[10-Q] UPBOUND GROUP, INC. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| (Mark One) | |||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number: 001-38047
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |||||||
| incorporation or organization) | Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(972 ) 801-1100
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
| Emerging Growth Company | |||||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of April 23, 2026:
| Class | Outstanding | |||||||
| Common stock, $.01 par value | ||||||||
TABLE OF CONTENTS
| Page No. | ||||||||
PART I. | FINANCIAL INFORMATION | |||||||
Item 1. | Condensed Consolidated Financial Statements | |||||||
Condensed Consolidated Statements of Operations for the three-month periods ended March 31, 2026 and 2025 | 1 | |||||||
Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2026 and 2025 | 2 | |||||||
Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 | 3 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity for the three-month periods ending March 31, 2026 and 2025 | 4 | |||||||
Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2026 and 2025 | 5 | |||||||
Notes to Condensed Consolidated Financial Statements | 6 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 35 | ||||||
Item 4. | Controls and Procedures | 35 | ||||||
PART II. | OTHER INFORMATION | |||||||
Item 1. | Legal Proceedings | 36 | ||||||
Item 1A. | Risk Factors | 36 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 36 | ||||||
Item 3. | Defaults Upon Senior Securities | 36 | ||||||
Item 4. | Mine Safety Disclosures | 36 | ||||||
Item 5. | Other Information | 36 | ||||||
Item 6. | Exhibits | 37 | ||||||
SIGNATURES | ||||||||
i
Item 1. Condensed Consolidated Financial Statements.
UPBOUND GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Rentals and fees | $ | $ | |||||||||||||||||||||
| Merchandise sales | |||||||||||||||||||||||
| Subscriptions and fees | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||
| Cost of rentals and fees | |||||||||||||||||||||||
| Cost of merchandise sold | |||||||||||||||||||||||
| Cost of subscriptions and fees | |||||||||||||||||||||||
| Total cost of revenues | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Operating labor | |||||||||||||||||||||||
| Non-labor operating expenses | |||||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Other gains and charges | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Interest income | ( | ( | |||||||||||||||||||||
| Earnings before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net earnings | $ | $ | |||||||||||||||||||||
| Basic earnings per common share | $ | $ | |||||||||||||||||||||
| Diluted earnings per common share | $ | $ | |||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
1
UPBOUND GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net earnings | $ | $ | |||||||||||||||||||||
| Other comprehensive loss: | |||||||||||||||||||||||
Foreign currency translation adjustments, net of tax of $( | ( | ( | |||||||||||||||||||||
| Total other comprehensive loss | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | |||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
2
UPBOUND GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, 2026 | December 31, 2025 | ||||||||||
| (in thousands, except share and par value data) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Receivables, net of allowance for doubtful accounts of $ | |||||||||||
| Prepaid expenses and other assets | |||||||||||
| Rental merchandise, net | |||||||||||
| On rent | |||||||||||
| Held for rent | |||||||||||
| Merchandise held for installment sale | |||||||||||
Property assets, net of accumulated depreciation of $ | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred tax asset | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES | |||||||||||
| Accounts payable – trade | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Operating lease liabilities | |||||||||||
| Deferred tax liability | |||||||||||
| Senior debt, net | |||||||||||
| Senior notes, net | |||||||||||
| Total liabilities | |||||||||||
| STOCKHOLDERS’ EQUITY | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Treasury stock at cost, | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements.
3
UPBOUND GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive (Loss) Income | Total | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Vesting of restricted share units, net of shares withheld for employee taxes | ( | — | — | — | |||||||||||||||||||||||||||||||||||||
| Tax effect of stock awards vested and options exercised | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Dividends declared(1) | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
(1) Cash dividends declared for the three months ended March 31, 2026 was $0.39 per common share. Cash dividends are paid in the quarter subsequent to declaration.
| Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive (Loss) Income | Total | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Vesting of restricted share units, net of shares withheld for employee taxes | ( | — | — | — | |||||||||||||||||||||||||||||||||||||
| Tax effect of stock awards vested and options exercised | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Dividends declared(1) | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Brigit acquisition equity consideration | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ( | |||||||||||||||||||||||||||||||||||||||
(1) Cash dividends declared for the three months ended March 31, 2025 were $0.39 per common share. Cash dividends are paid in the quarter subsequent to declaration.
See accompanying notes to condensed consolidated financial statements.
4
UPBOUND GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Cash flows from operating activities | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities | |||||||||||
| Depreciation of rental merchandise | |||||||||||
| Bad debt expense | |||||||||||
| Stock-based compensation expense | |||||||||||
| Depreciation of property assets | |||||||||||
| Loss on sale or disposal of property assets | |||||||||||
| Amortization of intangibles | |||||||||||
| Amortization of financing fees | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Changes in operating assets and liabilities, net of acquired assets | |||||||||||
Rental merchandise(1) | ( | ( | |||||||||
| Receivables | |||||||||||
| Prepaid expenses and other assets | |||||||||||
| Operating lease right-of-use assets and lease liabilities | ( | ( | |||||||||
| Accounts payable – trade | ( | ( | |||||||||
| Accrued liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Net originations and collections of customer cash advances | ( | ( | |||||||||
| Purchase of property assets | ( | ( | |||||||||
| Proceeds from sale of assets | |||||||||||
| Promissory loan collection | |||||||||||
| Acquisitions of businesses, net of cash acquired | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Exercise of stock options | |||||||||||
| Shares withheld for payment of employee tax withholdings | ( | ( | |||||||||
| Proceeds from debt | |||||||||||
| Repayments of debt | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash | ( | ( | |||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
(1) The change in Rental merchandise includes lease charge-offs and other merchandise losses.
See accompanying notes to condensed consolidated financial statements.
5
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The interim condensed consolidated financial statements of Upbound Group, Inc. included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. We suggest these financial statements be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. In our opinion, the accompanying unaudited interim financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary to present fairly our results of operations and cash flows for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
Condensed Consolidated Statement of Cash Flows - Correction of Error
As previously disclosed on our Quarterly Report on Form 10-Q for the period ended September 30, 2025, subsequent to the issuance of our condensed consolidated financial statements reported on our Quarterly Report on Form 10-Q for the period ended March 31, 2025, the Company identified a presentation error within the Condensed Consolidated Statement of Cash Flows related to net originations and collections of customer cash advances for our subsidiary, Bridge IT, Inc., which we determined was not material to our financial statements. In accordance with ASC Topic 230 the Company determined net originations and collections of customer cash advances should be presented as an investing activity and not included in Changes in Receivables within net cash provided by operating activities on the Condensed Consolidated Statement of Cash Flows. As a result, cash provided by operating activities and cash used in investing activities was understated for the three months ended March 31, 2025 by $10.2 million. Therefore, the presentation of net originations and collections of customer advances has been corrected in the Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2025 included in this Quarterly Report on Form 10-Q. Furthermore, this presentation error had no impact to our Condensed Consolidated Statements of Operations and Comprehensive Income, or our Condensed Consolidated Balance Sheet reported within our Form 10-Q for the period-ended March 31, 2025.
Use of Estimates
In preparing financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent losses and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. In applying accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. However, uncertainties, including those related to recent macroeconomic trends or other factors, may affect certain estimates and assumptions inherent in the financial reporting process, which may impact reported amounts of assets and liabilities in future periods and cause actual results to differ from those estimates.
Principles of Consolidation and Nature of Operations
The financial statements included herein include the accounts of Upbound Group, Inc. and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context indicates otherwise, references to “Upbound Group, Inc.” refer only to Upbound Group, Inc., the parent, and references to the “Company”, “we,” “us” and “our” refer to the consolidated business operations of Upbound Group, Inc. and any or all of its direct and indirect subsidiaries. We currently report four operating segments: Acima, Rent-A-Center, Brigit and Mexico.
Our Acima segment, which primarily operates in the United States and Puerto Rico, generally offers the lease-to-own transaction to consumers who do not qualify for traditional financing through staffed or unstaffed kiosks located within third-party retailer locations or other virtual options. In virtual locations, customers, either directly or with the assistance of a representative of the third-party retailer, initiate the lease-to-own transaction online in the retailers’ locations using our virtual solutions.
Our Rent-A-Center segment primarily consists of company-owned lease-to-own stores in the United States and Puerto Rico that lease durable goods to customers on a lease-to-own basis. In addition, we offer merchandise on an installment sales basis in certain of our stores operating under the names “Get It Now” and “Home Choice” in the states of Minnesota and Wisconsin. The Rent-A-Center segment also includes franchising operations that offer the sale of rental merchandise to our franchisees, who in turn offer the merchandise to the general public for rent or purchase under lease-to-own agreements consistent with our company-owned lease-to-own stores. We also receive royalties based on a percent of the franchisees' monthly gross revenues.
6
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Our Rent-A-Center segment operates through our company-owned and franchise stores, and e-commerce platforms through rentacenter.com, getitnowstores.com and homechoicestores.com.
Our Brigit segment, which operates in the United States, includes the operations of Bridge IT Inc., which was acquired on January 31, 2025 (the “Closing Date”). The Brigit segment, through mobile and web applications, offers various financial health products and tools to help users improve their financial health, such as Finance Helper, Deals & Offers, Instant Cash, Credit Builder, Identity Theft Protection and more. These products and tools help customers improve their financial health and literacy, find ways to earn and save money, access their earned wages before their regularly scheduled payday, build their credit through savings and protect themselves from identity theft.
Our Mexico segment consists of our company-owned stores in Mexico that lease durable goods to customers on a lease-to-own basis.
Newly Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326), which amends the existing standard that refers to estimating expected credit losses on current accounts receivable and current contract assets arising from transactions under Topic 606. Under the new standard, public business entities may elect a practical expedient that assumes the current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses. We adopted ASU 2025-05 effective January 1, 2026 on a prospective basis. The adoption did not have a material impact on our financial statements.
Note 2 - Acquisitions
Brigit Acquisition
On December 12, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Fortuna Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), Brigit, and Shareholder Representative Services LLC, solely in its capacity as the representative, agent and attorney-in-fact of Brigit’s securityholders, pursuant to which Merger Sub merged with and into Brigit (the “Merger”), with Brigit surviving the Merger as a wholly owned subsidiary of the Company. The Merger with Brigit, a leading holistic financial health technology company, is intended to accelerate Upbound’s strategy to provide technology-driven financial solutions to customers underserved by the traditional financial system. The Merger was completed on January 31, 2025 for total purchase consideration of approximately $395.4 million comprised of stock, cash and other consideration described further below.
In accordance with the Merger Agreement, we issued to the security holders of Brigit (the “Brigit Securityholders”) approximately 2.7 million shares of our common stock, par value $0.01 per share (the “Closing Stock Consideration”), with a value of $29.75 per share based on the volume-weighted average price of our common stock over the ten consecutive trading days ending on (and including) the trading day immediately prior to the Closing Date, and paid to them closing cash consideration of approximately $278.5 million (“Closing Cash Consideration”), excluding approximately $63.7 million in debt settlement payments and other transaction expenses.
We also entered into deferred cash award agreements with certain Brigit employees to replace their unvested Brigit stock options or unvested phantom awards, as applicable (“Replacement Awards”), each entitling the holder to receive an amount in cash upon vesting equal to the excess of the merger consideration per common share over the exercise price of the original award. The maximum amount payable pursuant to the Replacement Awards, approximately $7.8 million, which is included in the Closing Cash Consideration described above, was escrowed on the Closing Date and recorded to Prepaid and other assets in our Condensed Consolidated Balance Sheet. The Replacement Awards are subject to vesting conditions that are substantially similar to those of the original awards. They will be amortized over the remaining award vesting periods as compensation expense and recorded to other gains and charges in our unaudited Condensed Consolidated Statements of Operations.
Pursuant to the terms of the Merger Agreement, we will also pay the Brigit Securityholders $75 million, payable in multiple installments (the “Deferred Consideration”), $37.5 million of which will be payable 30 days following the first anniversary of the Closing Date and the remainder of which will be payable no later than 30 days following the second anniversary of the Closing Date. The payment of the Deferred Consideration is subject to acceleration if certain acceleration events specified in the Merger Agreement occur prior to the payment of the Deferred Consideration. The estimated fair value of the Deferred Consideration at the Closing Date was approximately $66.1 million, discounted to estimate the present value of the installment payments that will be made over a 2-year period as described above. The Brigit Securityholders may also receive up to $60 million in earnout payments based on the achievement of certain financial performance metrics for the Brigit business in 2026. The estimated fair value of the earnout payments at the Closing Date was approximately $10.6 million. The fair value of
7
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
the earnout payments was estimated using a Monte Carlo simulation model based on our estimated long range cash flow projections for the Brigit business.
