Upbound Group (UPBD) Q4 2025 Earnings Transcript

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Date

Thursday, Feb. 19, 2026 at 9 a.m. ET

Call participants

• Chief Executive Officer — Sami B. Sulaiman
• Chief Financial Officer — Hal Khouri

Takeaways

• Total revenue -- $4.7 billion for the year, up 8.7%, the highest annual revenue in the company’s history.
• Adjusted EBITDA -- Approximately $510 million for the year, representing 7.5% growth.
• Non-GAAP diluted EPS -- $4.13 for the year, a 7.8% increase.
• Free cash flow -- $180 million for the year, an increase of over $130 million, with net cash from operating activities at $306 million, the highest since 2022.
• Bridget acquisition -- Added in January; segment delivered $64.6 million revenue in Q4, a 41.5% increase, with 1,600,000 paid subscribers, up nearly 30% year over year.
• Bridget ARPU -- $14.15 per month in Q4, up nearly 10% year over year, and 3% sequentially.
• Bridget adjusted EBITDA margin -- 17.2% in Q4, an improvement of 110 basis points sequentially.
• Bridget instant cash loss rate -- 3.5% in Q4, a rise of 70 basis points, attributed to expansion into new user segments and continued consumer pressure.
• Acima GMV -- Nearly $550 million in Q4, up approximately 40 basis points year over year, marking the highest level since acquisition.
• Acima revenue -- 8.6% year-over-year growth in Q4, the ninth consecutive quarter of revenue growth.
• Acima adjusted EBITDA -- $87 million in Q4, up 7.3%, but EBITDA margin declined 10 basis points year over year while rising 180 basis points sequentially.
• Acima loss rate -- 10.1% in Q4, up 110 basis points year over year, and 40 basis points sequentially, aligned with previous guidance.
• Direct-to-consumer marketplace growth -- Acima’s direct-to-consumer GMV more than doubled, now representing nearly 10% of Acima GMV.
• Rent-A-Center Q4 revenue -- Nearly $480 million, flat year over year, an improvement from a 4.7% decline in Q3.
• Rent-A-Center same-store sales -- Up 80 basis points in Q4, a sequential improvement of 40 basis points.
• Rent-A-Center adjusted EBITDA -- $69.2 million in Q4, down approximately 13% year over year; adjusted EBITDA margin was 14.4%, down 230 basis points due to prior-year expense benefits.
• Rent-A-Center loss rate -- 4.9% in Q4, down 10 basis points year over year, in line with guidance.
• Liquidity -- Ended the year with $358 million in available liquidity.
• Legal accrual -- $72 million on the balance sheet at year end, primarily for pending settlements, with the McBurney class action and a multistate matter nearing resolution.
• Net leverage ratio -- 2.9 times at year end, up from 2.7 times due to the Bridget acquisition.
• 2026 guidance -- Revenue expected at $4.7 billion to $4.95 billion; adjusted EBITDA $500 million to $535 million; non-GAAP EPS $4.10 to $4.35; free cash flow targeted at $200 million, inclusive of $72 million legal/regulatory settlement outflows.
• Bridget 2026 outlook -- Projected annualized revenue growth of over 30% to $265 million-$285 million, and adjusted EBITDA of $50 million-$60 million, with delays in new product launches impacting near-term growth versus initial acquisition expectations.
• Acima 2026 guidance -- GMV and revenue expected to grow mid-single digits; adjusted EBITDA margin to remain in line with 2025; losses projected to stabilize at roughly 9.5% for the year.
• Rent-A-Center 2026 outlook -- Revenue forecasted to be flat to positive versus 2025, with adjusted EBITDA margin in line with 2025.
• Q1 2026 guidance -- Consolidated revenue $1.16 billion-$1.26 billion, adjusted EBITDA $120 million-$130 million, non-GAAP EPS $1.05-$1.15, with segment-specific loss rates expected to remain stable or improve.

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Risks

• Bridget product launch delays -- Sami B. Sulaiman said, "We talked about a little bit of a delay in some of our new products that we rolled out, started late 2025. We were hoping to get that out sooner in the year and by now have that kind of fully launched into 2026. So we are a little bit delayed on the new product front, as well as our marketing dollars did not stretch as far as we had hoped to."
• Acima elevated loss rates -- Hal Khouri stated, "Acima's loss rate of 10.1% for the fourth quarter was up 110 basis points year over year and up 40 basis points sequentially," with loss levels still at the upper end of management's target range.
• Competitive pressure and margin compression -- Hal Khouri explained, "In terms of the margins overall, certainly, the competitive landscape, I think, is putting pressure across the board on margins on the top-line perspective. But also, if you think about our gross profit margins, certainly the cost of goods as well. You know, we are experiencing some cost shifts there, you know, with tariffs certainly playing into the equation as well."
• Legal settlement and regulatory uncertainty -- $72 million in legal accrual for pending class action and regulatory settlements, with payment outflows included in 2026 guidance and final multistate settlement not yet assured.

Summary

Upbound Group (NASDAQ:UPBD) reported its highest-ever annual revenue and record free cash flow, driven by the integration of the Bridget segment and consistent growth at Acima. Guidance for 2026 suggests continued top-line expansion and free cash flow improvement, though management acknowledged that Bridget’s rollout of new products is slower than originally forecast, and legal settlement payments will impact cash flows within the year. Efficiency initiatives, capital allocation focus, and digital innovation across all segments remain central to future growth strategies. The company highlighted strong direct-to-consumer momentum at Acima and plans to sustain stable margins and address recent elevated loss rates through conservative underwriting and portfolio management.

• Management intends to limit near-term M&A, citing a focus on organic growth and product innovation within existing brands.
• Integration synergies between Bridget, Acima, and Rent-A-Center remain in early stages, with chief executives emphasizing cross-selling, and gradual leveraging of proprietary data for customer personalization and lifetime value optimization.
• The Bridget segment’s financial outlook accounts for macro-driven prudence in growth investments, cautious rollout of newly piloted line-of-credit products, and a back-end loaded subscriber growth cadence in 2026.
• Legal and regulatory settlements totaling $72 million are included as expected outflows, with the McBurney class action pending final court approval, and multistate negotiations continuing.
• Capital expenditures of $67 million in 2025 supported modernization and omnichannel strategies, with similar levels planned for 2026 to advance technology and data initiatives.
• Acima’s diversification into jewelry and automotive categories partially offset flat to down furniture demand, while management cited margin pressures and tariff-related cost increases.
• The company noted its dividend remains an integral part of shareholder return strategy, supported by increased cash generation even amidst legal and competitive headwinds.

Industry glossary

• GMV: Gross Merchandise Volume; the total dollar value of merchandise leased or transacted through the platform over a specific period.
• ARPU: Average Revenue Per User; monthly average revenue generated from each paid subscriber in the Bridget segment.
• EWA: Earned Wage Access; a fintech product providing consumers early access to earned wages.
• Lease charge-off rate: The percentage of lease receivables considered uncollectible and written off, key for Acima and Rent-A-Center risk management.

Full Conference Call Transcript

Sami B. Sulaiman, our Chief Executive Officer, and Hal Khouri, our Chief Financial Officer. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's Form 10-Ks and other SEC filings. Upbound Group, Inc. undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. This call will also include references to non-GAAP financial measures.

Please refer to today's earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures. Finally, Upbound Group, Inc. is not responsible for and does not edit or guarantee the accuracy of our earnings release teleconference transcripts provided by third parties. Please refer to our website for the only authorized webcast. With that, I will now turn the call over to Sami.

Sami B. Sulaiman: Thank you, Steven, and good morning, everyone.

Sami B. Sulaiman: I will begin with a review of key highlights from 2025, then I will hand it off to Hal for a more detailed review of our financial results and our financial outlook.

