potential? Could it be, you know, what level of growth should we be expecting once all of this normalizes? Thank you.

At BTIG, your line is open.

Nice to see the improvements, continuing as Sima and Bridget. Um, wanted to talk about a Rena Center and you described, you know, there that there were adjustments made last last year, uh, and those are still flowing through. Um, so I was wondering if you could maybe first in a near-term, talk about if it's possible to describe the, the drag to results, um, from those adjustments and maybe also from the, um, the product categories you have. So I know like you're still a lot of exposure to furniture and appliances. And then, if you could talk about the long-term of rent Center, what what's your view of, uh, you know, the long-term growth potential? Could it be, you know what, level of growth should we be expecting once? All of this normalizes? Thank you.

Fahmi Karam: Good morning, Vincent. Thanks for the question. Yeah, look, I think as we discussed last quarter on the Rent-A-Center side, we did do a purposeful pullback on the credit side and tightening around underwriting. And that's going to have an overall impact on revenue and EBITDA as we saw in the quarter, you know, consistent with how we guided at the beginning of the year and how we've guided last quarter. So a couple of factors, right? You have the reduction of 110 stores or so this year versus last year, you know, underwriting tightening around especially new customers coming through the web. And then the product categories that we talked about, you know, around mobile phones mostly, which is another form of underwriting, all of that has impacted the Rent-A-Center results. And, you know, in this environment, you feel like taking a more conservative approach in underwriting is prudent.

Good morning, Vincent. Thanks for the, uh, the question. Um, yeah. Look, I think as we discussed, uh, last quarter, on the Rina Center side, we did do a purposeful pullback, uh, on the credit side and tightening our own, uh, underwriting, and that's going to have an overall impact on revenue and EBITDA, as we saw in the quarter. Um, you know, consistent with how we guided at the beginning of the year and how we've guided, uh, last quarter.

Um, so a couple factors, right? You have the reduction of 110 stores or so, uh, this year versus last year, um, you know, the underwriting tightening around, uh, especially new customers coming through the web.

Fahmi Karam: As we've talked about, our consumer, you know, generally is resilient, but is still under pressure just from the accumulation of higher prices over the last couple of years. You know, your question around, you know, how big of a drag is it on the results? You know, without these moves, I would say without the tightening on underwriting and the product categories, you know, we would have been flat to maybe slightly up on the same store sales basis. We are going to lap some of these changes starting in the third quarter. You know, from a general underwriting standpoint, we started to tighten midway through the third quarter. You know, the product categories really were eliminated in the middle of Q4. So we'll start seeing some lapping of that underwriting in the second half of the year. But we're not waiting for that.

And then the product categories that we talked about, um, you know, around mobile phones, mostly, which is another form of of underwriting, all of that as uh have impacted, the Rena Center results. And you know, in this environment you'll feel like taking a more conservative approach in an underwriting is prudent. Um, as we've talked about our consumer, you know generally is resilient but it's still under pressure just from the accumulation of uh higher prices over the last uh couple years.

Fahmi Karam: As I mentioned on the call, we have done some initiatives to try to help drive more deliveries without, you know, loosening up on the underwriting. And one way we're doing that is taking folks who start on the web and who would normally be declined online and asking them to come into the store where we can have our store coworkers do more of a formal interview with the customer. Our approval rates are much higher in-store, and we're seeing some traction there, especially in furniture and appliances, when someone walks into one of our stores. So, you know, the good news is we have losses under control, you know, up 10 basis points sequentially. Delinquencies are flat year over year and improved sequentially. So I feel like we just got to find our pockets to drive deliveries, and we're doing that.

You know, your question around, you know, how big of a drag is it on the results. Um, you know, without these moves I would say without the tightening on the underwriting and the product categories, you know, we would have been flat to maybe slightly up on the same store sales uh basis. Uh we are going to lap some of these changes starting in the third quarter you know from a general underwriting standpoint we started to tighten Midway through the third quarter. You know the product category is really uh were eliminated in the middle of uh of Q4. So we will start seeing some of some lapping of that underwriting uh in the second half uh of the year. Uh, but we're not waiting for that. As I mentioned on the call, we have done some initiatives to try to help drive more deliveries without, you know, loosening up on the underwriting and 1 way we're doing that. Is

Fahmi Karam: So in this environment, being down four percentage points or four points on a same source sale basis, we think it's prudent to take a conservative approach to underwriting. And then long term, you know, the opportunity for Rent-A-Center, and we've talked about it, is, you know, how do we deliver that omnichannel experience and how do we become more of a digital e-commerce player while still leveraging the store capabilities and all the benefits we've talked about by having a footprint in the communities, but leveraging all the traffic that we get online and through Rent-A-Center.com. So our goal is to turn into positive same-store sales, hopefully by the end of this year into 2026, and then grow at low single digits going forward.

Taking folks who start on the web, uh, and who would normally be declined, uh, online and asking them to come into the store, uh, where we can have our store co-workers, uh, do more of a formal interview. With the customer, our approval rates are are much higher in store and we're seeing some traction there especially in furniture and appliances when somebody walks in uh, to 1 of our stores. So, you know, the good news is we have losses under control, um, you know, up 10 basis points sequentially delinquency is our our flat year-over-year and improved, uh, sequentially. So feel like we just got to find our pockets to drive deliveries and, and we're, and we're doing that. Um, so in this environment being down 4 percentage points or or 4 points on the same Source sale basis. Um, is we think it's prudent, uh, to take a conservative approach uh, to to underwriting and then long term, you know, the opportunity for for Rena Center we've talked about it is you know, how do we deliver that Omni channel, uh, experience and how do we

Become more of a digital e-commerce player, while still leveraging the store capabilities. And and all the benefits we've talked about by having a footprint in the communities. The leveraging all the traffic that we get online and through Rena center.com. So our goal is to turn into uh, positive same Source sales hopefully by the end of this year, into into 2026, and then grow at low single digits, uh, going forward.

Operator: Okay, great. That's super helpful detail. Thank you for that. And then switching over to Bridget. So the very nice results this quarter and your discussion about marketing investments and new products, you know, in the second half of the year. If you could maybe, you know, if you just could describe those marketing investments in more detail and how much you intend to invest. And are there other products that might be interesting here? Because, you know, as part of the Upbound umbrella, you kind of want to serve the consumer more fulsomely. So you talked about the line of credit products. I'm just wondering if you think long-term other products might make sense as well. Thank you.

Okay, great. That's uh super helpful detail. Thank you for that. And then, um, switching over to uh, Bridget. So very nice results. This quarter and um, your discussion about marketing Investments and new products, um, you know, in the second half of the year, if you can, maybe if you just could describe this marketing investments in more detail on how much you intend to to invest. And are there other products that might be interesting here? Because, um, you know, as part of the upbound umbrella, you kind of wind the serve

The consumer more more wholesome way. Um,

So, you talked about the, the line of credit products. I was just wondering, if you think long term, other products might make sense as well. Thank you.

Fahmi Karam: Thanks, Vincent. Yeah, so very pleased with Bridget. Overall, very much in line to exceeding our expectations. You know, their performance speaks for itself. I'd say we're also very pleased with just how it fits in with the Upbound group, even from a team dynamic standpoint. And the collaboration overall has been great. It's been a really good, solid first six months of ownership of the business. And you know, what the platform has demonstrated is its ability to grow subscribers and really pick where its OpEx spend is, whether it's through marketing or R&D. This quarter, you know, the EBITDA margin almost hitting 28% was probably slightly above where we wanted to be in the quarter from a marketing standpoint because we spent a little bit more time doing R&D type work for new products.

Fahmi Karam: And we're really excited about that line of credit product that I mentioned, you know, going up a little bit higher than our 250 instant cash product, up to 500 and extending the term. One of the reasons we were really attracted to Bridget was their R&D capabilities and their ability to listen to the consumer and what the consumer actually wants and needs. And that line of credit product is a direct result in us listening to the consumer, and the traction that we've gotten as we've piloted that program has been really, really tremendous. So the concept, again, is a little bit higher liquidity at 500 with a little bit longer extension of credit over the six to nine-month period. And we'll test and learn on kind of what gets the best traction and what performs best from a loss standpoint.

Patients. Um, you know, their performance speaks for itself. I'd say we we're also very pleased with just how it fits in with the upbound group, uh, even from a team Dynamic standpoint and the collaboration overall has been, uh, has been great. Uh, it's been a really good solid first 6 months of of of ownership of of the business. And you know what, the what the platform has demonstrated is its ability to grow subscribers and, uh, really pick words Opex. Spend is whether it's through marketing or R&D this quarter, you know, the ibida margin almost hitting, 28% was probably slightly above where we wanted to be in the quarter from a, from a marketing standpoint because we spent a little bit more time doing R&D type work for new products and we're really excited about that line of credit product that that I mentioned, you know, going up a little bit higher uh, than our 250 Instant Cash product up to 500 and extending the term. 1 of the reasons we really attracted to

It was their R&D capabilities and their ability to to listen to the consumer and what the consumer actually wants and needs. And that line of credit product is a direct result in US listening to the consumer and the traction that we've gotten as we've piloted, that program has been really really tremendous. So uh the concept again is a little bit higher uh liquidity at 500 with a little bit longer extension of of credit over the 6 to 9 month period and we'll test and learn on kind of what gets the best traction.

Fahmi Karam: But we're very, very excited about what Bridget can bring and some of its R&D and innovation into new products going forward. As far as the marketing goes, yeah, you know, we have been very heavily, historically heavily on social media. We are trying some new channels even across social media like Reddit and other type platforms to see if we can get a better lift there. We are doing things in-store and on-site and then are starting to pilot even advertising at the point of sale, whether it's at Rent-A-Center stores or some of the staffed Asima locations. We are going to start putting up some signage there, and we will test and learn and figure out what gets us the best response rate from the consumers. But overall, very excited about what Bridget's doing.

And what performs best from a, from a loss standpoint, uh, but we're very, uh, very excited about what Bridget can bring and some of its R&D and Innovation into into new products, uh, going forward. Um, as far as the marketing goes, yeah, we, you know, we have been very heavily historically heavily on social media. Uh, we are trying some new channels even across social media like Reddit and other other type platforms to see if we can get uh a better lift. There we are doing things in store uh and on-site and then our starting to Pilot even advertising at the point of sale. Whether it's at Renaissance Center stores or some of the staffed SEMA locations. We are going to start putting up some some signage there and and we will test and learn and figure out what, what gets us the best, uh, best response rate from the consumers. But but overall, very excited about what we're just doing.

Operator: Okay, great. Super helpful. Thank you.

Okay, great. Uh, super helpful. Thank you.

Fahmi Karam: Our next question comes from Bobby Griffin at Raymond James.

Operator: Good morning, Bobby. Thanks for taking my questions, and congrats on a good second quarter.

our next question comes from, Bobby Griffin at Raymond James,

good morning, buddy. Thanks for taking my questions and, uh, congrats on a good second quarter.

Fahmi Karam: Thanks, Bobby.

Operator: Fame, I guess first to start, you know, a lot of detail in the different customer segments of your business. But can you give us a high level? Would you call your core customer across the platform stable versus maybe one keyword versus six months ago just trying to connect kind of where the customer is first here?

Thanks Bobby.

Sam, I guess first to start, you know, a lot of details of different customer segments of your business. But if you want to take a really good look at a high level, would you be calling your core customer across the platform stable versus maybe one team or versus six months ago to try to come back to have a great.

First.

Fahmi Karam: Bobby, you're breaking up just a little bit, but I think I got the gist of your question being around the consumer and how it's trended. You know, I would say stable over the last few months, few quarters. Still under pressure, as I mentioned in our prepared remarks. You know, the core Rent-A-Center and maybe the bottom end of the Asima business, that consumer has to deal with high prices, and you know, inflation is still high. But there are some puts and takes. You know, on the good side, unemployment is still low. Gas prices are still relatively low. There is some wage growth and some of those new tax policies that I mentioned around, you know, not tipping or not taxing on tips and over time should be net positive to the consumer. But overall, there's still a lot of uncertainty.

Bobby, you're breaking up just a little bit but I think I got the gist of your of your question being around the the consumer and how it's how it's trended. Um, you know, I would say stable um over the last few months, few quarters, um, still under pressure. As I mentioned in our prepared remarks, you know, the the, the core Rena Center and maybe the bottom end of the Emma business, um, that consumer has to deal with high prices and uh, you know, inflation is still high. Uh, but there are some puts and takes, um,

Fahmi Karam: So I would say stable as far as just general consumer behavior and strength of the consumer. But we are being very, very mindful of it and still taking a pretty conservative approach from an underwriting standpoint. And as we look at just the overall portfolio strength at both Rent-A-Center and Asima, as we've been able to tighten our underwriting and look at where our portfolio sits today compared to where it was a year ago or two years ago, the mix has definitely shifted to the upper ends of our risk profile. So we feel really good about where the portfolio sits. And that's just something that we manage day to day. But generally saying the consumer is pretty stable. As we've mentioned, they're pretty resilient, but still face some pressure and there's some uncertainty in the macro environment.

You know, on on the, on the good side unemployment, still low, gas prices, are still relatively low, there is some, uh, some wage growth. Um, and some of those new tax policies that I that I mentioned around, you know, not tipping or not taxing on tips and and over time should be net positive, uh, to the consumer. Uh, but overall, there's still a lot of uncertainty. Um, so I would say stable as far as just general um uh consumer behavior and uh, strength of the consumer, but we are being very uh, very mindful of it and still taking a pretty conservative approach from an underwriting standpoint. And as we look at just the overall portfolio strength, uh, at both Rena Center and uh a SEMA as we've been able to tighten our underwriting and look at where our portfolio sits uh today compared to where it was a year ago or 2 years ago, the mix has

Operator: Thank you. Hopefully, you can hear me a little better now. I actually used stable in my question, so that was perfect, Famie. Good guess, and I appreciate it. Definitely, for me, it was just kind of on the Asima road, continues to be really strong app growth there, GMV. Understand you guys have been doing some more with, you know, the product offering. You know, what are you seeing there from a trade-down perspective? Is it, you know, what is it just new door growth driving that? What's driving the kind of core merchants, you know, leveraging the platform more, more aggressive sales tactics? Is anything there to better understand really the strength we're seeing across the apps as well as the GMV side of things?

Definitely shifted to the upper ends of our of our risk profile. Uh, so we feel really good about where the portfolio sits, um, and that's just something that we manage day-to-day. But generally saying, uh, the consumer is, uh, pretty stable as we've mentioned, that they're pretty resilient, but still face some pressure and there's some uncertainty, uh, in the macro environment.

V understand you guys have been doing some more with, uh, you know, the product offering, you know, what are you seeing there from a from a trade down perspective? Um, is it, you know, what is it just new door growth driving that what's driving the kind of core Merchants, you know, leveraging the platform more more aggressive sales tactics, is there anything there to better, understand really, the strength, we're seeing the apps as well as the gmv side of things.

Fahmi Karam: Thanks, Bobby. Yeah, you know, Asima, you know, continues to really outperform, you know, coming in again this quarter at, you know, double-digit growth this quarter at 16% growth. And really impressive when you think about the comp coming into the quarter last year was at 21%. So 37% on a two-year basis is really impressive growth, especially when you consider some of our bigger categories are still under pressure, you know, furniture and appliances. To be able to hit those growth targets is great execution by the team. And also, you know, expanding margins, you know, expanding the EBITDA margin this quarter by 40 basis points, last quarter by 170 basis points year over year. So being able to grow while not taking on additional losses and grow the EBITDA margin is really, really impressive from the Asima team.

Fahmi Karam: As far as the growth and where it's coming from, it is a mix, as we've said in the past, around both new merchants and productivity per merchant. If I had to bucket it this quarter, I would say the majority actually comes from new merchants we've onboarded over the last 12 months. About 80% of the growth comes from new merchants and about 20% comes from productivity gains. And, you know, one specific that I would highlight is our direct-to-consumer channel. And we consider that new as we add more of those national retailers to our website and to the app. That direct-to-consumer channel has been our fastest growing part of Asima. It grew 130% year over year and now is over 5% of our overall GMV. So we'll continue to invest in that. It's a returning customer channel today.

Thanks Bobby. Yeah, you know SEMA, you know continues to really outperform, you know, coming in again this quarter, you know, double digit growth this quarter at 16% growth and really impressive. When you think about the comp coming into the quarter last year with a 21%. So, 37% on a 2 year basis is really impressive growth, especially when you consider some of our bigger categories are still under pressure, you know, furniture. And and appliances, uh, to be able to hit those growth targets is is great execution, uh, by the team. And also, you know, expanding margins. Uh, you know, expanding the, the ibadan margin, this quarter by 40 basis points, last quarter by 170 basis points year-over-year. So, being able to grow while not taking on, uh, additional, uh, losses, uh, and grow, the ibadan margin is, is really, uh, really impressive, uh, from the asthma team as far as the, the growth and and where, where it's coming from. It is a mix as as we've said in the past around both, um,

New merchants and productivity per Merchant. If I had to bucket it, uh, this quarter, I would say, the majority actually comes from new Merchants we've onboarded over the last 12 months, about 80% of the growth comes from from the merchants and about 20% comes from uh, productivity gains.