The portion of Closing Stock Consideration issued to Brigit’s co-founders and certain of their respective affiliates (collectively, the “Co-Founders”) included approximately 1.3 million shares, valued at $39.1 million, which are subject to certain vesting restrictions over a two-year period from the Closing Date and other limitations set forth in a restricted stock agreement entered into with each such Co-Founder. The value of these shares is recognized as stock-based compensation expense subject to ASC Topic 718, “Stock-based Compensation”, over the required vesting period, and recorded to other gains and charges in our unaudited Condensed Consolidated Statements of Operations.
Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The following table provides the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date:
| (in thousands) | January 31, 2025 | ||||
Aggregate cash consideration(1) | $ | ||||
Aggregate stock consideration(2) | |||||
Other consideration(3) | |||||
| Total purchase consideration | $ | ||||
| ASSETS ACQUIRED | |||||
Receivables, net(4) | $ | ||||
| Prepaid expenses and other assets | |||||
| Property assets | |||||
| Operating lease right-of-use assets | |||||
| Goodwill | |||||
| Other intangible assets | |||||
| Total assets acquired | $ | ||||
| LIABILITIES ASSUMED | |||||
| Accounts payable - trade | $ | ||||
| Accrued liabilities | |||||
| Operating lease liabilities | |||||
| Deferred income taxes | |||||
| Total liabilities assumed | |||||
| Net assets acquired | $ | ||||
(1) Aggregate cash consideration excludes $7.8 million in Replacement Awards described above and $58.6 million in cash acquired, and includes cash paid to settle Brigit's outstanding debt and loan balances and other transaction expenses of $63.7 million, and post-closing net working capital adjustments of $1.7 million.
(2) Aggregate stock consideration excludes approximately 1.3 million shares valued at approximately $39.1 million subject to certain vesting restrictions, as described further above.
(3) Includes the fair value of Deferred Consideration and earnout payments described above, which were not included in Closing Cash Consideration paid at the time of closing but will be paid out in future periods pursuant to the terms of the Merger Agreement.
(4) Includes gross contractual receivables of $43.8 million related to customer cash advances, of which $4.5 million were estimated to be uncollectible as of the Closing Date.
The carrying values for certain assets and liabilities assumed as part of the acquisition, including receivables, prepaid expenses and other assets, accounts payable and accrued liabilities were considered equivalent to and recorded as fair value, as of the date of acquisition, due to the short-term nature of these balances. Operating lease right-of-use assets and liabilities were recorded as the discounted value of future obligations in accordance with ASC Topic 842, “Leases”. The fair value measurements for acquired intangible assets and developed technology were primarily based on significant unobservable inputs (Level 3) developed using company-specific information. Certain fair values were determined based on an independent valuation of the net assets acquired, including $152.3 million of identifiable intangible assets with an estimated weighted average useful life of nine years , as follows:
| Asset Class | Estimated Fair Value (in thousands) | Estimated Remaining Useful Life (in years) | ||||||
| Customer contracts | $ | |||||||
| Trade name | ||||||||
8
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Developed technology, included in Property assets, net, in line with our accounting policies, was also acquired with a value of $65.1 million and an estimated remaining useful life of seven years . The fair value for these intangibles and developed technology were estimated using common industry valuation methods for similar asset types, including the relief-from-royalty, excess earnings and replacement cost methods using significant unobservable inputs (level 3) based on the Company's historical financial results, cost estimates and projected future cash flows discounted by an estimated weighted average cost of capital.
In addition, we recorded goodwill of $196.9 million in our Brigit operating segment, which consists of the excess of the net purchase price over the fair value of the net assets acquired. Goodwill represents expected cost and revenue synergies and other benefits expected to result within our financial health business from the acquisition of Brigit.
Brigit’s results of operations are reflected in our unaudited Condensed Consolidated Statements of Operations from the Closing Date.
In the second quarter of 2025, we recorded adjustments to certain assets acquired and liabilities assumed related to post-closing updates in net working capital and adjustments to deferred income taxes resulting in an overall decrease to goodwill of approximately $1.3 million. The purchase price allocation for the Brigit acquisition was complete as of December 31, 2025.
In connection with this acquisition, we have incurred approximately $10.3 million in acquisition-related expenses including expenses related to legal, professional, and banking transaction fees. These costs were included in other gains and charges in our unaudited Condensed Consolidated Statements of Operations.
The following unaudited pro forma combined results of operations present our financial results as if the acquisition of Brigit had been completed on January 1, 2024. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma information reflects step-up and step-down adjustments for depreciation and amortization of $1.8 million for the fair value of the assets acquired, compensation expense of $0.9 million as a result of Closing Stock Consideration and Replacement Awards subject to vesting provisions, interest expense of $1.4 million due to the elimination of historical debt, accreted interest of $0.4 million related to the Deferred Consideration, and an adjustment to income tax expense of $1.8 million for the three months ended March 31, 2025. In addition, pro forma net income for the three months ended March 31, 2025 has been adjusted to reflect transaction expenses incurred of $22.5 The unaudited pro forma financial information is as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (in thousands) | 2025 | ||||||||||||||||||||||
| Pro Forma total revenues | $ | ||||||||||||||||||||||
Pro Forma net earnings (loss)(1) | |||||||||||||||||||||||
(1) Total pro forma adjustments to net earnings (loss) represented an increase of $6.9 million for the three months ended March 31, 2025.
The amounts of revenue and earnings of Brigit included in our Condensed Consolidated Statements of Operations from the acquisition date of January 31, 2025 are as follows:
| (in thousands) | January 31, 2025 - March 31, 2025 | |||||||
| Total revenues | $ | |||||||
Net earnings(1) | ||||||||
(1)Net earnings for the period includes amortization and depreciation of intangible assets and developed technology acquired upon closing of the Brigit acquisition.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Note 3 - Revenues
The following tables disaggregate our revenue for the periods ended March 31, 2026 and 2025:
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||
| Acima | Rent-A-Center | Brigit | Mexico | Consolidated | |||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| Rentals and fees | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Merchandise sales | |||||||||||||||||||||||||||||
| Subscriptions and fees | |||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||
| Acima | Rent-A-Center | Brigit | Mexico | Consolidated | |||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| Rentals and fees | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Merchandise sales | |||||||||||||||||||||||||||||
| Subscriptions and fees | |||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Lease Purchase Agreements
Rentals and Fees. Rental merchandise is leased to customers pursuant to lease-to-own agreements, which provide for weekly, bi-weekly, semi-monthly or monthly terms with non-refundable lease payments. At the expiration of each lease term, customers may renew the lease-to-own agreement for the next lease term. The customer has the right to acquire title of the merchandise either through an early purchase option or through payment of all optional lease renewal terms. Customers can terminate the lease-to-own agreement and return the product at the end of any lease term without penalty. Therefore, lease-to-own agreements are accounted for as operating leases.
Lease payments received at our company-owned Rent-A-Center stores, certain Acima locations formerly operating under the Acceptance Now brand, and Mexico stores must be prepaid in advance of the next lease renewal term. Under the Acima Holdings business model, in certain cases revenues may be earned prior to the lease payment due date, in which case revenue is accrued prior to receipt of the lease payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the lease term. See Note 4 for additional information regarding accrued lease revenue.
Cash received for rental payments, including fees, prior to the period in which it should be recognized, is deferred and recognized according to the lease term. At March 31, 2026 and December 31, 2025, we had $60.6 million and $62.1 million, respectively, in deferred revenue included in accrued liabilities related to our lease-to-own agreements. Revenues related to various payments, reinstatement or late fees are recognized when paid by the customer at the point service is provided. Rental merchandise in our company-owned Rent-A-Center stores, certain Acima locations formerly operating under the Acceptance Now brand, and Mexico stores is depreciated using the income forecasting method and recognized in cost of rentals and fees in our Condensed Consolidated Statements of Operations over the lease term. Lease merchandise under Acima Holdings is depreciated over the lease term using a straight-line depreciation method. Under the income forecasting method, the consumption of lease merchandise occurs during periods of rental and depreciation directly coincides with the receipt of rental revenue over the lease-to-own contract period. Depreciation under the straight-line method is recognized each period over the term of the lease-to-own contract irrespective of receipt of revenue payments from the customer.
We also offer additional optional product plans along with our lease-to-own agreements which provide customers with liability protection against significant damage or loss of a product, and club membership benefits, including various discount programs and product service and replacement benefits in the event merchandise is damaged or lost, and payment waivers in the event eligible customers become unemployed. Customers renew product plans in conjunction with their lease term renewals, and can cancel the plans at any time. We do not separate the lease and non-lease components for lease purchase agreements so revenue
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
for product plans is recognized over the term of the current term of the lease. Costs incurred related to product plans are primarily recognized in cost of revenues.
Revenue from contracts with customers
Merchandise Sales. Revenue for merchandise sales is recognized when payment is received and ownership of the merchandise passes to the customer. Merchandise sales include payments received for the exercise of the early purchase options offered through our lease-to-own agreements or merchandise sold through point-of-sale transactions. The remaining net value of lease merchandise sold is recorded to cost of merchandise sold at the time of the transaction. Revenue from the sale of lease merchandise to our franchisees is recognized upon shipment of the merchandise to the franchisee.
Revenue from the sale of merchandise in our retail installment stores is recognized when the installment note is signed and control of the merchandise has passed to the customer. The cost of merchandise sold through installment agreements is recognized at the time of the transaction. We offer optional extended service plans with our installment agreements which are administered by third parties and provide customers with product maintenance beyond the term of the installment agreement. Payments received for extended service plans are deferred and recognized, net of related costs, when the installment payment plan is complete and the service plan goes into effect. Customers can cancel extended service plans at any time during the installment agreement period and receive a refund for payments previously made towards the plan. At March 31, 2026 and December 31, 2025, the amount of deferred revenue included in accrued liabilities related to extended service plans was inconsequential to our financial statements.
Subscriptions and fees. Subscription payments in our Brigit segment are received on a monthly basis from customers who upgrade to a Plus or Premium subscription tier via the Brigit mobile application and/or web browser. Depending on the optional subscription tier, the customer gains access to some or all of the following services: Credit Monitoring, Credit Builder, Identity Theft Protection, and more. This payment can range based on a variety of factors and higher cost tiers generally offer additional services. Brigit continually fulfills obligations to each customer over the subscription term. The series of distinct services represent a single performance obligation that is satisfied over time. Revenue for the Plus and Premium subscription tiers are recognized over the subscription term. Customers pay subscriptions at the end of the term. Price concessions are granted to customers who have insufficient funds and are unable to make subscription payments when they are due.
We also receive payments from customers who request their cash advance be delivered faster for an optional expedited transfer fee. Such expedited transfer fee payments from customers are recognized as revenue over the expected term of the associated customer cash advance. We also serve offers from our marketplace partners’ products and services in our Deals & Offers section of our mobile application. We receive a payment from our partners based on contractual terms, generally on the basis of customer traffic or conversions brought to such products or services. Marketplace revenues are recognized as customer traffic is added and conversions to the marketplace partners’ products and services occur.
Other. Other revenue primarily consists of franchise royalties, including franchisee contributions to corporate advertising funds, which represent sales-based royalties calculated as a percentage of gross rental payments and sales. Royalty revenue is accrued and recognized as lease payments and merchandise sales occur. Franchise fees are initial fees charged to franchisees for new or converted franchise stores. Franchise fee revenue is recognized on a straight-line basis over the term of the franchise agreement. At March 31, 2026 and December 31, 2025, we had $1.2 million and $1.4 million, respectively, in deferred revenue included in accrued liabilities related to franchise fees.
Other revenue also includes revenues generated by other miscellaneous product plans offered to our lease-to-own and installment customers. Revenue for other product plans is recognized in accordance with the terms of the applicable plan agreement.
Note 4 - Receivables and Allowance for Doubtful Accounts
Trade and notes receivables consist of amounts due from our lease-to-own customers for lease renewal payments and past due uncollected lease payments, adjusted for the probability of collection based on our assessment of historical collection rates and length of time the receivable is past due; amounts owed from our franchisees for inventory purchases, earned royalties and other obligations; and other miscellaneous and corporate related receivables. Credit is extended to franchisees based on an evaluation of each franchisee’s financial condition and collateral is generally not required. Trade receivables are generally due within 30 days.
Installment sales receivables consist primarily of receivables due from customers for the sale of merchandise in our retail installment stores. Installment sales receivables associated with the sale of merchandise at our Get It Now and Home Choice stores generally consist of the sales price of the merchandise purchased and any additional fees for optional services the customer has chosen, less the customer’s down payment. No interest is accrued and interest income is recognized each time a
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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
customer makes a payment, generally on a monthly basis. Interest payments received on installment agreements for both the three months ended March 31, 2026 and 2025 were $2.5
Customer cash advances consist of earned wage access advances provided to Brigit customers when requested. By leveraging cash flow information from the customer’s bank account as well as customer verified income information, Brigit’s algorithm assesses their earned income and ability to repay, with no FICO or credit check needed and no impact on credit scores. Generally customers repay cash advances on or shortly after they receive their next paycheck.