Sami B. Sulaiman: After that, we will take some questions. As we reflect on the past year, it is clear that 2025 marked a period of significant progress for Upbound Group, Inc. as we execute against our strategic priorities. Since taking on the CEO role in June, following my tenure as CFO, I have been eager to build upon our recent momentum and to steer Upbound through our ongoing transformation into a leading digital and data-driven platform of financial solutions for underserved consumers. In 2025, across all of our brands, we served over 3,500,000 customers. Over the past eight months, my optimism about what is possible and the opportunity in front of us has only grown.

Our team's dedication and shared vision have driven key achievements that we believe strongly position Upbound for continued success and long-term growth. During 2025, we expanded our business by adding a new segment, Bridget.

Sami B. Sulaiman: A leading subscription-based financial health technology company, further diversifying our complementary offerings and strengthening our ability to serve our core customer. In addition, we welcomed two accomplished executives to our leadership team. I will start with Hal, our new CFO, who is on his first Upbound earnings

Sami B. Sulaiman: call with us this morning. Hal brings extensive experience to the CFO role and is a member of our executive team, including over 30 years in consumer-based banking, financial services, leasing, retail, consulting, and government service. I will let Hal introduce himself shortly, but I will add that his insights and strategic vision

Sami B. Sulaiman: have already proven valuable to our organization.

Sami B. Sulaiman: We also welcomed Rebecca Wooters as our Chief Growth Officer.

Sami B. Sulaiman: A newly created role for Upbound.

Sami B. Sulaiman: As mentioned during our last earnings call, Rebecca's role integrates

Sami B. Sulaiman: one team key strategic functions for our organization.

Sami B. Sulaiman: Rebecca will lead digital transformation and initiatives

Sami B. Sulaiman: and implement data-driven solutions across all three major segments of the company, promoting growth, innovation, and synergy within our omnichannel model. We have confidence in Rebecca and her team to deliver both short-term and long-term value as we continue to invest in digital products, personalized marketing, customer experience, and leveraging data as intelligence throughout our organization.

Sami B. Sulaiman: Adding these experienced leaders to our already strong management

Sami B. Sulaiman: team with years of operating experience inside of our brands I believe is a powerful combination that positions Upbound for long-term value creation. While these key additions help to build the foundation for growth in the years ahead, we also delivered strong operational and financial performance last year, achieving results within our expectations that we shared at the beginning of 2025. Let us dive deeper into some of the achievements across the enterprise that made 2025 successful. We are proud of the progress we have made executing on our focus areas during the year as we continue to invest in serving our customers with innovative solutions.

In January 2025, we welcomed a new high growth business into our through the successful closing of the Bridget acquisition. This milestone marked the beginning of an exciting combination whose value became increasingly evident throughout the year. From our very first conversations with Bridget, we were impressed by the team's vision, culture, and technical expertise for developing relevant digital financial products that help users build a brighter financial future.

Sami B. Sulaiman: A mission that closely aligns with Upbound.

Sami B. Sulaiman: With a relatively small team, Bridget has already achieved remarkable growth and delivered significant value to its users.

Sami B. Sulaiman: As we evaluated the acquisition,

Sami B. Sulaiman: confidence grew in the potential to unlock even greater value by combining Bridget's technology and rapidly expanding user base with Upbound's scale, and similar target consumer to meet a wider range of financial needs for underserved consumers and evolve our business in a changing competitive landscape. I am pleased that in 2025, Bridget's performance validated our enthusiasm for the growth opportunities from the transaction.

Sami B. Sulaiman: When introducing Bridget in 2025, we outlined three strategic priorities for the year: maintaining growth momentum,

Sami B. Sulaiman: launching new products, and cross marketing collaboration with our Upbound brands that already serve millions of customers each year.

Sami B. Sulaiman: Bridget demonstrated momentum throughout the year with

Sami B. Sulaiman: sequential improvements in year-over-year revenue growth each quarter. Top line performance was fueled by an increase in new users, and higher average revenue per user stemming from greater expedited transfer revenue for our earned wage access product, deeper engagement with Bridget Marketplace offers,

Sami B. Sulaiman: and continued upsell from Bridget's Plus membership to its premium tier membership,

Sami B. Sulaiman: demonstrating the value provided to customers by Bridget's range of products and price points. Bridget also made strides in developing new products, notably piloting a line of credit offering in late 2025. This product leverages Bridget's powerful cash flow underwriting capabilities to provide qualified consumers with up to $500 of liquidity for recent or upcoming purchases, bridging the gap between smaller ticket BNPL offerings and larger ticket lease-to-own solutions. The pilot has yielded promising preliminary results and we are planning a broader rollout in 2026. Finally, Bridget launched a number of cross selling initiatives, marketing its product to Acima and Rent-A-Center customers. These efforts included targeted email campaigns and in-store promotional material at Rent-A-Center and Acima staffed locations.

Expanded throughout the year and have shown promising early results. Now let us turn to Acima. Our strategic priorities for 2025 included driving repeat business through an even greater focus on the customer and leveraging digital advancements to grow merchant relationships. In 2025, the team successfully delivered on these priorities, which resulted in revenue and adjusted EBITDA growing low double digits, and adjusted EBITDA margins improving 10 basis points year over year

Sami B. Sulaiman: despite

Sami B. Sulaiman: a tougher macro environment that saw demand pressure and elevated losses in the half of the year. Acima demonstrated the power of its customer focus through the expansion of its direct-to-consumer marketplace, marketplace.

Sami B. Sulaiman: Over the years, Acima has built connections with millions of

Sami B. Sulaiman: by facilitating transactions at more than 35,000 merchants locations nationwide. Increasingly, and especially over the past year, Acima's innovative team is leveraging these relationships and data to empower its customers with additional choice and flexibility. Through its direct-to-consumer channels, Acima enables customers to start new leasing experiences with top national retailers, but or at virtually any durable goods retailer across the country using the Acima virtual lease card. At the beginning of 2025, Acima's direct-to-consumer market small but promising addition to Acima's established channels. By the end of 2025, the marketplace had experienced substantial growth with GMV growing more than 100% year over year in 2025.

Sami B. Sulaiman: The marketplace now accounts for nearly 10% of Acima's GMV

Sami B. Sulaiman: and continues to be a strategic focus as we enter 2026. Its ability to strengthen relationships with existing customers and to provide the ability to shop at a broader range of top retailers including those without integrated lease-to-own solutions,

Sami B. Sulaiman: makes the marketplace a valuable asset for driving repeat business, increasing the lifetime value of Acima customers, and

Sami B. Sulaiman: driving incremental revenue opportunities for our retailers. Moving on to Rent-A-Center. Throughout 2025, the segment concentrated on digital evolution and disciplined underwriting.

Sami B. Sulaiman: The segment made significant progress in elevating the customer

Sami B. Sulaiman: experience and strengthening its digital presence.

Sami B. Sulaiman: Including upgrading the infrastructure of the rentacenter.com website

Sami B. Sulaiman: to improve its scalability and reliability as the segment continues focus on growing its e-commerce channel. In addition, the Rent-A-Center team developed new tools to improve the approval process

Sami B. Sulaiman: for certain applicants who might not meet our more stringent online underwriting criteria. The website now invites these select online applicants

Sami B. Sulaiman: who may previously have been declined to visit their nearest store to complete the process in person. This approach exemplifies Rent-A-Center's ability to harness both the

Sami B. Sulaiman: expanding digital channels and its robust retail footprint

Sami B. Sulaiman: to drive customer acquisition. By balancing digital innovation with the strength of its physical locations, Rent-A-Center is well positioned to identify and capitalize on further synergies between channels, which will be critical to the segment's growth moving forward. Enhancements to Rent-A-Center's refer-a-friend campaign, the revitalization of its loyalty reward program, and successful marketing efforts that drove strong customer demand in the second half of the year all provided additional support to top line performance.

Sami B. Sulaiman: Reinforcing Rent-A-Center's commitment to new customer acquisition, customer engagement, and retention. As a result of these efforts, Rent-A-Center's

Sami B. Sulaiman: trends improved through the second half of the year and the segment finished 2025 with year-over-year same-store sales growth in the fourth quarter of 80 basis points, improving 40 basis points sequentially, paving the way for a sustainable path as we enter the new year.

