Executive Summary

Q2 2024 revenue was $503.1M with GAAP diluted loss per share of $0.39 and non-GAAP diluted loss per share of $0.07; adjusted EBITDA was $24.5M . Year-over-year trends were weaker given revenue decline and lower adjusted EBITDA, while Aaron’s Business gross margin improved and e-commerce momentum remained strong .
The company withdrew 2024 guidance and did not host an earnings call due to a definitive agreement to be acquired by IQVentures Holdings for $10.10 per share cash (enterprise value ~$504M), expected to close by year-end subject to approvals .
Segment mix: Aaron’s Business revenue fell 5.0% YoY but showed improving same-store lease portfolio size; BrandsMart revenue fell 5.8% with comp sales down 7.3% YoY, though gross margin improved modestly .
Non-GAAP adjustments materially narrowed the quarter’s loss (from GAAP EPS -$0.39 to non-GAAP EPS -$0.07), driven by acquisition-related costs, restructuring and amortization .
Dividend maintained at $0.125/share (declared for payment on Oct 3, 2024), providing income continuity amid the pending merger .

What Went Well and What Went Wrong

What Went Well

Omnichannel execution drove lease merchandise deliveries up 11.1% and e-commerce recurring revenue written up 79.4% YoY, supporting sequential lease portfolio improvement at Aaron’s Business .
Aaron’s Business gross profit margin expanded 100 bps YoY to 64.5% and same-store lease portfolio size rose 1.6% YoY, indicating improved unit economics and portfolio health .
The company signed a definitive merger agreement with IQVentures at $10.10 per share, creating a clear corporate catalyst and potential value realization pathway; management cited confidence in IQVentures’ resources to unlock long-term potential .

Management quote: “During the second quarter, we continued to see positive momentum in the business, despite ongoing macroeconomic pressures… We are excited about our recent agreement to be acquired by IQVentures… We believe the acquisition provides significant value to our shareholders” – CEO Douglas Lindsay .

What Went Wrong

Consolidated revenue declined 5.1% YoY and adjusted EBITDA fell 42.3% YoY; consolidated operating loss was $12.3M vs operating profit of $11.3M in the prior year quarter .
BrandsMart comparable sales declined 7.3% YoY, and the segment moved from positive EBT to a loss; adjusted EBITDA margin deteriorated from 3.1% to -0.2% .
Cash flow weakened as adjusted free cash flow turned negative (-$6.0M in Q2 vs +$36.0M in Q2 2023), reflecting lower operating cash and continued capex .

Financial Results

Consolidated performance vs prior periods and estimates

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$530.4	$511.5	$503.1
GAAP Diluted EPS ($)	$0.21	-$0.46	-$0.39
Non-GAAP Diluted EPS ($)	$0.39	-$0.15	-$0.07
Adjusted EBITDA ($USD Millions)	$42.4	$22.7	$24.5

Note on estimates: S&P Global consensus for Q2 2024 was unavailable via our SPGI tool; comparisons to Wall Street estimates are therefore not provided.

Segment breakdown – Aaron’s Business and BrandsMart

Metric	Q2 2023	Q2 2024
Aaron’s Business Revenues ($USD Millions)	$388.9	$369.4
Aaron’s Business Lease Portfolio Size ($USD Millions)	$119.6	$117.2
Aaron’s Business Same-Store Lease Portfolio Size YoY	-6.5%	1.6%
Aaron’s Business Lease Renewal Rate (%)	88.2%	86.8%
Aaron’s Business Gross Profit Margin (%)	63.5%	64.5%
Aaron’s Business EBT ($USD Millions)	$30.8	$17.3
Aaron’s Business Adjusted EBITDA ($USD Millions)	$49.5	$36.3
Aaron’s Business Adjusted EBITDA Margin (%)	12.7%	9.8%
Write-Offs (%)	5.4%	6.1%

Metric	Q2 2023	Q2 2024
BrandsMart Revenues ($USD Millions)	$143.8	$135.4
BrandsMart Comparable Sales (%)	-20.9%	-7.3%
BrandsMart Gross Profit Margin (%)	24.7%	25.1%
BrandsMart (Loss) Earnings Before Income Taxes ($USD Millions)	$1.1	-$4.0
BrandsMart Adjusted EBITDA ($USD Millions)	$4.5	-$0.3
BrandsMart Adjusted EBITDA Margin (%)	3.1%	-0.2%

KPIs and footprint

KPI	Q2 2023	Q2 2024
Ending Store Count – Total	1,256	1,205
Company-Operated Stores	1,026	976
GenNext (included in Company-Operated)	230	269
Franchised Stores	230	229

Additional operating highlights:

E-commerce recurring revenue written increased 79.4% YoY, and lease merchandise deliveries increased 11.1% YoY at Aaron’s Business .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Revenues	FY 2024	$2.055B–$2.155B	Withdrawn	Lowered/Withdrawn
Adjusted EBITDA	FY 2024	$105M–$125M	Withdrawn	Lowered/Withdrawn
Non-GAAP Diluted EPS	FY 2024	$0.00–$0.25	Withdrawn	Lowered/Withdrawn
Dividend	Q3 2024	$0.125/share (ongoing)	$0.125/share declared; payable Oct 3, 2024	Maintained

Rationale: Guidance pulled due to pending IQVentures acquisition; dividend policy maintained for continuity .