Fahmi Karam: We haven't opened it up to really new customers yet, but there's a lot of opportunity for us to grow that. And as we mentioned, you know, returning customers now is representing over 40% of our GMV. And it's a lot of a lot of that is driven by our direct-to-consumer in our marketplace. So it's across the board. As we've highlighted in the past, Asima is very diversified from a merchant standpoint, very diversified from a product standpoint. So really, the growth is across the board. And as I mentioned, you know, when furniture does come back, furniture and mattresses, the demand comes back, Asima will be very well positioned to continue the double-digit growth.

And, uh, you know, 1 specific that, I would highlight is our direct to Consumer Channel and we consider that, um, new. Uh, as we add more of those National retailers to our our website and to the app, um, that direct to Consumer channel has been our fastest, growing part of a SEMA, it grew 130% year-over-year, and now is over 5% of our overall gmv. So we'll continue to invest, uh, in that it. Uh, it's a returning customer Channel today, uh, we haven't opened it up to, to Really new customers yet, but there's a lot of opportunity for us to grow that. And as we mentioned, you know, returning customers now is representing over 40% of our of our gmv and it's a lot of, uh, a lot of that is driven by our direct consumer and our Marketplace. So it's across the board uh as we as we've highlighted in the past, the seam is very Diversified from emerging standpoint, very Diversified from a product standpoint. So really the growth is across

Operator: Thanks, Famie. And I guess one last quick one, if I can. On the loss ratios in Asima, down year over year, but they did tick up sequentially. And I think you guys were looking for flat when we spoke last quarter. So just anything there, or is it just timing or anything we should think about there?

Board. And as I mentioned, you know, when Furniture does come back furniture and mattresses, the demand comes back, a SEMA will be very well positioned to continue the double digit growth.

Thanks Sammy and I guess 1 last Quick 1 if I can I on the loss ratios in a SEMA down year over year but they did pick up sequentially and I think you guys were looking for flat when we spoke uh last quarter so just anything there or is it just timing or anything? We should think about their

Fahmi Karam: Most of that, Bobby, I would say is more mixed. You know, one of our fastest growing segments outside of the direct-to-consumer has been in the jewelry category. That's been growing now a couple of quarters in a row, much faster than some of our other categories and becoming a bigger and bigger part of the overall portfolio. And that tends to have a little bit higher loss ratio, tends to have a little bit higher 90-day buyout activity, which puts pressure on our gross profit margins, but also probably ended up being, you know, 10, 20 basis points higher from a loss ratio standpoint, but still well within our range of losses. And as I mentioned, you know, it trickled down into a positive EBITDA margin year over year. So nothing really there, still very much under control.

Operator: Thank you. Best of luck here in the back half of the year. Appreciate it.

Most of that Bobby is I, I would say it's more mix. Um, you know, 1 of our fastest growing segments um, outside of the direct to Consumer, has been in the jewelry category, uh, that's been growing now, a couple quarters in a row, uh, much faster than some of our other categories and becoming a bigger and bigger part of the, the overall portfolio and that tends to have a little bit higher loss ratio tend to have a little bit higher 90-day buyout activity which puts pressure on our gross profit margins but but also probably ended up being uh you know 1020 basis points. Higher from a from a loss ratio standpoint but still with well within our range uh of of losses. And as I mentioned, you know, it trickled down into a positive, ibaon margin year-over-year. So nothing really there still very much under control

Fahmi Karam: Thanks, Bobby.

Thank you. Best of luck here in the back, half of the Year, appreciate it.

Thanks Bobby.

Fahmi Karam: Our next question comes from Brad Thomas at KeyBank Capital Markets.

Our next question comes from Brad Thomas at keybanc Capital markets.

Operator: Morning, Famie. Thanks for taking the question. And we too think these were very good results in a tough environment out there. I wanted to start with a follow-up on Bridget. You all said that you thought revenue would improve slightly on a sequential basis. And obviously, you gave a very positive framework for how you're thinking about sales and EBITDA over the next couple of years at the time of acquisition. And so I was just wondering, having owned the business for six months, if you could share a bit more about how you're feeling about that outlook potential, because obviously, it's positioned to be a very significant contributor to sales and EBITDA over time.

Contributor to sales and IBA overtime.

Fahmi Karam: Morning, Brad. Thanks for the question. Yeah, as I mentioned, very, very pleased with the performance overall. Still very much on track, hitting our 2025 guide as well as positioning the company to hit the big ramp-up in growth in 2026. And as you recall, the 2026 number really didn't have any benefit of some of the cross-collaboration and cross-selling that we have been working on. So I feel like we're well positioned there. You know, we are being pretty methodical in how we, you know, tap the Rent-A-Center and Asima customers and really testing and learning there. But I feel really good about, you know, Bridget on a standalone basis, being able to hit the numbers that we expected at the time of the acquisition. The first half of the year has been above our expectations, as you mentioned, both on the top line and on the EBITDA side.

Fahmi Karam: So nothing that we've seen in the first six months has really slowed us down. If anything, we're more and more positive about the acquisition and the future cross-collaboration between all the segments.

Morning, Brad. Thanks for the the question. Yeah, as I mentioned, very, very pleased with the performance. Uh, overall still very much on track, uh, hitting our 2025 guide, as well as positioning the company to hit the, the, the big ramp up in growth in in 2026. Uh, and as you recall, um, the 2026 number really didn't have any benefit of some of the Cross collaboration and cross-selling that we have been working on. So feel like we're well positioned there. Um, you know, we are being pretty methodical in how we, um, you know, tap, the Rena Center in a SEMA customers, um, and, and really testing and learning their butt feel really good about, um, you know, bridging on the Standalone basis. Being able to hit the numbers that, uh, we expected at the time of the acquisition, uh, the first half of the year has been, uh, above our expectations. Um, as as you mentioned, both on the top line and on the ibida side, so nothing that we've seen in the first 6 months has really slowed us down.

If anything were more and more positive about the, uh, the acquisition and, and the future cross collaboration between all the segments.

Operator: That's very helpful. Thank you. And if I could add a follow-up on the Rent-A-Center side, you've already given a fair amount of detail here. But just as we think about the quarters ahead, and I know this is kind of a macro call that I'm asking you to make here, but is there a good way to think about, you know, when some of the EBITDA dollar pressures could potentially subside and when you could at least flatten out, if not start to take it back to growth for that segment?

That's very helpful. Thank you. And if I could add a follow-up on the rent to Center side, you've already given a fair amount of detail here, but just as we as we, think about the quarters ahead. And I know this is kind of a macro call and I'm asking you to make here, but is there a good way to think about? Um, you know, when some of the ebita dollar pressures could potentially, uh, subside, when you could at least flatten out, if, if not start to take it back to growth for that segment,

Fahmi Karam: Yeah, I think I mentioned, Brad, you know, we're going to start lapping some of these changes that we made on the underwriting side, you know, in the second half of the year. We'll get a little bit of it back in the third quarter, and then we'll get a little bit more of it back in the fourth quarter. And you know, and then we're still going to lap some of the store closures and consolidations that we did also last year. So I would say early 2026, we should start seeing us really start to have a clean comp and hopefully then returning into growth as we do some of these initiatives that we mentioned that hopefully help from a delivery standpoint.

Fahmi Karam: And then look, if the macro gets a little bit better, then we'll be able to pick our spots on where we open up some of the underwriting. You know, when we tighten underwriting between the two segments, it definitely has a different impact on Asima and Rent-A-Center. With Rent-A-Center given its fixed cost basis and having the stores, you know, there's definitely something that we have to balance there between growth and taking on prudent risk, where Asima benefits from trade down and being able to grow store count. So look, I think, you know, we'll start comping. The comps start to get a little bit easier in the second half, and then by the time we get into 2026, we should return to growth.

Yeah, I think I mentioned Brad. You know, we were going to start laughing some of these changes that we made on the underwriting side. Um, you know, in in the second half of the year, we we'll get a little bit of back in the third quarter and then we'll get a little bit more of it back, uh, in the in the, uh, fourth quarter. Um, and you know, and then we're still going to elapse some of the, the, the store closures and consolidations that we did also, uh, last year. So, um, I would say early 2026. Uh, you should start seeing us, uh, really start to have a clean comp and hopefully, then returning, uh, into growth as we do some of these initiatives, that, that, uh, we mentioned that hopefully help from a delivery standpoint and then you look at the macro gets a little bit better, um, then we'll be able to to pick our spots and where we open up, uh, some of the underwriting. You know, when we tighten underwriting between the 2 segments, it definitely has a different impact, uh, on a SEMA and, and Rena Center, um, with Rena Center but given its fixed cost, uh, basis, and and and and having the stores, you know, there

There's definitely something that we have to balance there between growth and taking on, uh, prudent risk. We're a SEMA benefits from trade down and being able to grow store count. So, um, look, I think, uh, you know, we'll start comping. Um, the comps start to get a little bit easier in the second half and then by the time we get into 2026, we should return to growth.

Operator: Very helpful. Thanks, Famie.

Very helpful. Thanks Tammy.

Fahmi Karam: Our next question comes from Hong Wen at TD Cohen.

Our next question comes from Hong win at TD Cohen.

Operator: Hi, team. Thanks for taking my question. I want to start with Bridget. Obviously, very strong results. I mean, if I look at the cash advance volume over the past couple of quarters, it's been decelerating. I think you mentioned that you guys are going to increase marketing in the back half of the year. So can you talk about maybe your expectations for Bridget going forward and how you are looking to re-accelerate growth?

Hi team. Uh, thanks for taking my question. Um, I want to start with uh, Bridget obviously very strong results. I mean, if you look at the cash advance volume of the past, couple of quarters, it's been decelerating. Uh, I think you, you mentioned that you guys are going to increase Marketing in this in the back half of the year. So can you talk about maybe your expectations, uh,

For uh, Bridget going forward and how you are looking to uh react growth.

Fahmi Karam: Yeah, look, Hong, thanks for the question. You know, the Bridget growth, I think, speaks for itself. As I mentioned, 40% revenue, almost 25% subscription or subscriber growth year over year. You know, the advances, you know, it doesn't have necessarily a financial impact onto the business given the subscription-based model. But with the other thing that we mentioned in the prepared remarks was, you know, the average revenue per user per month, you know, growing mid-single digits sequentially and, you know, up over 12% year over year. That is one thing that I would also call out as something that we are actively pursuing and seeing that grow sequentially, again, low single digits into the second half of the year.

Yeah, look, uh, how many thanks for the question? Uh, you know, the Bridget growth I think is, you know, speaks for itself. As I mentioned, 40% Revenue, uh, almost 25% subscription or subscriber growth, uh, year-over-year, you know the advances. You know, it doesn't have necessarily a financial impact onto the, the business given the subscription based, uh, based model. Uh, but the other thing that we mentioned on the prepared remarks was

Fahmi Karam: You know, the traction that we get, as I mentioned, both on the instant cash product, the credit building product, and now the line of credit really justifies the market need and the market demand for this product. And being able to offer our customers across all the brands these liquidity solutions is really powerful for us. It expands our market outside of just durable goods. It gives us another solution to offer our customers and keep them in the network. So again, you know, not to repeat too much, we're very pleased with what Bridget's doing, including its growth profile.

It's really powerful for us. It expands our market outside of just durable goods. It gives us another solution to offer our customers and keep them in the network. So again, you know, not to repeat too much, we're very pleased with what Bridget's doing, including its growth profile.

Operator: Got it. And maybe on the leverage, given that I guess you continue to see some revenue headwind on Upbound, sorry, on Rent-A-Center, which is about to lap. But you're also seeing very fast growth on Asima. So does that affect your ability to, I guess, quickly take down leverage? And you know, when should we expect you to hit your target leverage ratio? Thank you.

got it and maybe on The Leverage, uh, given that

I guess you you continue to see some um, revenue headwind on, sorry on Rena Center, which is about to lap. But you also seen very fast growth on a SEMA. So does that affect your ability to, I guess quickly take down and leverage and, you know, when should we expect you to hit? Uh, your target leverage ratio. Thank you.

Fahmi Karam: Yeah, free cash flow, you know, compare it this year to last year. You know, this year, year to date, we're at 117 million. Last year was about 34 million. So free cash flow is a real positive story for us, and that's including the growth at both Asima and Bridget. Some of that betterment year over year is the pullback at Rent-A-Center. Obviously, the EBITDA declines in there, but also fewer and fewer purchases is also in that free cash flow number. So free cash flow has actually been a really positive story for us the first six months. You know, the big beautiful bill that was passed also gives us some cash tax benefit that we'll incorporate into the guide going forward. But needless to say, it will be a significant plus to free cash flow for at least the next couple of years.

Yeah, free cash flow, you know, to compare this year to last year, you know, this year year to date. We're at 117 million. Uh, last year was about 34 million. Uh, so free cash flow, uh, is is a real positive story for us and that's including the growth at both the SEMA and and Bridget uh, some of that betterment year-over-year. Is the pullback at Rena Center obviously the the Eva dog declines in there but also fewer and fewer purchases uh is also uh in that free cash flow uh in that free cash flow number. Um, so free cash flow has actually been a really positive story for us, the first 6 months. Um, you know, the big beautiful bill that was passed also gives us some cash tax benefits. Um, that will

Fahmi Karam: So we will get down to our two times leverage target. You know, I would say over the next couple of years, Hong, you know, it depends on how fast we can grow Asima, how fast we can grow Bridget. But you know, if you just look at the guide for 2025, what we said was we could get leverage down to pre-acquisition levels by the end of the year. So let's hit that first, and then we'll try to get down to two times as we progress.

Incorporate into the guide going going forward, but needless to say, it will be a significant plus to free cash flow for the least the next couple years. Um, so we will get down to our 2 times, uh, leverage, uh, Target. Um, you know, I would, I would say over the next couple years Hong, you know, depends on how fast we can grow, um, a SEMA, how fast we can grow Bridget. Uh, but you know, if you just look at the guide for 2025, uh, what we said was, we could get leverage down to pre-acquisition levels, uh, by the end of the year. So let's hit that first and then we'll try to get down to 2 times. Uh, as we progress,

Operator: Got it. Thank you.

Got it. Thank you.

Fahmi Karam: Our next question comes from John Rowan at Janey Montgomery Scott.

Various Analysts: Morning, Famie. Morning, John. Do you know what percentage of your customers are affected by the change in tax policy on tips and overtime?

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

Morning, Tammy.

Morning John. Um do you know what percentage of your customers are affected by the change in tax policy on tips in overtime?

Fahmi Karam: You know, it's really hard for us to kind of pinpoint the exact percentage. But if you think about, you know, a Rent-A-Center customer making 25, 30,000 a year of annual income, Asima's 55 to 60,000, and Bridget's somewhere in between the two, it's going to be a lot of service-type folks. And those folks are the ones that have a lot of tips and a lot of overtime. So we think it's going to be a net positive, but I don't have an exact percentage, but it's a meaningful percentage of our consumers.

You know, it's really hard for us to kind of pinpoint the exact, uh, percentage. Uh, but if you think about, you know, uh, Rent-A-Center customer making $25,000 to $30,000 a year in annual income, um, you know, seems as, you know, $55,000 to $60,000, and, and, and bridges somewhere in between the two. It's going to be a lot of service-type, uh, um, folks, and, and those folks are the ones that have a lot of tips and a lot of overtime. So we think it's going to be a net positive, but don't have exact percent.

Various Analysts: Okay. Have there been any changes in the kind of, I know enough for you because you run a subscription-based model in Bridget, but have there been any changes in the market since the CFPB rescinded all the guidance documents?

But it's a it's a meaningful percentage of our our consumers, okay? Um, have there been any changes in the kind? I know not for you because you were on a subscription based model and Bridge it but have there been any changes in the market. Um, since the cfpb, rescinded, some all the guidance documents,

Fahmi Karam: No. Obviously, there's been a lot of news around that, the open banking rules. Even this week, the CFPB sounds like they may come back to the rule as the court to hit pause on the ongoing case. So nothing to date, John, has changed officially, but it's something that we're actively monitoring through the Bridget team. But nothing to date has necessarily changed as far as the new ruling.

No. Obviously there's been a a lot of news around that the open banking rules even this week. The cfpb sounds like they may come back to the rule as the as the courts that hit pause on on the ongoing case.

Various Analysts: Okay. And then lastly, I just want to make sure I understood. So there's a $32 million accrual for legal matters. Was that, I just want to make sure I understand, is that for future litigation or is that to settle one of the matters or is it both? I don't know if you could break out if it's both.

So nothing to date. John has has changed officially, uh, but it's something that we're actively monitoring, uh, through the through the Bridget team. Um, but but nothing today has necessarily changed as far as the, the, the new ruling

Okay. And then lastly I just want to make sure you understand. So there's a 32 million approval for legal matters. Was that

I, I was

Fahmi Karam: Yeah, it covers a lot of the different cases that we disclose, John. And we'll have the 10-Q out this week, and it'll have more of the, you know, disclosure in detail amongst all the cases. The majority of it, as we said in the prepared remarks, does relate to the multi-state AG matter that we've been working on now for several years. You know, I take this as good news that we're making progress. You know, a lot of these things have been, a lot of these matters have been very long-standing matters and mostly relate to legacy practices, including the McBurney case that we did settle post the quarter. You know, that was something that brought up five years ago and relates to our Legacy Acceptance Now business.