Sami B. Sulaiman: Now let us go to slides five and six and recap how these achievements across our enterprise drove strong consolidated financial results.

Sami B. Sulaiman: I am pleased to share that our full-year financial results exceeded the midpoint for

Sami B. Sulaiman: each of the figures we provided on our third quarter call. Our revenue grew 8.7% to approximately $4.7 billion, representing the highest full-year revenue on record for Upbound. Surpassing the previous record in fiscal year 2021 which, of course, benefited from stimulus and the pandemic-related pull forward in the furniture sector. Adjusted EBITDA for the year was nearly $510 million, which was up 7.5% from the prior year.

Sami B. Sulaiman: Our non-GAAP diluted EPS was $4.13 compared to $3.83 in 2024.

Sami B. Sulaiman: A 7.8% improvement and near the high end of our guidance last quarter.

Sami B. Sulaiman: Finally, our cash flow generation was particularly strong in 2025 with free cash flow of $180 million, increasing over $130 million year over year, and net cash provided by operating activities increasing over $200 million to approximately $306 million, the highest full-year figure since 2022.

Sami B. Sulaiman: Year-over-year improvement was due in part to the benefits associated with tax legislation allowing for accelerated recognition of tax depreciation. Turning to the fourth quarter on slide seven. Consolidated revenue was $1.2 billion, a 10.9% increase from a year-ago period,

Sami B. Sulaiman: driven primarily by the addition of the Bridget segment

Sami B. Sulaiman: in addition to 8.6% year-over-year revenue growth at Acima. Upbound delivered $126 million of adjusted EBITDA, which was a lift of 2.6% year over year and adjusted EBITDA margins of 10.5%, down 90 basis points from last year.

Sami B. Sulaiman: Non-GAAP diluted EPS was $1.01, down 4% from the year-ago quarter.

Sami B. Sulaiman: Overall, I am pleased with the financial and operational performance that our team delivered in 2025.

Sami B. Sulaiman: Throughout the year, in addition to completing a transformational acquisition,

Sami B. Sulaiman: the company executed on key priorities while also proactively implementing targeted risk management adjustments for the increasing pressures that our consumers face. Our core consumer continues to navigate a challenging environment, including the cumulative effects of inflation and elevated prices for essentials like groceries, rent, and utilities, which weigh on their purchasing power, and wages that have not kept up pace with their cost of living. Both of our lease-to-own segments took actions to reflect the evolving macroeconomic landscape,

Sami B. Sulaiman: and we are pleased with the outcome of these efforts and the health of our portfolio entering 2026.

Sami B. Sulaiman: At Bridget, as I mentioned, the segment's growth in 2025 has further demonstrated the growth potential we anticipated when we acquired the business a little over a year ago. And its opportunities for additional expansion make us excited for the future. On that note, as we look ahead to 2026, our priorities remain focused on positioning Upbound for sustainable, profitable growth as we continue to execute our strategic transformation. We will continue investing in our people,

Sami B. Sulaiman: data, and technology, including advanced analytics and AI capabilities, to better serve our customers and merchants while strengthening our competitive advantages. By leveraging our proprietary data more effectively,

Sami B. Sulaiman: we aim to deepen customer personalization, improve satisfaction and retention, drive repeat business, and realize the full benefits of our scale while pursuing increased cross-sell opportunities across our platform of brands. These efforts will also support continued enhancements to underwriting allowing us to optimize risk-adjusted returns against our targets.

Sami B. Sulaiman: We also remain focused on operational excellence by leveraging

Sami B. Sulaiman: technology in the core competencies of each of our brands, taking proven best practices and scaling them across the organization. In parallel, we are driving targeted efficiency and cost initiatives including enhancing coworker efficiency across store operations and customer service while simplifying processes to favorably impact the overall cost of doing business. We believe these efforts will improve execution, scalability, and discipline across the enterprise while supporting margin and long-term value creation.

Sami B. Sulaiman: Over the last few months, as I have transitioned into my new role,

Sami B. Sulaiman: I have had the opportunity to assess our business across various key aspects focused on serving our customers, growth opportunities, risk management, and synergies between the brands. While our overall strategic vision and focus areas will remain fairly consistent, we are in the early stages of our transformation and must continue to evolve to the ever-changing business environment. I am excited about the opportunities in front of us, and together with our new and existing leaders, I am even more confident in our ability to execute on our strategic goals.

Sami B. Sulaiman: Our goals for the long term are clear: deliver responsible and profitable growth,

Sami B. Sulaiman: through disciplined risk management while pursuing operational excellence through data and technology and effectively manage capital to ensure appropriate

Sami B. Sulaiman: returns.

Sami B. Sulaiman: With that, I will hand it over to Hal to cover the financials in more detail. Thank you, and good morning, everyone. Before reviewing segment results, I would like to start by expressing how excited I am to be joining the Upbound organization as the company's CFO and the opportunity to be part of its future success. I joined Upbound in November drawn by the company's durable foundation and scale, paired with its compelling growth profile. I am confident that together we are poised for exceptional times ahead. Let us now turn to a review of the segment results and then discuss our outlook for FY 2026, after which we will take questions.

Starting on slide nine, Acima recorded another quarter of GMV growth in the fourth quarter, an increase of approximately 40 basis points year over year. At nearly $550 million, fourth quarter GMV was the highest it has been since we added Acima five years ago. Acima's continued growth is due to a few factors, including the performance of its marketplace, as Sami mentioned earlier, in addition to its exceptional sales force continuously onboarding new retailers and servicing existing retailers. Furthermore, we continue to diversify our product lineup with furniture, our largest product category, representing approximately 40% of rental revenue in the fourth quarter, compared to 43% in the prior-year period.

Acima revenue grew 8.6% year over year, which was its ninth consecutive quarter of revenue growth, and adjusted EBITDA of $87 million was up 7.3% from a year ago. EBITDA margins were down 10 basis points from 2024, however, they were up 180 basis points compared to the prior quarter. Acima's loss rate of 10.1% for the fourth quarter was up 110 basis points year over year and up 40 basis points sequentially. While Acima's losses finished the year elevated relative to recent levels, in our targeted longer-term range, our fourth quarter loss rate was consistent with the guidance we had shared during our third quarter call.

We discussed how certain challenging vintages underwritten earlier in 2025 would temporarily impact Acima losses as they flowed through the portfolio. Key performance indicators, including early payment and delinquency trends, give us confidence that the adjustments we have made will drive loss-rate improvements from here. I will cover expectations for 2026 in more detail shortly. Let us move to slide 10 and review Bridget's results for the fourth quarter. Bridget finished the quarter with approximately 1,600,000 paid subscribers, which was a nearly 30% increase from the year-ago period and a 7.4% increase sequentially.

Hal Khouri: ARPU, or average revenue per user, was $14.15 on a monthly basis,

Hal Khouri: a nearly 10% increase from the fourth quarter in 2024 and a 3% lift sequentially. Bridget originated approximately $45 million in cash advances in the fourth quarter. That is up 19% year over year and nearly 4% sequentially, reflecting the value that consumers are discovering with not only the product offerings, but also the transparent subscription-based pricing model. For the fourth quarter, Bridget's instant cash loss rate was 3.5%, which was up 70 basis points from the year-ago period, primarily due to expansion into new profitable user segments and the impact of a consumer that remains under pressure. Bridget recorded $64.6 million of revenue for the fourth quarter, which represents an increase of 41.5% from the year-ago quarter.

Subscriptions were 68% of Bridget's fourth quarter revenue, with expedited transfer fees and marketplace income representing the balance. Bridget adjusted EBITDA was $11.1 million for the fourth quarter, representing an adjusted EBITDA margin of 17.2%, an increase of 110 basis points sequentially. Let us move to the Rent-A-Center results starting on page 11. As you will recall, in late 2024, Rent-A-Center tightened underwriting standards while strategically limiting certain product categories that typically experience higher risk metrics in challenging environments. While these changes weighed on top-line performance in 2025, especially in the first half of the year, the segment proved its resiliency and the success of these adjustments in the second half of the year.

