Upbound outlines 2026 EPS of $4-$4.35 while Acima targets GMV flat to low single-digit growth

Earnings Call Insights: Upbound Group (UPBD) Q1 2026

MANAGEMENT VIEW

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“Our first quarter represented a solid start to 2026 for Upbound. We executed well in a difficult operating environment, delivered results in line with our financial targets, generated robust cash flow and deleveraged our balance sheet” (CEO & Director Fahmi Karam).

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“With our Brigit acquisition last year, we have 3 complementary brands that deliver a wide range of financial solutions to a similar and sizable target consumer base” and management is focused on “using data, advanced analytics and AI to improve personalization, strengthen underwriting and enhance operating efficiency across our organization” (CEO & Director Karam).

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“We’ve continued investing in key senior leadership roles and talent and we’re thrilled to welcome our new Chief Technology Officer, Balaji Kumar” (CEO & Director Karam).

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“Lease charge-offs were approximately 8.8% in the first quarter, representing a meaningful improvement… including a 130 basis point improvement compared to the fourth quarter,” while “GMV finished the quarter below our expectations” (CEO & Director Karam).

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“Revenue was $1.2 billion, up 3.7% year-over-year. Adjusted EBITDA increased nearly 8% to $136 million and non-GAAP diluted EPS was $1.08” (CEO & Director Karam).

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“Quarter end liquidity was approximately $465 million… Net debt was approximately $1.4 billion and leverage was 2.6x trailing 12-month adjusted EBITDA” (Executive VP & CFO Hal Khouri).

OUTLOOK

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“We believe that we are well positioned to achieve the target ranges we shared for 2026 revenue, adjusted EBITDA and non-GAAP diluted EPS on our previous earnings call… consolidated revenue of approximately $4.7 billion to $4.95 billion, adjusted EBITDA of $500 million to $535 million and non-GAAP diluted earnings per share of $4 to $4.35” (CFO Khouri).

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“We also expect free cash flow of approximately $200 million in 2026,” and the guidance “is inclusive in an estimated 2026 payment outflow of approximately $70 million in non-ordinary course legal and regulatory settlements and assumes relatively flat CapEx spend” (CFO Khouri).

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Acima outlook was revised: “We expect 2026 GMV and revenue to be flat to up to low single digits year-over-year,” with losses “stabilizing in the low 9% area,” and “Acima adjusted EBITDA margin to finish the year up slightly relative to 2025” (CFO Khouri).

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Q2 guidance: “consolidated revenue of $1.1 billion to $1.2 billion, adjusted EBITDA of $120 million to $130 million and non-GAAP diluted earnings per share of $1 to $1.10” (CFO Khouri).

FINANCIAL RESULTS

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Segment detail included Brigit: “Revenue was $68 million,” “monthly ARPU… increased nearly 12% year-over-year to $14.41,” “Paying users were approximately 1.6 million,” and “adjusted EBITDA… approximately $22.9 million” (CFO Khouri).

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Acima: “First quarter revenue was $649 million,” “GMV was approximately $427 million,” “Acima lease charge-offs were approximately 8.8%,” and “Adjusted EBITDA for Acima was $89 million… adjusted EBITDA margin was 13.7%” (CFO Khouri).

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Rent-A-Center: “First quarter revenue was $482 million,” “same-store sales increasing approximately 40 basis points,” “lease charge-offs were approximately 4.7%,” and “Adjusted EBITDA for Rent-A-Center was $67 million” (CFO Khouri).

Q&A

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Kyle Joseph, Stephens: asked about tax refunds and gas prices’ quarter cadence; CEO Karam said “fuel prices… puts a lot of pressure on their discretionary spending” and “tax season… came in about 10% on average a little higher,” while “people… didn’t exercise the payout options as much,” and noted Brigit Q1 seasonality: “we take a light on the marketing spend” (CEO Karam).

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Kyle Joseph, Stephens: asked timing of Acima underwriting changes; CEO Karam said “we really started tightening… in the second quarter of last year” and added “by the second half of this year, we should return to growth at GMV” (CEO Karam).