Just want to make sure I understand is that for future litigation or is that to settle. Um, 1 of the matters or is it both or if you could break out if it's both

Yeah, it covers a lot of the different cases that we disclose, um, John. And we'll, we'll have the 10 Q out this week and we'll have more of the, the, you know, uh, disclosure and detail, but amongst all the cases. Um, the majority of it as we said, in the prepared, remarks does relate to, uh, the multi-state AG matter that we've been working on now, for, for, for several years. Um, you know, I I take this as as

Fahmi Karam: And so being able to settle that case, it was almost fully reserved for at the end of Q2 to now, you know, be able to move on, I think is a positive. And so we'll continue to update the accrual based on ongoing progress in the negotiations and hope to have these behind us soon.

Various Analysts: Okay. Thank you very much.

Fahmi Karam: Thanks, John.

To settle that case. Uh, it was almost uh, fully reserved for at the end of Q2 to now, you know, be able to to move on. I think it's a positive and so we'll continue to update the approval based on, uh, ongoing progress in the negotiations and and hope to have these behind us uh soon. Okay. Thank you very much.

Thanks John.

Fahmi Karam: Our next question comes from Bill Reeder at Bank of America.

Our next question comes from Bill reader at Bank of America.

Various Analysts: Good morning. I just have two. The first is the growth of Asima I find particularly impressive in light of general store closures across retail. I guess, is that something which is negatively impacting all the positive momentum? And are you having some of your partners that are closing their stores?

Good morning. Uh, I just have 2. The first is, um, the growth of the SEMA. I find particularly impressive in light of General Store closures across retail. Um, I guess is that something which is negatively, impacting, um, all the positive momentum and and are you having some of your partners that are closing their stores?

Fahmi Karam: You know, Bill, thanks for the question. You know, one of the big benefits of Asima's platform is the diversity in, as I mentioned, diversity both in product and in merchants. And you know, because we are a majority of our business comes from small, medium-sized businesses, you know, not one location closing or one merchant closing really has a meaningful impact to the business. So to answer your question directly, no, there hasn't really been anyone who's closed down that's been necessarily material to us. We're constantly adding hundreds of locations to the platform. So it hasn't necessarily been a headwind for us. You know, furniture, as we talked about, is a big category for Asima.

You know, Bill, thanks for the the question, you know, 1 of the big benefits of a seamless platform. Is the diversity in, uh, as I mentioned, diversity, both in product and in, in Merchants, um, and you know, because we are a majority of our business comes from small medium-sized businesses, you know, not 1 location, closing or or 1 Merchants closing really has a meaningful, uh, impact uh, to, to the, to the business. So, to answer your question directly know, there hasn't been really been anyone who's, who's who's closed down, um, that's been necessarily material to us. We're constantly

Fahmi Karam: And the team has done a great job of, you know, while that category has been under pressure, you know, from the pull forward of stimulus to diversify where the GMV comes from into different high growth categories. And I mentioned jewelry. Electronics has been really, really strong for us as we've gone through the marketplace and added bigger retailers there. So no, to answer your question directly, it hasn't necessarily been an impact for us.

Adding hundreds of of locations to, uh, to the platform. Um, so it hasn't necessarily been a headwind for us, you know, Furniture as we talked about is a big category for uh, a SEMA and the team has done a great job of, you know. Well that category has been under pressure. Um you know, from the pull forward of stimulus to diversify where the gmv comes from into different high growth. Um um categories. And I mentioned jewelry Electronics has been really, really strong for us as we've gone through the uh, the marketplace and and added bigger retailers there. Um, so no to answer your question directly, it hasn't necessarily been an impact for us.

Various Analysts: Great to hear. And then secondarily, you talked about getting towards two times leverage towards the end of next year, potentially. I guess I'm wondering whether, given all that's going on with the growth in Bridget and Asima, whether you would consider additional acquisitions at this point or you'd have so much going on internally, plus the leverage target that kind of those are going to be your focuses.

Great to hear. Um, and then secondarily, you talked about getting towards 2 times leverage towards the end of next year potentially. Um, I guess I'm wondering whether, given all that's going on with the growth in Bridges and Emma, you would consider additional acquisitions at this point, or if you have so much going on internally, plus the leverage target, that those are going to be your focuses.

Fahmi Karam: I think that's fair, Bill. You know, I think you never say never on M&A. You always keep the door open if it's something that expedites our strategic vision, adds another, you know, technology or solution for our consumers. But at the same time, as you said, and I think as we've highlighted, we have a lot of opportunity in front of us with what we have between the three major brands of Rent-A-Center, Asima, and Bridget. And we have a lot of room there to execute and hit our strategic plan with what we have in-house. So the focus right now is let's get Bridget further integrated. Let's get, you know, Rent-A-Center growing again. Let Asima continue to grow double digits and, you know, find different ways to service our customers through Asima.

I think that's fair bill, you know, I think the you know you never say never on m&a. You always keep the door open. If it's something that uh, expedites our strategic Vision, adds another, you know, technology or or or solution, um, for our consumers. Uh, but at the same time as you said, and I think as we've highlighted, uh, we have a lot of opportunity in front of

Fahmi Karam: And at the same time, pay down debt, get to our target leverage ratios, and then position the company for really supercharged growth in '26 and beyond.

With what we have between the, you know, 3 Major Brands the Rena and and Bridget. And we have a lot of room there, to to execute and, and, uh, hit our, our strategic, uh, plan with what we have in house. Um, so the focus right now is, is, let's get, uh, Bridget further integrated, let's get, um, you know, Rent A Center growing again, like a SEMA continue to grow double digits and and uh, you know, find different ways to Service. Uh, our customers through that, uh, through a SEMA and the same time, pay down, uh, pay down debt. Get to our Target, leverage ratios, and then position the company for, for really, uh, supercharged growth in 26 and Beyond

Operator: All good to hear. Thanks for taking the questions.

Fahmi Karam: Thanks, Bill.

Uh, good to hear. Thanks for taking the questions.

Thanks Bill.

Fahmi Karam: Our next question comes from Anthony Chacumba at Loop Capital Markets.

Operator: Good morning. Thanks for taking my question. Just had a couple of quick ones. First one, you know, you had the 50 basis point year-over-year increase in the lease charge-off rate in the Rent-A-Center business. I was just wondering if there was, if you could just provide any color in terms of what the drivers were for that.

Our next question comes from Anthony chukumba at loop capital markets.

Good morning. Thanks for taking my question. Um, just had a couple quick ones. Um, first 1, um, you know, you had a 50 basis point your, your increasing the least charge off rate in the Rena Center business. I was just wondering if there was, if you could just provide any color, uh, in terms of what the drivers were for that.

Fahmi Karam: Anthony, good morning. Thanks for the question. Yeah, look, I think, you know, it's 50 basis points year over year. Some of that is, you know, why we tightened late last year, why we removed some of those bones. Some of that has to go through the portfolio, and you're seeing that. You know, I'd characterize it as stable. It's only up 10 basis points from the first quarter. You know, and we've always said that 4.5% range in this environment, give or take 10, 20 basis points, is kind of fine for the Rent-A-Center business. So some of it is why we tightened in the fourth quarter and earlier this year. So some of that just has to work through the portfolio. But again, it's within a range that we're.We

Fahmi Karam: find acceptable, especially as you have pressure on on deliveries in in the top line.

Jeff Chesnut: Got it. No, that makes sense. And then just, you know, you talked to when you had, acquired Bridget, you talked about, at some point, I guess sort of migrating their decisioning engine to Rent-A-Center and Asima. I was just wondering if there's any update there. Thanks.

IO. But uh, again, it's in, it's within a range that we're we find acceptable, especially as you have pressure on on deliveries. And, and the Top Line

Got it. Now that makes sense. And then just um, you know, you talked to when you had uh, acquired Bridget, you talked about uh at some point um I guess sort of migrating, their decisioning engine to rent a center and a seam. I was just wondering if there's any update there. Thanks.

Fahmi Karam: No real updates. Definitely still something we're very focused on. Anthony, to be candid, it kind of comes down to prioritization of where we feel like we can get the best, bang for our buck, if you will, with our time and resources. Similar answer to what we said on the marketing side on the cross-collaboration. you know, between, you know, R&D, developing new products, and growing Bridget versus, you know, having some of the, the, data sharing, and cash flow underwriting. We are going to do some testing this year around that just through the the overlap of customers that we currently have. so we are starting on it. It is something that we think will be a big benefit for the combined, company. probably not something you'll see in 2025. Probably something that we'll we'll tackle in 2026.

Jeff Chesnut: Got it. good luck with the remainder of the year.

No real update. It's definitely still something we're very focused on. Um, Anthony to be candidates, kind of comes down to prioritization of where we feel like we can get the best, uh, bang for our buck. If you will, with our time and and resources, similar to our answer, to what we said on the marketing side, on the cross collaboration. Um, you know, between you know, R&D developing new products uh, and growing Bridget versus, you know, having some of the the uh data sharing uh and cash flow underwriting. We are going to do some testing this year around that just through the the overlap of customers that we currently have. So we are starting on it. It is something that we think will be a big benefit for the combined uh, uh, company. Uh, probably not something you'll see in 2025, probably something that we'll we'll tackle in 2026.

Fahmi Karam: Thanks, Anthony.

Got it. Um, good luck with the remainder of the year.

Thanks Anthony.

Operator: I'm showing no further questions at this time. I would now like to turn it back to Sammy for closing remarks.

I'm showing no further questions at this time, I would now like to turn it back to fammy for closing remarks.

Fahmi Karam: Thank you, operator, and thank you to everyone who joined us today for an update on our Q2 performance and our outlook for the balance of 2025. Before we conclude, I'd like to extend my sincere gratitude to all of my colleagues at Upbound. Thank you for your unwavering contributions and support of our mission, our values, and our customers. Have a great day, everyone.

Thank you, operator. And thank you to everyone who joined us today for an update on our Q2 performance and our outlook for the balance of, uh, 2025 before we conclude, I'd like to extend my sincere gratitude to all of my colleagues at upbound. Thank you for your unwavering contributions and support of our mission. Our values and our customers have a great day, everyone.

Operator: Thank you for participation in today's conference. This does conclude the program. You may now you. Good day, and thank you for standing by. Welcome to the Upbound Group's second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 11 on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today.

Thank you for participating. In today's conference, this does conclude the program. You may now disconnect

Mhm.

Please.

Good day and thank you for standing by. Welcome to the upbound group second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1, 1 on your telephone and you will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again, please be advised. That today's conference is being recorded.

I will now like to hand the conference over to your first Speaker today.

Fahmi Karam: Good morning, and thank you all for joining us to discuss Upbound Group's performance for the second quarter of 2025. We issued our earnings release this morning before the market open, and the release and all related materials, including a link to the live webcast, are available on our website at investor.upbound.com. On the call today, we have Fahmi Karam, our CEO. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that can 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 filings. Upbound Group undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. This call will also include references to non-GAAP financial measures.

Good morning, and thank you all for joining us to discuss Upbound Group's performance for the second quarter of 2025. We issued our earnings release this morning before the market opened, and the release and all related materials, including a link to the live webcast, are available on our website at investor.gov.

On the call. Today, we have Pammy qtum our CEO, 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.

Fahmi Karam: 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. Finally, Upbound Group is not responsible for and does not edit or 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 Fahmi.

These factors are described in our earnings release as well. As in the company's SEC, filings upbound group undertakes, no obligation to publicly update, or revise any forward-looking statements except as required by law. 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 finally upon group is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by Third parties, please refer to our website, for the only authorized webcasts,

Fahmi Karam: Thank you, Jeff, and good morning, everyone. Before we review the results of another strong quarter, I'd like to lead off by emphasizing our excitement as we continue to implement our growth strategies and the digital transformation of our company, which will fulfill our mission to elevate financial opportunity for all. As we always have, we will relentlessly work each day to turn our mission into a reality by capitalizing on our unique strengths, including our differentiated insights into a large and growing consumer segment, our industry-leading capabilities, and our team of dedicated, passionate coworkers across the enterprise. We're focused on helping financially underserved consumers with the financial solutions they rely on, building off our lease-to-own foundation while adding new products and services like earned wage access and credit building that strengthen our relationship with our customers and enhance the value we deliver to them.

With that, I'll turn the call over to fammy.

Thank you, Jeff and good morning, everyone.

Before we review the results of another strong quarter, I'd like to lead off by emphasizing our excitement as we continue to implement our growth strategies and a digital transformation of our company, which will fulfill our mission to elevate Financial opportunity for all.

As we always have, we will relentlessly work each day to turn our mission into reality.

by capitalizing on our unique strengths, including our differentiated insights into a large and growing consumer segment, our industry-leading capabilities and our team of dedicated passionate co-workers across the Enterprise

We're focused on helping financially underserved, consumers with the Financial Solutions. They rely on.

Building off our lease to own Foundation while adding new products and services like earned wage access and credit building, that strengthen our relationship with our customers and enhance the value, we deliver to them.

Fahmi Karam: Let's move to slide four and talk about how those goals translate to our business. Today, we serve our customers by leveraging a platform that generated approximately 4.5 billion in revenue and roughly 500 million in adjusted EBITDA over the last 12 months. Upbound's size and scale provide a stable base for growth and a durable competitive position supported by a vast number of consumer data points that we accumulate each day when serving our millions of customers. That's the common thread that connects each of our segments, and we're leveraging that data to deepen our understanding of our customers' needs and guide the evolution of our business.

Let's move to slide 4 and talk about how those goals translate to our business.

Today, we serve our customers by leveraging, a platform that generated approximately 4 and a half billion in revenue and roughly 500 million in adjusted. Eva dial over the last 12 months.

About size and scale provide a stable base for growth in a durable, competitive position supported by a vast number of consumer data points that we accumulate each day when serving our millions of customers.

Fahmi Karam: As we capture, catalog, and unify the data across the organization, we will draw out new insights that inform our strategy, shape our product roadmap, sharpen our marketing efforts, refine our underwriting decisioning, and ultimately best position the business for sustained growth and success across economic cycles. With that background, let's move to the key highlights from the second quarter of 2025, as well as a discussion of the progress we've made on our priorities for the year. Then I will share a more detailed review of our financial results and our outlook. Slide five shows some of the key drivers of our performance in Q2, which I'm pleased to report led to another strong quarter for the company. These results demonstrated our discipline in protecting our balance sheet with prudent risk management decisions while growing our digital assets at industry-leading levels and expanding margins.

That's the Common Thread that connects each of our segments and we're leveraging that data to deepen, our understanding of our customers needs and guide the evolution of our business.

As we capture catalog and unifying, the data across the organization, we will draw out new insights that inform our strategy shape, our product roadmap sharpen, our marketing efforts refine our underwriting, decisioning and ultimately best positioned our business for sustained growth and success across economic Cycles.

With that background. Let's move to the key highlights from the second quarter of 2025, as well. As a discussion of the progress we've made on our priorities for the year. Then I will share a more detailed review of our financial results and our Outlook

Slide 5 shows, some of the key drivers of our performance in Q2, which I'm pleased to report led to another strong quarter for the company.

Fahmi Karam: Asima's strong run of GMV performance continued this quarter with GMV up 16% year over year, representing its seventh consecutive quarter of GMV growth. Its convenient and flexible platform continues to outperform with both of its main stakeholders. Merchants know Asima is a trusted partner whose API-first integration, real-time underwriting, and embedded sales enablement lift conversion rates. Consumers appreciate Asima's easy process and strong customer service, which is why our rate of returning customer transactions continues to rise as they leverage the Asima marketplace for their future shopping needs. Compared to the second quarter of 2024, applications were up nearly 20%, and the approval rate was down more than 300 basis points. The growth in GMV and applications was distributed across Asima's broad set of retailer relationships and product categories. The top 10 merchants represented about 31% of total GMV, consistent with the prior quarter.

These results, demonstrated our discipline and protecting our balance sheet with prudent, risk management decisions. While growing, our digital assets at industry-leading, levels and expanding margins,

Representing its seventh consecutive quarter of gmv growth.

Its convenient and flexible platform continues to outperform with both of its main stakeholders.

Merchants know, Asthma as a trusted partner, whose API first integration real-time underwriting and embedded sales, enablement lift conversion rates.

Consumers, appreciate as soon as easy process and strong customer service, which is why our rate of returning customer transactions continues to rise as they Leverage, The Asthma Marketplace for their future shopping needs.

Compared to the second quarter of 2024 applications were up, nearly 20% and the approval rate was down more than 300 basis points.

The growth in GMV and applications was distributed across a seamless, broad set of retailer relationships and product categories.

Fahmi Karam: Segment revenue grew 12% and adjusted EBITDA grew 15% in part due to operational leverage as we continue to scale the business. Asima's lease charge-off rate improved 30 basis points from the year-ago quarter, which also contributed to the 40 basis point lift in EBITDA margin. Moving to our new fast-growing segment, Bridget. Bridget continues to thrive with nearly 40% revenue growth powered by another quarter of over 20% growth in subscribers versus the second quarter of 2024. The net advanced loss rate of 2.6% came in relatively flat sequentially from 2.5% from the first full quarter and 20 basis points higher from a year-ago period. Bridget's second quarter customer acquisition costs were in line with expectations as the team tested marketing investments across new channels with new messaging.