In the third quarter, we guided that same-store sales would return to flat to positive in the fourth quarter, and we are pleased that the team achieved this goal. Same-store sales increased 80 basis points in the fourth quarter, which was the first positive quarter of same-store sales since 2024. Rent-A-Center recorded nearly $480 million of revenue in the fourth quarter, which was flat compared to the year-ago quarter, an improvement from a 4.7% year-over-year decrease in the third quarter. Ultimately, those adjustments from late 2024 helped manage Rent-A-Center's loss rate, which improved year over year in both the third and the fourth quarters as the portfolio flowed through.

The loss rate for the fourth quarter finished at 4.9%, down 10 basis points from the year-ago period, in line with the guidance given on our prior call. Rent-A-Center's adjusted EBITDA was $69.2 million, down approximately 13% from 2024, while Rent-A-Center's adjusted EBITDA margin was 14.4%, down 230 basis points year over year, due primarily to the impact of certain expense benefits that positively impacted operating expenses in the prior-year period. For Rent-A-Center, 2025 represented a year of stabilization that sets the segment on a promising path moving forward. Next, let us cover our liquidity and capital allocation priorities on slide 12. Our business has a proven and long track record

Hal Khouri: Our cash flow generation trended closer to historic, finishing the year with approximately $180 million of free cash,

Hal Khouri: above the midpoint of our guidance. This represents an increase of $132 million year over year and exceeds even 2023 levels by over $30 million. Net cash provided by operating activities was approximately $306 million, an increase of over $200 million year over year and due in part to benefits associated with the bonus depreciation provision tax legislation last year. I will say more about our expectations for 2026 in a moment. But we anticipate cash flow to continue to improve in the year ahead. Regarding liquidity, as you will recall, the company leveraged its balance sheet to address the upfront cash portion of the consideration for the Bridget acquisition in January 2025.

This decreased the company's ABL availability and resulted in approximately $312 million of liquidity at the end of the first quarter. We are pleased that liquidity improved by year end, reflecting in part the company's refinancing of its Term Loan B in the third quarter. As of December 31, between our cash on hand and revolver availability, liquidity was $358 million. Next, let us take a moment to reiterate our capital allocation priorities, which include reinvesting in the business and funding organic growth, delevering debt on the balance sheet, and supporting our shareholder dividend distributions. The company will also consider executing opportunistic share buybacks based on market conditions and funding constraints.

And while we continue to remain open to strategic corporate development opportunities as they arise, our current expectation is to focus on organic growth in the near term through our expanded portfolio of products and services across the enterprise. These remain our main priorities entering the new year, and I will now expand on our approach to each. First, in 2025, we made investments that bolster our ability to serve our millions of customers efficiently at an increasing scale, representing a meaningful growth engine for our business. This included approximately $67 million of CapEx, reflecting investment in our technological infrastructure, data modernization initiatives, and improvements to our omnichannel customer experience.

As we look ahead towards 2026, we expect to continue deploying capital towards investments in our enterprise technology and digital capabilities across segments. Additionally, Upbound's robust free cash flow allows us to sustain a strong dividend alongside other business priorities. Our dividend remains integral to our strategy for returning capital to shareholders. Turning to leverage, at year end, our net leverage ratio was approximately 2.9 times, above our leverage ratio of 2.7 times at the end of the prior year due to the acquisition of Bridget in January 2025, but slightly below our recent peak of 3 times at the end of the second quarter.

With higher free cash flow and adjusted EBITDA growth expected in 2026, as well as consistent focus on deleveraging, we are targeting a leverage ratio in the 2 times range over the long term, with additional progress expected throughout 2026. We are also frequently asked about share repurchases, especially given our strong cash position, free cash flow generation, and recent trading levels. Our team has evaluated share repurchases over the past few months and while compelling, we have to date opted to prioritize our commitment to leverage reduction. That said, we will continue to evaluate opportunistic share repurchases in the year ahead.

And it is worth noting that our expectations for leverage ratio improvement over the coming quarters should enhance the company's ability to return additional capital to shareholders depending on other opportunities to deploy that capital. And finally, following the Bridget acquisition and our focus on integration, we do not currently have any near-term plans for M&A. Our capital structure is flexible and we will be ready if the right combination of value and strategic fit arises. Before turning to 2026 guidance, I would like to provide an update on the progress we have made regarding a number of our legal and regulatory matters. At year end 2025, our estimated legal accrual on the balance sheet was $72 million.

This accrual is primarily tied to previously disclosed matters we are now expecting a near-term resolution and reflects what we believe are the ultimate cash amounts that we expect to pay as part of the settlement of those matters. The McBurney class action is awaiting a final court approval on the settlement. And for the multistate attorneys general matter that has been ongoing since 2021, we believe we are nearing a nonbinding agreement in principle with the Executive Committee regarding the primary monetary and injunctive terms of potential settlement. We are actively engaged in discussions with the objective of finalizing the multistate settlement agreement in the near term, although any final binding settlement cannot be assured.

Our 10-Ks filing will provide more details on both matters. Let us shift to our financial outlook. In this external operating environment, we expect the near- to mid-term horizon will continue to be challenging and characterized by continued evolving domestic economic and monetary policies. Uneven macro factors that pressure our core consumer discretionary income and demand levels, but also tend to make our range of flexible financial solutions even more relevant to these consumers. This outlook also assumes a normalized tax season and maintaining our conservative underwriting posture throughout the year. At Acima, we expect continued growth and opportunity.

Our team is committed to profitably expanding GMV through several avenues, including by acquiring new retail accounts through a robust business development pipeline, as well as enhancing productivity amongst our existing merchant base. Acima will also focus on leveraging its customer relationships and data to deepen connections while boosting engagement and lifetime value. We will do this by expanding our direct-to-consumer marketplace and our virtual lease card as Sami described earlier. Finally, Acima's loss rate is expected to benefit from continued disciplined and targeted underwriting and the flow-through of those challenging 2025 customer vintages I mentioned earlier.

Taken together, we expect 2026 GMV and revenue to increase mid-single digits year over year, while adjusted EBITDA margins should remain in line with 2025 and losses stabilizing in the 9.5% area for the year. Turning to Bridget, we expect the segment to maintain a strong growth trajectory in the new year. Bridget's value proposition is especially relevant in today's economy, with more consumers appreciating the flexibility and value of Bridget's instant cash products and its other financial wellness tools. That is why the segment remains focused on refining its marketing efforts and rolling out new products and features that further meet the evolving needs of its users.

Through continued innovation in financial health and liquidity tools, Bridget aims to serve its customers more frequently and with even more relevance, strengthening the business' long-term competitive positioning while reinforcing the segment's role as a high-growth engine in Upbound's portfolio. As a result of these efforts, we expect Bridget to deliver annualized revenue growth of over 30% in the $265 million to $285 million range and an adjusted EBITDA in the $50 million to $60 million range. Although the figures are trailing our initial estimates from the 2024 acquisition, this variance is impacted by the extended timeline required for launching new products and obtaining necessary underwriting and product insights for iteration and improving in a challenging macroeconomic environment.

Despite these factors, we remain optimistic about Bridget's future financial performance. We continue to support product design, marketing, and infrastructure development to drive growth. Bridget is committed to ongoing product innovation and to prudently manage the scale and timing of new rollouts to navigate the current economic uncertainties, while testing additional marketing initiatives to showcase the anticipated levels of economic performance of the portfolio. At Rent-A-Center, 2026 priorities will include a focus on customer-driven growth, as well as improvements that modernize and unify the digital customer experience. The business will leverage the force of its expanded digital presence and its national store footprint to focus on driving productivity, all while continuing to focus on capital efficiency and disciplined cost management.

