8-K: Upbound Group Exceeds FY25 Targets, Projects Growth

Upbound Group, Inc. reported strong fourth quarter and full year 2025 results, surpassing annual targets for revenue, adjusted EBITDA, non-GAAP diluted EPS, and free cash flow, driven by Acima and Brigit's performance.

Summary

• FY 2025 Consolidated Revenue: $4.7 billion, an increase of 8.7% year-over-year.
• FY 2025 Non-GAAP diluted EPS: $4.13, an increase of 7.8% year-over-year.
• FY 2025 Adjusted EBITDA: $508.8 million, an increase of 7.5% year-over-year.
• FY 2025 Net Cash Provided by Operating Activities: $305.6 million, an increase of $200.9 million year-over-year.
• Q4 2025 Consolidated Revenue: $1,196.4 million, an increase of 10.9% year-over-year.
• Q4 2025 Non-GAAP diluted EPS: $1.01, compared to $1.05 in the prior year period.
• Q4 2025 Adjusted EBITDA: $125.9 million, an increase of 2.6% year-over-year.
• Acima segment achieved its ninth consecutive quarter of GMV growth, with revenue up 8.6% year-over-year in Q4.
• Brigit segment revenue grew nearly 40% in 2025, with paying subscribers increasing approximately 29% year-over-year in Q4 to 1.55 million.
• Rent-A-Center segment company-owned same store sales increased 0.8% year-over-year in Q4, an improvement of 440 bps sequentially.
• Upbound acquired Brigit on January 31, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, demonstrating strong execution in key growth segments (Acima, Brigit) and successful achievement of full-year non-GAAP targets, despite some GAAP profit declines. The positive 2026 outlook and robust cash flow generation contribute to a favorable sentiment, though increased leverage and ongoing legal matters warrant monitoring.

Positives

• Achieved FY 2025 targets for Revenue, Adjusted EBITDA, Non-GAAP Diluted EPS, and Free Cash Flow.
• Consolidated revenue increased 8.7% year-over-year to $4.7 billion for FY 2025.
• Non-GAAP diluted EPS increased 7.8% year-over-year to $4.13 for FY 2025.
• Adjusted EBITDA increased 7.5% year-over-year to $508.8 million for FY 2025.
• Net Cash Provided by Operating Activities for FY 2025 was $305.6 million, a significant increase of $200.9 million year-over-year.
• Fourth quarter consolidated revenues increased 10.9% year-over-year to $1,196.4 million.
• Acima achieved its ninth consecutive quarter of GMV growth, with GMV from its direct-to-consumer marketplace growing over 60% year-over-year in Q4.
• Brigit's revenue grew nearly 40% in 2025, with paying subscribers increasing approximately 29% year-over-year to 1.55 million in Q4.
• Rent-A-Center segment achieved positive company-owned same store sales growth of 0.8% year-over-year in Q4, a 440 bps sequential improvement.
• Lease charge-offs for company-owned Rent-A-Center stores decreased 10 bps year-over-year to 4.9% in Q4.
• The Company paid a quarterly dividend of $0.39 per share, a 5.4% increase year-over-year.
• Strong cash flow generation supports capital allocation priorities, including the dividend and debt reduction objectives.

Negatives

• GAAP operating profit for Q4 2025 was $57.2 million, down from $79.2 million in the prior year period, with margin decreasing from 7.3% to 4.8%.
• Net earnings on a GAAP basis for Q4 2025 decreased by $11.2 million to $19.7 million, with net profit margin decreasing 120 bps year-over-year to 1.7%.
• Adjusted EBITDA margin for Q4 2025 decreased 90 basis points to 10.5% compared to the prior year period, primarily due to a decrease in the Rent-A-Center segment.
• GAAP diluted earnings per share for Q4 2025 was $0.34, down from $0.55 in the prior year period.
• Non-GAAP diluted earnings per share for Q4 2025 was $1.01, down from $1.05 in the prior year period.
• Full year 2025 GAAP operating profit was $223.3 million, down from $291.6 million in the prior year, with margin decreasing from 6.7% to 4.8%.
• Full year 2025 Net earnings on a GAAP basis decreased to $73.2 million from $123.5 million in the prior year, with net profit margin decreasing 130 bps year-over-year to 1.6%.
• Full year 2025 GAAP diluted earnings per share was $1.25, down from $2.21 in the prior year.
• Adjusted EBITDA margin for FY 2025 decreased 20 basis points to 10.8% compared to the prior year.
• Rent-A-Center segment net earnings and Adjusted EBITDA decreased $10.5 million and $10.8 million year-over-year respectively in Q4.
• Consolidated GAAP operating expenses as a % of total revenue increased to 44.3% in Q4 2025 from 39.8% in Q4 2024.
• Consolidated GAAP operating expenses as a % of total revenue increased to 43.6% in FY 2025 from 41.4% in FY 2024.
• Net leverage ratio increased to 2.9x as of December 31, 2025, from 2.7x as of December 31, 2024.

