Upbound Group (UPBD) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $1,077 million, up 9.9% year-over-year, with strong growth in both Acima and Rent-A-Center segments.

• Net income for Q2 was $33.9 million, a $79.5 million improvement year-over-year, and GAAP diluted EPS was $0.61, up from a loss of $0.83 in the prior year.

• Adjusted EBITDA was $124.5 million, down 4.6% year-over-year, with a margin of 11.6%.

• Non-GAAP diluted EPS was $1.04, reflecting adjustments for debt refinancing, asset impairments, accelerated depreciation, stock compensation, and legal settlements.

• The company raised the midpoint of its full-year 2024 guidance for revenue, adjusted EBITDA, and non-GAAP EPS based on strong first-half performance.

Financial highlights

• Acima revenue grew 19% year-over-year to $552.8 million; Rent-A-Center revenue increased 1.9% to $474.9 million.

• Consolidated gross margin was 49.4% in Q2, down 230 basis points year-over-year, mainly due to margin contraction in both Acima and Rent-A-Center.

• Free cash flow was $0.6 million, down from $24.7 million in the prior year, due to increased GMV at Acima.

• Net profit margin improved to 3.2%, up 790 basis points year-over-year.

• Cash dividend of $0.37 per share distributed.

Outlook and guidance

• Full-year 2024 revenue guidance raised to $4.1–$4.3 billion, adjusted EBITDA to $465–$485 million, and non-GAAP EPS to $3.65–$4.00.

• Q3 non-GAAP EPS expected in the $0.90–$1.00 range, with free cash flow of $60–$75 million.

• Free cash flow guidance for the year maintained at $100–$130 million.

• Midpoint of revised guidance implies 4% revenue growth, 5% adjusted EBITDA growth, and 8% non-GAAP EPS growth over 2023.

• Management expects continued growth in Acima through expanded retail partnerships and direct-to-consumer channels.