As a result of the Rent-A-Center team's efforts over the past year, we believe that trends have stabilized and the business is poised for modest top-line growth in the coming year, with full-year 2026 revenue expected to be flat to positive relative to 2025 and with adjusted EBITDA margins in line with 2025. At the Upbound level, our corporate costs are expected to be roughly flat to 2025 as a percentage of revenue, at approximately 4%. We expect the tax rate to be slightly higher than 2025, in the 26% range, with an average diluted share count for the year of approximately 59,400,000 shares.

Taken together, our consolidated outlook for 2026 includes a revenue range of $4.7 billion to $4.95 billion, an adjusted EBITDA range of $500 million to $535 million, and fully diluted non-GAAP earnings per share of $4.10 to $4.35. The company expects to increase free cash flow to approximately $200 million in 2026. This growth is expected to be primarily driven by enhanced profitability and the accelerated tax depreciation benefits from the One Big Beautiful Bill Act, projected to augment the company's cash flow by around $100 million. This guidance is inclusive of a payment outflow of $72 million in non-ordinary course legal and regulatory settlements as previously discussed, including the largest portion of that amount for the multistate matter.

And it assumes relatively flat CapEx spend to support business growth initiatives. These factors position Upbound favorably to advance its capital allocation priorities as we focus on delivering compelling and sustainable returns for shareholders. In regards to the first quarter, each of our segments will navigate seasonal and macro factors including the start of a tax season. Based on what we have seen to this point, we expect consolidated revenue to be $1.16 billion to $1.26 billion and adjusted EBITDA to be $120 million to $130 million. We expect non-GAAP EPS to range from $1.05 to $1.15 compared to $1.00 a year ago.

With respect to loss rates, we expect Rent-A-Center's lease charge-off rate to remain flat to slightly higher sequentially. Acima's lease charge-offs should improve sequentially, finishing the first quarter in the mid-9% area and remaining in that range over the course of the year, while first quarter GMV should be relatively flat to the prior year, reflecting the tightening we have undertaken to keep lease charge-offs in our target range. Bridget's net advance loss ratio remained in the 3% to 3.5% range in the first quarter. Now as we wrap up, I would like to emphasize a couple of points that Sami mentioned earlier. In 2025, we made substantial progress on our key strategic priorities.

For over five decades, we have provided accessible and flexible lease-to-own solutions to millions of underserved consumers. In 2021, we added further scale by significantly expanding into higher growth digital, technology-driven lease-to-own channels through our Acima acquisition. Now with Bridget, we have added in-demand scalable digital financial health and liquidity tools that expand our growth opportunities even further, and our ability to support our core customer when and where they need us most. These expanding complementary products and capabilities make our platform even more relevant. Especially in today's economy, when consumers are looking for innovative solutions that improve their financial lives.

Our consumers' needs and expectations are always evolving, and in 2025, we enhanced our ability to meet those needs today and in the future. In 2026, we will continue to prudently introduce relevant solutions with scalable growth opportunities, both online through expanded digital capabilities and in store at our over 2,200 retail locations across the United States and Mexico. For our stakeholders, we remain committed to creating long-term sustainable value by building off of our strong financial foundation, allocating capital thoughtfully, and responsibly growing our business through our platform of connected financial products and services. We look forward to delivering on our goals again in 2026 and continuing the momentum we have built across our brands.

Thank you for your time this morning. Operator, you may now open the line for questions. Thank you. If your question has been answered, and you wish

Operator: to remove yourself from the queue, please press *11 again. Our first question comes from Robert Kenneth Griffin with Raymond James. Your line is open.

Robert Kenneth Griffin: Good morning, guys. Thank you for taking my question. I guess, first, part of the question is just trying to unpack maybe the guidance a little differently or look at it

Robert Kenneth Griffin: a little differently and understand it. If you take the 1Q guidance midpoint, you are up in, you know, call it 10% EPS, but then the year is only up 1% at the midpoint. So what is happening from, like, the seasonality of the year or something that is driving that? There are some cost pressures developing, or I am just trying to figure out kind of how the year is playing out. Does that make sense?

Sami B. Sulaiman: Good morning, Bobby. Yes. Thanks for the question. It makes sense. First thing I would say is you have a full benefit of a full quarter of Bridget being in the numbers. So that is last year in 2025. Recall, we closed the acquisition at the end of January, and so you only had two-thirds of the quarter with Bridget on our books. So that is first and foremost. And then, yes, the benefit of coming into the year with a stronger portfolio, both on the Rent-A-Center side and still growing on the Acima side, should flow into our EBITDA numbers for the first quarter.

So nothing that I really want to point to in second, third, fourth quarter that we would say is surprising from a or unusual, I guess, for the rest of the year. But the big thing is for the first quarter, I think, is the Bridget acquisition being for the full three months. So that would—

Hal Khouri: Yes. No worries. It is Hal here. Just to also tack on there a little bit as well. So, you know, we have got some seasonality happening through the course of the full year. So, you know, Q1 is typically a bit stronger, and then Q2, Q3, you know, we have got some seasonality that brings that down a little bit. So just a little bit of movement there at play.

Robert Kenneth Griffin: Okay. And then, and then, Sami, to dive into the second part, you know, it is a good callout on the one month to Bridget, but, like, the strong portfolio momentum coming into the year, I mean, do you see anything today from the customer base or something that would, you know, imply that would not continue to build? Or you would not continue to be successful? And I understand the idea of keeping some conservatism baked in the guide, and I truly appreciate that. But just, you know, I am trying to gauge between the strong momentum entering the year and then something slowed.

It does not seem like something has slowed for that part of the equation to actually not be as powerful in the remaining nine months.

Hal Khouri: Yes. Hey, hey, Bobby. Maybe I will play in to Sami here. So, you know, we did, as you might recall, tighten up credit prudently towards the back half of the year. You know, one, just kind of given experience that we were undertaking there. Prominently in our Acima business, I would say, as well as what we are seeing in terms of broader macroeconomic environment. So that credit tightening likely will manifest itself through the first quarter or two of this year.

And then, you know, subject to, you know, environmental conditions at that time, you know, loosening up the portfolio towards the back end of the year as some of that credit tightening would have allowed itself to kind of flow through the business in the earlier part of the year. Notwithstanding the jump-off point that you are referencing?

Robert Kenneth Griffin: Okay. Makes sense. I appreciate it. Sorry to be so granular, but it was just the shape was giving me some questions. I guess, secondly for me, it is just on Bridget. You know, you kind of trimmed a little bit of the outlook

Robert Kenneth Griffin: from original expectations, talked about the delay in new products. Can you maybe just expand on that? And kind of what is driving that? Has stuff changed regulatory wise? Is it just, you know, just something that maybe we did not quite fully understand or get fully taken into account originally? And then the second part of it on Bridget is just the deposit side has been kind of the underwriting and how that is different from your core business. And I have asked this before, but just curious on, you know, that integration and where that can go and, you know, when you can start seeing that kind of benefits across the enterprise more?

Sami B. Sulaiman: Yes. Bobby, this is Sami. I will touch on Bridget generally and try to touch on both of your questions. First and foremost, obviously, pleased with the performance throughout the year. As we have highlighted really every quarter this year and including in the fourth quarter, we expanded revenue by 41% year over year, subscriber growth of 29%, and then ARPU up almost 10% in the quarter. And for the year, coming in above our expectations really from an EBITDA contribution standpoint. So really strong performance. And as I said in our prepared remarks, we are still very excited about the future with Bridget.

As far as the guide for 2026, revenue of $265 to $285, there are a couple things that are driving that. First, I would highlight just lower year-end subscribers kind of coming into the year, you know, as we saw that little softness in the fourth quarter, so we kind of bled that through the forecast. We talked about a little bit of a delay in some of our new products that we rolled out, started late 2025. We were hoping to get that out sooner in the year and by now have that kind of fully launched into 2026.

