Executive Summary

Q4 2024 revenue was $1.079B (+6.0% y/y), GAAP diluted EPS $0.55 versus $(0.21) in Q4 2023, and non-GAAP diluted EPS $1.05 (+$0.24 y/y); Adjusted EBITDA rose 14.1% to $122.8M while consolidated lease charge-off rate improved 20 bps to 7.3% .
Segment performance was mixed: Acima GMV +15.3% y/y with revenue +14.4% and LCO down to 9.0%; Rent-A-Center revenue declined 3.3% y/y but Adjusted EBITDA margin expanded to 17.0% amid lower operating expenses .
FY 2025 guidance initiated: revenue $4.50–$4.75B, non-GAAP EPS $3.90–$4.40, Adjusted EBITDA (ex-SBC) $500–$540M, FCF $150–$200M; Q1 2025 non-GAAP EPS guided to $0.90–$1.00 .
Potential stock catalysts: CEO succession (CFO Fahmi Karam to become CEO on June 1, 2025), dividend raised 5%+ to $0.39/qtr, and Brigit acquisition closed Jan 31, 2025 to accelerate digital financial health cross-sell and underwriting enhancements .

What Went Well and What Went Wrong

What Went Well

Acima delivered its fifth consecutive quarter of double-digit GMV growth (+15.3% y/y), with revenue +14.4% y/y and LCO improving to 9.0%; management highlighted expanding merchant roster and higher DTC marketplace contribution .
Rent-A-Center Adjusted EBITDA margin rose to 17.0% (14.5% prior year) on lower operating expenses; GAAP operating profit reached $69.7M (15.7% margin) despite revenue headwinds .
Consolidated operating discipline: GAAP operating expenses fell to 39.8% of revenue (from 44.9%), driving operating margin expansion (7.3% vs 5.5%) and non-GAAP EPS to $1.05; CEO: “Acima’s momentum continued…largest-ever adjusted EBITDA” .

What Went Wrong

Rent-A-Center revenue declined 3.3% y/y; LCO increased 80 bps to 5.0% and store count fell to 1,728 after franchising and consolidation actions, pressuring top line despite margin gains .
Acima gross margin contracted 260 bps y/y due to a higher merchandise sales mix (more 90-day purchase option elections) and the ANOW-to-Acima platform conversion impact .
Q4 cash flow: net cash from operations (-$61.9M) and FCF (-$74.0M) were negative as growth funding and working capital needs weighed versus Q3’s positive FCF .

Financial Results

Consolidated vs Prior Periods and Estimates

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	$1,018.1	$1,068.9	$1,079.2
GAAP Diluted EPS ($)	$(0.21)	$0.55	$0.55
Non-GAAP Diluted EPS ($)	$0.81	$0.95	$1.05
Adjusted EBITDA ($USD Millions)	$107.6	$116.9	$122.8
Net Profit Margin (%)	(1.1%)	2.9%	2.9%
Lease Charge-Off Rate (%)	7.5%	7.4%	7.3%

Note: Wall Street consensus from S&P Global for Q4 2024 was not available via our data connection at time of analysis. We attempted retrieval but could not obtain the figures. As such, we cannot state beat/miss versus consensus for Q4 2024.

Segment Breakdown

Segment Metric	Q4 2023	Q3 2024	Q4 2024
Rent-A-Center Revenue ($MM)	$459.3	$458.7	$444.0
Rent-A-Center Adj. EBITDA ($MM)	$66.7	$74.7	$75.4
Rent-A-Center Adj. EBITDA Margin (%)	14.5%	16.3%	17.0%
Rent-A-Center LCO (%)	4.2%	4.9%	5.0%
Rent-A-Center 30+ Past Due (%)	3.1%	3.4%	3.4%
Acima GMV ($MM)	$475.2	$436.1	$547.8
Acima GMV Y/Y (%)	19.0%	13.0%	15.3%
Acima Revenue ($MM)	$507.9	$566.2	$581.1
Acima Adj. EBITDA ($MM)	$75.0	$75.3	$80.9
Acima Adj. EBITDA Margin (%)	14.8%	13.3%	13.9%
Acima LCO (%)	9.9%	9.2%	9.0%
Acima 60+ Past Due (%)	13.0%	13.4%	13.3%
Mexico Revenue ($MM)	$19.1	$—	$18.3
Franchising Revenue ($MM)	$31.8	$—	$35.8

KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
On-Rent Rental Merchandise, Net ($MM)	$1,109.9	$1,016.7	$1,134.9
RAC Lease Portfolio – Monthly Value ($MM)	$145.0	$132.2	$136.8
Corporate-Owned Store Count (U.S. & PR)	1,839	1,726	1,728
Net Cash from Operating Activities ($MM)	$(19.7)	$106.2	$(61.9)
Free Cash Flow ($MM)	$(36.9)	$88.3	$(74.0)