The top 10 Merchants represented about 31% of total gmv consistent with the prior quarter.

Segment, Revenue, grew 12% and adjusted Eva dog. Grew 15% in part due to operational leverage. As we continue to scale the business.

A seam of lease charge off rate improved 30 basis points from the year ago quarter, which also contributed to the 40 basis point lift, in IBA margin

Moving to our new fast growing segment Bridges.

Bridget continues to thrive with nearly 40% revenue growth, powered by another quarter of over 20% growth in subscribers versus Q2 2024.

The net advanced loss rate of 2.6% came in relatively flat sequentially from 2.5% from the first full quarter and 20 basis points higher than the year-ago period.

Fahmi Karam: Bridget's adjusted EBITDA margin was nearly 28%, above our expectations due to the timing of marketing spend and other cost efficiencies in the quarter. Our customer acquisition efforts will significantly expand across the balance of the year as we look to further increase subscribers heading into the holiday season. As we make our planned investments in our marketing and customer acquisition efforts in the second half, we expect EBITDA margins will decrease to the low teens range. Overall, we are extremely pleased with Bridget's performance from a top-line growth perspective, as well as its ability to generate meaningful EBITDA margins and free cash flow. Integration is on track with cross-selling efforts improving and gaining traction every day while we begin integration plans on data sharing and utilizing cash flow underwriting in our lease-to-own segments.

Rigid second quarter customer acquisition costs were in line with expectations as the team tested marketing Investments are cross. New channels, with new messaging,

Bridges. Adjusted ebiz on margin was nearly 28% above our expectations, due to the timing of marketing, spend, and other cost efficiencies in the quarter.

Our customer acquisition efforts will significantly expand across the balance of the year, as we look to further increase subscribers heading into the holiday season as we make our planned investments in our marketing and customer acquisition efforts in the second half. We expect, evidam margins will decrease to the low teens range.

Overall, we are extremely pleased with Bridges performance from a Topline growth perspective, as well as its ability to generate meaningful. Eva margins and free cash flow.

Integration is on track with cross-selling, efforts improving and gaining traction every day. While we begin integration plans on data sharing and utilizing cash flow underwriting in our lease to own segments.

Fahmi Karam: At Rent-A-Center, SameSource sales declined by 4% in the quarter, consistent with our expectations as a result of tactical decisions we made in the fourth quarter that we discussed on our last call. The intentional adjustments to our product lineup, combined with the impact of our underwriting tightening efforts, limited top-line growth in the second quarter. Rent-A-Center's lease charge-off rate of 4.7% was 10 basis points higher sequentially, partly as a result of the denominator effect from lower quarterly revenues. These impacts collectively produced a 1.7 percentage point decline in adjusted EBITDA margin compared to last year. One of the operational metrics we do monitor is the number of deliveries, which ultimately underpins the overall lease portfolio value.

At Rena Center. Same Source sales declined by 4% in the quarter consistent with our expectations as a result of tactical decisions we made in the fourth quarter that we discussed on our last call.

The intentional adjustments to our product lineup. Combined with the impact of our underwriting. Tightening efforts limited Topline growth in the second quarter.

Rena's least charge off rate of 4.7% was 10 basis points higher sequentially partly as a result of the denominator effect from lower quarterly revenues

These impacts collectively reduced a 1.7 percentage Point decline in adjusted evaa margin compared to last year.

Fahmi Karam: I'm pleased to share that our delivery trends have stabilized across the quarter compared to the prior year, providing a level of foundation that we will build upon moving into the second half of the year. As we roll out new initiatives to spur customer engagement at Rent-A-Center with a focus on our digital and online capabilities, we will continue to prudently manage our risk profile to deliver responsible and sustainable results. Even with the operational and underwriting changes, the Rent-A-Center segment remains a cash generator, funding our reinvestment in our businesses and deleveraging. With year-to-date free cash flow conversion up year over year compared to the first half of 2024 and in line with last year on a dollar basis due to improved account and expense management. Let's move to slide six and recap our consolidated financial results in Q2.

1 of the operational. Metrics we do monitor is the number of deliveries, which ultimately underpins the overall lease portfolio value.

I'm pleased to share that our delivery trends have stabilized across the quarter. Compared to the prior year, this provides a level of foundation that we will build upon as we move into the second half of the year.

As we roll out, new initiatives to Spur customer engagement at Rena center with a focus on our digital and online capabilities. We will continue to prudently manage our risk profile to the delivery responsible and sustainable results.

Even with the operational and underwriting changes, the Rena Center segment, remains a Cash Generator funding our reinvestment, in our businesses and deleveraging.

With year-to-date free cash, flow conversion up year-over-year, compared to the first half of 2024 and in line, with last year, on a dollar basis, due to improved account and expense management.

Let's move to slide 6 and recap. Our Consolidated Financial results in Q2

Fahmi Karam: Second quarter revenue of 1.16 billion was a 7.5% increase from the year-ago period, mainly driven by strength at Asima, plus the addition of Bridget. Upbound delivered 133 million of adjusted EBITDA, which was a lift of 7% against Q2 2024, an adjusted EBITDA margin of 11.5%, which was roughly flat in the prior year quarter, but up 80 basis points sequentially. Non-GAAP diluted EPS was $1.12, which is 7.7% higher than a year-ago quarter. Our non-GAAP EPS included a 2.5% benefit related to stock-based comp and the associated tax impact tied to our recent CEO transition and certain open executive roles that we are actively working to fill in the near term, which will normalize stock-based compensation in future periods. The second quarter results exceeded the midpoint or high end across every guided metric.

Second quarter, revenue of 1.16 billion, was a 7 and a half percent increase from the year ago, period, mainly driven by strength at a SEMA. Plus, the addition of bridges

Upbound delivered 133 million of adjusted Eva doll which was a list of 7% against Q2 2024 and adjusted Ava on margin of 11 and a half percent which was roughly flat to the prior year quarter but up 80 basis points sequentially.

Non-gaap diluted EPS was $1.12, Which is 7.7% higher than a year ago quarter.

And a half cent benefit related to stock-based comp and the Associated Tax impact tied to our recent CEO transition. And certain open executive roles that we are actively working to fill in the near term, which will normalize stock-based compensation in future periods.

Fahmi Karam: Upbound also recorded a net usage of free cash flow of 10 million in the second quarter as we continue to support the growth initiatives at Asima and Bridget. Year-to-date free cash flow is 117 million, representing an improvement of more than three times the prior year. In terms of lease charge-offs, our disciplined underwriting has enabled the company to serve additional customers profitably while achieving lease charge-offs within our target range. On a consolidated basis, Upbound grew year-over-year second quarter revenue, adjusted EBITDA, and non-GAAP diluted EPS by at least 7% each, while delivering a lease charge-off rate that appropriately balances our risk and return objectives. Our growth businesses in Asima and Bridget continue to outperform our expectations. Asima is growing mid-teens and expanding margins. Bridget is growing its top line, nearly 40% this quarter, while introducing new products to our customers and testing new marketing channels.

The second quarter results, exceeded the midpoint, or high-end across every guided ventricle.

A bound also recorded a Net usage of free, cash flow of 10 million in the second quarter as we continue to support the growth initiatives at a SEMA and Bridgette.

Year to date, free cash flow is 117 million. Representing an improvement of more than 3 times the prior year.

In terms of lease charge offs are disciplined underwriting, has enabled the company to serve additional customers profitably while achieving lease charge offs within our target range.

On a consolidated basis, year-over-year for the second quarter, revenue, adjusted IBA, and non-GAAP diluted EPS increased by at least 7% each.

While delivering elite charged-off rates that appropriately balance our risk and return objectives.

Fahmi Karam: We're really proud of these results and our ability to operate successfully despite a difficult market backdrop. Our cash flow engine, Rent-A-Center, is under top-line pressure due in large part to our underwriting tightening as our core consumer continues to be under pressure, fighting against the accumulation of higher prices for the past couple of years. These actions reduce deliveries, but we were still able to produce mid-teens EBITDA margins and generate significant free cash flow. Across the quarter, we did not see a direct impact to our business from the recent federal economic policy changes, but we're ready for that change if and when it starts to ripple through the economy. For our consumers, we expect there to be some puts and takes.

Our growth businesses in a SEMA and Bridgette continue to outperform our expectations as Sima is growing mid-, teens and expanding margins. Bridgette is growing, its top top line, nearly 40% this quarter, while introducing new products to our customers and testing new marketing channels.

We're really proud of these results, and our ability to operate successfully, despite a difficult Market backdrop.

Our cash flow engine Rena. Center is under Topline pressure due in large part to our underwriting tightening as our core consumer continues to be under pressure fighting against the accumulation of higher prices for the past couple of years.

These actions reduce deliveries but we were still able to produce mid-teens evaa margins and generate significant free, cash flow.

Across the quarter, we did not see a direct impact to our business from the recent Federal economic policy changes. But we're ready for that change if and when it starts to Ripple through the economy

Fahmi Karam: Considerations like higher prices and enhanced requirements for certain governmental assistance programs like SNAP and Medicaid, in addition to the resumption of student loan payments, may have a more pronounced impact on lower-income consumers. But unemployment and gas prices remain low, and recent legislation may put more money in our consumers' pockets through new tax policies covering tips and overtime. Overall, our core consumers remain resilient and have grown accustomed to a volatile market over the past couple of years. They are constantly evaluating spending priorities and recalibrating their spending behavior. We see it every day, and they're still spending, but being cautious on bigger ticket items, managing bills to align with their cash flows, looking for discounted deals, and focusing on making their dollar deliver more value than ever before.

For our consumers. We expect there to be some puts and takes considerations like higher prices and enhanced requirements for certain governmental assistance programs like Snap and Medicaid. In addition to the resumption of student loan payments, may have a more pronounced impact on lower-income consumers.

But unemployment and gas prices, remain low. And recent legislation may put more money in our consumers. Pockets through new tax policies, covering tips and overtime.

Overall our core consumers remain resilient and have grown accustomed to a volatile Market over the past couple of years.

They are constantly evaluating spending priorities and recalibrating their spending Behavior. We see it every day and they're still spending but being cautious on bigger, ticket items managing bills to align with their cash flows. Looking for discounted deals and focusing on making their dollar deliver more value than ever before.

Fahmi Karam: We are being equally as vigilant, and we continue to refine our decisioning across the enterprise based on early performance indicators. We're confident that our model and our consumer solutions will help us succeed no matter the economic backdrop. We're ready to help our customers navigate the shifting consumer landscape with our new liquidity solutions and our flexible lease-to-own solutions that provide customers with access to products they want and need through low payment structures with no long-term financial commitment. We are ready to welcome new customers as we grow our reach, and we will continue to support our current customers as their needs evolve. On slide seven, I will share an update on the strategic priorities for 2025 that we outlined at the beginning of the year.

We are being equally as Vigilant. And we continue to refine our decisioning across the Enterprise based on early performance indicators.

We're confident that our model and our consumer Solutions will help us succeed. No matter the economic backdrop.

We're ready to help our customers navigate, the shifting consumer landscape with our new liquidity Solutions. And our flexible leads to own solutions that provide customers with access to products, they want and need through low payment structures with no long-term Financial commitment.

We are ready to welcome new customers as we grow our reach, and we will continue to support our current customers as their needs evolve.

On slide 7, I will share an update on the strategic priorities for 2025 that we outlined at the beginning of the year.

Fahmi Karam: At Asima, our ongoing digital investments passed a major milestone in the second quarter with the debut of Asima's new website, which features an updated look and feel with more streamlined navigation to make the customer experience more enjoyable and efficient. During the development phase, we also migrated the site to a new e-com platform, offering more scalability and flexibility for future enhancements. And that scalability is especially important as we began to pilot Asima's in-store virtual lease card in the quarter, which really opens up a universe of opportunities for consumers and retailers. Now a consumer with the Asima app can walk into any retailer selling durable goods and choose an item, and the leasability engine in the app will confirm whether it's a lease-eligible item or not in real time in the card.

At a SEMA, our ongoing digital Investments, passed a major milestone in the second quarter with the debut of a seamless new website, which features an updated look, and feel with more streamlined, navigation, to make the customer experience, more enjoyable and efficient.

During the development phase, we also migrated the site to a new Ecom platform, offering more scalability and flexibility for future enhancements. And that scalability is especially important. As we began to Pilot a sema's in-store virtual lease card in the quarter, which really opens up a universe of opportunities for consumers and retailers.

Now, a consumer with the asthma app can walk into any retailer selling durable goods and choose an item.

Fahmi Karam: The shopper can then tap to pay with Asima's virtual lease card while bypassing the usual waterfall of credit options, making leasing universally accessible on a foundation of safety, speed, and privacy. We believe initiatives like these will create more scale and efficiency, driving margin improvements in future quarters. In addition, these investments will keep existing customers and merchants engaged and returning, as we will be able to send more and more customers back to our merchants, reinforcing Asima's value to our retailers. Merchant growth is also part of Asima's growth strategy, and I'm pleased to share that in the quarter, we were able to extend one of our largest accounts to a new five-year agreement with a deeper mutual commitment that now gives Asima LTO exclusivity in all states that allow lease to own.

in the lease ability engine in the app will confirm, whether it's lease whether it's a lease eligible item or not in real time in the cards,

The Shopper can tap to pay with a seamless virtual lease card while bypassing the usual waterfall of credit options.

Making leasing universally accessible on a foundation of safety speed and privacy.

We Believe initiatives like these will create more scale inefficiency driving margin improvements in future quarters.

Existing customers and Merchants engaged and returning. As we will be able to send more and more customers back to our Merchants reinforcing. A seamless value to our retailers.

Fahmi Karam: Our technology and commitment to innovation have positioned Asima to continue increasing its market share and showcasing Asima's growing capabilities while serving as a marquee to attract new merchants of all sizes. Let's shift to Bridget, where our focus on innovation continues to power subscriber growth. To accelerate our momentum, Bridget is expanding its marketing efforts into additional customer acquisition channels using a test-and-learn approach. We expect to amplify our marketing efforts across the balance of the year as the cash-advanced product is expected to be more relevant than ever for our core consumers, especially if the macro environment worsens. Bridget is also innovating on the product side and is currently piloting a line of credit offering with a loan size ranging of up to $500, which is twice the current $250 top end of the instant cash product.

Merchant growth is also part of a seamless growth strategy and I'm pleased to share that in the quarter. We were able to extend 1 of our largest accounts to a new 5 year agreement, with a deeper Mutual commitment that now gives us SEMA lto, exclusivity in all states that allow lease to own.

Our technology and commitment to Innovation have positioned to Seema to continue increasing its market share and showcasing a seamless growing capabilities. While serving it as a marquee to attract new merchants of all sizes.

Let's shift to Bridges, where our focus on innovation continues to power subscriber growth.

To accelerate our momentum, Bridges expanding, its marketing, efforts, into additional customer acquisition channels, using a test and learn approach.

We expect to amplify our marketing efforts across the balance of the year. As the cash advance product is expected to be more relevant than ever for our core consumers. Especially if the macro environment worsens,

Fahmi Karam: It's an efficient alternative for consumers carrying a variety of debt, including BNPL loans, since this is a single product with a payment plan option up to nine months. As we continue to cross-sell Bridget's solutions to our Asima and Rent-A-Center customers, we're excited to feature another product that addresses our consumers' needs for liquidity and financial flexibility. Across the balance of the year, Bridget's priorities will continue to focus on growing the subscriber base by leveraging new acquisition channels and new products while increasing retention and managing losses. We believe the investments we're making this year in innovation and cross-company collaboration will accelerate Bridget's near and long-term growth curve. At Rent-A-Center, we are targeting our investments towards near-term sales enablement efforts to better leverage our existing scale and return to growth.

Bridges on the product side and is currently piloting. A a line of credit offering with a loan size rating of up to $500, which is twice. The current $50 top end of the Instant Cash product.

It's an efficient alternative for consumers, carrying a variety of debt, including bnpl loans.

Since this is a single product with a payment plan option up to 9 months,

as we continue to cross-sell, Bridget solutions to our Seema and Rena Center customers. We're excited to feature another product. That addresses our consumers needs for liquidity and financial flexibility.

Across the balance of the Year. Bridges priorities will continue to focus on growing, the subscriber Base by leveraging. New acquisition channels and new products while increasing retention and management losses.

We believe the Investments were making this year, an innovation and cross company collaboration will accelerate Bridget's near and long-term growth curve.

Fahmi Karam: As an example, to offset underwriting tightening on the web, we've recently introduced preliminary approvals whereby select shoppers are invited to finish their application in-store, which helps us lift approvals and create store-based relationships while managing our risk profile. In addition, we're piloting Agentic AI to deliver real-time sales coaching and context-aware suggestions aimed at higher conversion and improved store productivity. The tool keys on contextual markers like shoppers' browsing history to deliver a more personalized interaction, and it leverages those outcomes to improve future suggestions, which we believe will drive higher lease volume. I'm also pleased to share that last month marked the national launch of Rent-A-Center's Refer-A-Friend program, which enables our customers who already appreciate the value and flexibility we deliver to become trusted ambassadors who can introduce new consumers to our brand. In return, they'll earn rewards that can be redeemed towards future rental payments.