So we are a little bit delayed on the new product front, as well as our marketing dollars did not stretch as far as we had hoped to stretch in the fourth quarter. And then as we also said, the macro uncertainty—let me touch on the macro piece of it—that uncertain market landscape or the macro landscape did give us some pause and does give us some pause to really aggressively roll out some of these new products or our existing products to new audiences. We want to be very cautious just like we are in Rent-A-Center and Acima around our loss profile and kind of judging where the consumer is.

And so really focused around being very disciplined and profitable in our growth objectives for 2026 across the board. We would love to maximize EBITDA dollars. We are focused on maximizing EBITDA dollars on all of our segments. But at the same time, we are really focused around, you know, profitable and responsible growth. So, you know, on the new product side, as I have mentioned, line of credit, we were hoping to have it rolled out a little bit faster. You know, we had some back and forth around getting our bank partner to approve the product.

I think, you know, it has been well documented last year around some of the very public bankruptcy around bank partners, and, you know, our bank partner, even though that was not who we were dealing with, it is not our bank partner, but there was a domino effect across the industry and really around fintechs generally around slowdown of new products rollouts, just given some of that uncertainty with the bank partners. So the good news is we rolled it out.

We have been able to put in some new features in December and in January, and now that product line of credit product, you know, because it is a little bit longer tenured product than our instant cash product, six to nine months, now it is a matter of just seeing how performance comes in, tweaking it, and then making sure that we are ready for the rollout. So a combination of things that has caused us to slow down, but it is a shift, I would say, from 2026 to 2027. The opportunity is still very much in front of us.

We still see a lot of opportunity with the cash flow underwriting, and maybe that is a good segue into your other question around where we are from integration standpoint. I would point you back to, you know, at the beginning of when we announced the acquisition, we said that we were going to have a pretty light touch around integration, and that has been the case. We bought Bridget for their innovation, for their product roadmap, and their pipeline of new product rollouts. And the last thing we wanted to do was slow them down through the acquisition. And so that is still the case.

We have done some things around, you know, cross selling around some of the marketing and some of the email campaigns and some of the text campaigns, but I would say it has been fairly light touch. We have not done any of the data integrations that we plan to do. We have not really done any system integrations outside of some accounting things. And so all that is on the come. None of that is in our forecast for 2026. We will start making real plans for that by the end of the year to hopefully kind of build that foundation for growth in 2027. So I would say very early stages, but an intentional integration plan.

Robert Kenneth Griffin: Thank you.

Robert Kenneth Griffin: Appreciate it. Best of luck here on 2026.

Sami B. Sulaiman: Thanks, Bobby. Thanks, One moment for our next question. Our next question comes from Vincent Albert Caintic with BTIG. Your line is open.

Vincent Albert Caintic: Hey, good morning. Thank you for taking my questions. A lot of great detail already. First, I wanted to focus on Acima. So appreciate the guidance for, I think, full-year GMV, mid-single year-over-year growth. And I think the first quarter is flat—

Vincent Albert Caintic: I am sort of wondering if you could maybe help us with the cadence of growth. It sounds like maybe the second half of the year, we should be expecting that you can—

Vincent Albert Caintic: greater acceleration. And then if you can talk about if I remember correctly, it was a particular cohort of GMV that you had to tighten up on. Is there any sense that you could give us if you were to exclude that cohort where you

Vincent Albert Caintic: where underlying GMV has been growing so far? Thank you.

Sami B. Sulaiman: Vincent, thanks for the questions. I will start and Hal is welcome to chime in. As far as the GMV trends, let me answer your question directly, then I want to take a step back and highlight a couple of things that we saw really throughout the year and then in the quarter. But I think as far as the cadence goes for GMV, I think the first half of the year will be relatively flat, consistent with what we guided for the first quarter.

And then we kind of get back to Acima's norm as we lap some of the changes that we made in the second half of the year, and that kind of evens out into the mid-single digits for the year. So from a cadence standpoint, I think we will lap the changes we made sometime in the third quarter and then obviously in the fourth quarter. So you will see an uptick and hopefully return back to the low double-digit growth in the second half of the year, but that is how you get to kind of the mid-single digits for the year.

As far as just maybe some highlights go for Acima, I want to point out two things around GMV that were really fantastic developments. One, we talked about, which was direct-to-consumer channel for us. When we talked about some of the strategic objectives coming into 2025, we talked about shifting and adding focus into the customer, not just merchants are always going to be part of our bread and butter strategy with Acima, but we also wanted to take a look at the consumer and make sure that we viewed it kind of from both lenses.

And growing the direct-to-consumer channel by 100% this year, fantastic, leveraging our AI leasability engine, and getting it to be 10% of our GMV in the fourth quarter. With still plenty of room for upside there. We are just now getting started with our virtual lease card program. We are in pilot phases there, and that should continue to benefit us going forward. And then returning customers, you know, as we talked about focusing on the customer and the direct-to-consumer channel is a returning-customer channel for us. Our returning customers are up to 45% of GMV in the fourth quarter, which is up from kind of the mid-thirties last year.

So we are able to generate more GMV from customers that we know well. GMV per customer in the calendar year 2025 was up 5.5%. And the number of transactions that our returning customers interacted with us was up 15%. So the direct-to-consumer channel really gives us a lot of LTV, a lifetime value for our consumers, and should really help us continue to grow as we add more and more merchants to the lineup. As far as normalizing for underwriting changes, that is a tough one to answer, Vincent. We are constantly making changes to underwriting day in, day out.

Obviously, what we did through the second, third quarter last year was a little bit more broad based than what we typically would do. But it is hard to quantify how much of the guide is because of the changes that we made just given mix shifts, consumer mix shifts, and uncertainty in the market. But as you can tell, I mean, we have been on a really good run with Acima growing GMV. And being growing in the fourth quarter, but at a different clip, is a big function of the underwriting changes as well as just consumer deterioration and continued consumer stress. So hard to really normalize for the changes that we made.

Hal Khouri: And maybe I will just bolt on here, Vincent. So we continue to invest overall in the business. But, you know, as it relates to Acima in particular, as Sami had referenced, continue to put dollars into digital technology and transformation and enhancing that customer and merchant experience. So, certainly, those are going to be key initiatives for us in 2026 as well.

Vincent Albert Caintic: Okay. That is very helpful detail. Thank you. Switching to Bridget. So you are at your one-year anniversary of acquisition. You talked about product rollout and so forth, what you are expecting in 2026. I am sort of wondering, you know, from that initial 2025 when you put the deck out on your expectations, kind of where are we in terms of the roadmap of what you are expecting from Bridget? How much more can you do? You say you have a light touch in terms of the integration. Perhaps, you know, where could you see that over time? Maybe not putting it necessarily just on 2026, but your kind of the evolution of your views for the long term.

Thank you.

Sami B. Sulaiman: Sure, Vincent. Yes. Look, as I said, everything that we talked about when we made the acquisition in December 2024 and everything that we highlighted since then is still very much part of the plan. And us integrating their data insights, their technology, even just their process—you know, some of the things that we are doing now with our growth organization really mimics a lot of the Bridget model and how we go around thinking about innovation. But the cash flow underwriting attributes that they generate and they look at are going to be game changing for Rent-A-Center and Acima at the appropriate time.

You know, we are doing things to—again, light touch—but we are doing things to try to learn as best we can on how do we approve more customers, how do we market to our customers more effectively, given some of the insights that we have, and we think about what we are trying to do really across all of our segments around personalization. I mean, that is going to be the future for us is to really be smart around personalizing our offers, personalizing our inventory purchases on RAC, and putting those promos in front of the right customers at the right time.

And I think a lot of the data insights that we get from the Bridget model are going to allow us to do that. So, you know, even though the product rollout and the pipeline is a little bit delayed given the things that I mentioned earlier, they are still on the come. You know, the line of credit product, as we said, is in pilot phase. There is a lot of demand for that product. We just want to make sure that we do not overextend on losses, and we understand kind of the performance of that product before we really launch it. So a little bit delayed, but still very much excited about the opportunity.