Risks

• Difficulties encountered in managing the financial and operational performance of the Company's multiple business segments.
• Risks associated with pricing, value proposition and other changes to the Company’s consumer offerings and strategies being deployed in the Company's businesses.
• The Company's ability to continue to effectively execute its strategic initiatives, including mitigating risks associated with any potential additional mergers and acquisitions, or lease-to-own refranchising opportunities.
• The Company’s ability to effectively provide consumers with additional products and services beyond lease-to-own and products and services currently offered by the Company’s Brigit segment, including through third-party partnerships.
• The possibility that costs, difficulties or disruptions related to the integration of Brigit operations into the Company’s other operations will be greater than expected.
• The possibility that the anticipated benefits from the Brigit acquisition may not be fully realized or may take longer to realize than expected.
• The general strength of the economy and other economic conditions affecting consumer preferences, spending and payment behaviors, including the availability of credit to the Company's target consumers and to other consumers, impacts from continued or renewed inflation, central bank monetary policy initiatives to address inflation concerns and a possible recession or slowdown in economic growth.
• Failure to effectively manage the Company's operating labor and non-labor operating expenses, including failure to effectively optimize proprietary algorithms and customer decisioning tools to limit merchandise losses for lease-to-own offerings.
• The Company's ability to retain the revenue associated with acquired lease-to-own customer accounts and enhance the performance of acquired stores.
• Factors affecting the disposable income available to the Company's current and potential customers.
• Changes in the unemployment rate.
• Capital market conditions, including changes in interest rates and availability of funding sources for the Company.
• Changes in the Company's credit ratings.
• The Company's ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies.
• Disruptions caused by the operation of the Company's information management systems or disruptions in the systems of the Company's third-party retailers or other third parties with whom the Company does business.
• Risks related to the Company's virtual lease-to-own business, including the Company's ability to continue to develop and successfully implement the necessary technologies.
• The Company's ability to achieve the benefits expected from its integrated virtual and staffed third-party retailer offering and to successfully grow this business segment.
• Exposure to potential operating margin degradation due to the higher cost of merchandise and higher merchandise losses in the Company's Acima segment compared to the Rent-A-Center segment.
• Additional risks associated with the Company’s Brigit segment and its consumer products and services, including managing losses, regulatory, licensing and other compliance risks, risks associated with the Company’s Brigit segment’s reliance on regulated banks and on providers of third-party data and technology and other third-party service providers.
• The Company’s ability to (i) effectively adjust to changes in the composition of its offerings and product mix as a result of acquiring Brigit and continue to maintain the quality of existing offerings and (ii) successfully introduce other new product or service offerings on a timely and cost-effective basis.
• Changes in the Company’s future cash requirements as a result of the Brigit acquisition, whether caused by unanticipated increases in capital expenditures or working capital needs, unanticipated liabilities or otherwise.
• The Company’s ability to retain the talent and dedication of key employees of Brigit.
• Litigation or administrative proceedings to which the Company is or may be a party to from time to time and changes in estimates relating to litigation reserves including, in each case in connection with the regulatory and litigation matters described in the Company’s most recent Form 10-K or Form 10-Q.
