Executive Summary

Q2 delivered steady top-line and EPS growth, with consolidated revenue up 7.5% y/y to $1.16B and non-GAAP diluted EPS up 7.7% y/y to $1.12, finishing above guidance midpoints; Adjusted EBITDA rose 7% y/y to $133.2M, with sequential margin expansion (+80 bps) .
Versus S&P Global consensus, revenue and non-GAAP EPS were modest beats, while EBITDA fell below the consensus metric (definition differences vs company-adjusted). Revenue $1,157.5M vs $1,143.9M*, EPS $1.12 vs $1.055*, EBITDA $117.6M* (company Adjusted EBITDA: $133.2M) . Values marked * retrieved from S&P Global.
FY25 guidance: midpoint for non-GAAP EPS raised to $4.05–$4.40 (vs $4.00–$4.40 prior); revenue ($4.60–$4.75B) and FCF ($150–$200M) unchanged; Adj. EBITDA ex-SBC range tightened to $515–$535M (midpoint unchanged) .
Stock narrative catalysts: sustained double-digit growth and margin lift at Acima, Brigit scaling with new products/marketing, Rent‑A‑Center (RAC) stabilization initiatives, and clarity on legal accruals/settlement progress; Q3 guide implies continued revenue/EPS momentum with non-GAAP EPS $0.95–$1.05 .

What Went Well and What Went Wrong

What Went Well
- Acima delivered its seventh straight quarter of GMV growth (+16% y/y), with applications up nearly 20% y/y and EBITDA margin +40 bps y/y; returning customers exceeded 40% of GMV, and Marketplace GMV grew >130% y/y .
- Brigit grew revenue nearly 40% y/y with ARPU +12.5% y/y; paying subscribers +24% y/y; EBITDA margin ~28% on timing of marketing; line-of-credit pilot (up to $500; up to 9 months) adds to product optionality .
- Guidance quality and execution: Q2 results exceeded midpoint across guided metrics; company raised midpoint of FY25 non-GAAP EPS and added Q3 guidance; non-GAAP EPS benefitted by ~$0.025 from lower SBC due to leadership transition timing .
What Went Wrong
- Consolidated GAAP margins compressed: operating margin 4.4% vs 7.5% y/y, impacted by $65.5M pre-tax special items (notably $31.7M legal accrual) .
- Rent‑A‑Center revenue declined 7.1% y/y with SSS -4%, reflecting 2024 underwriting tightening, product exits (e.g., mobile phones), and lower deliveries; RAC Adjusted EBITDA margin fell 170 bps y/y to 14.6% .
- Legal/regulatory overhang: multi-state AG matter accrual increased; $14M McBurnie class action settlement reached in principle after quarter-end (substantially reserved at 6/30); management will update accruals as negotiations progress .

Financial Results

Consolidated performance vs prior year and prior quarter

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	1,076.5	1,176.4	1,157.5
GAAP Operating Profit ($M)	80.7	62.6	50.7
Net Earnings ($M)	33.9	24.8	15.5
Net Profit Margin (%)	3.2%	2.1%	1.3%
Adjusted EBITDA ($M)	124.5	126.1	133.2
Adjusted EBITDA Margin (%)	11.6%	10.7%	11.5%
GAAP Diluted EPS ($)	0.61	0.42	0.26
Non-GAAP Diluted EPS ($)	1.04	1.00	1.12
Free Cash Flow ($M)	0.6	127.2	(10.4)