Earnings Call Themes & Trends

Note: The company did not host a Q2 2024 earnings call due to the pending merger . Themes are tracked from Q4 2023 and Q1 2024 calls/releases.

Topic	Q4 2023 (Prior-2)	Q1 2024 (Prior-1)	Q2 2024 (Current)	Trend
Omnichannel lease decisioning and e-commerce	New omnichannel program launched; e-commerce recurring revenue written +60% YoY; focus on higher conversion	E-commerce recurring revenue written +94.1% YoY; April deliveries +18.6%	E-commerce recurring revenue written +79.4% YoY	Continued strength
Aaron’s Business lease portfolio trajectory	Ended 2023 down 7% YoY but expected to grow mid-single digits by YE 2024	Sequential improvement; same-store lease portfolio size down 1.4% YoY, improving vs Q4	Same-store lease portfolio size +1.6% YoY; lease portfolio -2.0% YoY	Improving
BrandsMart demand and margins	Ongoing pressure; comp -14% in Q4; margin improved 320 bps	Comp -9.4% (sequentially better); profitability remains challenging	Comp -7.3% (further improvement); gross margin +40 bps; EBT turned negative	Stabilizing comps; earnings pressure
Macro/tax season and credit metrics	Write-offs improved in 2023; tax season impacts portfolio dynamics	Write-offs 5.9%; reiterates 6–7% FY write-offs; lease renewal rate down ~110 bps YoY	Write-offs 6.1%; lease renewal rate 86.8% (down 140 bps YoY)	Slightly worse credit metrics
Real estate/store optimization	Cost savings actions in Q4; footprint optimization continues	Ongoing store rationalization; mix shift to GenNext showroom formats	New BrandsMart store opened in Kennesaw, GA	Active optimization
Corporate actions	2024 outlook provided at Q4	Reaffirmed revenue/EBITDA; raised non-GAAP EPS outlook (lower tax rate)	Merger with IQVentures; guidance withdrawn	Major strategic shift

Management Commentary

Prepared remarks emphasized continued positive momentum despite macro headwinds, with omnichannel lease decisioning and customer acquisition programs driving growth in deliveries and sequential portfolio improvements at Aaron’s Business; a new BrandsMart store was opened in Kennesaw, GA .
Strategic direction: “We believe the acquisition provides significant value to our shareholders, and that IQVentures’ resources and financial services expertise will help better position the Company to achieve its long-term potential” – CEO Douglas Lindsay .
Outlook posture: With the pending transaction, the company withdrew 2024 guidance and opted not to host an earnings call, shifting focus to transaction closure by year-end .

Q&A Highlights

The company did not host an earnings call for Q2 2024 due to the pending merger, so no Q&A session or guidance clarifications were provided .

Estimates Context

S&P Global (Capital IQ) consensus estimates for Q2 2024 were unavailable via our SPGI data tool; therefore, formal comparisons to Wall Street consensus are not provided.
Implication: Sell-side models may need to reflect non-GAAP adjustments (acquisition-related costs, restructuring, amortization) and the withdrawal of guidance given the pending transaction .

Key Takeaways for Investors

Omnichannel initiatives are a bright spot, driving strong e-commerce growth and improving same-store lease portfolio size; expect continued focus on digital acquisition and centralized decisioning to sustain portfolio momentum .
BrandsMart remains the key pressure point: comps improved but profitability deteriorated; monitor mix, procurement savings, pricing, and traffic trends for signs of bottoming and profit stabilization .
Non-GAAP adjustments were material this quarter (notably ~$8.0M acquisition-related costs and ~$2.9M restructuring), significantly narrowing EPS loss; investors should track adjusters as merger-related costs continue through close .
Cash generation softened with adjusted free cash flow negative in Q2; watch operating cash trajectory, capex pacing, and working capital efficiency into H2 as merger-related constraints apply .
The IQVentures deal is the dominant catalyst; with guidance withdrawn and no call, focus shifts to deal process (shareholder approval, closing conditions) and potential timing implications for capital allocation and operations .
Dividend continuity offers limited income support ($0.125/share declared for Oct 3, 2024), but the strategic path is largely defined by the merger .
Near-term trading lens: limited informational updates (no call, withdrawn guidance) and merger arbitrage dynamics likely dominate; medium-term thesis hinges on the combined entity’s ability to leverage fintech capabilities to enhance underwriting, retention, and omnichannel growth .

Appendix: Consolidated Financial Statements (select line items)

Consolidated gross profit: $272.0M in Q2 2024 (vs $282.3M in Q2 2023) .
Consolidated operating loss: -$12.3M in Q2 2024 (vs +$11.3M in Q2 2023) .
Balance sheet: Cash $34.2M; Debt $215.8M; Shareholders’ equity $657.7M (June 30, 2024) .
Cash flow (six months): Cash used in operating activities -$6.9M; capex -$40.3M .

Aaron's Company, Inc. (AAN)·Q2 2024 Earnings Summary