Receivables consist of the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
Trade and notes receivables(1) | $ | $ | |||||||||
| Installment sales receivables | |||||||||||
| Customer cash advances | |||||||||||
| Total receivables | |||||||||||
Less allowance for doubtful accounts(2) | ( | ( | |||||||||
| Total receivables, net of allowance for doubtful accounts | $ | $ | |||||||||
(1) Trade and notes receivables includes accrued revenue, adjusted for the probability of collection, related to our lease-to-own agreements of $56.3 million and $55.9 million at March 31, 2026 and December 31, 2025, respectively, including $53.1 million and $51.9 million related to lease-to-own agreements for Acima Holdings and $2.9 million and $3.6 million related to lease-to-own agreements for Rent-A-Center at March 31, 2026 and December 31, 2025, respectively.
(2) Lease receivables are accrued on a net basis, adjusted for the probability of collection based on our assessment of historical collection rates, as described above. Therefore, we do not maintain a separate allowance for doubtful accounts related to our lease receivables.
The allowance for our franchising trade and notes receivables is determined by considering a number of factors, including the length of time receivables are past due, previous loss history, the franchisee’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Trade receivables that are more than 90 days past due are either written-off or fully reserved in our allowance for doubtful accounts. Payments subsequently received on such receivables are recognized as contra-bad debt expense in our Condensed Consolidated Statements of Operations.
We have established an allowance for doubtful accounts for our installment notes receivable. Our policy for determining the allowance is primarily based on historical loss experience, as well as the results of management’s review and analysis of the payment and collection of the installment notes receivable within the previous year. Our allowance is adequate to absorb all expected losses. Our policy is to charge off installment notes receivable that are 120 days or more past due. Charge-offs are applied as a reduction to the allowance for doubtful accounts and any recoveries of previously charged off balances are recognized as contra-bad debt expense in our Condensed Consolidated Statements of Operations.
We estimate the allowance for customer cash advance losses based on a number of factors, including the length of time receivables are past due, previous loss history and current economic conditions. The allowance for credit losses is recognized upon origination of customer cash advances. Customer cash advances are charged-off 45 days past their due date as a reduction to the allowance for doubtful accounts and any recoveries of previously charged off balances are recognized as contra-bad debt expense in our Condensed Consolidated Statements of Operations.
The allowance for doubtful accounts related to franchising trade and notes receivables was $12.9 million and $12.7 million at March 31, 2026 and December 31, 2025, respectively, the allowance for doubtful accounts related to installment sales receivables was $12.3 million and $11.1 million at March 31, 2026 and December 31, 2025, respectively, and the allowance for doubtful accounts related to Brigit customer cash advances was $4.9 million and $5.9 million at March 31, 2026 and December 31, 2025, respectively.
Changes in our allowance for doubtful accounts are as follows:
| (in thousands) | March 31, 2026 | ||||||||||||||||
| Beginning allowance for doubtful accounts | $ | ||||||||||||||||
Bad debt expense(1) | |||||||||||||||||
| Accounts written off, net of recoveries | ( | ||||||||||||||||
| Ending allowance for doubtful accounts | $ | ||||||||||||||||
(1) Uncollectible installment payments, franchisee obligations, customer cash advances and other corporate receivables are recognized in non-labor operating expenses in our condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The details of Brigit customer cash advances aging are as follows:
| March 31, 2026 | ||||||||
| ($ in thousands) | Amount | Percent | ||||||
| 0-15 days | $ | % | ||||||
| 16-30 days | % | |||||||
| 31-45 days | % | |||||||
| 45+ days | % | |||||||
| Customer cash advances before allowance for doubtful accounts | $ | % | ||||||
| December 31, 2025 | ||||||||
| ($ in thousands) | Amount | Percent | ||||||
| 0-15 days | $ | % | ||||||
| 16-30 days | % | |||||||
| 31-45 days | % | |||||||
| 45+ days | % | |||||||
| Customer cash advances before allowance for doubtful accounts | $ | % | ||||||
Note 5 - Senior Debt
On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, providing for a seven-year $875 million senior secured term loan facility (the “Term Loan Facility”), as amended on September 21, 2021, June 15, 2023, May 28, 2024 and August 19, 2025, and an Asset Based Loan Credit Facility (the “ABL Credit Facility”), as amended August 10, 2022, June 7, 2024 and August 29, 2025, providing for a five-year asset-based revolving credit facility with commitments of $550 million and a letter of credit sublimit of $150 million. Commitments under the ABL Credit Facility may be increased, at our option and under certain conditions, by up to an additional $125 million in the aggregate.
On August 19, 2025, we entered into a Fourth Amendment to the Term Loan Facility, effective as of August 19, 2025. The amendment, in addition to certain other changes, (i) extended the maturity date for the loans outstanding under the Term Loan Facility to August 19, 2032 (subject to certain springing maturity provisions) and (ii) provided approximately $77 million of incremental commitments under the Term Loan Facility, all of which were drawn on August 19, 2025, resulting in total aggregate borrowings under the Term Loan Facility on such date of $875 million. Proceeds from the Term Loan Facility were net of original issue discount of $4.4 million upon issuance from the lenders.
On August 29, 2025, we entered into a Third Amendment to the ABL Credit Facility, effective as of August 29, 2025. The amendment provided for certain changes to the covenants applicable to the ABL Credit Facility.
In connection with the execution of the Fourth Amendment to the Term Loan Facility and Third Amendment to the ABL Credit Facility, we incurred approximately $4.2 million in debt issuance costs, including third-party arrangement and other professional fees, of which approximately $4.0 million were expensed as debt refinance charges in our Condensed Consolidated Statements of Operations, and approximately $0.2 million were capitalized and recorded as a reduction to our outstanding senior debt in our Condensed Consolidated Balance Sheets. In addition, in accordance with ASC Topic 470, “Debt”, we recorded approximately $0.9 million in write-offs of unamortized debt issuance costs and original issue discount previously capitalized upon the Third Amendment to the Term Loan Facility on May 28, 2024. The write-offs were recorded as debt refinance charges in our Condensed Consolidated Statements of Operations.
As of March 31, 2026, the total remaining balances of unamortized debt issuance costs and original issue discount related to our senior debt reported in the Condensed Consolidated Balance Sheets were approximately $5.9 million and $4.5 million, respectively. Remaining unamortized debt issuance costs and original issue discount will be amortized to interest expense over the remaining terms of the ABL Credit Facility and Term Loan Facility.
We had $135.0 million outstanding borrowings under our ABL Credit Facility at March 31, 2026 and borrowing capacity of $366.6 million, net of issued letters of credit of approximately $48.4 million. The amount outstanding under the Term Loan Facility was $870.6 million at March 31, 2026.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
ABL Credit Facility
The ABL Credit Facility will mature on June 7, 2029 (subject to certain springing maturity provisions). We may borrow only up to the lesser of the level of the then-current borrowing base and the aggregate amount of commitments under the ABL Credit Facility. The borrowing base is tied to the amount of eligible installment sales accounts, inventory and eligible lease contracts, reduced by certain reserves.
The ABL Credit Facility bears interest at a fluctuating rate determined by reference to an adjusted Term SOFR rate plus an applicable margin of 1.50 % to 2.00 %. The total interest rate on the ABL Credit Facility at March 31, 2026 was 5.76 %, including an applicable margin of 2.00 %. A commitment fee equal to 0.250 % to 0.375 % of the unused portion of the ABL Credit Facility fluctuates dependent upon average utilization for the prior month as defined by a pricing grid included in the governing documents of the ABL Credit Facility. The commitment fee at March 31, 2026 was 0.375 %.
Loans under the ABL Credit Facility may be borrowed, repaid and re-borrowed until June 7, 2029 (subject to certain springing maturity provisions), at which time all amounts borrowed must be repaid. The obligations under the ABL Credit Facility are guaranteed by us and certain of our material wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations under the ABL Credit Facility and such guarantees are secured on a first-priority basis by all of our and our subsidiary guarantors’ accounts, inventory, deposit accounts, securities accounts, cash and cash equivalents, rental agreements, general intangibles (other than equity interests in our subsidiaries), chattel paper, instruments, documents, letter of credit rights, commercial tort claims related to the foregoing and other related assets and all proceeds thereof related to the foregoing, subject to permitted liens and certain exceptions (such assets, collectively, the “ABL Priority Collateral”) and a second-priority basis in substantially all other present and future tangible and intangible personal property of ours and the subsidiary guarantors, subject to certain exceptions.
The ABL Credit Facility contains covenants that are usual and customary for similar facilities and transactions and that, among other things, restrict our ability and our restricted subsidiaries’ ability to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, or convey, transfer or lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments.
The governing documents of the ABL Credit Facility provide for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. As of March 31, 2026, we were in compliance with all requirements and conditions set forth in our ABL Credit Facility governing documents.
Term Loan Facility
The Term Loan Facility, which matures on August 19, 2032 (subject to certain springing maturity provisions), amortizes in equal quarterly installments at a rate of 1.00 % per annum of the original principal amount thereof, with the remaining balance due at final maturity. Subject in each case to certain restrictions and conditions, we may add up to $625 million (plus additional amounts subject to satisfaction of certain financial ratios) of incremental term loan facilities to the Term Loan Facility or utilize incremental capacity under the Term Loan Facility at any time by issuing or incurring incremental equivalent term debt.
Interest on borrowings under the Term Loan Facility is payable at a fluctuating rate of interest determined by reference to the Term SOFR rate plus an applicable margin of 2.75 %, subject to a 0.50 % Term SOFR floor. The total interest rate on the Term Loan Facility was 6.42 % at March 31, 2026.
The Term Loan Facility is secured by a first-priority security interest in substantially all of our present and future tangible and intangible personal property, including our subsidiary guarantors, other than the ABL Priority Collateral (as defined below), and by a second-priority security interest in the ABL Priority Collateral, subject to certain exceptions. The obligations under the Term Loan Facility are guaranteed by us and our material wholly owned domestic restricted subsidiaries that also guarantee the ABL Credit Facility.
The Term Loan Facility contains covenants that are usual and customary for similar facilities and transactions and that, among other things, restrict our ability and our restricted subsidiaries’ ability to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, or convey, transfer or lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments. The Term Loan Facility also includes mandatory prepayment requirements related to asset sales (subject to reinvestment), debt incurrence (other than permitted debt) and, excess cash flow, in each case, subject to certain limitations described therein. These covenants are subject to a number of limitations and exceptions set forth in the governing documents of the Term Loan Facility.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The Term Loan Facility provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries.
The table below shows the scheduled maturity dates of our outstanding senior debt at March 31, 2026 for each of the years ending December 31:
| (in thousands) | ABL Credit Facility | Term Loan Facility(1) | Total | ||||||||||||||||||||
| 2026 | $ | $ | $ | ||||||||||||||||||||
| 2027 | |||||||||||||||||||||||
| 2028 | |||||||||||||||||||||||
| 2029 | |||||||||||||||||||||||
| 2030 | |||||||||||||||||||||||
| Thereafter | |||||||||||||||||||||||
| Total senior debt | $ | $ | $ | ||||||||||||||||||||
(1) Annual installment requirements were reduced by the amount of the excess cash flow payments made in 2023, in accordance with the terms of the credit agreement governing the Term Loan Facility.
Note 6 - Senior Notes
On February 17, 2021, we issued $450 million in senior unsecured notes all of which are due February 15, 2029 , at par value, bearing interest at 6.375 % (the “Notes”), the proceeds of which were used to fund a portion of the consideration upon closing of the Acima Holdings acquisition. Interest on the Notes is payable in arrears on February 15 and August 15 of each year. In connection with the issuance of the Notes, we incurred approximately $15.7 million in debt issuance costs, including bank financing fees and third party legal and other professional fees, which were capitalized in accordance with ASC Topic 470, “Debt” and recorded as a reduction of our outstanding Notes in our Condensed Consolidated Balance Sheets. Debt issuance costs are amortized as interest expense over the term of the Notes. As of March 31, 2026, the total remaining balance of unamortized debt issuance costs related to our Notes reported in the Condensed Consolidated Balance Sheets was approximately $5.7 million.
We may redeem some or all of the Notes at any time for cash at the redemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest to, but not including, the redemption date. If we experience specific kinds of change in control, we will be required to offer to purchase the Notes at a price equal to 101 % of the principal amount thereof plus accrued and unpaid interest.
The Notes are our general unsecured senior obligations, and are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries, equal in right of payment to all of our and our guarantor subsidiaries’ existing and future senior unsecured indebtedness and senior in right of payment to all of our future subordinated indebtedness, if any. The Notes are jointly and severally guaranteed on a senior unsecured basis by certain of our domestic subsidiaries that have outstanding indebtedness or guarantee other specified indebtedness, including the ABL Credit Facility and the Term Loan Facility.