Segment breakdown

Segment	Metric	Q2 2024	Q1 2025	Q2 2025
Acima	GMV ($M)	450.1	454.1	522.1
	GMV y/y %	21.0%	8.8%	16.0%
	Revenue ($M)	552.8	637.3	619.0
	Adjusted EBITDA ($M)	81.3	85.0	93.3
	Adj. EBITDA Margin (%)	14.7%	13.3%	15.1%
	Lease Charge-Off Rate (%)	9.6%	8.9%	9.3%
	60+ Day Past Due Rate (%)	12.1%	12.9%	11.8%
Rent‑A‑Center	Revenue ($M)	502.8	489.0	467.1
	Same Store Sales y/y (%)	2.6%	(2.0%)	(4.0%)
	Adjusted EBITDA ($M)	82.2	72.1	68.4
	Adj. EBITDA Margin (%)	16.3%	14.7%	14.6%
	Lease Charge-Off Rate (%)	4.2%	4.6%	4.7%
	30+ Day Past Due Rate (%)	2.7%	3.3%	2.7%
Brigit	Revenue ($M)	—	31.9 (Feb–Mar)	51.9
	Paying Users (#)	—	1,230,158	1,320,272
	ARPU ($/mo)	—	12.88	13.45
	Net Advance Loss Rate (%)	—	2.4%	2.6%
	Adjusted EBITDA ($M)	—	11.4	14.4
Mexico	Revenue ($M)	20.9	19.6	19.6
	Adj. EBITDA ($M)	1.9	1.7	2.4

Consensus vs Actual (S&P Global; Q2 2025)

Metric	Consensus	Actual	Note
Revenue ($M)	1,143.9*	1,157.5	Beat
Non-GAAP EPS ($)	1.055*	1.12	Beat
EBITDA ($M)	131.2*	117.6*	Miss; consensus metric differs from company “Adjusted EBITDA” of $133.2M

Values marked * retrieved from S&P Global.

Non-GAAP adjustments (Q2 2025 EPS, per reconciliation)

Special Item	EPS Impact
Legal matters	0.41
Acima acquired assets D&A	0.20
Brigit equity vesting	0.11
Brigit acquired assets D&A	0.08
Brigit replacement awards & other comp	0.06
Net (includes minor items)	~0.86 to reach $1.12 non-GAAP

Guidance Changes

Metric	Period	Previous Guidance (5/1/2025)	Current Guidance (7/31/2025)	Change
Revenue ($B)	FY 2025	4.60 – 4.75	4.60 – 4.75	Maintained
Adj. EBITDA ex‑SBC ($M)	FY 2025	510 – 540	515 – 535	Tightened (midpoint unchanged)
Non‑GAAP Diluted EPS ($)	FY 2025	4.00 – 4.40	4.05 – 4.40	Raised midpoint
Free Cash Flow ($M)	FY 2025	150 – 200	150 – 200	Maintained
Revenue ($B)	Q3 2025	—	1.05 – 1.15	New
Adj. EBITDA ex‑SBC ($M)	Q3 2025	—	120 – 130	New
Non‑GAAP Diluted EPS ($)	Q3 2025	—	0.95 – 1.05	New

Earnings Call Themes & Trends

Topic	Q4 2024	Q1 2025	Q2 2025	Trend
Digital/AI initiatives	RAC AI search and chatbot; Acima Marketplace/leaseability engine; DTC expansion	Progress on personalization; Cash App integration; Mexico pilot preview for Acima	Acima new website/platform; virtual lease card pilot; RAC “agentic AIs” for real‑time sales coaching	Accelerating digital tooling and UX across segments
Supply chain/tariffs/macro	Neutral to slightly cautious; LTO countercyclical positioning	Limited direct tariff exposure; pricing levers ($1–$2/week; term)	No tariff-driven price increases yet; poised to protect margins if needed	Monitoring; prepared to adjust pricing/terms
Product performance mix	Acima GMV +15% in Q4; diversification beyond furniture	Acima GMV +8.8% y/y; DTC Marketplace +80% q/q (first quarter)	Acima GMV +16% y/y; Marketplace GMV >130% y/y; jewelry strength; returning customer >40% GMV	Robust, diversified growth; DTC scaling
Regulatory/legal	CFPB matter dismissed in prior period; other matters ongoing	Legal items remain; special items in reconciliation	$31.7M accrual; McBurnie settlement in principle at $14M post‑quarter (substantially reserved)	Progress but overhang persists
Brigit integration & R&D	Acquisition closed 1/31; roadmap to cross‑sell and underwriting synergies	Early cross‑sell; seasonality; ARPU expansion; CAC discipline	Revenue +~40% y/y; line-of-credit pilot (up to $500, 9 months); marketing spend ramp 2H	Scaling products/marketing; underwriting data sharing later