At Rena Center. We are targeting our investments towards near-term sales. Enablement efforts to better leverage our existing scale and return to growth.

As an example to offset underwriting tightening on the web. We've recently introduced preliminary approvals whereby, select Shoppers are invited to finish their application in store which helps us. Lift approvals and create store-based relationships while managing our risk profile.

In addition, we're piloting. Agentic AI to deliver real-time sales coaching and context aware of suggestions aimed at higher conversion and improved store productivity.

The tool keys on contextual markers, like shoppers' browsing history, to deliver a more personalized interaction. It leverages those outcomes to improve future suggestions, which we believe will drive higher lease volume.

I'm also pleased to share that last month marked a national launch of Rena, Cent's referral friend program, which enables our customers, who are already, appreciate the value and flexibility. We deliver to become trusted ambassadors. Who can introduce new consumers to our brand.

Fahmi Karam: We look forward to seeing these initiatives make a meaningful contribution to Rent-A-Center's growth over the coming quarters. Collectively, these investments across all of our brands will support our strategic imperative to serve our customers whenever and however they prefer, and that preference continues to migrate to online channels. Today, over 50% of our revenue is through our virtual platforms, and we look forward to driving that even higher in the coming quarters. Let's now turn to the segment results and then discuss our outlook for the balance of 2025, after which I will take questions. Asima delivered 16% year-over-year GMV growth in the second quarter, another strong result since last year's second quarter GMV grew at 21%. Together, that's 37% GMV growth on a stacked two-year basis.

In return. They'll earn rewards that can be redeemed towards future, rental payments.

We look forward to seeing these initiatives. Make a meaningful contribution to Renaissance growth. Over the coming quarters.

Collectively, these investments are cross. All of our brands will support our strategic imperative to serve our customers whenever and however they prefer, and that preference continues to migrate to online channels.

Today over 50% of our revenues through our virtual platforms and we look forward to driving that even higher in the coming quarters.

Let's now turn to the segment results and then discuss our outlook for the balance of 2025, after which, I will take questions,

A SEMA delivered, 16% year-over-year, gmv growth in the second quarter. Another strong result since last year's second quarter gmv grew at 21%.

Fahmi Karam: This quarter's GMV balance equaled Asima's stimulus-fueled high watermark in Q2 of 2021, but this result wasn't driven by an unprecedented macro backdrop. It was powered by Asima's methodical and multi-year effort to enroll new merchants while boosting productivity at existing retailers. Those efforts paid off with a record number of lease applications, which was nearly 20% higher than the year-ago period. And as more consumers discover Asima's convenience, service, and flexibility, we're seeing more returning customers visit Asima's marketplace where they can start their shopping journey with a diverse lineup of leading national retailers. The Q2 GMV from Asima's marketplace was up over 130% year-over-year, and it was up more than 30% sequentially. Additionally, Asima's mix of returning customers increased from a year ago and now exceeds 40% of GMV.

Together. That's 37% gmv growth on a stacked 2-year basis.

This quarter's gmv balance equal to seamless, stimulus, fueled, high, water margin Q2 of 2021 but this result wasn't driven by an unprecedented macro backdrop. It was powered by a semis methodical and multi-year effort to enroll new Merchants while boosting productivity at existing retailers.

Those efforts paid off with a record number of lease applications which was nearly 20% higher than the year ago period.

And as more consumers discover a seamless convenience service and flexibility, we're seeing more returning customers visit a Sema's marketplace where they can start their shopping journey with a diverse lineup of leading national retailers.

The Q2 GMV from a seamless marketplace was up over 130% year-over-year. It was up more than 30% sequentially.

Fahmi Karam: As we continue to grow our customer base, Asima remains well-diversified from a merchant standpoint, with just over 31% of the GMV this quarter coming from the top 10 retailers. Our largest product category, furniture, represented less than 40% of GMV in the second quarter, slightly less than last year. As that category continues to remain under pressure, the Asima team has done an amazing job diversifying our GMV into higher growth segments like wheel and tire, jewelry, and direct-to-consumer. When the cycle turns and demand for furniture, including mattresses, normalizes, Asima will be well-positioned to continue its trend of double-digit GMV growth. Asima revenues grew 12% year-over-year, which was the sixth consecutive quarter of double-digit growth, and adjusted EBITDA was up 15% from a year ago. Adjusted EBITDA margins were up 40 basis points from Q2 of 2024, driven by two primary factors.

Additionally, a seamless mix of returning customers increased from a year ago and now exceeds 40% of GMV.

As we continue to grow our customer base. As Sima remains well, Diversified from a merchant standpoint with just over 31% of the gmv, this quarter coming from the top 10 retailers.

Our largest product category, Furniture, represented less than 40% of GMV in the second quarter, slightly less than last year.

As that category continues to remain Under Pressure, the estimate is done, an amazing job diversifying. Our gmv into higher growth segments like Wheel and Tire jewelry and direct to consumer.

When the cycle turns and demand for furniture, including mattresses, normalizes, Seema will be well positioned to continue its trend of double-digit GMV growth.

SEMA revenues grew 12% year-over-year, marking the sixth consecutive quarter of double-digit growth. Adjusted Evida was up 15% from a year ago.

Fahmi Karam: First is that Asima's sustained GMV growth is leveraging the platform's economies of scale to realize margin enhancement. That's supported by a 100 basis point improvement in the OpEx efficiency ratio in the segment. Second is Asima's lease charge-off rate of 9.3%, a 30 basis point improvement year-over-year, as the growth in applications has enabled Asima to drive GMV while maintaining a disciplined underwriting posture. Let's move to slide nine and recap Bridget's performance in the second quarter. The Bridget team finished with more than 1.3 million paid subscribers at quarter end, which was a 24% increase from a year-ago period and a 7.3% increase sequentially. ARPU, or average revenue per user, was $13.45 on a monthly basis, a 12.5% increase from the second quarter of 2024 and a 4% lift sequentially. ARPU expansion reflects deeper marketplace engagement, expedited transfer revenue, and a mixed shift to the premium subscription tier.

Adjusted Ava on margins were up, 40 basis points from Q2 of 2024 driven by 2 primary factors.

First is that a SEMA sustained? Gmv growth is leveraging. The platform's economies of scale to realize margin enhancement.

That's supported by 100 basis. Point Improvement in the Opex, efficiency ratio in the segment.

Second, there is a seamless lease charge-off rate of 9.3%, reflecting a 30 basis point improvement year-over-year. The growth in applications has enabled Seamless to drive GMV while maintaining a disciplined underwriting posture.

Let's move to slide 9 and recap Bridges. Performance in the second quarter.

The Bridget team finished with more than 1.3 million paid subscribers at quarter end which was a 24% increase from a year ago period and a 7.3% increase sequentially.

Our poo, or average revenue per user was $13.45 on a monthly basis at 12. And a half percent increase from the second quarter of 2024 and a 4% lift sequentially.

Fahmi Karam: Bridget originated over 350 million in advances this quarter, up 21% year-over-year and a record high in both number of advances and total dollars advanced. This performance underscores the strong product-to-market fit we have achieved and emphasizes the relevance of Bridget's offering for today's financially constrained consumers. For the second quarter, Bridget's cash advanced loss rate was 2.6%, defined as cash advanced losses divided by total originations in the period. In terms of financial metrics, Bridget recorded 52 million of revenue and 14 million of adjusted EBITDA for the second quarter, with the top-line results representing an increase of nearly 40% against Bridget's performance from the corresponding period a year ago. Subscriptions made up 70% of the second quarter revenue, with EBITDA transfer fees and marketplace income representing the balance.

Our food expansion reflects deeper marketplace engagement, expedited transfer revenue, and a mixed shift to the premium subscription tier.

Bridget originated over 350 million in advances this quarter of 21%, year-over-year and a record high in both number of advances and total dollars advanced.

This performance, underscores the strong product to Market fit, we have achieved and emphasized. The relevance of Bridget's offering for today's financial aid, constrained consumers

For the second quarter. Bridget cash advanced loss rate was 2.6% defined as cash advance. Losses divided by total originations in the period.

In terms of financial metrics, Bridget recorded 52 million of Revenue. And 14 million of adjusted debe. Do for the second quarter with a Topline results, representing an increase of nearly 40% against Bridges performance from the corresponding period, a year ago.

Fahmi Karam: Adjusted EBITDA margin of 28% was driven by the timing of marketing investments originally planned for Q2 that will now be deployed in the second half of the year. As I mentioned earlier, we are pleased with Bridget's performance. On a standalone basis, it's our fastest growing and highest margin business, with future cross-selling opportunities that will supercharge growth in the future. Let's move to the Rent-A-Center results, starting on slide 10. As a reminder, last quarter we combined the Rent-A-Center and franchising segments into a single reporting unit. In the second quarter, the Rent-A-Center segment recorded 467 million of revenue, down 7.1% from the year-ago quarter, in part due to the sale and consolidation of 110 stores in 2024. This outcome was consistent with the mid-single-digit step back we highlighted on our last call.

Subscription is made up 70% of the second quarter Revenue with ibaa, transfer fees and Marketplace income representing the balance.

Adjusted IBA margin of 28%, was driven by the timing of marketing Investments originally planned for Q2, that will now be deployed in the second half of the year.

As I mentioned earlier, we are pleased with Bridges' performance on a standalone basis. It's our fastest-growing and highest-margin business, with future cross-selling opportunities that will supercharge growth in the future.

Let's move to the Rena Center results, starting on slide 10.

As a reminder, last quarter we combined the Rena Center and franchising segments into a single reporting unit.

In the second quarter, the Renaissance Center segment recorded $467 million in revenue, down 7.1% from the year-ago quarter, in part due to the sale and consolidation of 110 stores in 2024.

This outcome was consistent with the mid single digit. Step back, we highlighted on our last call.

Fahmi Karam: SameSource sales were down 4% year-over-year, reflecting fewer deliveries in the second quarter relative to the prior year period. This resulted in part from our decision in late 2024 to tighten underwriting and exit certain merchandise categories, coupled with softer demand year-over-year for furniture, which is Rent-A-Center's largest category. Collectively, furniture and appliances represented approximately 67% of the mix, which is consistent with a year-ago and sequential periods. Rent-A-Center's adjusted EBITDA was 68 million, down 17% in the second quarter of 2024, due primarily to less rental income off a smaller lease portfolio value. Rent-A-Center is a business where scale matters, and we're focused on turning around the trends in the lease portfolio value while maintaining our disciplined approach to risk management. As I mentioned earlier, I am pleased that Rent-A-Center deliveries, which are an early indicator of future lease portfolio value, have stabilized over the past couple of months.

Same Source, sales were down 4% year-over-year reflecting fewer deliveries. In the second quarter relative to the prior year period.

This resulted in part from our decision in late 2024 to tighten underwriting and exit certain merchandise categories, coupled with softer demand year-over-year for furniture, which is Rent-A-Center's largest category.

Collectively, furniture and appliances represented approximately 67% of the mix, which is consistent with a year ago and sequential periods.

VA centers adjusted Eva. Dog was 68 million down 17% in the second quarter of 2024, due primarily to less rental income off, a smaller lease, portfolio value.

Rent A Center is a business where scale matters and we're focused on turning around the trends in the lease portfolio value. While maintaining our disciplined approach to risk management.

Fahmi Karam: As we worked to better balance the portfolio size, the loss rate for the second quarter finished at 4.7%, which was up 50 basis points from the year-ago period and 10 basis points sequentially. Rent-A-Center's adjusted EBITDA margin was 14.6%, which was down 10 basis points sequentially and 1.7 percentage points from the year-ago period. As we manage through a difficult operating environment, we believe our investments in our digital capabilities will drive portfolio growth in a responsible way and will help drive sustainable margin improvements over the near and medium term. Let's cover our liquidity and capital allocation policies on slide 11. We finished the second quarter with 276 million in liquidity between cash on hand and our revolver availability. Our net leverage ratio was approximately three times on June 30th, generally consistent with the end of the first quarter.

Which are an early indicator of future. Lease portfolio value have stabilized over the past couple months.

As we worked to better balance the portfolio size, the loss rate for the second quarter finished at 4.7%, which was up 50 basis points from the year-ago period and 10 basis points sequentially.

Rena centers, adjusted ibaon margin was 14.6% which was down 10 basis, points sequentially and 1.7 percentage points from the year ago. Period.

As we managed through a difficult operating environment, we believe our investments in our digital capabilities will drive portfolio growth in a responsible way and will help Drive sustainable margin improvements over the near and medium term.

Let's cover our liquidity and capital allocation policies on slide 11.

We finished the second quarter with 276 million in liquidity between cash on hand and our revolver, availability.

Fahmi Karam: Our business has generated approximately 117 million of free cash flow year to date, up substantially from 34 million in the prior year. That cash flow supports our capital allocation priorities, which remain unchanged from our guidance across prior quarters. First, we will continue to invest across our business by elevating our current capabilities and developing new digital-first products to better serve our customers and merchants while advancing our competitive position. We're also focused on strengthening our balance sheet with an ongoing focus on deleveraging as we continue to work towards our target leverage ratio of two times. Finally, although we are going to be very intentional to drive further growth in all of our brands, we also remain committed to supporting our regular dividend, which is $1.56 per share annually, for a yield of about 6% at current prices.

Our net leverage ratio was approximately 3 times on June 30th, generally consistent with the end of the first quarter.

Our business has generated approximately 117 million of free cash flow year to date of substantially from 34 million in the prior year.

That cash flow supports our Capital, allocation priorities, which remain unchanged from our guidance across prior quarters.

First, we will continue to investing across our business by elevating our current capabilities, and developing new digital first products to better serve our customers and Merchants while advancing our competitive position.

We're also focused on strengthening our balance sheet with an ongoing focus on deleveraging, as we continue to work toward our Target, leverage ratio of 2 times.

Finally, although we are going to be very intentional to drive further growth in all of our Brands, we also remain committed to supporting our regular dividend, which is a 1.56 per share annually for a yield of about 6% at current prices.

Fahmi Karam: We are confident that our disciplined capital allocation strategy will fund responsible and profitable growth while we create long-term shareholder value. Let's shift to our financial outlook, beginning with an update on tariffs and consumer behavior. While the timing and levels of the potential tariffs are uncertain, we can say two things with confidence. One is that the Rent-A-Center business has seen no tariff-driven merchandise price increases as of today, though some suppliers have signaled that pricing actions may follow depending on the final outcome of trade policy negotiations. The other is that both of our lease-to-own businesses are poised to protect their margins using the operational levers we discussed last quarter. With modest adjustments to the weekly payment rate or the overall term of the lease, Rent-A-Center and Asima can respond to cost increases at a level that protects both our volumes and maintains consumers' low weekly payments.

We are confident that our disciplined Capital, allocation strategy will fund responsible and profitable growth while we create long-term shareholder values.

Let's shift to our financial Outlook beginning with an update on tariffs and consumer Behavior.

While the timing and levels of the potential tariffs are uncertain. We can say 2 things with confidence.

1. Is that the Rena Center business has seen, no, tariff-driven merchandise price increases as of today.

Though some suppliers have signaled that pricing actions may follow depending on the final outcome of trade policy negotiations.

The other is that both of our leads to own businesses are poised to protect their margins using the operational. Levers, we discussed last quarter,

Fahmi Karam: To date, we have not seen any change in consumer behavior that we can pinpoint as being tariff-related, but we monitor our KPIs daily so that we can respond in real time. Additionally, it is possible that macro forces could result in higher prices for a period of time. If this dynamic puts pressure on consumer liquidity, it could make the value prop of our lease-to-own offerings more relevant to more people, creating another wave of trade down. Similarly, Bridget's instant cash and financial wellness offerings may see incremental demand against that backdrop. We are prepared to welcome new customers and merchants while supporting our current relationships with our expanding lineup of financial solutions. As we consider our guidance, we are aware that the impact of near-term tariff and trade developments are difficult to predict.

With modest adjustments to the weekly payment rate, or the overall term of the lease, Rent-A-Center and a SEMA can respond to cost increases at a level that protects both our volumes and maintains consumers' low weekly payments.

To date. We have not seen any change in consumer behavior that we can pinpoint as being tariff related. But we monitor our kpis daily so that we can respond in real time.

Additionally, it is possible that macro forces could result in higher prices for a period of time.

If this Dynamic puts pressure on consumer liquidity, it could make the value prop of our lease to own offerings. More relevant to more people creating another wave of trade Downs.

Similarly Bridget's instant cash and financial Wellness offerings may see incremental demand against that backdrop.

We are prepared to welcome new customers and Merchants. While supporting our current relationships with our expanding lineup of Financial Solutions,

Fahmi Karam: However, we know that our business is durable and resilient, with growth opportunities available across all economic cycles. With our strong start to the year and with the continued momentum in Asima and the Bridget segments, we are tightening the range of adjusted EBITDA to 515 million to 535 million and raising the midpoint of our full-year non-GAAP diluted earnings per share guidance by tightening the range to $4.05 to $4.40 per share. In terms of the third quarter, we expect revenues ranging from 1.05 billion to 1.15 billion, adjusted EBITDA of 120 million to 130 million, and non-GAAP EPS of $0.95 to $1.05. Rent-A-Center's revenue should follow the same seasonal sequential path as 2024, with a mid-single-digit step back in Q3 compared to Q2, with EBITDA margins down slightly sequentially despite an improvement in loss rates.