If you think about the midpoint of the revenue guidance that we just gave, you are up 25% on a full-year basis, up 30% from a contribution standpoint. So—and generating, you know, high teens to low 20% EBITDA margin. So the business is definitely performing. Some of the higher growth items are shifted between 2026 and 2027, but we are building a foundation for long-term growth and we are still very excited about the acquisition.

Vincent Albert Caintic: Perfect. Very helpful. Thank you.

Operator: One moment for our next question.

Operator: Our next question comes from Kyle Joseph with Stephens. Your line is open.

Kyle Joseph: Hey, good morning, guys. Thanks for taking my questions.

Kyle Joseph: Just want to

Kyle Joseph: kind of walk through tax refund expectations. I know it is

Kyle Joseph: early in the season. We have seen a lot of headlines about refunds being elevated this year, but kind of walk us through the assumptions you have for first quarter, really on the Acima and Bridget side of things. Obviously, we know well how that, how tax refunds and potentially an outsized refund season impact RAC and Acima, but kind of walk us through your assumptions on Bridget for the first quarter in particular.

Sami B. Sulaiman: Sure. Happy to, Kyle. Thanks for the question. So as you said, still very early on tax season. They are a little bit delayed, I would say, from typical years. But they are right around the corner. So the guide assumes more of a normalized tax season. As you referenced, the range of people have said that they are going to be up 10% to, I have seen, 30% range. And I think if they are in the lower end of that, 5%, 10% increase, it will have some impact but not a lot.

But if it is, you know, up 30% or so, then I do think it will have a meaningful impact to us and really across the board between all three segments. Generally speaking, when you put more cash in our consumers' pockets, it is going to be a good thing for all of us. But in the short term, what I would say is if we do see that big tax refund, you will see higher revenue in the first quarter for both Rent-A-Center and Acima. But it will come at a lower gross profit margin.

So even though you definitely will clean up credit and will be positive, you will have to replenish that, and so it puts a little bit more pressure on us to make sure that we convert some of those payouts into new leases. But generally speaking, you will see higher revenue and lower gross profit impact. And with Bridget, you know, typically in the first quarter, just seasonally speaking, you will have lower subscriber growth given people are with cash. You will see higher profitability levels in the first quarter and lower losses. So very similar from that standpoint.

And then kind of post tax season, you will start seeing a ramp-up both in subscriber growth as well as our marketing spend to kind of match the seasonality there. So early on, but look. If it ends up being a lot higher than what we guided to, then that is great for our consumers, and we will be ready to market to them on getting their second, third, and fourth leases.

Kyle Joseph: Great. Really helpful. And then just the follow-up for me in terms of the outlook for RAC, we understand that the second half benefited, obviously, lapped some underwriting changes. And it sounds like, you know, some successful marketing efforts. You know, but talk about some of the macro puts and takes on the RAC business and how that is influencing your outlook into 2026 and beyond? Thanks.

Sami B. Sulaiman: Thanks, Kyle. Yes. Look, Rent-A-Center has had a really strong end to the year from a pretty volatile first half of the year. If you think about the sequence in same-store sales being down 4% in the second quarter, down 3.6% in the third quarter, and then really challenging the team to make it flat, and they end up growing the portfolio and grew the same-store sales by 80 basis points. So quite a turnaround from the first half of the year, and we feel like, you know, on a same-store sales basis, we are poised to be flat to slightly positive in 2026.

And we were able to do that with losses coming in slightly better year over year, down 10 basis points. Delinquencies are stable under 3.5%. EBITDA margins normalized in the fourth quarter this year compared to where they were last year, but still hit our 15%, our mid-teens number for the year, and we expect that to continue into 2026. So very pleased with the team's execution in a very difficult environment. We talked about, you know, the consumer and kind of where that is. But we feel really, really good about where we are from an inventory standpoint, from a supply chain standpoint, from an e-commerce standpoint.

We have got a lot of things in the works with the growth organization around being smarter about how we interact with our customers. They are all in the future. We feel really good about that segment. It really turned the business around throughout 2025. And if you look at the portfolio value ending the year, it was up almost 11% year over year. So again, a really strong fourth quarter, really strong execution on the Rent-A-Center side.

Kyle Joseph: Great. Thanks for taking my questions.

Operator: Thanks,

Operator: One moment for our next question. Our next question comes from Bradley Bingham Thomas with KeyBanc Capital Markets.

Bradley Bingham Thomas: Good morning. Thanks for taking my question. I wanted to follow up on the Acima parts of the business and the GMV outlook. And, Sami, just wondering if you could talk a little bit more about

Bradley Bingham Thomas: category performance, how much that has played a role. And how do you think about the opportunity ahead to continue to add new merchants going forward?

Bradley Bingham Thomas: Thanks.

Sami B. Sulaiman: Morning, Brad. Thanks for the question. So, yes, I kind of take a step back and look at, you know, Acima's performance. You know, I think it is important to kind of maybe look back to 2024. You know, we grew that business percent that year. And on top of that, now we are growing at low double digits this year. So really strong performance across the board over the last two years. And in 2025, you know, applications were up 9%. Our approval rate was down 120 basis points. Average ticket was relatively flat. Our customers were up, as I mentioned before. We interacted with 1.3 million customers throughout the year.

So very, very pleased in a pretty challenging environment with Acima's performance as well. As far as the categories go, I would say furniture, which is still our largest category, is still very much under pressure. Looking at it, really, all year has been flat to slightly down year over year. And so offsetting that, we have done a really great job of diversifying where the GMV comes from. We talked a little bit earlier around the direct-to-consumer channel, but as I look at just the broader categories, you know, jewelry was up over 20%. The auto business in wheel and tire was up mid-single digits.

Now jewelry, we talked about last quarter around some of these cohorts that were underperforming. Fourth quarter was actually flat in jewelry, but still a strong year in 2025 that positions us for growth next year. And as far as the pipeline goes, look, very bullish around our ability to continuously add merchants and locations into our network. We have done really, really well in the small- and medium-sized businesses throughout the year. We do have some RFPs in the works that we hope that we win our fair share as we always do on the regional side throughout the year.

So yes, very confident in our sales team's and our business development team's execution around continuously adding to our network and continuously diversifying where the GMV comes from.

Bradley Bingham Thomas: That is really helpful. And if I could just squeeze in a follow-up regarding AI, you did touch on it in your prepared remarks, and I know there are going to be a number of opportunities.

Bradley Bingham Thomas: But at this stage, if you tried to maybe rank where you think it can first be

Bradley Bingham Thomas: you know, most impactful for you, is it what you are seeing on the revenue or new customer side of things, or the efficiency side, or the underwriting discipline? Where do you see the biggest bright spots for the impact of AI for you all?

Sami B. Sulaiman: Brad, so it is all of the above. I think you touched on it almost in the right order, I think. We are—the biggest thing that I can point to is the leasability engine at Acima. I mean, we talked about the direct-to-consumer channel. What unlocked that GMV for us would be being able to basically in real time determine if the product that is in the cart is lease eligible or not. And AI is the feature to do that. So very much integrated in our innovation strategy.

The core of our innovation strategy, we are trying to do it around the consumer, and we are already doing that both through the Rent-A-Center business and the Acima business, and Bridget for that matter, just through, you know, generative and the GenAI. We are, you know, establishing different tests and pilots and use cases around how do we interact with customers, how do we understand where the customers are shopping and what they are interested in? And so as we think about kind of rank ordering where it is, it is around growth, revenue growth and customer interactions. Then, you know, underwriting.

I think we are already doing a lot in the machine learning space and talked a little bit about integrating what Bridget is doing into our other business. So that will also be, you know, driven by AI functionality and automation. And then probably last in that order is probably around efficiency. We are rolling that out to all of our coworkers and dabbling with that, but it probably starts with revenue growth and then ends with the efficiency piece.

Bradley Bingham Thomas: Very helpful. Thanks so much.

Operator: One moment for our next question. Next question comes from Hoang Manh Nguyen with TD Cowen. Your line is open.