• The Company’s compliance with applicable statutes and regulations governing the Company’s businesses, impacts from the enforcement of existing laws and regulations and the enactment of new laws and regulations adversely affecting the Company’s business, including in connection with the regulatory matters in which the Company is involved, and any legislative or other regulatory enforcement efforts or private party litigation or arbitration that seeks to re-characterize store-based or virtual lease-to-own transactions as credit sales and to apply consumer credit laws and regulations to the Company’s lease-to-own business or to apply credit laws to the Company’s Brigit segment’s non-credit consumer offerings.
• The Company's transition to more readily scalable cloud-based solutions.
• The Company's ability to continue to enhance digital or e-commerce capabilities, including mobile applications.
• The Company's ability to protect its proprietary intellectual property and to defend against allegations by third parties that any of the Company’s products, services or business activities may infringe against their intellectual property rights.
• Risks from development, deployment and governance of artificial intelligence (AI) and adjacent technologies, including technical failures or inaccuracies, rapid adoption by competitors, and evolving regulatory requirements that may restrict certain AI uses or increase compliance costs.
• The Company's ability or that of the Company's third-party retailers or other third parties with whom the company does business to protect the integrity and security of customer, employee, supplier and third-party retailer or other third party information, which may be adversely affected by hacking, computer viruses, cybersecurity attacks or similar disruptions.
• Impairment of the Company's goodwill or other intangible assets.
• Disruptions in the Company's supply chain.
• Limitations of, or disruptions in, the Company's distribution network.
• Rapid inflation or deflation in the prices of the Company's lease-to-own products and other related costs.
• Allegations of product safety and quality control issues, including recalls of goods the Company leases to customers.
• The Company's ability to execute, as well as, the effectiveness of, lease-to-own store consolidations, including the Company's ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation.
• The Company's available cash flow and its ability to generate sufficient cash flow to continue paying dividends.
• Increased competition from traditional competitors, virtual lease-to-own competitors, online retailers, Buy-Now-Pay-Later, earned wage access and financial health technology competitors and other fintech companies and other competitors, including subprime lenders.
• The Company's ability to identify and successfully market products and services that appeal to its current and future targeted customer segments and to accurately estimate the size of the total addressable market.
• Consumer preferences and perceptions of the Company's brands.
• The Company's ability to enter into new rental or lease purchase agreements and collect on existing rental or lease purchase agreements.
• Ongoing changes in tariff policies, including impacts from tariffs proposed or imposed by the current U.S. Presidential Administration on the price of imported goods, or consumer prices overall or other financial impacts of such tariffs or proposed or imposed retaliatory tariffs enacted by U.S. trading partners on the Company’s costs or target consumers.
• Adverse changes in the economic conditions of the industries, countries or markets that the Company serves.
• Information technology and data security costs.
• The impact of breaches in data security or other disturbances to the Company's information technology and other networks.
• Changes in estimates relating to self-insurance liabilities and income tax reserves.
• Changes in the Company's effective tax rate.
• Fluctuations in foreign currency exchange rates.
• The Company's ability to maintain an effective system of internal controls.