As we consider our guidance, we are aware that the impact of near-term tariffs and trade developments is difficult to predict.

However, we know that our business is durable and resilient with growth opportunities available across all economic Cycles.

With our strong, start to the year. And with the continued momentum in a SEMA and the Bridget segments, we are tightening the range of adjusted Eva to 515 million to 535 million in raising the Bitcoin of our full year, non-gaap diluted earnings per share guidance by tightening the range to $4.55 to $4.40 per share

in terms of the third quarter, we expect revenues ranging from 1.05 billion to 1.15 billion adjusted Eva of 120 million to 130 million

And non-gaap, EPS of 95 cents to $15.

Rent Cent's Revenue should follow the same seasonal sequential path as 2024 with a mid single digit step back in Q3 compared to Q2.

With Eva Daw margins down slightly sequentially despite despite an improvement in loss rates.

Fahmi Karam: We expect Asima to deliver low double-digit GMV and revenue growth, with EBITDA margins slightly better than a year-ago period, and lease charge-offs are expected to remain stable year over year. Bridget's Q3 revenue should be slightly up sequentially, with expected low-teens EBITDA margins and a net advanced loss rate in the 3% area as new models are refined, new campaigns are run, and new products are tested. For corporate costs, we expect the impact to adjusted EBITDA in Q3 to be consistent with Q2. Also at the corporate level, our net interest expense in Q3 should be in line with Q2. 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 58.7 million shares, which includes the shares issued for the Bridget acquisition.

Expected to remain stable year-over-year.

Is Q3 Revenue should be slightly obsequent with expected, low, teens ibaon margins and a net, Advanced loss rate in the 3% area as new models are refined. New campaigns are run and new products are tested.

For corporate costs. We expect the impact to adjusted evidon Q3 to be consistent with Q2.

also, at the corporate level, our net interest expense in Q3 should be in line with Q2,

We expect that 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 58.7 million shares which includes the sheriff's issued for the Bridgette acquisition.

Fahmi Karam: During the second quarter, we continue to have discussions with counterparties related to the various pending legal and regulatory matters, including the previously disclosed multi-state AG matter and the McBurney, California class action related to the Legacy Acceptance Now business. After evaluating the status of our negotiations under the relevant accounting guidance, we recorded an additional accrual of 31.7 million in the second quarter. Last week, after the quarter closed, Upbound reached an agreement in principle for $14 million to settle the McBurney matter, which was substantially reserved for as of June 30th. The McBurney settlement in principle remains subject to finalizing a definitive settlement agreement and approval of the class settlement by the trial court. The balance of the accrual relates primarily to the multi-state AG matter, and we will continue to evaluate and update the accrual estimate each quarter based on the current status of the matter.

During the second quarter, we continue to have discussions with counterparties related to the various pending legal and regulatory matters, including the previously disclosed multi-state AG matter and the MC Bernie California class action related to the Legacy Acceptance Now business.

After evaluating the status of our negotiations, under the relevant accounting guidance. We recorded an additional cruel of 31.7 million in the second quarter.

Last week after the quarter closed upon reached an agreement in principle for 14 million to settle the mcvertt.

Which was substantially reserved for, as of June 30.

The MC Bernie settlement in principle remains subject to finalizing a definitive settlement agreement and approval of the class settlement by the trial court.

Fahmi Karam: Let's wrap up with some key takeaways. There is no shortage of data points about the economy and our consumers, but it is important to separate the headlines and general consumer sentiment from our portfolio and our core consumer. The macro environment is uneven with some mixed signals, but our business is fundamentally strong and built to succeed across cycles. Our customers are accustomed to financial pressures and are resilient and adept at seeking out solutions that reduce those pressures. That's where Upbound's products, which offer accessibility, flexibility, and convenience, can and do make such a difference. That's why Asima has logged seven consecutive quarters of impressive GMV growth with expanding margins, and it's why we continue to invest in new technologies and capabilities to sustain that growth as conditions change.

The balance of the approval relates primarily to the multi-state AG matter. We will continue to evaluate and update the approval estimate each quarter based on the current status of the matter.

Let's wrap up with some key takeaways.

There is no shortage of data points about the economy and our consumers, but it is important to separate the headlines and general consumer sentiment from our portfolio and our core consumer.

The macro environment is uneven with some mixed signals but our business is fundamentally strong and built to succeed across Cycles.

Our customers are accustomed to financial pressures and our resilient and Adept at seeking out solutions that reduce those pressures, that's where upbound products, which offer accessibility flexibility and convenience can and do make such a difference.

Fahmi Karam: The Rent-A-Center business is working through a purposeful pullback in underwriting and product categories, but maintaining mid-teens margins and producing reliable free cash flow. The Bridget platform continues to grow, and we believe its new marketing channels and innovative new products will position it for growth in subscribers, revenue, and earnings. Overall, I'm tremendously excited about the results we've achieved, and even more so about the opportunities ahead of us as the company continues to transform and focus on digital asset-like growth opportunities. Our business and our teams are fully aligned to our mission and strategy, which we know will help our consumers and our merchants be successful and will create sustainable value for our stakeholders. Thank you for your time this morning. Operator, you may now open the line for questions.

That's why Sima has logged 7 consecutive quarters of impressive GMV growth with expanding margins. It's also why we continue to invest in new technologies and capabilities to sustain that growth as conditions change.

The Rena Center business is working through a purposeful pullback and underwriting and product categories, but maintaining mid teens margins and producing reliable free, cash flow.

The Bridget platform continues to grow, and we believe its new marketing channels and innovative new products will position it for growth in subscriber revenue and earnings.

Overall, I'm tremendously excited about the results we've achieved and even more. So about the opportunities ahead of us as a company continues to transform and focus on digital assets like growth opportunities.

Our business and our teams are fully aligned to our mission and strategy which we know will help our consumers and our Merchants be successful and will create sustainable value for our stakeholders.

Thank you for your time this morning. Operator, you may now open the line for questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Vincent Kantik at BPIG. Your line is open.

Thank you. At this time. We will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 1 on your telephone and wait for your name to be announced. She was draw your question. Please, press star, 1, 1 1, again please, stand by while we compile the Q&A roster,

our first question comes from Vincent Keck,

Various Analysts: Hi, good morning. Thanks for taking my questions. So, great results and nice to see the improvements continuing at Asima and Bridget. I wanted to talk about Rent-A-Center, and you described, you know, that there were adjustments made last last year, and those are still flowing through. So I was wondering if you could maybe first, in the near term, talk about if it's possible to describe the the drag to results from those adjustments and maybe also from the the product categories you have. So I know there's still a lot of exposure to furniture and appliances. And then if you could talk about the long-term of Rent-A-Center, what's your view of, you know, the long-term growth potential? Could it be, you know, what level of growth should we be expecting once all of this normalizes? Thank you.

At btig, your line is open.

Fahmi Karam: Good morning, Vincent. Thanks for the question. Yeah, look, I think as we discussed last quarter on the Rent-A-Center side, we did do a purposeful pullback on the credit side and tightening around underwriting. And that's going to have an overall impact on revenue and EBITDA as we saw in the quarter, you know, consistent with how we guided at the beginning of the year and how we've guided last quarter. So a couple of factors, right? You have a reduction of 110 stores or so this year versus last year, you know, underwriting tightening around especially new customers coming through the web. And then the product categories that we talked about, you know, around mobile phones mostly, which is another form of underwriting, all of that has impacted the Rent-A-Center results. And, you know, in this environment, you feel like taking a more conservative approach in underwriting is prudent.

Fahmi Karam: As we've talked about, our consumer, you know, generally is resilient, but is still under pressure just from the accumulation of higher prices over the last couple of years. You know, your question around, you know, how big of a drag is it on the results? You know, without these moves, I would say without the tightening on underwriting and the product categories, you know, we would have been flat to maybe slightly up on the same store sales basis. We are going to lap some of these changes starting in the third quarter. You know, from a general underwriting standpoint, we started to tighten midway through the third quarter. You know, the product categories really were eliminated in the middle of Q4. So we'll start seeing some lapping of that underwriting in the second half of the year. But we're not waiting for that.

Good morning, Vincent. Thanks for the uh, the question. Um, yeah. Look, I think as we discussed, uh, last quarter, on the Rina Center side, we did do a purposeful pullback, uh, on on the credit side and tightening our own uh, underwriting and that's going to have an overall impact on on revenue and ibida. We saw in the quarter, um, you know, consistent with how we guided at the beginning of the year and how we've guided, uh, last quarter. Um, so a couple of factors, right? You have the reduction of 110 stores, uh, or so, uh, this year versus last year, um, you know, the underwriting tightening around, uh, especially new customers coming through the web. And then, the product categories that we talked about, um, you know, around mobile phones mostly, which is another form of of underwriting, all of that as uh, have impacted, the Rena Center results. And you know, in this environment you'll feel like taking a more conservative approach in an underwriting is prudent. Um, as we've talked about our consumer, you know, generally is resilient

But it's still under pressure just from the accumulation of uh higher prices over the last, uh, couple years. You know, your question around. You know, how big of a drag is it on the results. Um, you know, without these moves I would say without the tightening on the underwriting and the product categories, you know, we would have been flat to maybe slightly up on the same store sales uh basis. Uh we are going to lapse some of these changes starting in the third quarter, you know, from a general underwriting.

Fahmi Karam: As I mentioned on the call, we have done some initiatives to try to help drive more deliveries without, you know, loosening up on the underwriting. And one way we're doing that is taking folks who start on the web and who would normally be declined online and asking them to come into the store where we can have our store coworkers do more of a formal interview with the customer. Our approval rates are much higher in-store, and we're seeing some traction there, especially in furniture and appliances, when someone walks into one of our stores. So, you know, the good news is we have losses under control, you know, up 10 basis points sequentially. Delinquencies are flat year over year and improved sequentially. So I feel like we just got to find our pockets to drive deliveries, and we're doing that.

Standpoint we started to tighten Midway through the third quarter. You know, the product category is really uh, we're eliminated in the middle of uh, of Q4. So we will start seeing some, some lapping of that underwriting on the second half, uh, of the year. Uh, but we're not waiting for that. As I mentioned on the call, we have done some initiatives to try to help drive more deliveries without, you know, loosening up on the underwriting and 1 way we're doing. That is taking folks who start on the web, uh, and who would normally be declined online and asking them to come into the store, uh, where we can have our store co-workers, uh, do more of a formal interview. With the customer, our approval rates are are much higher in store and we're seeing some traction there, especially in furniture and appliances when somebody walks in, uh, to 1 of our stores. So, you know, the good news is we have losses under control. Um, you know, up 10 basis points, sequentially delinquencies are are flat year-over-year and have improved.

Fahmi Karam: So in this environment, being down four percentage points or four points on a same source sale basis, we think it's prudent to take a conservative approach to underwriting. And then long-term, you know, the opportunity for Rent-A-Center, and we've talked about it, is, you know, how do we deliver that omnichannel experience and how do we become more of a digital e-commerce player while still leveraging the store capabilities and all the benefits we've talked about, about having a footprint in the communities, but leveraging all the traffic that we get online and through Rent-A-Center.com. So our goal is to turn into positive same-store sales, hopefully by the end of this year into 2026, and then grow at low single digits going forward.

Sequentially. So feel like we just got to find our pockets to drive deliveries and and we're and we're doing that. Um, so in this environment being down 4 percentage points or or 4 points on the same Source sale basis. Um, is we think it's prudent uh, to take a conservative approach uh, to underwriting and then long term, you know, the opportunity for for running a center we've talked about it is you know, how do we deliver that Omni channel? Uh, experience. And how do we become more of a digital e-commerce player?

Still leveraging the store capabilities and all the benefits we've talked about by having a footprint in the communities, but leveraging all the traffic that we get online and through Renacenter.com. So our goal is to turn that into positive things for sales, hopefully by the end of this year, into 2026, and then grow at low single digits going forward.

Various Analysts: Okay, great. That's super helpful, Diesel. Thank you for that. And then switching over to Bridget. So those are very nice results this quarter and your discussion about marketing investments and new products, you know, in the second half of the year. If you can maybe, you know, if you just could describe those marketing investments in more detail and how much you intend to invest and are there other products that might be interesting here because, you know, as part of the upbound umbrella, you kind of want to serve the consumer more fulsomely. So you talked about the line of credit products. I'm just wondering if you think long-term other products might make sense as well. Thank you.

Okay, great. That's uh super helpful detail. Thank you for that. And then, um, switching over to, uh, Bridget. So very nice results. This quarter and um, your discussion about marketing Investments and new products, um, you know, in the second half of the year, if you can, maybe, you know, if you just could describe this marketing investments in more detail on how much you intend to to invest and other other products that might be interesting here because, um, you know, as part of the upbound umbrella, you kind of wind to serve

the consumer more, more wholesomely, um,

So, you talked about the, the line of credit products. I was just wondering, if you think long term, other products might make sense as well. Thank you.

Fahmi Karam: Thanks, Vincent. Yeah, so very pleased with Bridget overall, very much in line to exceeding our expectations. You know, their performance speaks for itself. I'd say we're also very pleased with just how it fits in with the upbound group, even from a team dynamic standpoint, and the collaboration overall has been great. It's been a really good, solid first six months of ownership of the business. And you know, what the platform has demonstrated is its ability to grow subscribers and really pick where its OPEX spend is, whether it's through marketing or R&D. This quarter, you know, the EBITDA margin almost hitting 28% was probably slightly above where we wanted to be in the quarter from a marketing standpoint because we spent a little bit more time doing R&D type work for new products.

Thanks Vincent. I yeah so Barry please with Bridget uh overall uh very much in line to to exceeding our expectations. Um you know their performance speaks for itself. I'd say we we're also very pleased with just how it fits in with the upbound group, uh, even from a team Dynamic standpoint and the collaboration overall has been, uh, has been great. Uh, it's been a really good solid first 6 months of of of ownership of of the

Fahmi Karam: And we're really excited about that line of credit product that I mentioned, you know, going up a little bit higher than our 250 instant cash product, up to 500 and extending the term. One of the reasons we were really attracted to Bridget was their R&D capabilities and their ability to listen to the consumer and what the consumer actually wants and needs. And that line of credit product is a direct result in us listening to the consumer, and the traction that we've gotten as we've piloted that program has been really, really tremendous. So the concept, again, is a little bit higher liquidity at 500 with a little bit longer extension of credit over the six to nine-month period. And we'll test and learn on kind of what gets the best traction and what performs best from a loss standpoint.

Fahmi Karam: But we're very, very excited about what Bridget can bring and some of its R&D and innovation into new products going forward. As far as the marketing goes, yeah, you know, we have been very heavily, historically heavily on social media. We are trying some new channels even across social media like Reddit and other other type platforms to see if we can get a better lift there. We are doing things in-store and on-site and then are starting to pilot even advertising at the point of sale, whether it's at Rent-A-Center stores or some of the staffed Asima locations. We are going to start putting up some signage there, and we will test and learn and figure out what gets us the best response rate from the consumers. But overall, very excited about what Bridget's doing.

Work for new products and we're really excited about that line of credit product that that I mentioned, you know, going up a little bit higher, uh, than our 250 Instant Cash product up to 500 and extending the term. 1 of the reasons we really attracted to Bridget was their R&D capabilities and their ability to to listen to the consumer and what the consumer actually wants and needs. And that line of credit product is a direct result in US listening to the consumer. And the traction that we've gotten as we've piloted, that program has been really really tremendous. So uh, the concept again is a little bit higher uh liquidity at 500 with a little bit longer extension of of credit over the 6 to 9 month period and we'll test and learn on kind of what gets the best traction and what performs best from a from a loss standpoint, uh, but we're very track, uh, very excited about what Bridget can bring and some of its R&D and Innovation into into new products, uh, going forward. Um, as far as the marketing goes, yeah, we, you know, we have

been very heavily historically heavily on social media. Uh, we are trying some new channels even across social media like Reddit and other other type platforms to see if we can get uh a better lift. There we are doing things in store uh, and on-site and then our starting to Pilot even advertising at the point of sale. Whether it's at Reno Center stores, or some of the staffed SEO locations, we are going to start putting up some some signage there. And and we will test and learn and figure out what, what gets us the best, uh, best response.

Response rate from the consumers. But overall, I'm very excited about what we're doing.

Various Analysts: Okay, great. Super helpful. Thank you.

Okay, great. Uh, super helpful. Thank you.

Operator: Our next question comes from Bobby Griffin at Raymond James.

Various Analysts: Good morning, Bobby. Thanks for taking my questions, and congrats on a good second quarter.

our next question comes from, Bobby Griffin at Raymond James,

Good morning, buddy. Thanks for taking my questions, and, uh, congrats on a good second quarter.

Fahmi Karam: Thanks, Bobby.

Various Analysts: Dammy, I guess first to start, you know, a lot of detail in the different customer segments of your business. Like, because even if you can maybe just a high level, would you tell your core customer across the platform stable versus maybe once you were versus a month ago just trying to connect kind of where the customer is first here?

Thanks Bobby.