The indenture governing the Notes contains covenants that limit, among other things, our ability and the ability of some of our restricted subsidiaries to create liens, transfer or sell assets, incur indebtedness or issue certain preferred stock, pay dividends, redeem stock or make other distributions, make other restricted payments or investments, create restrictions on payment of dividends or other amounts to us by our restricted subsidiaries, merge or consolidate with other entities, engage in certain transactions with affiliates and designate our subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions and qualifications. The covenants limiting restricted payments, restrictions on payment of dividends or other amounts to us by our restricted subsidiaries, the ability to incur indebtedness, asset dispositions and transactions with affiliates will be suspended if and while the Notes have investment grade ratings from any two of Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc.
The indenture governing the Notes also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and interest on all the then outstanding Notes to be due and payable.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Note 7 - Fair Value
We follow a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of our non-financial assets and non-financial liabilities, which consist primarily of goodwill. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Our financial instruments include cash and cash equivalents, receivables, payables, borrowings against our ABL Credit Facility and Term Loan Facility, and outstanding Notes. The carrying amount of cash and cash equivalents, receivables and payables approximates fair value at March 31, 2026 and December 31, 2025, because of the short maturities of these instruments. In addition, the interest rates on our Term Loan Facility and ABL Credit Facility are variable and, therefore, we believe the carrying value of outstanding borrowings approximates their fair value.
The fair value of our Notes is based on Level 1 inputs and was as follows at March 31, 2026:
| March 31, 2026 | |||||||||||||||||
| (in thousands) | Carrying Value | Fair Value | Difference | ||||||||||||||
| Senior notes | $ | $ | $ | ( | |||||||||||||
Note 8 - Other Gains and Charges
Acima Holdings Acquisition. On February 17, 2021, we completed the acquisition of Acima Holdings, a leading provider of virtual lease-to-own solutions. The fair value of assets acquired as part of the transaction included $520 million in intangible assets and $170 million in developed technology. During the three months ended March 31, 2026 and 2025, we recognized approximately $11.0 million and $10.9 million, respectively, in amortization expense, related to acquired intangible assets. We also recognized approximately $4.0
Brigit Acquisition. As described in Note 2, on January 31, 2025, we completed the acquisition of Brigit, a leading holistic financial health technology company. Included in the aggregate consideration issued to the former owners of Brigit were 1,313,331 shares, valued at $39.1 million, issued under restricted stock agreements and subject to vesting conditions, which will be recognized as stock compensation expense over the vesting term, in accordance with ASC Topic 718, “Stock-based Compensation”. During the three months ended March 31, 2026 and 2025, we recognized approximately $4.7 million and $4.1 million, respectively, in stock compensation expense related to these restricted stock agreements, in addition to $5.5 million and $1.1 million, respectively, related to Brigit's Replacement Awards and other agreement compensation. Stock-based and other acquisition-related compensation expense associated with the Brigit acquisition is reported under our Corporate segment. See Note 2 and Note 10 for additional information.
The fair value of assets acquired as part of the transaction included $152.3 million in intangible assets and $65.1 million in developed technology. During the three months ended March 31, 2026 and 2025, we recognized approximately $3.9 million and $2.6 million, respectively, in amortization expense related to acquired intangible assets. We also recognized approximately $2.3 million and $1.6 million in incremental depreciation expense related to acquired technology assets during the three months ended March 31, 2026 and 2025, respectively. Depreciation expense for technology assets is reported under our Corporate segment.
For the three months ended March 31, 2025, we recognized approximately $6.2 million in transaction costs associated with the closing of the transaction, reported under our Corporate segment.
Legal Matters. As disclosed further in Note 11 in this Quarterly Report on Form 10-Q and as previously disclosed, we are currently party to a filed regulatory lawsuit with the New York Attorney General, as well as a multistate and District of Columbia regulatory investigation by attorneys’ general offices, none of which we believe are representative of historical regulatory matters that arise in the ordinary course of our business. These matters relate to lease-to-own transactions for our Acima subsidiary, which was acquired in 2021. We were also party to a recently settled certified class action brought on behalf of certain individuals who entered into rental purchase agreements and paid certain fees with the Company’s former Acceptance Now business in the state of California, and we were party to a recently settled patent infringement lawsuit. During the three months ended March 31, 2026 and 2025, we recorded estimated legal accruals of $3.5 million and $10.0 million, respectively, based on the then-current status of our legal matters, including the foregoing matters, and incurred related litigation and defense
16
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
expenses of $0.5 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively. Legal accruals for litigation matters and related defense expenses are reported under our Corporate segment. We will continue to evaluate and modify our estimated legal accruals as appropriate in future periods based on future developments.
Stock Award Letter Agreement. On April 3, 2024, we entered into a letter agreement with the Company’s former Chief Executive Officer as disclosed in our Current Report on Form 8-K dated as of April 5, 2024. The terms of the letter agreement included special provisions for his outstanding restricted stock awards vesting at various times through February 2027, which resulted in the acceleration of stock compensation expense for those awards in accordance with ASC Topic 718, “Stock-based Compensation”. Accelerated stock compensation expense recognized for the three months ended March 31, 2025 due to this letter agreement was approximately $1.6 million. Stock-based compensation expense is reported under our Corporate segment.
Activity with respect to other gains and charges is summarized in the below table:
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||
| Acima acquired assets depreciation and amortization | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Brigit acquired assets depreciation and amortization | |||||||||||||||||||||||||||||||||||||||||
| Brigit replacement awards and other compensation | |||||||||||||||||||||||||||||||||||||||||
| Brigit equity consideration vesting | |||||||||||||||||||||||||||||||||||||||||
| Legal matters | |||||||||||||||||||||||||||||||||||||||||
| Labor reduction cost | |||||||||||||||||||||||||||||||||||||||||
| Asset impairments and disposals | |||||||||||||||||||||||||||||||||||||||||
| Brigit transaction costs | |||||||||||||||||||||||||||||||||||||||||
| Accelerated stock compensation | |||||||||||||||||||||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||||||||||||||||||||
Total other gains and charges | $ | $ | |||||||||||||||||||||||||||||||||||||||
Note 9 - Segment Information
The operating segments reported below are the segments for which separate financial information is available and for which segment results are evaluated by our Chief Operating Decision Makers (“CODMs”). Our CODMs include Upbound’s Chief Executive Officer and Chief Financial Officer. Our CODMs regularly review the revenues and operating profit for each operating segment in comparison to Company projections and previously reported periods, in addition to other factors, including the Company’s strategic initiatives, as well as industry, macroeconomic, and market trends, in determining the appropriate allocation of resources to support our business operations. Our operating segments are organized based on factors including, but not limited to, type of business transaction, geographic location and store ownership. Financial information disclosed within this report has been recast for the related prior year period to reflect this change. We report financial operating performance under four operating segments: Acima, Rent-A-Center, Brigit and Mexico.
17
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Segment information is as follows:
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||
| (in thousands) | Acima | Rent-A-Center | Brigit | Mexico | Total | ||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Operating labor | |||||||||||||||||||||||||||||
Non-labor operating expenses(1) | |||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||
Other segment expenses(2) | |||||||||||||||||||||||||||||
| Segment operating profit (loss) | ( | ||||||||||||||||||||||||||||
| Corporate | ( | ||||||||||||||||||||||||||||
| Operating profit | |||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Interest income | ( | ||||||||||||||||||||||||||||
| Earnings before income taxes | $ | ||||||||||||||||||||||||||||
(1) Includes Lease Charge-Offs of $57.3 million and $21.0 million in the Acima and Rent-A-Center segments, respectively, and net advance losses of $13.9 million in the Brigit segment for the three months ended March 31, 2026.
(2) Includes certain general and administrative expenses and other gains and charges. See Note 8 for additional information regarding other gains and charges.
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Acima | Rent-A-Center | Brigit | Mexico | Total | ||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Operating labor | |||||||||||||||||||||||||||||
Non-labor operating expenses(1) | |||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||
Other segment expenses(2) | |||||||||||||||||||||||||||||
| Segment operating profit | |||||||||||||||||||||||||||||
| Corporate | ( | ||||||||||||||||||||||||||||
| Operating profit | |||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Interest income | ( | ||||||||||||||||||||||||||||
| Earnings before income taxes | $ | ||||||||||||||||||||||||||||
(1) Includes Lease Charge-Offs of $56.7 million and $20.4 million in the Acima and Rent-A-Center segments, respectively, and net advance losses of $5.0 million in the Brigit segment for the three months ended March 31, 2025.
(2) Includes certain general and administrative expenses and other gains and charges. See Note 8 for additional information regarding other gains and charges.
18
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | |||||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| Acima | $ | ||||||||||||||||||||||
| Rent-A-Center | |||||||||||||||||||||||
| Brigit | |||||||||||||||||||||||
| Mexico | |||||||||||||||||||||||
| Total operating segments | |||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||
| Total capital expenditures | $ | $ | |||||||||||||||||||||
| (in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| On rent rental merchandise, net | |||||||||||
| Acima | $ | $ | |||||||||
| Rent-A-Center | |||||||||||
| Mexico | |||||||||||
| Total on rent rental merchandise, net | $ | $ | |||||||||
| (in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Held for rent rental merchandise, net | |||||||||||
| Acima | $ | $ | |||||||||
| Rent-A-Center | |||||||||||
| Mexico | |||||||||||
| Total held for rent rental merchandise, net | $ | $ | |||||||||
| (in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Assets by segment | |||||||||||
| Acima | $ | $ | |||||||||
| Rent-A-Center | |||||||||||
| Brigit | |||||||||||
| Mexico | |||||||||||
| Total operating segments | |||||||||||
| Corporate | |||||||||||
| Total assets | $ | $ | |||||||||
Note 10 - Common Stock and Stock-Based Compensation
Stock Repurchase Program
In early December 2021, our Board of Directors authorized a stock repurchase program for up to $500 million (the “December 2021 Program”), which superseded our previous stock repurchase program. Under the December 2021 Program, we may purchase shares of our common stock from time to time in the open market or privately negotiated transactions. We are not obligated to acquire any shares under the program, and the program may be suspended or discontinued at any time. There were no 235.0 million remains available for repurchases under the current authorization at March 31, 2026.
Stock-Based Compensation
We recognized $6.1 million and $7.7 million in compensation expense related to stock awards issued under the Upbound Group, Inc. Amended 2021 Long-Term Incentive Plan (the “2021 Plan”) and 2016 Long-Term Incentive Plan (the “2016 Plan”) during the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026, we granted 311,641 market-based performance units and 668,297 time-vesting units under the 2021 Plan. Performance-based
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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
restricted stock units are valued using a Monte Carlo simulation. Time-vesting restricted stock units are valued based on our closing stock price on the trading day immediately preceding the date of the grant, or as of the date of modification in the event an award is modified. The weighted-average grant date fair value of the market-based performance and time-vesting restricted stock units granted during the three months ended March 31, 2026 was $27.22 and $22.30 , respectively.
As described in Note 2, in connection with the acquisition of Brigit on January 31, 2025, we issued to the former owners of Brigit approximately 2.7 million common shares valued at $29.75 per share, as of the Closing Date. Of this total, 1,313,331 common shares, valued at approximately $39.1 million, issued under restricted stock agreements and subject to vesting conditions, will be recognized as stock compensation expense over the vesting term in accordance with ASC Topic 718, “Stock-based Compensation”. We recognized $4.7 million and $4.1 million in stock compensation expense related to these restricted stock agreements during the three months ended March 31, 2026 and 2025, respectively, recorded to other gains and charges in our unaudited Condensed Consolidated Statements of Operations.
On April 3, 2024, we entered into a letter agreement with the Company’s former Chief Executive Officer as disclosed in our Current Report on Form 8-K dated as of April 5, 2024. The terms of the letter agreement included special provisions for his outstanding restricted stock awards vesting at various times through February 2027, which resulted in the acceleration of stock compensation expense for those awards in accordance with ASC Topic 718, “Stock-based Compensation”. Accelerated stock compensation expense recognized for the three months ended March 31, 2025 due to this letter agreement was approximately $1.6 million, and was recorded to other gains and charges in our unaudited Condensed Consolidated Statements of Operations.
Note 11 - Contingencies
Given the nature of our businesses and the heavily regulated industries in which we operate, we, along with our subsidiaries, are party to various legal proceedings and governmental inquiries and investigations. Certain legal proceedings and governmental inquiries and investigations involving us or our subsidiaries are described below. In addition to the matters described below, we are also party to other legal proceedings and governmental inquiries and investigations involving us or our subsidiaries that we believe, based on our current knowledge, will not have a material adverse effect on our business or our consolidated results of operations, financial condition or liquidity, including arbitrations, litigation, putative class actions and other matters alleging various types of claims, including those based on consumer regulatory, contract, labor and employment and other alleged claims. However, in light of the uncertainties involved in such matters, including the fact that some pending legal proceedings are at preliminary stages or seek an indeterminate amount of damages, penalties, fines or other relief, it is possible that the outcome of one or more legal proceedings could have a material adverse impact on our results of operations.