Future Outlook

For fiscal year 2026, the Company expects consolidated revenue between $4.70 billion and $4.95 billion, Adjusted EBITDA (excluding stock-based compensation) between $500 million and $535 million, and Non-GAAP diluted earnings per share between $4.00 and $4.35. First quarter 2026 guidance includes revenues between $1.16 billion and $1.26 billion, Adjusted EBITDA (excluding SBC) between $120 million and $130 million, and Non-GAAP diluted EPS between $1.05 and $1.15.

Management Comments

• "2025 was a transformative year for Upbound. We welcomed a new segment and team members at Brigit along with our new Chief Financial Officer and Chief Growth Officer. We were able to strengthen our foundation for future growth while continuing to deliver strong performance." CEO Fahmi Karam
• "In 2025, we achieved both top-line and bottom-line growth, with revenue increasing 8.7% year-over-year and Non-GAAP diluted EPS increasing 7.8% year-over-year. These results are a testament to our team's ability to adapt and find new ways to serve our customers in an evolving consumer landscape." CEO Fahmi Karam
• "In 2026, we believe our focus on execution, efficiency, and innovation will enable us to build on our performance in 2025. We will focus on enhancements across our digital and retail channels to facilitate sustained profitable growth. We will utilize our data and technology investment to focus on the customer journey, prudent risk management, and unlocking additional synergies across brands." CEO Fahmi Karam
• "Upbound is well positioned to continue elevating our customers financial opportunity for the long term while achieving strong financial and operational results, in 2026 and beyond." CEO Fahmi Karam
• "Upbound finished the year on a strong note, with fourth quarter performance enabling the Company to achieve results above the midpoint of our annual guidance." CFO Hal Khouri
• "At the segment level, Acima finished the year with its ninth consecutive quarter of GMV growth, while Rent-A-Center achieved positive same store sales in the fourth quarter. Our newest segment, Brigit, accelerated its growth, with revenue increasing nearly 40% in 2025. Our growth was underpinned by our disciplined underwriting." CFO Hal Khouri
• "In response to a challenging macroeconomic environment, we made proactive targeted refinements to our decisioning across the business. Our strong cash flow generation in 2025 enabled meaningful progress toward our capital allocation priorities, including reinvestment in our enterprise technology and support for our dividend." CFO Hal Khouri
• "In the year ahead, we expect additional cash flow growth, further supporting our debt and leverage reduction objectives. Our 2025 results paired with our outlook gives us confidence in our ability to achieve continued success and drive shareholder value, in 2026 and beyond." CFO Hal Khouri

Industry Context

StockSavvy.ai notes that Upbound Group's strong performance in its digital-first segments, Acima and Brigit, aligns with broader industry trends favoring accessible, technology-driven financial solutions for underserved consumers. The stabilization of Rent-A-Center's same-store sales suggests resilience in traditional lease-to-own models amidst evolving consumer behaviors and macroeconomic pressures, while the growth in fintech offerings like Brigit positions the company well within the expanding financial wellness and earned wage access markets.

Management Changes

Legal Proceedings

• Multi-State Attorneys General regulatory investigation.
• Recently settled patent infringement lawsuit.
• Current regulatory lawsuit with the New York Attorney General.
• Previously dismissed regulatory lawsuit with the Consumer Financial Protection Bureau.
• Previously disclosed McBurnie class action, which was agreed to be settled in 2025.

Stakeholder Impact

• Shareholders: Positive impact from achieving financial targets, increased dividend, and positive future outlook. Potential concern from GAAP profit declines and increased net leverage ratio.
• Customers: Continued focus on elevating financial opportunity for underserved consumers through accessible and inclusive financial solutions. Expansion of digital models (Acima, Brigit) provides more access and choice.
• Employees: Welcomed new team members at Brigit, new CFO and CGO. Stock compensation expenses related to Brigit acquisition and former CEO.
• Creditors: Strong cash flow generation supports debt and leverage reduction objectives, but net leverage ratio increased to 2.9x.

Next Steps

• Focus on execution, efficiency, and innovation in 2026.
• Enhancements across digital and retail channels to facilitate sustained profitable growth.
• Utilize data and technology investment for customer journey, prudent risk management, and unlocking additional synergies across brands.
• Expect additional cash flow growth in the year ahead, supporting debt and leverage reduction objectives.
• Host a conference call on February 19, 2026, at 9:00 a.m. ET to discuss results and guidance.

Key Dates

Recommendation

While Upbound Group delivered strong non-GAAP results, achieved its full-year targets, and showed robust growth in its digital segments (Acima and Brigit), the significant decline in GAAP operating profit and net earnings, coupled with an increased net leverage ratio, presents a mixed picture. The positive outlook for 2026 is encouraging, but ongoing legal matters and the challenging macroeconomic environment introduce uncertainties. A 'hold' recommendation allows investors to monitor the company's ability to translate non-GAAP strength into sustainable GAAP profitability and manage its debt, while benefiting from its strategic growth areas.

Keywords

Financial Services, Lease-to-Own, Fintech, Consumer Finance, Acima, Brigit, Rent-A-Center, Earnings, Revenue Growth, Adjusted EBITDA, Non-GAAP EPS, Cash Flow, Digital Transformation, Risk Management, Underserved Consumers