In This Article:
Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Upbound Group Inc (NASDAQ:UPBD) reported a 7.3% increase in first-quarter revenue, driven by strong performance from AEMA and the addition of Bridget.
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AEMA achieved nearly 9% year-over-year GMV growth, with improved lease charge-offs and adjusted EBITDA margins.
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Bridget's acquisition has been successful, with a 35% increase in revenue and a 26% rise in subscribers year-over-year.
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The company generated $127 million in free cash flow, nearly four times larger than the previous year's first quarter.
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Upbound Group Inc (NASDAQ:UPBD) has a strong balance sheet with $312 million in liquidity, supporting continued growth and capital allocation priorities.
Negative Points
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Rent A Center's same-store sales were down 2% year-over-year due to tightened underwriting and removal of higher loss products.
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The company faces potential impacts from tariff changes, which could affect market expectations and consumer confidence.
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Bridget's cash advance loss rate was 2.4%, indicating some risk in the cash advance segment.
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Rent A Center's revenue declined by 4.9% due to fewer company-owned stores and a streamlined product lineup.
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The macroeconomic environment remains uncertain, with potential headwinds from inflation and trade policy changes.
Q & A Highlights
Q: Can you provide more details on the impact of tariffs and any price changes from suppliers? A: (CFO) We haven't encountered any price changes due to tariffs so far. In some categories like TVs and appliances, we've even seen price reductions compared to last year. We have strategies to adjust pricing if needed, such as altering weekly payments or extending lease terms, which can offset any potential price increases. Our business model could benefit from more consumers opting for lease-to-own options if inflation rises.
Q: How is the integration of Bridget progressing, and what synergies do you expect? A: (CFO) Bridget's results have exceeded expectations with revenue up over 35% and subscribers up 26%. We've started cross-selling initiatives and data collaboration, particularly around cash flow insights. We expect these efforts to improve customer approvals and reduce losses. The integration is on track, and we're excited about Bridget's potential within Upbound.
Q: Can you explain the seasonality of Bridget's business and its impact on financials? A: (CFO) Bridget experiences seasonality, especially in Q1, where margins are higher due to reduced marketing spend and lower losses during tax season. Subscriber growth is typically flat from Q4 to Q1 but picks up post-tax season. We expect marketing spend to increase in Q2 and Q3, leading to subscriber growth.