We regularly monitor developments related to our legal proceedings and governmental inquiries and investigations, determine whether a reserve is appropriate if the loss is both probable and reasonably estimable, and review the adequacy of our reserves for such matters on a quarterly basis. As a result, we do not have reserves for all matters with respect to which we may or will have future liability, and no assurance can be given that our reserves, when recorded, will be adequate to cover the full amount of any loss we may ultimately incur. In addition, certain of these matters involve demands for monetary relief and changes to our business practices that could materially and adversely impact our business, financial condition and results of operations were we to agree to them as part of a settlement or be subject to them following an adverse result in litigation.
At March 31, 2026 and December 31, 2025, we had estimated legal accruals of $74.2 million and $72.0 million, respectively, included in accrued liabilities in our Condensed Consolidated Balance Sheet for pending legal and regulatory matters for which we believe losses are probable and the amount of the loss can be reasonably estimated. Included in the $74.2 million estimated legal accrual at March 31, 2026 are (1) the previously agreed McBurnie litigation settlement payment, which was paid in April 2026 as described below, and (2) the ultimate cash amounts that we currently expect to pay as part of the Multistate and District of Columbia Attorneys’ General matters described further below if we are able to enter a final, binding settlement agreement with the Multistate, which cannot be assured. However, as of the date of this Quarterly Report on Form 10-Q, other than as stated in the immediately preceding sentence with respect to the McBurnie litigation and the Multistate and District of Columbia Attorneys’ General matters, we cannot reasonably predict the ultimate resolution of our pending legal proceedings, governmental inquiries and investigations (which include, but are not limited to, the matters discussed below) and, therefore, are unable to estimate a range of losses related to these matters that may be reasonably possible to occur. In addition to our estimated legal accruals, as of March 31, 2026 we have incurred legal and other related expenses, and expect to incur substantial additional legal and related expenses, associated with the litigation and investigations discussed below and other pending legal matters.
Unclaimed Property. We are subject to unclaimed property audits by states in the ordinary course of business. The property subject to review in the audit process includes unclaimed wages, vendor payments and customer refunds. State escheat laws generally require entities to report and remit abandoned and unclaimed property to the state. Failure to timely report and remit
20
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability itself. We routinely remit escheat payments to states and believe we are in compliance with applicable escheat laws.
Multistate and District of Columbia Attorneys’ General Investigations. In November 2021, Acima received a letter from the Nebraska Attorney General’s office stating that the Attorney General of Nebraska, along with a coalition of thirty-eight state Attorneys General, initiated a multistate investigation into the business acts and practices of Acima and that a civil investigative demand(s) and/or subpoena(s) pursuant to respective state consumer protection laws will be forthcoming. Since receiving the letter, we have held multiple discussions and attended meetings with officials at many of the applicable attorneys’ general offices, including members of the Executive Committee, which is leading the negotiations on behalf of the multistate group (the “Multistate”). Based on our engagement with the Multistate, it is our understanding that the investigation involves forty-three states. The District of Columbia was formerly a member of the Multistate and part of the Executive Committee, but withdrew from the Multistate and presented a separate settlement demand.
In the second quarter 2024, Acima received an initial settlement proposal from the Multistate. Since then, the parties have engaged in conversations regarding a potential resolution and Acima has responded to the Multistate’s and District of Columbia’s settlement proposals and monetary demands. In September 2025, we reached a non-binding agreement in principle with the District of Columbia’s Attorney General’s office regarding the primary monetary and injunctive terms of a potential settlement, and we reached a final settlement agreement with the District of Columbia’s Attorney General’s office in the first quarter 2026. We also believe we are nearing a non-binding agreement in principle with the Executive Committee of the Multistate matter regarding the primary monetary and injunctive terms of a potential settlement, although any final binding settlement remains subject to negotiation and execution of definitive settlement agreements with each of the states in the Multistate, which we cannot assure you will be achieved. As of the date of this Quarterly Report on Form 10-Q, we are continuing to actively discuss the potential resolution of these matters with the Multistate with the objective of finalizing settlement agreements in the near term. We are unable to provide assurance that we will be able to reach final binding settlement agreements with the Multistate. If we are able to reach final binding settlement agreements in the Multistate matter, we expect that any potential settlement of such matters would include monetary relief, reporting and other provisions, including a release of claims by the Attorneys’ General offices and injunctive relief regarding various aspects of Acima’s business. If, however, we are unable to reach final binding settlement agreements, some or all of such states may commence legal proceedings against Acima. We cannot provide any assurance that any adverse result in litigation will not require a monetary payment and/or changes to Acima’s business practices or operations that could materially and adversely affect our business, financial condition, results of operations or reputation.
New York Attorney General Litigation. The New York Attorney General (the “NYAG”) issued a subpoena to our Acima subsidiary in January 2020, prior to our acquisition of Acima, seeking information with respect to various business practices in connection with Acima’s lease-to-own transactions. Acima received additional subpoenas from the NYAG in August 2021 and July 2023. Acima cooperated with the NYAG throughout its investigation. In March 2023, the NYAG provided Acima with a proposed assurance of discontinuance alleging violations of certain consumer laws, seeking injunctive relief regarding certain business practices, and seeking payment of unspecified amounts for restitution and civil penalties. In April 2023, Acima submitted its response to the NYAG’s proposed assurance of discontinuance. In February 2024, Acima provided a settlement proposal to the NYAG. In March 2024, the NYAG presented Acima with an initial monetary demand for settlement purposes. On August 14, 2024, despite Acima’s cooperation with the investigation and its active engagement in settlement discussions with the NYAG, the NYAG filed a lawsuit against Acima in the Supreme Court of the State of New York, County of New York. The lawsuit alleges violations of various consumer financial protection laws and regulations similar to those set forth in the NYAG’s March 2023 proposed assurance of discontinuance. The lawsuit seeks injunctive relief, unspecified monetary relief and civil penalties and other relief. Acima filed a motion to dismiss the NYAG’s lawsuit. As of the date of filing this Quarterly Report on Form 10-Q, the trial court has not yet ruled on Acima’s motion to dismiss. Acima will continue to vigorously defend itself against the NYAG’s lawsuit. We cannot provide any assurance that Acima will be successful in defending against the NYAG’s litigation or that an adverse result in litigation will not require a monetary payment and/or changes to Acima’s business practices or operations that could materially and adversely affect our business, financial condition, results of operations or reputation.
McBurnie Litigation Settlement. We were a defendant in a certified class action entitled McBurnie, et al. v. Acceptance Now, LLC, brought on behalf of individuals who entered into a rental purchase agreement with the Company’s former Acceptance Now business in California and were charged a processing fee and/or an expedited fee. Plaintiffs alleged that the fees they were charged were neither “reasonable” nor “actually incurred” in violation of the Karnette Rental-Purchase Act and other California state consumer protection laws. The action was pending in the United States District Court for the Northern District of California. In June 2025, the District Court certified a class of consumers who were charged a processing fee in California within the class period and scheduled a trial date for January 2026. In July 2025, the parties reached an agreement in principle
21
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
to settle the class action. We denied the allegations in the case and we did not admit to any violations of law or any wrongdoing. In addition, there was no adjudication regarding the claims and allegations in the lawsuit. However, to avoid additional expense, risk and distractions associated with further protracted litigation, the parties agreed to settle the litigation. In August 2025, the parties executed a definitive class-wide settlement agreement, which provided for a cash payment by the Company of $14.0 million, which was fully reserved for as of March 31, 2026 as an estimated loss contingency in our consolidated financial statements. The settlement agreement was approved by the District Court and payment of the settlement amount was made in April 2026.
Note 12 - Earnings Per Common Share
Summarized basic and diluted earnings per common share were calculated as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (in thousands, except per share data) | 2026 | 2025 | |||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net earnings | $ | $ | |||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average shares outstanding | |||||||||||||||||||||||
Effect of dilutive stock awards(1) | |||||||||||||||||||||||
| Weighted-average dilutive shares | |||||||||||||||||||||||
| Basic earnings per common share | $ | $ | |||||||||||||||||||||
Diluted earnings per common share(1) | $ | $ | |||||||||||||||||||||
| Anti-dilutive securities excluded from diluted earnings per common share: | |||||||||||||||||||||||
| Anti-dilutive restricted share units | |||||||||||||||||||||||
| Anti-dilutive performance share units | |||||||||||||||||||||||
| Anti-dilutive stock options | |||||||||||||||||||||||
(1) Weighted-average dilutive shares outstanding for the three months ended March 31, 2026 and 2025 includes approximately 0.6 1.3 million, respectively, common shares issued in connection with the acquisition of Brigit and subject to vesting conditions under restricted stock agreements.
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” These forward-looking statements include, without limitation, those relating to the impact of ongoing challenging macroeconomic conditions on our business, operations, financial performance and prospects, the future business prospects and financial performance of our Company as a whole and our segments, our growth strategies, our expectations, plans and strategy relating to our capital structure and capital allocation, including any share repurchases under our share repurchase program, the potential impact of the matters discussed in Note 11 - “Contingencies” in this Quarterly Report on Form 10-Q, and other statements that are not historical facts. Unless expressly indicated or the context requires otherwise, the terms “Upbound Group, Inc.,” “Company,” “we,” “us,” and “our” in this document refer to Upbound Group, Inc. and, where appropriate, its subsidiaries.
A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially and adversely depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below. Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Quarterly Report on Form 10-Q and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. Except as required by law, we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. Factors that could cause or contribute to these differences include, but are not limited to:
•difficulties encountered in managing the financial and operational performance of our multiple business segments;
•risks associated with pricing, value proposition and other changes to our consumer offerings and strategies being deployed in our businesses;
•our ability to continue to effectively execute our strategic initiatives, including mitigating risks associated with any potential additional mergers and acquisitions, or lease-to-own refranchising opportunities;
•our ability to effectively provide consumers with additional products and services beyond lease-to-own and products and services currently offered by our Brigit segment, including through third-party partnerships;
•the possibility that costs, difficulties or disruptions related to the integration of Brigit operations into our 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 our 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 our operating labor and non-labor operating expenses, including failure to effectively optimize our proprietary algorithms and customer decisioning tools to limit merchandise losses for our lease-to-own offerings;
•our 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 our current and potential customers;
•changes in the unemployment rate;
•capital market conditions, including changes in interest rates and availability of funding sources for us;
23
•changes in our credit ratings;
•our ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies;
•disruptions caused by the operation of our information management systems or disruptions in the systems of our third-party retailers or other third parties with whom we do business;
•risks related to our virtual lease-to-own business, including our ability to continue to develop and successfully implement the necessary technologies;
•our ability to achieve the benefits expected from our 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 our Acima segment compared to our Rent-A-Center segment;
•additional risks associated with our Brigit segment and its consumer products and services, including managing losses, regulatory, licensing and other compliance risks, risks associated with our Brigit segment’s reliance on regulated banks and on providers of third-party data and technology and other third-party service providers; and other new risks for our Company;
•our ability to (i) effectively adjust to changes in the composition of our 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 our 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;
•our ability to retain the talent and dedication of key employees of Brigit;
•litigation or administrative proceedings to which we are 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 Note 11 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q;
•our compliance with applicable statutes and regulations governing our businesses, impacts from the enforcement of existing laws and regulations and the enactment of new laws and regulations adversely affecting our business 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 our lease-to-own business or to apply consumer credit laws to our Brigit segment’s non-credit consumer offerings, in each case including in connection with, but not limited to, the regulatory matters described in Note 11 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q;
•our transition to more-readily scalable “cloud-based” solutions;
•our ability to continue to enhance digital or e-commerce capabilities, including mobile applications;
•our ability to protect our proprietary intellectual property and to defend against allegations by third parties that any of our 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 our competitors, and evolving regulatory requirements that may restrict certain AI uses or increase compliance costs;
•our ability or that of our third-party retailers or other third parties with whom we do 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 our goodwill or other intangible assets;
•disruptions in our supply chain;
•limitations of, or disruptions in, our distribution network;
•rapid inflation or deflation in the prices of our lease-to-own products and other related costs;
•allegations of product safety and quality control issues, including recalls of goods we lease to customers;
•our ability to execute, as well as the effectiveness of, lease-to-own store consolidations, including our ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation;
•our available cash flow and our ability to generate sufficient cash flow to continue paying dividends;
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•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;
•our ability to identify and successfully market products and services that appeal to our current and future targeted customer segments and to accurately estimate the size of the total addressable market;
•consumer preferences and perceptions of our brands;
•our ability to enter into new rental or lease purchase agreements and collect on our 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 our costs or target consumers;
•adverse changes in the economic conditions of the industries, countries or markets that we serve;
•information technology and data security costs;
•the impact of breaches in data security or other disturbances to our information technology and other networks;
•changes in estimates relating to self-insurance liabilities and income tax reserves;
•changes in our effective tax rate;
•fluctuations in foreign currency exchange rates;
•our ability to maintain an effective system of internal controls; and
•the other risks detailed from time to time in our reports furnished or filed with the United States Securities and Exchange Commission (the “SEC”).