Damn, I guess first to start, you know, a lot of detail in the different customer segments of of your business like, but it's going to take a minute, it's a high level. Would you, would you call them your core customer across the 5 or more stable version? Maybe once you reverse 6 months ago, to try to come back, kind of

Fahmi Karam: Bobby, you're breaking up just a little bit, but I think I got the gist of your question being around the consumer and how it's trended. You know, I would say stable over the last few months, few quarters. Still under pressure, as I mentioned in our prepared remarks. You know, the core Rent-A-Center and maybe the bottom end of the Asima business, that consumer has to deal with high prices, and you know, inflation is still high. But there are some puts and takes. You know, on the good side, unemployment's still low, gas prices are still relatively low, there is some wage growth, and some of those new tax policies that I mentioned around, you know, not tipping or not taxing on tips and over time should be net positive to the consumer. But overall, there's still a lot of uncertainty.

Byebye. You're breaking up just a little bit but I think I got the gist of your of your question being around the the consumer and how it's how it's trended. Um, you know, I would say stable um over the last few months, a few quarters, um, still under pressure. As I mentioned in our prepared remarks, you know, the the, the core Renaissance Center and maybe the bottom end of the asthma business. Um, that consumer has to deal with high prices and uh, you know, inflation is still high. Uh, but there are some puts and takes, um,

Fahmi Karam: So I would say stable as far as just general consumer behavior and strength of the consumer, but we are being very, very mindful of it and still taking a pretty conservative approach from an underwriting standpoint. And as we look at just the overall portfolio strength at both Rent-A-Center and Asima, as we've been able to tighten our underwriting and look at where our portfolio sits today compared to where it was a year ago or two years ago, the mix has definitely shifted to the upper end of our risk profile. So we feel really good about where the portfolio sits, and that's just something that we manage day to day. But generally saying the consumer is pretty stable. As we've mentioned, they're pretty resilient, but still face some pressure and there's some uncertainty in the macro environment.

You know, on on the, on the good side on employment, still low gas, prices are still relatively low, there is some, uh, some wage growth. Um, and some of those new tax policies that I, that I mentioned around, you know, not tipping or not taxing on tips and, and over time should be net positive, uh, to the consumer. Uh, but overall, there's still a lot of uncertainty. Um, so I would say stable as far as just general um uh consumer behavior and uh, strength of the consumer, but we are being very uh, very mindful of it and still taking a pretty conservative approach from an underwriting standpoint. And as we look at just the overall portfolio strength, uh, at both Rena Center and uh a SEMA as we've been able to tighten our underwriting and look at where our portfolio sits uh, today compared to where it was a year ago or 2 years ago. The mix has definitely shifted to the upper ends of our of our of our risk profile. Uh so we feel really good.

Various Analysts: Thank you. Hopefully, you can hear me a little better now. I actually used stable in my question, so that was perfect for having a good guest, and I appreciate it. Definitely, for me, it was just kind of on the Asima road, continuously really strong app growth there. I understand you guys have been doing some more with, you know, the product offering. You know, what are you seeing there from a trade-down perspective? Is it, you know, what is it just new door growth driving that? What's driving the kind of core merchants, you know, leveraging the platform more, more aggressive sales tactics? Is anything there to better understand really the strength we're seeing across the apps as well as the GMV side of things?

About where the portfolio sits. Um, and that's just something that we manage day-to-day. But generally saying, uh, the consumer is, uh, pretty stable as we've mentioned, that they're pretty resilient but still face some pressure and there's some uncertainty, uh, in the macro environment.

Thank you. Hopefully you can hear me a little better now. I actually use stable on my questions and it's perfect for any good guess, and I appreciate it. Um, I guess secondly for me, it was just not on the Emma road, continuously really strong a growth there. At GV understand you guys have been doing some more with, uh, you know the product offering, you know, what are you seeing there from a from a trade down perspective? Um, is it, you know, what is it just new door growth driving that what's driving the kind of core Merchants, you know, leveraging the platform more more aggressive sales tactics, is there anything there to better understand really? The strength, we're seeing AC the apps, as well as the gmv side of things?

Fahmi Karam: Thanks, Bobby. Yeah, you know, Asima, you know, continues to really outperform, you know, coming in again this quarter at, you know, double-digit growth this quarter at 16% growth. And really impressive when you think about the comp coming into the quarter last year was at 21%. So 37% on a two-year basis is really impressive growth, especially when you consider some of our bigger categories are still under pressure, you know, furniture and appliances. To be able to hit those growth targets is great execution by the team. And also, you know, expanding margins, you know, expanding the EBITDA margin this quarter by 40 basis points, last quarter by 170 basis points year over year. So being able to grow while not taking on additional losses and grow the EBITDA margin is really, really impressive from the Asima team.

Fahmi Karam: As far as the growth and where it's coming from, it is a mix, as we've said in the past, around both new merchants and productivity per merchant. If I had to bucket it this quarter, I would say the majority actually comes from new merchants we've onboarded over the last 12 months. About 80% of the growth comes from new merchants and about 20% comes from productivity gains. And, you know, one specific that I would highlight is our direct-to-consumer channel, and we consider that new as we add more of those national retailers to our website and to the app. That direct-to-consumer channel has been our fastest growing part of Asima. It grew 130% year over year and now is over 5% of our overall GMV. So we'll continue to invest in that. It's a returning customer channel today.

On a 2 year. Basis is really impressive growth, especially when you consider some of our bigger categories are still under pressure, you know, furniture. And and appliances, uh, to be able to hit those growth targets is is great execution, uh, by the team. And also, you know, expanding margins. Uh, you know, expanding the, the ibadan margin, this quarter by 40 basis points, last quarter by 170 basis points year-over-year. So, being able to grow while not taking on, uh, additional, uh, losses, uh, and grow, the ibadan margin is, is really, uh, really impressive, uh, from the asthma team as far as the, the growth and and where, where it's coming from. It is a mix as as we've said in the past around, both, uh, new merchants and productivity per Merchant. If I had to bucket it, uh, this quarter, I would say, the majority actually comes from new Merchants, we've onboarded over the last 12 months, about 80% of the growth comes from from new merchants and about 20% comes from, uh, product.

Gains.

And, uh, you know, 1 specific that, I would highlight is our direct to Consumer Channel and we consider that, um, new. Uh, as we add more of those National retailers to our our website and to the app, um, that direct to Consumer channel has been our fastest, growing part of a SEMA, it grew 130% year-over-year, and now is over 5% of our overall gmv. So we'll continue to invest, uh, in that it's

Fahmi Karam: We haven't opened it up to really new customers yet, but there's a lot of opportunity for us to grow that. And as we mentioned, you know, returning customers now is representing over 40% of our GMV. And it's a lot of, a lot of that is driven by our direct-to-consumer and our marketplace. So it's across the board. As we've highlighted in the past, Asima is very diversified from a merchant standpoint, very diversified from a product standpoint. So really, the growth is across the board. And as I mentioned, you know, when furniture does come back, furniture and mattresses, the demand comes back, Asima will be very well positioned to continue the double-digit growth.

Various Analysts: Thanks, Fammy. And I guess one last quick one, if I can. On the loss ratios in Asima, down year over year, but they did tick up sequentially, and I think you guys were looking for flat when we spoke last quarter. So just anything there, or is it just timing or anything we should think about there?

It's a returning customer Channel today. Uh, we haven't opened it up to, to Really new customers yet, but there's a lot of opportunity for us to grow that. And as we mentioned, you know, returning customers now is representing over 40% of our of our gmv and it's a lot of, uh, a lot of that is driven by our direct to Consumer and our Marketplace. So it's across the board, uh, as we as we've highlighted in the past, the SEMA is very Diversified from emerging standpoint, very Diversified from a product standpoint. So really the growth of the board. And as I mentioned, you know, when Furniture does come back furniture and mattresses, the demand comes back, a SEMA will be very well positioned to to continue to the Double Digit growth.

Thanks Sammy and I guess 1 last Quick 1, if I can I on the loss ratio is in a SEMA down year over year but they did pick up sequentially and I think you guys were looking for flat when we spoke uh last quarter so just anything there or is it just timing or anything? We should think about their

Fahmi Karam: Most of that, Bobby, I would say is more mixed. You know, one of our fastest growing segments outside of the direct-to-consumer has been in the jewelry category. That's been growing now a couple of quarters in a row, much faster than some of our other categories and becoming a bigger and bigger part of the overall portfolio. And that tends to have a little bit higher loss ratio, tends to have a little bit higher 90-day buyout activity, which puts pressure on our gross profit margins, but also probably ended up being, you know, 10, 20 basis points higher from a loss ratio standpoint, but still well within our range of losses. And as I mentioned, you know, it trickled down into a positive EBITDA margin year over year. So nothing really there, still very much under control.

Most of that Bobby is I, I would say it's more mix. Um, you know, 1 of our fastest growing segments um, outside of the direct to Consumer, has been in the jewelry category, uh, that's been growing now, a couple quarters in a row, uh, much faster than some of our other categories, and becoming a bigger and bigger part of the, the overall portfolio and that tends to have a little bit higher loss ratio tends to have a little bit higher, 90-day buyout activity, which puts pressure on our gross profit margins. But but also probably

Various Analysts: Thank you. Best of luck here in the back half of the year. Appreciate it.

Ended up being uh you know 1020 basis points higher from a from a loss ratio standpoint, but still well within our range uh of of losses. And as I mentioned, you know, it trickled down into a positive, ibaon margin year-over-year. So nothing really there still very much under control

Fahmi Karam: Thanks, Bobby.

Thank you. Best of luck here in the back, half of the Year, appreciate it.

Operator: Our next question comes from Brad Thomas at KeyBank Capital Markets.

Our next question comes from Brad Thomas at keybanc Capital markets.

Various Analysts: Morning, Fammy. Thanks for taking the question, and we too think these were very good results in a tough environment out there. I wanted to start with a follow-up on Bridget. You all, you know, said that you thought revenue would improve slightly on a sequential basis, and obviously, you gave a very positive framework for how you're thinking about sales and EBITDA over the next couple of years at the time of acquisition. And so I was just wondering, having owned the business for six months, if you could share a bit more about, you know, how you're feeling about that outlook potential, because obviously, it's positioned to be a very significant contributor to sales and EBITDA over time.

Bonnie, uh, thanks for taking the question, and, and we too think these were, uh, very good results in a tough environment out there. Um, I I wanted to start with a follow up on on Bridget. Uh, you, you all, you know, said that you've got revenue would would improve slightly on a sequential basis. And obviously, you gave a very positive framework for how you're thinking about sales and Evita over the next couple of years at the time of acquisition. And so I was just wondering having owned the business for 6 months if you could share a bit more about, you know, how you're feeling about that Outlook potential, uh, because obviously it's it's positioned to be a very significant contributor to sales and ebit to overtime.

Fahmi Karam: Morning, Brad. Thanks for the question. Yeah, as I mentioned, very, very pleased with the performance overall, still very much on track, hitting our 2025 guide as well as positioning the company to hit the big ramp-up in growth in 2026. And as you recall, the 2026 number really didn't have any benefit of some of the cross-collaboration and cross-selling that we have been working on. So I feel like we're well positioned there. You know, we are being pretty methodical in how we, you know, tap the Rent-A-Center and Asima customers and really testing and learning there, but feel really good about, you know, Bridget on a standalone basis, being able to hit the numbers that we.Expected at the time of the acquisition. the first half of the year has been, above our expectations, as you mentioned, both on the top line and on the EBITDA side.

Fahmi Karam: So nothing that we've seen in the first six months has really slowed us down. If anything, we're more and more positive about the, the acquisition and the future cross-cooperation between all the segments.

But feel really good about um, you know, Bridget on a standalone basis. Being able to hit the numbers that, uh, we expected at the time of the acquisition, uh, the first half of the year has been, uh, above our expectations. Um, as you mentioned, both on the top line and on the ibida side, so nothing that we've seen in the first 6 months has really slowed us down. If anything were more and more positive about the uh, the acquisition and in the future cross collaboration between all the segments.

Jeff Chesnut: That's very helpful. Thank you. And if I could add a follow-up on the Renta Center side, you've already given a fair amount of detail here. But just as we as we think about the quarters ahead, and I know this is kind of a macro call that I'm asking you to make here, but is there a good way to think about, you know, when some of the EBITDA dollar pressures could potentially, subside and when you could at least flatten out, if not start to take it back to growth for that segment?

That's very helpful. Thank you. And if I could add a follow-up on the rent to Center side, you've already given a fair amount of detail here, but just as we as we, think about the quarters ahead. And I know this is kind of a macro call and I'm asking you to make here, but is there a good way to think about? Um, you know, when some of the ebit dollar pressures could potentially, uh, subside, when you could at least flatten out, if, if not start to kick it back to growth for that segment,

Fahmi Karam: Yeah. I think I mentioned, Brad, you know, we were going to start lapping some of these changes that we made on the underwriting side, you know, in the second half of the year. We'll get a little bit of it back in the third quarter, and then we'll get a little bit more of it back, in the in the fourth quarter. and you know, and then we're still going to lap some of the the the store closures and consolidations that we did also, last year. So, I would say early 2026, you should start seeing us, really start to have a clean comp and hopefully then returning, into growth as we do some of these initiatives that that, we mentioned that hopefully help, from a delivery standpoint.

Yeah, I think I mentioned Brad. You know, we were going to start laughing some of these changes that we made on the underwriting side. Um, you know, and and the second half of the year, we we'll get a little bit of back in the third quarter and then we'll get a little bit more of it back, uh, in the in the, uh, fourth quarter. Um, and you know, and then we're still going to elapse some of the, the, the store closures and consolidations that we did also, uh, last year. So, um, I would say early 2026. Uh, you should start seeing us, uh, really start to have a clean comp and hopefully, then returning uh, into growth as we.

Fahmi Karam: And then, you know, look, if the macro gets a little bit better, then we'll be able to to pick our spots on where we open up, some of the underwriting. You know, when we tighten underwriting between the two segments, it definitely has a different impact, on Asima and Renta Center. With Renta Center, given its fixed cost, basis and and and having the stores, you know, there's definitely something that we have to balance there between growth and taking on, prudent risk, where Asima benefits from trade down and being able to grow store count. So, look, I think, you know, we'll start comping. the comps start to get a little bit easier in the second half, and then by the time we get into 2026, we should return to growth.

Do some of these initiatives that, that, uh, we mentioned that hopefully help from a delivery standpoint and then you look at the macro gets a little bit better, um, then we'll be able to to pick our spots and where we open up, uh, some of the underwriting. You know, when we tighten underwriting between the 2 segments, it definitely has a different impact, uh, on a SEMA and, and Rena Center, um, with Rena Center given its fixed cost, uh, basis, and and, and, and having the stores, you know, there's definitely something that we have to balance there between growth and taking on, uh, prudent risk. We're a SEMA benefits from trade down and being able to grow store count. So, um, look, I think, uh, you know, we'll start comping. Um, the comps start to get a little bit easier in the second half and then by the time we get into 2026, we should return to growth.

Jeff Chesnut: Very helpful. Thanks, Jamie.

Very helpful. Thanks Amy.

Operator: Our next question comes from Hong Wen at TD Cohen.

Our next question comes from Hong win at TD Cohen.

Fahmi Karam: Hi, team. Thanks for taking my question. I want to start with Bridget. Obviously, very strong result. I mean, if I look at the cash advance volume over the past couple of quarters, it's been decelerating. And I think you mentioned that you guys are going to increase marketing in the back half of the year. So can you talk about maybe your expectations for Bridget going forward and how you are looking to re-accelerate growth?

Hi team. Uh, thanks for taking my question. Um, I want to start with uh, Bridget obviously very strong results. I mean, if you look at the cash advance volume of the past, couple of quarters, it's been decelerating. Uh, I think you, you mentioned that you guys are going to increase Marketing in the back half of the year. So can you talk about maybe your expectations?

For uh, Bridget going forward and how you are looking to uh react growth.

Fahmi Karam: Yeah. Look, Hong, thanks for the question. You know, the Bridget growth, I think, speaks for itself. As I mentioned, 40% revenue, almost 25% subscription or subscriber growth year over year. You know, the advances, you know, it doesn't have necessarily a financial impact onto the business given the subscription-based model. But the other thing that we mentioned in the prepared remarks was, you know, the average revenue per user per month, you know, growing mid-single digits sequentially and, you know, up over 12% year over year. That is one thing that I would also call out as something that we are actively pursuing and seeing that grow sequentially, again, low single digits into the second half of the year.

Yeah. Look, uh

Fahmi Karam: You know, the traction that we get, as I mentioned, both on the instant cash product, the credit-building product, and now the line of credit really justifies the market need and the market demand for this product. And being able to offer our customers across all the brands these liquidity solutions is really powerful for us. It expands our market outside of just durable goods. It gives us another solution to offer our customers and keep them in the network. So again, you know, not to repeat too much, we're very pleased with what Bridget's doing, including its growth profile.