Management Commentary

“Acima’s growth algorithm continues to deliver sustainable, double-digit GMV growth, and Brigit’s growth curve is powered by its marketing and product innovation efforts.”
“The Q2 GMV from Acima's Marketplace was up over 130% y/y... returning customers now exceeds 40% of GMV.”
“Brigit's adjusted EBITDA margin was nearly 28%... Our customer acquisition efforts will significantly expand across the balance of the year... we expect EBITDA margins will decrease to the low teens range.”
“Rent-A-Center deliveries... stabilized across the quarter... we will roll out new initiatives to spur customer engagement... focus on digital and online capabilities.”
“We recorded an additional accrual of $31.7 million in the second quarter... agreement in principle for $14 million to settle the McBurnie matter.”

Q&A Highlights

Rent‑A‑Center outlook: Underwriting tightening and removal of low-profit mobile phones impacted top line; without these moves, SSS would have been flat to slightly up; expect lapping benefits in 2H25 and aim to return to positive SSS into 2026 .
Brigit strategy: Ramp marketing channels (including social, in‑store/at POS) in 2H; piloting line-of-credit up to $500 with up to 9‑month terms; integration synergies targeted more in 2026 (cash-flow underwriting/data sharing) .
Acima loss metrics: Slight sequential uptick driven by mix (jewelry growth), but still within range; margin expanded y/y despite mix .
Leverage and capital allocation: YTD FCF $117M supports deleveraging toward ~2x over next couple years; M&A not a focus near-term as internal opportunities are substantial .
Legal matters: Majority of accrual relates to multi-state AG matter; McBurnie settlement substantially reserved at quarter-end .

Estimates Context

Q2 2025 vs S&P Global consensus: Revenue (actual $1,157.5M) exceeded $1,143.9M*; non-GAAP diluted EPS (actual $1.12) exceeded $1.055*; EBITDA (consensus $131.2M*) below the S&P “actual” $117.6M*, noting definitional differences with company Adjusted EBITDA of $133.2M . Values marked * retrieved from S&P Global.
Implications: Street may lift FY25 EPS modestly given raised midpoint and momentum at Acima/Brigit; scrutiny likely on RAC recovery cadence and the level/timing of legal expense normalization .

Key Takeaways for Investors

Mix-led durability: Acima’s double-digit GMV (+16% y/y) with margin expansion and rising returning-customer mix (>40%) underscores sustainable growth even as furniture remains soft .
Brigit scaling: Nearly 40% revenue growth with ARPU expansion and a new line‑of‑credit pilot broadens TAM; expect lower H2 EBITDA margins as marketing ramps to drive subscriber growth into holiday season .
RAC bridge to stabilization: Underwriting discipline and digital initiatives (pre‑approvals, agentic AIs, referral program) aim to stabilize deliveries and rebuild lease portfolio; comp lapping should aid 2H25/2026 trajectory .
Guidance quality: FY25 EPS midpoint raised; Q3 guide implies continued EPS momentum; free cash flow intact ($150–$200M) and leverage targeted to trend toward ~2x over time .
Legal overhang manageable: Additional accruals recognized; one class action settled in principle post‑quarter; monitor multi-state AG outcome as a gating factor on multiple expansion .
Trading lens: Near‑term upside tied to continued Acima outperformance and Brigit subscriber growth; watch RAC SSS stabilization evidence and legal updates; consensus EPS may drift higher while EBITDA definition differences remain a modeling nuance .

Note: No additional Q2 2025 press releases beyond the 8‑K earnings materials were found in the period searched . All financials and commentary cited from company filings and transcripts as referenced above. Values marked * retrieved from S&P Global.

UPBOUND GROUP, INC. (UPBD)·Q2 2025 Earnings Summary