Additional important factors that could cause our actual results to differ materially from our expectations are discussed under the section “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 and elsewhere in this Quarterly Report on Form 10-Q.
Our Business
We are a technology and data-driven leader in accessible and inclusive financial solutions that address the evolving needs and aspirations of underserved consumers. Through our Acima and Rent-A-Center segments, we are a leading lease-to-own provider with operations in the United States, Puerto Rico and Mexico. We provide a critical service for underserved consumers by providing them with access to, and the opportunity to obtain ownership of, high-quality, name brand durable products under a flexible lease-purchase agreement with no long-term debt obligation. Our Acima segment offers lease-to-own solutions through retailers in stores and online enabling such retailers to grow sales by expanding their customer base utilizing our differentiated offering and allowing customers to access our flexible lease-to-own solutions at thousands of retailers and to lease a wide range of durable products. Through our Rent-A-Center segment, we provide a fully integrated customer experience through our e-commerce platform and brick and mortar presence.
On January 31, 2025, we completed the acquisition of Brigit, a holistic financial health technology company that has helped millions of customers improve their financial health and literacy, find ways to earn and save money, access their earned wages before their regularly scheduled payday, build their credit through savings and protect themselves from identity theft. Its mission is to help customers build a better financial future. See Note 2 in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
We were incorporated in the State of Delaware in 1986, and our common stock is traded on the Nasdaq Global Select Market under the ticker symbol “UPBD.”
Executive Summary
Our Strategy
Our strategy is focused on achieving our mission to elevate financial opportunity for all and growing our business through emphasis on the following key initiatives:
•At Acima, grow penetration with current Acima third-party retailers and build on our strength with small to medium size businesses while also adding new national and regional third-party retailers to our platform and expanding our direct-to-consumer channels;
•At Brigit, continue to grow Brigit’s EWA, credit builder and other existing products and increase Brigit’s portfolio of products;
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•At Rent-A-Center, accelerate the shift to e-commerce, improve the fully integrated omni-channel customer experience and expand product categories, which we expect will increase brand awareness and customer loyalty;
•Leverage data analytics capabilities to attract new customers, approve more customers and mitigate risk across business segments;
•Execute on market opportunities and enhance our competitive position across both traditional and virtual lease-to-own solutions, and implement complementary products and services that supplement our current offerings and provide our customers more financial alternatives; and
•Upgrade and integrate technology platforms to allow for a more simplified and seamless consumer experience, third-party retailer and waterfall integration, consumer transaction process and coworker efficiency.
As we pursue our strategy, we have taken, and may in the future take, advantage of joint venture, partnership, or merger and acquisition opportunities from time to time that advance our key initiatives and elevate the financial mobility of underserved consumers.
Recent Developments
Dividend. On March 25, 2026, we announced that our board of directors approved a quarterly cash dividend of $0.39 per share for the first quarter of 2026. The dividend was paid on April 28, 2026 to our common stockholders of record as of the close of business on April 7, 2026.
Executive Management Change. Effective March 30, 2026, Balaji Kumar joined Upbound Group, Inc. as Executive Vice President, Chief Technology Officer. Mr. Kumar brings more than 25 years of technology leadership experience across financial services and retail.
Business and Operational Trends
Macroeconomic Conditions. In recent years, we have experienced significant change in business and operational trends driven by macroeconomic conditions, which have directly impacted our customers as well as our operations, including significant changes in the U.S. consumer price index, changes in demand for certain consumer retail categories, changes in consumer payment behaviors, a condensed labor market, which has also contributed to wage inflation, rapid increases in interest rates, changes in tariff and trade policies, and global supply chain disruptions resulting in reduced product availability and rising product costs.
While our businesses have historically remained resilient through various economic cycles, the full extent to which our risk management strategy and these macroeconomic trends (including consumer spending and payment behavior) may impact the Company in future periods is uncertain. The continuation of volatile macroeconomic trends may have a material adverse impact on our financial statements, including our results of operations, operating cash flows, liquidity and capital resources.
See “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2025, for additional discussion of impacts to our business and additional risks associated with macroeconomic conditions.
Rent-A-Center e-commerce revenue. In recent years, e-commerce revenues have increased over time as a percentage of total rentals and fees revenue in our Rent-A-Center segment. For the three months ended March 31, 2026 and 2025, e-commerce revenues represented approximately 28% and 27% of total lease-to-own revenues, respectively. Due to recent trends in consumer shopping behaviors and expectations, we believe e-commerce solutions are an important part of our lease-to-own offering. However, we are unable to quantify the extent to which e-commerce revenues are incremental compared to what our overall revenues would have been in the absence of those e-commerce transactions. In addition, the profitability of e-commerce transactions can be impacted by different merchandise loss factors compared to traditional store-based transactions in the Rent-A-Center segment. Therefore, we are unable to determine with certainty whether the continuation of this trend toward increased e-commerce transactions will have a significant impact on our financial statements in future periods or be ultimately favorable or unfavorable to our financial results.
Results of Operations
The following discussion focuses on our results of operations and our liquidity and capital resources. You should read this discussion in conjunction with the condensed consolidated financial statements and notes thereto for the three months ended March 31, 2026 included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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Key Metrics
Gross Merchandise Volume (“GMV”): The Company defines Gross Merchandise Volume as the retail value in U.S. dollars of merchandise acquired by the Acima segment that is leased to customers through a transaction that occurs within a defined period, net of estimated cancellations as of the measurement date.
Lease Portfolio Value: Represents the aggregate dollar value of the expected monthly rental income associated with current active lease agreements from our Company-owned Rent-A-Center lease-to-own stores and e-commerce platform at the end of any given period.
Same Store Lease Portfolio Value: Represents the aggregate dollar value of the expected monthly rental income associated with current active lease agreements from our Company-owned Rent-A-Center lease-to-own stores that were operated by us for 13 months or more at the end of any given period. The Company excludes from the same store base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store base in the 30th full month following account transfer.
Same Store Sales: Same store sales generally represents revenue earned in Company-owned Rent-A-Center stores that were operated by us for 13 months or more and are reported on a constant currency basis as a percentage of total revenue earned in stores of the segment during the indicated period. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store sales base in the 30th full month following account transfer.
Lease Charge-Offs (“LCOs”) (previously referred to as “skip / stolen losses”): Represents charge-offs of the net book value of unrecoverable on-rent merchandise with lease-to-own customers who are past due. This is typically expressed as a percentage of revenues for the applicable period. For the Rent-A-Center segment, LCOs exclude Get It Now, Home Choice and franchise-owned Rent-A-Center locations.
Brigit Net Advance Losses: Represents charge-offs of Brigit uncollectible customer cash advances that are more than 45 days past due. This is typically expressed as a percentage of total cash advances originated in the applicable period.
Overview
We report four operating segments: Acima, Rent-A-Center, Brigit and Mexico. The following briefly summarizes our financial performance for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 on a consolidated basis and for our operating segments.
During the first three months of 2026, consolidated revenues and gross profit increased by approximately $43.4 million and $36.3 million, respectively, primarily due to increases in the Brigit and Acima segment revenues, partially offset by a decrease in Rent-A-Center segment revenues described below. Operating profit increased by approximately $14.8 million, primarily due to the increase in gross profit noted above and decreases in general and administrative expenses and other gains and charges of $6.7 million and $4.9 million, respectively, partially offset by increases in non-labor operating expenses of $31.3 million.
The Acima segment revenues increased approximately $11.4 million for the three months ended March 31, 2026, primarily due to increases in rentals and fees revenues of $12.6 million, primarily resulting from higher GMV in prior quarters and fewer customers electing early purchase options in 2026. Operating profit increased approximately $3.6 million for the three months ended March 31, 2026, primarily due to an increase in gross profit of $7.6 million, partially offset by an increase in non-labor operating expenses of $4.5 million. See “Segment Performance” below for further discussion of Acima segment operating results for the three months ended March 31, 2026.
Revenues in our Rent-A-Center segment decreased approximately $7.4 million for the three months ended March 31, 2026, primarily due to decreases in merchandise sales and other revenues of $5.0 million and $3.6 million, respectively, primarily resulting from fewer customers electing early purchase options and lower franchise revenues. Operating profit decreased approximately $4.1 million for the three months ended March 31, 2026, primarily due to a decrease in gross profit of approximately $5.6 million driven by lower revenues, in addition to higher non-labor operating expenses of $5.5 million, partially offset by decreases in general and administrative expenses and operating labor expense of approximately $5.1 million and $1.3 million, respectively. See “Segment Performance” below for further discussion of Rent-A-Center segment operating results for the three months ended March 31, 2026.
The Brigit segment revenues and gross profit increased by $35.8 million and $32.1 million, respectively, primarily due to the three months ended March 31, 2025 including two months of revenues after the Closing Date, compared to the three months ended March 31, 2026, which includes three months of revenues. See “Segment Performance” below for further discussion of Brigit segment operating results for the three months ended March 31, 2026.
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The Mexico segment revenues and gross profit increased by 19.6% and 17.3% for the three months ended March 31, 2026, respectively, primarily due to positive impacts of exchange rate fluctuations. See “Segment Performance” below for further discussion of Mexico segment operating results for the three months ended March 31, 2026.
Cash flow from operations was $170.7 million for the three months ended March 31, 2026. As of March 31, 2026, we held $98.4 million of cash and cash equivalents and had outstanding indebtedness of $1.5 billion.
The following table is a reference for the discussion that follows.
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Rentals and fees | $ | 916,425 | $ | 899,212 | $ | 17,213 | 1.9 | % | |||||||||||||||||||||||||||||||||||||||
| Merchandise sales | 230,206 | 236,245 | (6,039) | (2.6) | % | ||||||||||||||||||||||||||||||||||||||||||
| Subscriptions and fees | 67,670 | 31,861 | 35,809 | 112.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Other | 5,428 | 9,045 | (3,617) | (40.0) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 1,219,729 | 1,176,363 | 43,366 | 3.7 | % | ||||||||||||||||||||||||||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of rentals and fees | 357,627 | 352,546 | 5,081 | 1.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Cost of merchandise sold | 267,892 | 269,682 | (1,790) | (0.7) | % | ||||||||||||||||||||||||||||||||||||||||||
| Cost of subscriptions and fees | 7,748 | 4,006 | 3,742 | 93.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total cost of revenues | 633,267 | 626,234 | 7,033 | 1.1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Gross profit | 586,462 | 550,129 | 36,333 | 6.6 | % | ||||||||||||||||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Operating labor | 149,110 | 149,167 | (57) | — | % | ||||||||||||||||||||||||||||||||||||||||||
| Non-labor operating expenses | 250,262 | 219,011 | 31,251 | 14.3 | % | ||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 57,090 | 63,787 | (6,697) | (10.5) | % | ||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 14,139 | 12,252 | 1,887 | 15.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Other gains and charges | 38,423 | 43,297 | (4,874) | (11.3) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 509,024 | 487,514 | 21,510 | 4.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Operating profit | 77,438 | 62,615 | 14,823 | 23.7 | % | ||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | 26,167 | 27,104 | (937) | (3.5) | % | ||||||||||||||||||||||||||||||||||||||||||
| Earnings before income taxes | 51,271 | 35,511 | 15,760 | 44.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 15,482 | 10,718 | 4,764 | 44.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Net earnings | $ | 35,789 | $ | 24,793 | $ | 10,996 | 44.4 | % | |||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2026, compared to Three Months Ended March 31, 2025
Revenue. Total revenues increased by $43.3 million, or 3.7%, to $1,219.7 million for the three months ended March 31, 2026, from $1,176.4 million for the three months ended March 31, 2025. This increase was primarily due to increases of approximately $35.8 million and $11.4 million in the Brigit and Acima segments, respectively, partially offset by a decrease of approximately $7.4 million in the Rent-A-Center segment, as discussed further in the “Segment Performance” section below.
Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the three months ended March 31, 2026 increased by $5.1 million, or 1.4%, to $357.6 million as compared to $352.5 million for the three months ended March 31, 2025. The increase was primarily attributable to an increase of approximately $8.4 million in the Acima segment, driven by an increase in rentals and fees revenues, partially offset by a decrease of approximately $4.4 million in the Rent-A-Center segment. Cost of rentals and fees expressed as a percentage of rentals and fees revenue decreased to 39.0% for the three months ended March 31, 2026, as compared to 39.2% for the three months ended March 31, 2025.