Hoang Manh Nguyen: Thanks, guys. I just have a question on

Hoang Manh Nguyen: Bridget. So I think at the beginning, when you guys announced the deal,

Hoang Manh Nguyen: you guys were calling for an acceleration in revenue growth this year versus 2025. Given some of the delays that you mentioned as well as, I guess, maybe subscribers coming in a little bit below what you had previously expected. Can we sort of expect Bridget to accelerate this year, and if so, what would be the cadence throughout the year as you guys continue with your cross-sell efforts? And then one of your competitors also recently launched a, I guess, cash advance feature as well. It seems a success. But how do we think about the competitive landscape for Bridget's offering at this moment? Thank you.

Sami B. Sulaiman: Hoang, you broke up a little bit. Who did you say launched a product?

Hoang Manh Nguyen: Oh, one of your competitors. I read yesterday. New cash app. So—

Sami B. Sulaiman: Yes. I will just touch a little bit around just the competitive landscape, I guess, first, and then I will move over to the revenue and subscriber growth for 2026. Yes. Look. I think there are people who are announcing different versions of EWA products and instant cash-

Sami B. Sulaiman: like

Sami B. Sulaiman: products. And honestly, I am not surprised by that. There is a lot of demand for the product. People are seeing the same thing that we are seeing, that consumers, especially in this environment, need liquidity solutions. And it is not surprising that others are jumping along developing or acquiring similar products like Bridget, like we saw, you know, all the same rationale and merits that we saw. Others are seeing the same thing. So what we need to do is make sure that we continue to differentiate our products and to add value to our bundle to make sure that we retain the customers that we get from Bridget. And I think we have done that.

And we will continue to do that with the product roadmap and the line of credit and the other things that we have talked about, really giving consumers more choice around the different pricing and different tiers that we have. That is the way that we will be able to differentiate Bridget and hopefully maintain the growth that we expect. As far as the cadence goes for 2026, as I mentioned, still very healthy top-line growth year over year. We are delayed on some of the new products. And again, being very cautious from a, you know, new audience and new product rollout given the uncertainty in the market.

I think the acceleration seasonally is generally subscriber growth is going to be back-end loaded. I think the faster we are able to roll out the new line of credit will also have big impact on subscriber growth, and all those things are kind of pointed to the second half of the year as we get performance data around that product.

Hoang Manh Nguyen: Got it. Thank you.

Operator: One moment for our next question. Our next question comes from Eunice Sun with Jefferies. Your line is open.

Eunice Sun: Hello. Thank you for taking my question. And congratulations, Hal, on joining the team.

Eunice Sun: My question was around the margin across the segment. You mentioned there was some comp effect in the fourth quarter 2024.

Eunice Sun: But looking at the gross margin per segment, it is

Eunice Sun: still trending downward compared to past quarters and fourth quarter 2024 in RAC segment. And could you give a little color around if that is driven by any changes in product mix shift, consumer behavior, or is it more so on the inventory side? Any color will be great. Thank you.

Hal Khouri: Yes. Sure. It is Hal here. Maybe I can touch on that. You know, in terms of the first piece of that, we did actually in Q4 of last year experience some in-period benefits on the labor cost lines associated with our worker compensation numbers. So that was an in-period benefit last year. And as we look at the comp year over year, obviously, this year, we would not have realized some of those in-period benefits. In terms of the margins overall, certainly, the competitive landscape, I think, is putting pressure across the board on margins on the top-line perspective. But also, if you think about our gross profit margins, certainly the cost of goods as well.

You know, we are experiencing some cost shifts there, you know, with tariffs certainly playing into the equation as well. Our furniture category has been impacted by that as well. And so, you know, those in concert—you know, selectively top-line pressure competitively, us trying to garner additional volume, and being competitive with our pricing—tightening up on the credit side as well, I would say. So on the margin, you know, perhaps reducing some of the customer that would have been a bit higher in terms of the overall margin contribution as well on a top-line perspective. That and the overall cost of goods actually increasing period over period.

So, you know, all of that being said, as we think about the outlook going into 2026, as Sami had mentioned, generally positive outlook in that respect, being more efficient, I would say, in terms of how we operate, looking at areas as some of those historical vintages flow through. We would expect, you know, some improvement through the back end of the year and expansion in overall margin and contribution there as well.

Eunice Sun: Great.

Eunice Sun: Really helpful. And in regards to some of the tightening actions throughout 2025, how should we think about the cadence of that unfolding in terms of credit or growth throughout 2026? Thank you.

Sami B. Sulaiman: So, yes, I think we answered some of this as far as the cadence goes from a GMV standpoint. But look, on the underwriting side, losses—and Hal touched on it a little bit earlier—you know, delinquencies on both Rent-A-Center and Acima are in line with years past and at a very acceptable level. The changes that we made at Acima seem to be working as intended. The early performance indicators of the more recent vintages are much more in line with historical years. And so that is why we felt confident in guiding the first quarter and really the year for Acima to be in that 9.5% range.

And so we feel good about peaking like we said we would in the fourth quarter at 10% and coming back into a more normalized range really throughout the year. Now it does come at a cost of GMV growth, and that will be impacting GMV for the first half of the year, then hopefully we rebound into more normalized levels in the second half of the year. And with Rent-A-Center, I think the same thing, pretty stable environment from our consumer standpoint. You know, no major changes that we see on the horizon from an underwriting standpoint other than our normal, you know, push-pull on some of the levers that we would do, and it has been stable.

We are very comfortable operating in that 4.5% to 5% ZIP code from a loss perspective and generating mid-teens margin on that business. And with Acima, kind of the low- to mid-teens EBITDA margin. So losses seem to be stable, obviously, a very uncertain macro that we are dealing with here. But for now, we feel really good about our portfolio and the health of the portfolio coming into the year.

Operator: One moment for our next question. Our next question comes from Anthony Chinonye Chukumba with Loop Capital Markets. Your line is open.

Anthony Chinonye Chukumba: Good morning. I will keep this short, so you guys

Anthony Chinonye Chukumba: get back to actually managing your business.

Anthony Chinonye Chukumba: You have touched on this a few times, but I just wanted to clarify. The slowdown in Acima GMV, was that solely due to the credit tightening, or was there, you know, were there any other factors, like, any kind of slowdown in underlying demand for

Anthony Chinonye Chukumba: furniture and appliances? Thank you.

Sami B. Sulaiman: Morning, Anthony. Thanks for the question. Yes, I would say the majority of it was probably just intentional from our underwriting standards. There was some softness in demand going into the year—or sorry, into the fourth quarter, I should say—in the holiday season. So there is a part of it that is the macro. There is no doubt that furniture continues to be under pressure. I do not think that is unique to us at all, either Rent-A-Center or Acima. And I think that did, you know, have some headwinds in the fourth quarter. But as I said, we are very optimistic about our ability to continue to add merchants and add locations on the Acima side.

And when furniture does come back, you know, we will still have all of those furniture retailers on our network. We will have all the diversification that we talked about, and we can then, you know, use that to feed the marketplace and direct-to-consumer channels. So, you know, right now we are managing losses the best we can, managing the underwriting in a pretty difficult environment, also through demand pressures, especially in our largest category. But once all that kind of clears, we will be in a really good position to have a lot of tailwinds, especially when you think about our ability to generate repeat business on the Acima side that I went through earlier on the call.

That gives us a lot of confidence to continue to grow GMV.

Anthony Chinonye Chukumba: Got it. Thanks so much.

Operator: And I am not showing any further questions. I would like to turn the call back over to Sami for any further remarks.

Sami B. Sulaiman: Thanks, Kevin. Thank you, everyone, who joined us today for an update on our Q4 performance and our outlook for 2026. I am thankful for the collective efforts of our exceptionally talented and dedicated coworkers and our merchants who helped us deliver 2025 strong results while setting us up for another transformational year ahead. We are grateful for your interest and support. We look forward to updating you all again next quarter on our continued progress. Have a great day, everyone.

Operator: Ladies and gentlemen, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

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