Thanks for the question. Uh, you know, the Bridget growth I think is, you know, speaks for itself. As I mentioned, 40% Revenue, uh, almost 25% subscription, a subscriber growth, uh, year-over-year, you know the advances. You know, it doesn't have necessarily a financial impact onto the, the business given the subscription based, uh, based model. Um, but the other thing that we mentioned on the prepared, remarks was, you know, the average revenue per user per month. Um, you know, growing mid single digits, uh, sequentially and, you know, up over 12% year-over-year, that is 1 thing that I would also call out as something that we are actively pursuing. Uh, and seeing that growth sequentially, uh, again low single digits, uh, into the second half, uh, of of the year, you know, the traction that we get, as I mentioned, both on the Instant Cash product, the credit Building Product. And now the line of credit really justifies the the market need and the market

Demand, uh, for this product and and being able to offer our customers uh, across all the brands these liquidity Solutions is really powerful for us. Uh, it expands our our Market outside of just durable goods. It gives us a another solution to offer our customers and keep them in the network. So again, you know, not to re

Too much. We're very pleased with what Bridget's doing including its growth profile.

Fahmi Karam: Got it. And maybe on the leverage, given that I guess you continue to see some revenue headwind on Upbound, sorry, on Renta Center, which is about to lap. But you're also seeing very fast growth on Asima. So does that affect your ability to, I guess, quickly take down leverage? And you know, when should we expect you to hit your target leverage ratio? Thank you.

got it and maybe on The Leverage, uh, given that

I guess you, you continue to see some um, revenue headwind on, sorry on Rena Center, which is about to lap, but you also seeing very fast growth on a SEMA. So does that affect your ability to, I guess quickly take down and leverage and, you know, when should we expect you to hit? Uh, your target leverage ratio. Thank you.

Fahmi Karam: Yeah. Free cash flow, you know, compare it this year to last year. You know, this year, year to date, we're at 117 million. Last year was about 34 million. So free cash flow is a real positive story for us, and that's including the growth at both Asima and Bridget. Some of that betterment year over year is the pullback at Renta Center. Obviously, the EBITDA declines in there, but also fewer and fewer purchases is also in that free cash flow number. So free cash flow has actually been a really positive story for us the first six months. You know, the big beautiful bill that was passed also gives us some cash tax benefit that we'll incorporate into the guide going forward. But needless to say, it will be a significant plus to free cash flow for at least the next couple of years.

Fahmi Karam: So we will get down to our two-times leverage target. You know, I would say over the next couple of years, Hong, you know, it depends on how fast we can grow Asima and how fast we can grow Bridget. But you know, if you just look at the guide for 2025, what we said was we could get leverage down to pre-acquisition levels by the end of the year. So let's hit that first, and then we'll try to get down to two times as we progress.

Yeah, free cash flow, you know, to compare this year to last year, you know, this year year to date. We're at 117 million. Uh, last year was about 34 million. Uh, so free cash flow, uh, is is a real positive story for us and that's including the growth at both the SEMA and and Bridget, uh, some of that betterment year-over-year is the pullback at Rena Center obviously the the Eva declines in there but also fewer and fewer purchases uh is also uh in that free cash flow uh in that free cash flow number. Um, so free cash flow has actually been a really positive story for us, the first 6 months. Um, you know, the big beautiful bill that was passed also gives us some cash tax benefits, um, that will incorporate into the guide going going forward. But needless to say, it will be a significant plus to free cash flow for the least the next couple years. Um, so we will get down to our 2 times, uh, leverage, uh, Target. Uh, you know, I would I would say over the next

Couple of years Hong, you know, depends on how fast we can grow um a SEMA. How fast we can grow Bridgette. Uh, but you know, if you just look at the guide for 2025, uh, what we said was, we could get leverage down to pre-acquisition levels, uh, by the end of the year. So let's hit that first and then we'll try to get down to 2 times. Uh, as we progress,

Jeff Chesnut: Got it. Thank you.

Got it. Thank you.

Operator: Our next question comes from John Rowan at Jamie Montgomery Scott.

Operator: Morning, Fammy.

Our next question comes from John Rowan at Jaime Montgomery Scott.

Fahmi Karam: Morning, John.

Morning, Tammy.

Operator: Do you know what percentage of your customers are affected by the change in tax policy on tips and overtime? You know.

Morning, John. Um, do you know what percentage of your customers are affected by the change in tax policy on tips in overtime?

Fahmi Karam: It's really hard for us to kind of pinpoint the exact percentage. But if you think about, you know, a Renta Center customer making 25, 30,000 a year annual income, Asima's 55 to 60,000, and Bridget's somewhere in between the two, it's going to be a lot of service-type folks. And those folks are the ones that have a lot of tips and a lot of overtime. So we think it's going to be a net positive, but I don't have an exact percentage, but it's a meaningful percentage of our consumers.

Operator: Okay. Has there been any changes in the kind of I know not for you because you run a subscription-based model in Bridget, but have there been any changes in the market since the CFPB rescinded all the guidance documents?

You know, it's really hard for us to kind of pinpoint the exact uh, percentage. Uh, but if you think about, you know, uh Rena Center customer making 2530 thousand a year annual income, um, you know, sema's you know, 55 to 60,000 and and Bridget somewhere in between the 2. It's going to be a lot of service type. Uh, um, folks, and, and those folks are the ones that have a lot of tips and a lot of overtime. So we think it's going to be a net positive but don't have exact percentage but it's a it's a meaningful percentage of our our consumers, okay? Um, have there been any changes in the kind? I know not for you because you were on a subscription based model in Bridget, but have there been any changes in the market? Um since the cfpb, rescinded, some all the guidance documents,

Fahmi Karam: No. Obviously, there's been a lot of news around that, the open banking rules. Even this week, the CFPB sounds like they may come back to the rule as the court to hit pause on the ongoing case. So nothing to date, John, has changed officially, but it's something that we're actively monitoring through the Bridget team. But nothing to date has necessarily changed as far as the new ruling.

No. Obviously there's been a a lot of news around that the open banking rules even this week. The cfpb sounds like they may come back to the rule as the as the courts that hit pause uh, on on the ongoing case.

Operator: Okay. And then lastly, I just want to make sure I understand. So there's a $32 million accrual for legal matters. Was that I just want to make sure I understand. Is that for future litigation, or is that to settle one of the matters, or is it both? Or if you could break out if it's both.

So nothing to date. John has has changed officially, uh, but it's something that we're actively monitoring, uh, through the through the Bridget team. Um, but but nothing today has necessarily changed as far as the, the, the new ruling

Okay. And then lastly I just want to make sure I understand. So there's a 32 million approval for legal matters. Would that?

I, I was

Just want to make sure I understand is that for future litigation or is that to settle. Um, 1 of the matters or is it both or if you could break out if it's both

Fahmi Karam: Yeah. It covers a lot of the different cases that we disclose, John. And we'll have the 10Q out this week, and it'll have more of the, you know, disclosure in detail amongst all the cases. The majority of it, as we said in the prepared remarks, does relate to the multi-state AG matter that we've been working on now for several years. You know, I take this as good news that we're making progress. You know, a lot of these things have been, a lot of these matters have been very long-standing matters, and mostly relate to legacy practices, including the McBurney case that we did settle post the quarter. You know, that was something that brought up five years ago and relates to our legacy acceptance now business.

Fahmi Karam: And so being able to settle that case, it was almost fully reserved for at the end of Q2 to now, you know, be able to move on, I think, is a positive. And so we'll continue to update the accrual based on ongoing progress in the negotiations and hope to have these behind us soon.

Yeah, it covers a lot of the different cases that we disclose, um, John. And we'll, we'll have the 10 Q out this week and we'll have more of the of the, you know, uh, disclosure and detail but amongst all the cases. Um, the majority of it as we said, in the prepared, remarks does relate to, uh, the multi-state AG matter that we've been working on now, for, for, for several years. Um, you know, I I take this as as good news that we're making progress, you know, a lot of these things have been a lot of these matters uh have been very long-standing matters and mostly relate to Legacy practices and including the MC. Bernie case that we we did settle uh post uh post the quarter. Um, you know, that that was something that brought up uh 5 years ago uh and relates to our Legacy Acceptance Now business. Um, and so being able to settle that case, uh, it was almost fully reserved for at the end of Q2 to now, you know, be able.

Operator: Okay. Thank you very much.

Fahmi Karam: Thanks, John.

To to move on. I think it's a positive and so we'll continue to update the approval based on uh, ongoing progress in the negotiations and and hope to have these behind us uh soon. Okay. Thank you very much.

Thanks John.

Operator: Our next question comes from Bill Reeder at Bank of America.

Our next question comes from Bill reer at Bank of America.

Various Analysts: Good morning. I just have two. The first is, the growth of Asima I find particularly impressive in light of general store closures across retail. I guess, is that something which is negatively impacting, all the positive momentum? And are you having some of your partners that are closing their stores? You know.

Is negatively impacting, um, all the positive momentum and and are you having some of your partners that are closing their stores?

Fahmi Karam: Bill, thanks for the the question. You know, one of the big benefits of Asima's platform is the diversity in, as I mentioned, diversity both in product and in merchants. And you know, because we are a majority of our business comes from small, medium-sized businesses, you know, not one location closing or one merchant closing really has a meaningful impact to the business. So to answer your question directly, no, there hasn't really been anyone who's closed down that's been necessarily material to us. We're constantly adding hundreds of locations to the platform. So it hasn't necessarily been a headwind for us. You know, furniture, as we talked about, is a big category for Asima.

You know, Bill, thanks for the the question, you know, 1 of the big benefits of a sema's platform. Is the diversity in. Uh, as I mentioned diversity, both in product and in

Fahmi Karam: And the team has done a great job of, you know, while that category has been under pressure, you know, from the pull forward of stimulus to diversify where the DMV comes from into different high-growth categories. And I mentioned jewelry. Electronics has been really, really strong for us as we've gone through the marketplace and added bigger retailers there. So no, to answer your question directly, it hasn't necessarily been an impact for us.

In Merchants. Um, and you know, because we are a majority of our business comes from small medium-sized businesses, you know, not 1 location, closing or or 1 Merchants closing really has a meaningful, uh, impact uh, to, to the, to the business. So, to answer your question directly know, there hasn't been really been anyone who's, who's who's closed down, um, that's been necessarily material to us. We're constantly adding hundreds of of locations to, uh, to the platform. Um, so it doesn't, it hasn't necessarily been a headwind for us, you know, Furniture as we talked about is a big category for uh, a SEMA and the team has done a great job of, you know. Well that category has been under pressure. Um you know, from the pull forward of stimulus to diversify where the gmv comes from into different high growth. Um, um, categories. And I mentioned jewelry Electronics has been really, really strong for us as we've gone through the, uh, the market.

Place and and added bigger retailers there. Um, so no to answer your question directly, it hasn't necessarily been an impact for us.

Various Analysts: Great to hear. And then secondarily, you talked about getting towards two times leverage towards the end of next year, potentially. I guess I'm wondering whether, given all that's going on with the growth in Bridget and Asima, whether you would consider additional acquisitions at this point, or you have so much going on internally, plus the leverage target, that kind of those are going to be your focuses.

Great to hear. Um and then secondarily uh you talked about getting towards 2 times. Leverage towards the end of next year potentially. Um I guess I'm wondering whether given all that's going on with the growth in bridges and Emma. Whether you would consider additional Acquisitions at this point, or you have so much going on. Internally plus the leverage Target that kind of those are going to be your focuses.

Fahmi Karam: I think that's fair, Bill. You know, I think you know, you never say never on M&A. You always keep the door open if it's something that expedites our strategic vision, adds another technology or solution for our consumers. But at the same time, as you said, and I think as we've highlighted, we have a lot of opportunity in front of us with what we have between the three major brands: Renta Center, Asima, and Bridget. And we have a lot of room there to execute and hit our strategic plan with what we have in-house. So the focus right now is let's get Bridget further integrated. Let's get Renta Center growing again. Let Asima continue to grow double digits and find different ways to service our customers through Asima.

Fahmi Karam: And at the same time, pay down debt, get to our target leverage ratios, and then position the company for really supercharged growth in '26 and beyond.

That's fair bill, you know, I think the, you know you never say never on m&a. You always keep the door open. If it's something that uh, expedites our strategic Vision, adds another, you know, technology or or or solution, um, for our consumers. Uh, but at the same time as you said, and I think as we've highlighted, uh, we have a lot of opportunity in front of us, with what we have between the, you know, 3 major brands that rent a center, a SEMA and, and Bridget, and we have a lot of room there, to to execute and, and, uh, hit our, our strategic, uh, plan with what we have in house. Um, so the focus right now is, is, let's get, uh, Bridget further integrated, let's get, um, you know, Rent A Center growing again, like a SEMA continue to grow double digits and and uh, you know, find different ways to Service. Uh, our customers through that, uh, through a SEMA and at the same time, pay down, uh pay down debt. Get

To our Target, leverage ratios, and then position the company for, for really, uh, supercharged growth in 26 and Beyond.

Various Analysts: All good to hear. Thanks for taking the questions.

Fahmi Karam: Thanks, Bill.

All good to hear. Thanks for taking the questions.

Thanks Bill.

Operator: Our next question comes from Anthony Chacumba at Loop Capital Markets.

Various Analysts: Good morning. Thanks for taking my question. Just a couple of quick ones. First one, you know, you had a 50 basis point year-over-year increase in the lease charge-off rate in the Renta Center business. I was just wondering if there was, if you could just provide any color in terms of what the drivers were for that.

Our next question comes from Anthony chukumba at loop capital markets.

Good morning. Thanks for taking my question. Um, just had a couple quick ones. Um, first 1, um, you know, you had a 50 basis, point year-over-year increase in the lease charge off rate in the Rena Center business. I was just wondering if there was a, if you could just surprised it any color uh, in terms of what the drivers were for that.

Fahmi Karam: Anthony, good morning. Thanks for the question. Yeah. Look, I think, you know, it's 50 basis points year over year. Some of that is, you know, why we tightened late last year, why we removed some of those phones. Some of that has to go through the portfolio, and you're seeing that. You know, I'd characterize it as stable. It's only up 10 basis points from the first quarter. You know, and we've always said that 4.5% range in this environment, give or take 10, 20 basis points, is kind of fine for the Renta Center business. So some of it is why we tightened in the fourth quarter and earlier this year. So some of that just has to work through the portfolio. But again, it's within a range that we find acceptable, especially as you have pressure on deliveries in the top line.

Various Analysts: Got it. No, that makes sense. And then just, you know, you talked to when you had acquired Bridget, you talked about at some point, I guess, sort of migrating their decisioning engine to Renta Center and Asima. I was just wondering if there's any update there. Thanks.

Anthony good morning. Uh, thanks for the question. Yeah, look, I think you know, it's, uh, 50 basis points. You're over over over a year. Some of that is, you know, why we tightened, um, late last year, why we removed some of those phones, some of that has to go through the portfolio and and and you're seeing that, you know, I'd characterize it as stable. It's only up 10 basis points, um, from the first quarter, you know, and we've always said that 4 and a half percent range in this environment, give or take 10. 20 basis points is, is kind of fine for the, uh, for the Rena Center business. So, some of it, uh, is why we tightened, uh, in the fourth quarter, uh, and earlier this year. Um, so some of that has just has to work through, uh, the portfolio. But, uh, again, it's in, it's within a range that we're we find acceptable, especially as you have pressure on, on deliveries. And, and the Top Line,

Got it. Now that makes sense. And then just um, you know, you talked to when you had uh, acquired Bridget, you talked about uh at some point um I guess sort of migrating, their decisioning engine to rent a center and a seam. I was just wondering if there's any update there. Thanks.

Fahmi Karam: No real updates. Definitely still something we're very focused on. Anthony, to be candid, it kind of comes down to prioritization of where we feel like we can get the best bang for our buck, if you will, with our time and resources. Similar answer to what we said on the marketing side on the cross-collaboration. You know, between R&D, developing new products, and growing Bridget versus having some of the data sharing and cash flow underwriting, we are going to do some testing this year around that just through the overlap of customers that we currently have. So we are starting on it. It is something that we think will be a big benefit for the combined company. Probably not something you'll see in 2025, probably something that we'll tackle in 2026.

Various Analysts: Got it. Good luck with the remainder of the year.

You know, between you know, R&D developing new products uh and growing Bridget versus, you know, having some of the the uh data sharing uh and cash flow underwriting. We are going to do some testing this year around that just through the the overlap of customers that we currently have. Um, so we are starting on it. It is something that we think will be a big benefit for the combined uh, uh company. Uh, probably not something you'll see in 2025, probably something that we'll we'll tackle in 2026.

Fahmi Karam: Thanks, Anthony.

Got it. Um, good luck with the remainder of the year.

Thanks Anthony.

Operator: I'm showing no further questions at this time. I would now like to turn it back to Fammy for closing remarks.

I'm showing no further questions at this time, I would now like to turn it back to fammy for closing remarks.

Fahmi Karam: Thank you, operator, and thank you to everyone who joined us today for an update on our Q2 performance and our outlook for the balance of 2025. Before we conclude, I'd like to extend my sincere gratitude to all of my colleagues at Upbound. Thank you for your unwavering contributions and support of our mission, our values, and our customers. Have a great day, everyone.

Thank you, operator. And thank you to everyone who joined us today, for an update on our Q2 performance, and our outlook for the balance of 2025. Before we conclude, I'd like, to extend my sincere gratitude to all of my colleagues at outbound. Thank you for your unwavering contributions and support of our mission. Our values and our customers have a great day, everyone.

Operator: Thank you for participating in today's conference. This does conclude the program. You may now disconnect.

Thank you for participating. In today's conference, this does conclude the program. You may now disconnect.