Cost of Merchandise Sold. Cost of merchandise sold represents the net book value of rental merchandise at time of sale. Cost of merchandise sold decreased by $1.8 million, or 0.7%, to $267.9 million for the three months ended March 31, 2026, from $269.7 million for the three months ended March 31, 2025, primarily attributable to a decrease of $4.6 million in the Acima
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segment, driven by lower merchandise sales, partially offset by an increase of approximately $2.6 million in the Rent-A-Center segment. The gross margin percent of merchandise sales decreased to (16.4)% for the three months ended March 31, 2026, from (14.2)% for the three months ended March 31, 2025, primarily resulting from lower early purchase option exercises in the Rent-A-Center segment for the three months ended March 31, 2026.
Gross Profit. Gross profit increased by $36.4 million, or 6.6%, to $586.5 million for the three months ended March 31, 2026, from $550.1 million for the three months ended March 31, 2025, primarily due to increases of $32.1 million and $7.6 million in the Brigit and Acima segments, respectively, partially offset by a decrease of $5.6 million in the Rent-A-Center segment, as discussed further in the section “Segment Performance” below. Gross profit as a percentage of total revenue increased to 48.1% for the three months ended March 31, 2026, from 46.8% for both the three months ended March 31, 2025.
Operating Labor. Operating labor includes all salaries and wages paid to operational employees and district managers, together with payroll taxes and benefits. Operating labor decreased by $0.1 million to $149.1 million for the three months ended March 31, 2026, as compared to $149.2 million for the three months ended March 31, 2025. Operating labor expressed as a percentage of total revenue was 12.2% for the three months ended March 31, 2026, as compared to 12.7% for the three months ended March 31, 2025.
Non-Labor Operating Expenses. Non-labor operating expenses include LCOs, occupancy, delivery, advertising, selling, insurance, travel and other operating expenses. Non-labor operating expenses increased by $31.3 million, or 14.3%, to $250.3 million for the three months ended March 31, 2026, as compared to $219.0 million for the three months ended March 31, 2025, primarily due to increases of $19.5 million, $5.5 million and $4.5 million in the Brigit, Rent-A-Center and Acima segments, respectively. The increase in the Brigit segment was primarily due to the three months ended March 31, 2025 including two months of expenses after the Closing Date, compared to the three months ended March 31, 2026 which includes three months of expenses, resulting in higher advertising expenses and net advance losses of $9.4 million and $8.9 million, respectively. Non-labor operating expenses expressed as a percentage of total revenue was 20.5% for the three months ended March 31, 2026, compared to 18.6% for the three months ended March 31, 2025.
General and Administrative Expenses. General and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries, payroll taxes and benefits, stock-based compensation, occupancy, administrative and other expenses, as well as salaries and labor costs for our regional directors, divisional vice presidents and executive vice presidents. General and administrative expenses decreased by $6.7 million, or 10.5%, to $57.1 million for the three months ended March 31, 2026, as compared to $63.8 million for the three months ended March 31, 2025, primarily due to a decrease in bad debt expense of $4.2 million related to franchising trade receivables. General and administrative expenses expressed as a percentage of total revenue was 4.7% for the three months ended March 31, 2026, compared to 5.4% for the three months ended March 31, 2025.
Other Gains and Charges. Other gains and charges decreased by $4.9 million to $38.4 million for the three months ended March 31, 2026, as compared to $43.3 million for the three months ended March 31, 2025. The decrease in other gains and charges was driven primarily by a decrease of $6.6 million in estimated legal accruals and related litigation and defense expenses as described in Note 11 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, partially offset by an increase of $1.0 million related to the Brigit acquisition, including depreciation and amortization of the fair value of acquired software and intangible assets, stock compensation expense related to the vesting of a portion of the equity consideration, and other compensation and transaction costs.
Operating Profit. Operating profit increased by $14.8 million, or 23.7%, to $77.4 million for the three months ended March 31, 2026, as compared to $62.6 million for the three months ended March 31, 2025, primarily due to increases in gross profit and decreases in general and administrative expenses and other gains and charges, partially offset by an increase in non-labor operating expenses, as described above. Operating profit expressed as a percentage of total revenue was 6.3% for the three months ended March 31, 2026, compared to 5.3% for the three months ended March 31, 2025.
Income Tax Expense. Income tax expense increased by $4.8 million to $15.5 million for the three months ended March 31, 2026, as compared to $10.7 million for the three months ended March 31, 2025, primarily due to the increase in earnings before income taxes for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
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Segment Performance
Acima segment
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands) | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 648,690 | $ | 637,287 | $ | 11,403 | 1.8 | % | ||||||||||||||||||||||||||||||||||||||||||
| Gross profit | 194,100 | 186,451 | 7,649 | 4.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Operating profit | 77,266 | 73,708 | 3,558 | 4.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
Gross merchandise volume(1) | 427,084 | 454,100 | (27,016) | (5.9) | % | |||||||||||||||||||||||||||||||||||||||||||||
(1) See Key Metrics described above for additional information.
Revenues. The increase in revenues for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to an increase in rentals and fees revenues of $12.6 million, primarily resulting from higher GMV in prior quarters and fewer customers electing early purchase options in 2026.
Gross Profit. Gross profit increased for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, driven primarily by the increase in revenues described above. Gross profit as a percentage of segment revenues increased to 29.9% for the three months ended March 31, 2026, compared to 29.3% for the three months ended March 31, 2025, primarily due to fewer customers electing early purchase options in 2026.
Operating Profit. Operating profit as a percentage of segment revenues increased to 11.9% for the three months ended March 31, 2026, compared to 11.6% for the three months ended March 31, 2025. The increase in operating profit for the three months ended March 31, 2026 is primarily due to the increase in gross profit. Merchandise losses in our Acima locations due to LCOs, expressed as a percentage of segment revenues, were approximately 8.8% for the three months ended March 31, 2026, compared to 8.9% for the three months ended March 31, 2025. Merchandise losses in our Acima locations due to other merchandise losses, expressed as a percentage of segment revenues, were approximately 0.5% and 0.3% for the three months ended March 31, 2026 and 2025, respectively.
Rent-A-Center segment
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands) | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 481,605 | $ | 489,025 | $ | (7,420) | (1.5) | % | ||||||||||||||||||||||||||||||||||||||||||
| Gross profit | 317,199 | 322,826 | (5,627) | (1.7) | % | |||||||||||||||||||||||||||||||||||||||||||||
| Operating profit | 62,276 | 66,415 | (4,139) | (6.2) | % | |||||||||||||||||||||||||||||||||||||||||||||
Lease portfolio value(1) | 131,417 | 129,908 | 1,509 | 1.2 | % | |||||||||||||||||||||||||||||||||||||||||||||
Same store sales lease portfolio value(1) | 116,289 | 114,671 | 1,618 | 1.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
Change in same store sales(1) | 0.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
| Stores in same store sales calculation | 1,514 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1) See Key Metrics described above for additional information.
Revenues. The decrease in revenue for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was primarily due to decreases in merchandise sales and other revenues of $5.0 million and $3.6 million, respectively, primarily resulting from fewer customers electing early purchase options and lower franchise revenues.
Gross Profit. Gross profit decreased for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, driven primarily by the decrease in revenues described above. Gross profit as a percentage of segment revenues was 65.9% for the three months ended March 31, 2026, as compared to 66.0% for the three months ended March 31, 2025.
Operating Profit. Operating profit as a percentage of segment revenues was 12.9% for the three months ended March 31, 2026, compared to 13.6% for the three months ended March 31, 2025. The decrease in operating profit margin for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was primarily driven by the decrease in gross profit described above. Merchandise losses in our company-owned Rent-A-Center lease-to-own stores due to LCOs, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 4.7% for the three months ended March 31, 2026, compared to 4.6% for the three months ended March 31, 2025. Other merchandise losses in our company-owned Rent-A-Center
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lease-to-own stores, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 0.8% for both the three months ended March 31, 2026 and 2025. Other merchandise losses include unrepairable and missing merchandise and loss/damage waiver claims.
Brigit segment
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 67,670 | $ | 31,861 | $ | 35,809 | 112.4 | % | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 59,922 | 27,855 | 32,067 | 115.1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Operating profit | 18,563 | 8,829 | 9,734 | 110.3 | % | ||||||||||||||||||||||||||||||||||||||||||
Revenues. The increase in revenues for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, was primarily due to the three months ended March 31, 2025 including two months of revenues after the Closing Date, compared to the three months ended March 31, 2026 which includes three months of revenues. The Brigit segment revenues included increases of $24.5 million, $6.6 million and $4.6 million in subscription revenue, transfer fee revenue and marketplace revenue, respectively.
Gross Profit. Gross profit as a percentage of segment revenues was 88.6% for the three months ended March 31, 2026, as compared to 87.4% for the three months ended March 31, 2025. The increase was primarily due to mix-shift changes between subscriptions and fees product categories.
Operating Profit. Operating profit as a percentage of segment revenues was 27.4% for the three months ended March 31, 2026, compared to 27.7% for the three months ended March 31, 2025. Net advance losses expressed as a percentage of total cash advances originated were approximately 3.5% and 2.4% for the three months ended March 31, 2026 and 2025, respectively.
Please refer to Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information about the acquisition of Brigit that was completed on January 31, 2025.
Mexico segment
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 21,764 | $ | 18,190 | $ | 3,574 | 19.6 | % | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 15,241 | 12,997 | 2,244 | 17.3 | % | ||||||||||||||||||||||||||||||||||||||||||
| Operating (loss) profit | (92) | 1,223 | (1,315) | (107.5) | % | ||||||||||||||||||||||||||||||||||||||||||
Change in same store revenue(1) | 1.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Stores in same store revenue calculation | 124 | ||||||||||||||||||||||||||||||||||||||||||||||
(1) See Key Metrics described above for additional information.
Revenues. Revenues were positively impacted by exchange rate fluctuations of approximately $3.1 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. On a constant currency basis, revenues for the three months ended March 31, 2026 increased approximately $0.5 million, compared to the three months ended March 31, 2025.
Gross Profit. Gross profit was positively impacted by exchange rate fluctuations of approximately $2.1 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. On a constant currency basis, gross profit for the three months ended March 31, 2026 increased by approximately $0.1 million as compared to the three months ended March 31, 2025. Gross profit as a percentage of segment revenues was 70.0% for the three months ended March 31, 2026, compared to 71.5% for the three months ended March 31, 2025.
Operating Profit. Operating profit was minimally impacted by exchange rate fluctuations for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. On a constant currency basis, operating profit for the three months ended March 31, 2026 decreased by approximately $1.3 million as compared to the three months ended March 31, 2025. Operating profit as a percentage of segment revenues decreased to (0.4)% for the three months ended March 31, 2026, compared to 6.7% for the three months ended March 31, 2025.
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Liquidity and Capital Resources
Overview. For the three months ended March 31, 2026, we generated $170.7 million in operating cash flow, used cash in the amount of $236.2 million for debt repayments, $23.1 million for dividends, $18.8 million for customer cash advance originations net of collections, and $16.0 million for capital expenditures, and had cash proceeds from indebtedness of $105.0 million. We ended the first quarter of 2026 with $98.4 million of cash and cash equivalents and outstanding indebtedness of $1.5 billion.
Analysis of Cash Flow. Cash provided by operating activities increased by $22.7 million to $170.7 million for the three months ended March 31, 2026, from $148.0 million for the three months ended March 31, 2025, primarily due to an increase of approximately $53.0 million in cash provided by net earnings (net earnings less adjustments to reconcile net earnings to net cash provided by operating activities) and lower inventory purchases of approximately $14.1 million, net of a decrease of approximately $6.0 million of customer lease buyouts through early purchase options, lease charge-offs, and other merchandise losses, driven by lower inventory purchases in the Acima segment resulting from a 5.9% decrease in GMV for the three months ended March 31, 2026. These impacts were partially offset by a year-over-year increase of approximately $28.3 million in payments of outstanding inventory and trade payables primarily due to higher payments of outstanding inventory payables made for the three months ended March 31, 2026.
Cash used in investing activities decreased by $261.7 million to $34.0 million for the three months ended March 31, 2026, compared to $295.7 million for the three months ended March 31, 2025, primarily due to payment of cash consideration for the acquisition of Brigit of $275.9 million for the three months ended March 31, 2025, partially offset by higher investment in software development of $5.4 million and an increase of $8.5 million in net originations and collections of customer cash advances for the three months ended March 31, 2026.
Cash (used in) provided by financing activities was $(158.7) million for the three months ended March 31, 2026, compared to $194.2 million for the three months ended March 31, 2025. The increase in cash used in financing activities resulted from higher borrowings under the ABL Credit Facility of $354.0 million during the three months ended March 31, 2025, primarily used to facilitate the Brigit acquisition.
Liquidity Requirements. Our primary liquidity requirements are for rental merchandise purchases in our Acima and Rent-A-Center segments, which are impacted by consumer demand for our lease-to-own solutions, and customer advances in our Brigit segment. Other capital requirements include expenditures for technology and property assets, and debt service. Our primary source of liquidity has been cash provided by operations.
