Upbound Group (UPBD) Q3 2024 earnings summary

Executive summary

• Q3 2024 consolidated revenue reached $1,068.9 million, up 9.2% year-over-year, with net income of $30.9 million and GAAP diluted EPS of $0.55, up from $0.08 last year.

• Adjusted EBITDA grew 10.3% year-over-year to $116.9 million, with a margin of 10.9%; non-GAAP diluted EPS was $0.95.

• Acima posted its fourth consecutive quarter of double-digit GMV growth (+13% y/y), while Rent-A-Center achieved another quarter of same store sales growth (+2.6% y/y) and completed a retail footprint rebalancing.

• Strategic initiatives included the sale of 55 Rent-A-Center stores in NYC/NJ, a $3.1 million net gain, and the launch of an AI-powered leasability engine.

• Strong Q3 performance positions the company to achieve full-year 2024 guidance targets.

Financial highlights

• Revenue: $1,068.9 million (+9.2% y/y); operating profit: $70.1 million (+$12.0 million y/y); net profit margin: 2.9% (+250 bps y/y).

• Adjusted EBITDA: $116.9 million (+10.3% y/y); margin: 10.9%; non-GAAP EPS: $0.95 (up from $0.79); GAAP EPS: $0.55.

• Free cash flow for Q3 was $88.3 million, up from $63.2 million last year; quarterly dividend of $0.37 per share distributed.

• Gross margin declined 300 bps year-over-year to 47.8%, mainly due to Acima's product mix shift and increased 90-day purchase options.

• Lease charge-off rate was 7.4%, up 40 bps year-over-year, with Acima at 9.2% (down 20 bps YoY) and Rent-A-Center at 4.9% (up 60 bps YoY).

Outlook and guidance

• Full-year 2024 revenue guidance: $4.20–$4.30 billion; adjusted EBITDA: $470–$480 million; non-GAAP EPS: $3.75–$3.90; free cash flow: $100–$130 million.

• Q4 adjusted EBITDA guidance is $120–$130 million, with non-GAAP EPS of $0.97–$1.12.

• Guidance unchanged from previous update; strong Q3 performance supports achieving targets.

• Acima GMV growth for Q4 projected at low double digits year-over-year, with gross margins similar to Q3.

• Free cash flow expected at the lower end of guidance due to strong GMV growth at Acima.