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Robert Griffin, Raymond James: pressed on what drove Acima GMV decline and whether anything else was “bleeding off”; CEO Karam said “the majority of what we saw… is around the underwriting tightness” and cited jewelry tightening: “that was down probably low to mid-teens” (CEO Karam).

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Vincent Caintic, BTIG: asked about leadership hiring and Brigit turnover/earnouts; CEO Karam said founders “are going to transition into more of an advisory and consulting role in 2026” and framed it as “a natural evolution,” while CFO Khouri added the company is adding expertise “particularly in the areas of digital technology… AI, underwriting” (CEO Karam; CFO Khouri).

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Anthony Chukumba, Loop Capital: asked about the large e-commerce furniture retailer agreement; CEO Karam said “The revised agreement enhances our integration and provides Acima exclusive rights as a checkout option” and later clarified exclusivity is “just on having the checkout button” (CEO Karam).

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John Hecht, Jefferies: asked on deleveraging pace; CFO Khouri said “we’re contemplating paying that off and then aggressively paying down the debt,” but “there’s no real clock on that” (CFO Khouri).

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Bradley Thomas, KeyBanc: asked about underwriting buffer and Brigit sensitivity; CEO Karam said “we remain highly disciplined… conservative,” and on Brigit: “people are feeling that pressure and need that extra cash and that extra liquidity” (CEO Karam).

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William Reuter, BofA: asked how quickly fuel spikes hit behavior; CEO Karam said it was “noticeable” in “lower payouts” but “wasn’t an immediate shock” (CEO Karam).

SENTIMENT ANALYSIS

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Analysts’ tone was slightly negative to pressing on GMV drivers, underwriting conservatism, product rollout timing, and legal accruals, including “how much of the GMV decline is from the tightening actions versus anything else” (Robert Griffin, Raymond James).

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Management tone was slightly positive and disciplined, repeatedly emphasizing conservatism and playbooks, including “we remain highly disciplined… conservative in our posture” (CEO Karam).

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Versus last quarter, management maintained similar confidence on 2026 consolidated targets, but used more revision language for Acima, stating “we revised our outlook” for flatter GMV growth (CFO Khouri).

QUARTER-OVER-QUARTER COMPARISON

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2026 consolidated targets were reiterated in both calls: “consolidated revenue of approximately $4.7 billion to $4.95 billion… non-GAAP diluted earnings per share of $4 to $4.35” (CFO Khouri, Q1 2026; CFO Khouri, Q4 2025).

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Acima guidance language shifted from growth to flatter: Q4 call said “2026 GMV and revenue to increase mid-single digits,” while Q1 call said “flat to up to low single digits year-over-year” (CFO Khouri, Q4 2025; CFO Khouri, Q1 2026).

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Leadership build-out progressed: Q4 call highlighted new CFO and Chief Growth Officer, while Q1 call added “our new Chief Technology Officer, Balaji Kumar” (CEO Karam, Q4 2025; CEO Karam, Q1 2026).

RISKS AND CONCERNS

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Management cited consumer pressure: “elevated costs in essential categories such as groceries, rent, utilities and energy… weighs on discretionary spending” (CEO Karam).

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Acima volume risk was linked to credit posture and macro: “Tightening underwriting, coupled with macro headwinds… pressured our GMV” (CEO Karam).

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Legal and regulatory cash outflows remained in guidance: “estimated 2026 payment outflow of approximately $70 million in non-ordinary course legal and regulatory settlements” (CFO Khouri).

FINAL TAKEAWAY

Management described Q1 as “in line with our financial targets” while highlighting improved lease charge-offs at Acima alongside lower-than-expected GMV, and reiterated full-year 2026 consolidated targets (revenue $4.7 billion to $4.95 billion, adjusted EBITDA $500 million to $535 million, non-GAAP EPS $4 to $4.35, free cash flow about $200 million). Executives emphasized a conservative underwriting posture, accelerated digital/AI execution, continued deleveraging (2.6x leverage at quarter-end), and near-term catalysts including the broader Brigit line of credit rollout later in the year, an expanded e-commerce checkout partnership expected to drive GMV in the second half, and the Amazon pickup/returns rollout across more than 1,700 Rent-A-Center stores starting in June.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/upbd/earnings/transcripts]

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