We generally utilize our ABL Credit Facility for the issuance of letters of credit to manage normal fluctuations in operational cash flow caused by the timing of cash payments relative to cash receipts, and to potentially fund strategic initiatives including acquisitions. In that regard, we may from time to time draw funds under the ABL Credit Facility for general corporate purposes. Amounts are drawn as needed due to the timing of cash flows and are generally paid down as cash is generated by our operating activities. We believe cash flow generated from operations and availability under our ABL Credit Facility will be sufficient to fund our operations during the next twelve months. At April 23, 2026, we had approximately $62.8 million in cash on hand and $301.6 million available under our ABL Credit Facility.
Merchandise Losses. Merchandise losses consist of the following:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | |||||||||||||||||||||
| Lease charge-offs | $ | 86,901 | $ | 81,905 | |||||||||||||||||||
Other merchandise losses(1) | 7,309 | 5,560 | |||||||||||||||||||||
| Total merchandise losses | $ | 94,210 | $ | 87,465 | |||||||||||||||||||
(1)Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.
Capital Expenditures. We make capital expenditures in order to maintain our existing operations, acquire new capital assets in new and acquired stores and invest in information technology. We spent $16.0 million and $10.6 million on capital expenditures during the three months ended March 31, 2026 and 2025, respectively. The increase of $5.4 million is primarily due to higher investment in software development.
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Acquisitions and New Location Openings. The table below summarizes the store location activity for the three-month period ended March 31, 2026 for our Rent-A-Center and Mexico operating segments.
| Rent-A-Center | Mexico | Total | |||||||||||||||||||||
| Locations at beginning of period | 2,075 | 136 | 2,211 | ||||||||||||||||||||
| New location openings | — | 5 | 5 | ||||||||||||||||||||
| Closed locations | |||||||||||||||||||||||
Merged with existing locations | (1) | — | (1) | ||||||||||||||||||||
Sold or closed with no surviving location(1) | (27) | — | (27) | ||||||||||||||||||||
Locations at end of period(2) | 2,047 | 141 | 2,188 | ||||||||||||||||||||
(1) Includes closure of Rent-A-Center 26 franchisee store locations.
(2) Rent-A-Center includes 1,720 company-owned and 327 franchisee store locations
Senior Debt. On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, that provides for a five-year asset-based revolving credit facility with commitments of $550 million and a letter of credit sublimit of $150 million, which commitments may be increased, at our option and under certain conditions, by up to an additional $125 million in the aggregate (as most recently amended on August 29, 2025, the “ABL Credit Facility”). Under the ABL Credit Facility, we may borrow only up to the lesser of the level of the then-current borrowing base and the aggregate amount of commitments under the ABL Credit Facility. The borrowing base is tied to the amount of eligible installment sales accounts, inventory and eligible lease contracts, reduced by certain reserves. The ABL Credit Facility bears interest at a fluctuating rate determined by reference to an adjusted Term SOFR rate plus an applicable margin of 1.50% to 2.00%, which, as of April 23, 2026, was 5.76%. A commitment fee equal to 0.250% to 0.375% of the unused portion of the ABL Credit Facility fluctuates dependent upon average utilization for the prior month as defined by a pricing grid included in the documentation governing the ABL Credit Facility. Loans under the ABL Credit Facility may be borrowed, repaid and re-borrowed until June 7, 2029 (subject to certain springing maturity provisions), at which time all amounts borrowed must be repaid.
The obligations under the ABL Credit Facility are guaranteed by us and certain of our material wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations under the ABL Credit Facility and such guarantees are secured on a first-priority basis by all of our and our subsidiary guarantors’ accounts, inventory, deposit accounts, securities accounts, cash and cash equivalents, rental agreements, general intangibles (other than equity interests in our subsidiaries), chattel paper, instruments, documents, letter of credit rights, commercial tort claims related to the foregoing and other related assets and all proceeds thereof related to the foregoing, subject to permitted liens and certain exceptions (such assets, collectively, the “ABL Priority Collateral”) and a second-priority basis in substantially all other present and future tangible and intangible personal property of ours and the subsidiary guarantors, subject to certain exceptions.
On February 17, 2021, we also entered into a term loan credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, that provides for a seven-year $875 million senior secured term loan facility (as most recently amended on August 19, 2025, the “Term Loan Facility”). Subject in each case to certain restrictions and conditions, we may add up to $625 million (plus additional amounts subject to the satisfaction of certain financial ratios) of incremental term loan facilities to the Term Loan Facility or utilize incremental capacity under the Term Loan Facility at any time by issuing or incurring incremental equivalent term debt. Interest on borrowings under the Term Loan Facility is payable at a fluctuating rate of interest determined by reference to the Term SOFR rate plus an applicable margin of 2.75%, subject to a 0.50% Term SOFR floor, which, as of April 23, 2026 was 6.43%.
Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.000% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity on August 19, 2032 (subject to certain springing maturity provisions). The Term Loan Facility is secured by a first-priority security interest in substantially all of present and future tangible and intangible personal property of us and our subsidiary guarantors, other than the ABL Priority Collateral, and by a second-priority security interest in the ABL Priority Collateral, subject to certain exceptions. The obligations under the Term Loan Facility are guaranteed by us and our material wholly owned domestic restricted subsidiaries that also guarantee the ABL Credit Facility.
At April 23, 2026, we had outstanding borrowings of $870.6 million under the Term Loan Facility and available commitments of $301.6 million under our ABL Credit Facility, net of letters of credit.
See Note 5 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our senior debt.
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Senior Notes. On February 17, 2021, we issued $450 million in senior unsecured notes due February 15, 2029, at par value, bearing interest at 6.375% (the “Notes”). Interest on the Notes is payable in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. We may redeem some or all of the Notes at any time for cash at the redemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest to, but not including, the redemption date. If we experience specific kinds of change in control, we will be required to offer to purchase the Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest. See Note 6 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our senior notes.
Operating Leases. We lease space for all of our Rent-A-Center and Mexico stores under operating leases expiring at various times through 2036. In addition, we lease space for certain support facilities under operating leases expiring at various times through 2032. Most of our store leases are five-year leases and contain renewal options for additional periods ranging from three to five years at rental rates adjusted according to agreed-upon formulas. As of March 31, 2026, our total remaining obligation for existing store lease contracts was approximately $337.4 million.
We lease vehicles for all of our Rent-A-Center stores under operating leases with lease terms expiring twelve months after the start date of the lease. We classify these leases as short-term and have elected the short-term lease exemption for our vehicle leases, and have therefore excluded them from our operating lease right-of-use assets within our Condensed Consolidated Balance Sheets. As of March 31, 2026, our total remaining minimum obligation for existing Rent-A-Center vehicle lease contracts was approximately $1.6 million.
We also lease vehicles for all of our Mexico stores which have terms expiring at various times through 2030 with rental rates adjusted periodically for inflation. As of March 31, 2026, our total remaining obligation for existing Mexico vehicle lease contracts was approximately $2.9 million.
Uncertain Tax Position. As of March 31, 2026, we have recorded $1.0 million in uncertain tax positions. Although these positions represent a potential future cash liability to us, the amounts and timing of such payments are uncertain.
Seasonality. Our revenue mix in our lease-to-own businesses is moderately seasonal, with the first quarter of each fiscal year generally providing higher sales than any other quarter during a fiscal year. Generally, our customers will more frequently exercise the early purchase option on their existing lease purchase agreements in our Acima and Rent-A-Center segments or purchase pre-leased merchandise off the showroom floor in our Rent-A-Center segment during the first quarter of each fiscal year, primarily due to the receipt of federal income tax refunds. In contrast, our cash expenditures for our merchandise purchases for the fiscal year are generally the highest beginning in the latter part of the third quarter through the fourth quarter, primarily as a result of holiday promotions that lead to increased demand for our lease-to-own offerings.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires new tabular disclosures disaggregating prescribed expense categories within relevant income statement captions. In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date for ASU No. 2024-03. The adoption of ASU 2024-03 will be required for us for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. We are currently in the preliminary stages of assessing this ASU and the impact it will have on our financial statements following adoption but expect it will result in increased disclosure.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which amends the existing standard that refers to various stages of a software development. Under the new standard, entities will start capitalizing eligible costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. The adoption of ASU 2025-06 will be required for us for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. We are in the preliminary stages of assessing this ASU and the impact it will have on our financial statements following adoption.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270. The new standard specifies the types of interim reporting and the form and content of interim financial statements, adds a comprehensive list of required interim disclosures and includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The adoption of ASU 2025-11 will be required for us for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. We are in the preliminary stages of assessing this ASU and the impact, if any, it will have on our disclosures within our interim financial statements filed on our Quarterly Reports on Form 10-Q.
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From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt as of the specified effective date. As of March 31, 2026, unless otherwise discussed, we believe the impact of any other recently issued standards that are not yet effective are either not applicable to us at this time, or will not have a material impact on our consolidated financial statements upon adoption.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Interest Rate Risk
Our primary market risk exposure is fluctuations in interest rates. Monitoring and managing this risk is a continual process carried out by our senior management. We manage our market risk based on an ongoing assessment of trends in interest rates and economic developments, giving consideration to possible effects on both total return and reported earnings. As a result of such assessment, we may enter into swap contracts or other interest rate protection agreements from time to time to mitigate this risk.
As of March 31, 2026, we had $450 million in Notes outstanding at a fixed interest rate of 6.375%. We also had $870.6 million outstanding under the Term Loan Facility and $135.0 million outstanding under our ABL Credit Facility, each at interest rates indexed to the Term SOFR rate or the prime rate. Carrying value of the Term Loan Facility and ABL Credit Facility approximates fair value for such indebtedness. Based on our overall interest rate exposure at March 31, 2026, a hypothetical 1.0% increase or decrease in market interest rates would have the effect of causing an additional $10.1 million annualized pre-tax charge or credit to our Condensed Consolidated Statements of Operations. We have not entered into any interest rate swap agreements as of March 31, 2026.
Foreign Currency Translation
We are also exposed to market risk from foreign exchange rate fluctuations of the Mexican peso to the U.S. dollar as the financial position and operating results of our stores in Mexico are translated into U.S. dollars for consolidation. Resulting translation adjustments are recorded as a separate component of stockholders’ equity.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures. In accordance with Rule 13a-15(b) under the Securities Exchange Act of 1934, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that, as of March 31, 2026, our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934) were effective.
Changes in Internal Controls over Financial Reporting. For the quarter ended March 31, 2026, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that, in the aggregate, have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – Other Information
Item 1. Legal Proceedings
Please see Note 11 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional discussion of certain of our legal proceedings and governmental inquiries.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in Item 1A of Part 1, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Certain of our officers have made, or may make, elections to participate in, or are participating in, the Company’s stock investment option and dividend reinvestment available through the Company’s 401(k) plan. In addition, certain of our officers and directors may from time to time make elections
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Item 6. Exhibits.
| Exhibit No. | Description | |||||||
| Articles of Incorporation and Bylaws | ||||||||
| 3.1 | Restated Certificate of Incorporation of the registrant, dated as of December 5, 2024 (incorporated herein by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-3 dated as of February 20, 2025.) | |||||||
| 3.2 | Amended and Restated Bylaws of the registrant (incorporated herein by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K dated as of June 4, 2024.) | |||||||
| 3.3 | Certificate of Correction to the Certificate of Elimination of the Series A Preferred Stock of the registrant, dated June 4, 2024 (incorporated herein by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K dated as of June 5 2024.) | |||||||
| Instruments Defining the Rights of Security Holders, Including Indentures | ||||||||
| 4.1 | Description of the registrant’s Common Stock (incorporated herein by reference to Exhibit 4.1 to the registrant’s Registration Statement on Form S-3 dated as of February 20, 2025.) | |||||||
| 4.2 | Form of Certificate evidencing Common Stock (incorporated herein by reference to Exhibit 4.6 to the registrant’s Registration Statement on Form S-8 dated as of June 7, 2023.) | |||||||
| 4.3 | Indenture, dated as of February 17, 2021, by and between Radiant Funding SPV, LLC and Truist Bank (incorporated herein by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K dated as of February 17, 2021.) | |||||||
| Other Exhibits and Certifications | ||||||||
| 31.1* | Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by Fahmi Karam | |||||||
| 31.2* | Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by Hal Khouri | |||||||
| 32.1* | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Fahmi Karam | |||||||
| 32.2* | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Hal Khouri | |||||||
| 101.INS* | XBRL Instance Document - The instance document does not appear in the interactive data files because its XBRL tags are embedded within the inline XBRL document | |||||||
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104* | Cover page Interactive Data File (embedded within the inline XBRL document contained in Exhibit 101) | |||||||
| * | Filed herewith. | |||||||
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| UPBOUND GROUP, INC. | ||||||||
| By: | /S/ HAL KHOURI | |||||||
| Hal Khouri | ||||||||
| EVP, Chief Financial Officer | ||||||||
Date: April 30, 2026
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