Non-GAAP EPS excludes “special items” such as Acima acquired assets amortization/depreciation, legal matters, transaction fees, accelerated stock comp, and discrete tax items per reconciliations .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated Revenue ($B)	FY 2025	N/A	$4.50 – $4.75	Initiated
Adjusted EBITDA ex-SBC ($MM)	FY 2025	N/A	$500 – $540	Initiated
Non-GAAP Diluted EPS ($)	FY 2025	N/A	$3.90 – $4.40	Initiated
Free Cash Flow ($MM)	FY 2025	N/A	$150 – $200	Initiated
Consolidated Revenue ($B)	Q1 2025	N/A	$1.05 – $1.15	Initiated
Non-GAAP Diluted EPS ($)	Q1 2025	N/A	$0.90 – $1.00	Initiated
Tax Rate (%)	FY 2025	N/A	~26%	Initiated
Diluted Shares (MM)	FY 2025	N/A	~58.9 incl. ~2.7M Brigit shares	Initiated
Acima (GMV/Rev growth; EBITDA margin)	FY 2025	N/A	High single-digit to low double-digit growth; margins improving toward mid-teens	Initiated
Rent-A-Center (Revenue; EBITDA margin)	FY 2025	N/A	Revenue down low single digits; margins mid-teens, down y/y	Initiated
Brigit (Revenue; Adj. EBITDA)	FY 2025	N/A	Rev $215–$230M; Adj. EBITDA $25–$30M (11/12 months consolidated)	Initiated
Dividend per Share (Quarterly)	Ongoing	$0.37 in 2024	$0.39 (+5%+)	Raised

Earnings Call Themes & Trends

Topic	Q2 2024 (Prior-2)	Q3 2024 (Prior-1)	Q4 2024 (Current)	Trend
AI/Technology	Launched cloud-native POS (RecPad), modular e-commerce; AI-powered leasability engine; Google partnerships for personalization	Generative AI on rentacenter.com; AI-powered Acima marketplace onboarding; virtual lease card roadmap	Rack Bed POS improvements; continued Google work; marketplace added Walmart/Amazon/Target; ongoing virtual lease card testing	Scaling digital initiatives
Macro/Trade-down	Trade-down lifting Acima apps +35%; selective underwriting; revenue guidance raised	Trade-down continued; Acima LCO improved; RAC seasonality headwinds but margins up	Trade-down persists; Acima margins expected to improve in 2025; cautious underwriting posture	Stable-to-improving risk profile
Product performance	Furniture softer industry-wide; diversification (jewelry, wheel & tire) offsets	Furniture/e-com mix increases; category diversification	Jewelry and wheel/tire strong; marketplace adds large brands	Diversification benefits
Regulatory/legal	Filed suit vs CFPB; disclosed investigation context	Legal accrual (~$7.5M) estimate commentary; cautious disclosures	Special items in Q4 include legal matters; management expects ongoing resolution; competitor case dismissal cited	Continuing but contained
Regional/events	RAC store consolidation; NY franchise sale announced	RAC impacted by competitor liquidations; e-com revenue 26%	Hurricanes Helene/Milton modest impact; footprint optimization largely complete	Operationally manageable

Management Commentary

CEO (Mitch Fadel): “Acima’s momentum continued…delivered over 17% growth this year on both GMV and revenue, while generating its largest-ever adjusted EBITDA…we welcomed Brigit…” .
CFO (Fahmi Karam): “Upbound delivered strong results in Q4…we met or exceeded annual guidance…In 2025, we expect stronger cash flow…ongoing commitment to reducing our debt” .
On 2025 priorities: focus on merchants, customers, and margins (Acima); underwriting discipline; digital evolution and omni-channel efficiency (RAC); cross-marketing and cash-flow underwriting synergies (Brigit) .

Q&A Highlights

Consumer/Underwriting: Core customer remains under pressure; conservative posture; Acima benefits from trade-down while RAC does not see direct waterfall effect .
Acima margin drivers: Expect margin improvement via lower losses and operating leverage; near-term gross profit impacted by early purchase mix; sequential margin uptick already evident .
Merchant pipeline: Active and robust, with recent wins among top-50 furniture retailers; integration speed and service drive share gains .
External dynamics: Furniture retailer bankruptcies created Q4 liquidation headwind but potential 2025 upside for RAC and Acima .
Tax season: Early indications of higher refunds vs prior year support consumer demand; management constructive .
Legal: No material update; management confident in position; notes competitor’s similar case largely dismissed .

Estimates Context

S&P Global consensus for Q4 2024 EPS and revenue was not retrievable at the time of analysis; therefore we cannot state beat/miss versus Street for Q4 2024. Management did not cite specific consensus comparisons on the Q4 call –.
Given new FY 2025 guidance, Street estimates may need to adjust higher for revenue and EPS if Acima margin improvements and Brigit contributions materialize as guided .

Key Takeaways for Investors

Acima is the growth engine: double-digit GMV and revenue growth with improving loss rates and a clear path to margin normalization; leverage merchant adds, DTC marketplace, and underwriting discipline .
RAC resilience: despite revenue pressure, margin execution was strong; footprint optimization largely complete, with digital conversion supporting mid-teens margins in 2025 even as expenses normalize .
FY 2025 setup: Initiated guidance points to top-line growth, EPS expansion, and stronger FCF; delivery hinges on Acima margin recovery and Brigit integration/cross-sell .
Capital allocation: dividend raised to $0.39; deleveraging remains a priority with target net leverage ≤2x over time supported by improved FCF .
Regulatory risk monitored but quantified via special items; no new adverse developments disclosed in Q4; watch for resolution trajectory in 2025 .
Near-term trading: Positive momentum likely tied to Acima margin trajectory and validation of Q1 guidance ($0.90–$1.00 EPS); CEO transition adds governance spotlight but continuity assured .
Medium-term thesis: Digital-first platform across Acima/Brigit/RAC.com expands TAM and relevance; cross-sell and underwriting data advantages can compound growth and margin over 2025–2026 .

UPBOUND GROUP, INC. (UPBD)·Q4 2024 Earnings Summary