Upbound Group, Inc.

Good day and thank you for standing by. Welcome to the Upbound Group Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that this conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Koss, Upbound Investor Relations. Please go ahead.

Good morning, and thank you all for joining us to discuss the company's performance for the fourth quarter and full year of 2025 and our outlook for 2026. We issued our earnings release this morning before the market opened, and the release and all related materials, including a link to the live webcast, are available on our website at investor.upbound.com. On the call today from Upbound Group, we have Sami Khuddam, our Chief Executive Officer, and Hal Kudry, our Chief Financial Officer. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's Form 10-K and other SEC filings. UpGround Group undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures. Finally, Upbound Group is not responsible for and does not edit or guarantee the accuracy of our earnings release teleconference transcripts provided by third parties. Please refer to our website for the only authorized webcast. With that, I'll turn the call over to Fami.

Thank you, Stephen, and good morning, everyone. I'll begin with a review of key highlights from 2025, and then I'll hand it off to Hal for a more detailed review of our financial results and our financial outlook. After that, we'll take some questions. As we reflect on the past year, it is clear that 2025 marked a period of significant progress for Upbound as we execute against our strategic priorities. Since taking on the CEO role in June, following my tenure as CFO, I have been eager to build upon our recent momentum and to steer Upbound through our ongoing transformation into a leading digital and data-driven platform of financial solutions for underserved consumers. In 2025, across all of our brands, we served over three and a half million customers. Over the past eight months, my optimism about what's possible and the opportunity in front of us has only grown. Our team's dedication and shared vision have driven key achievements that we believe strongly position Upbound for continued success and long-term growth. During 2025, we expanded our business by adding a new segment, Bridget, a leading subscription-based financial health technology company, further diversifying our complimentary offerings and strengthening our ability to serve our core customer. In addition, we welcomed two accomplished executives to our leadership team. I'll start with Hal, our new CFO who is on his first upbound earnings call with us this morning. Hal brings extensive experience to the CFO role and is a member of our executive team, including over 30 years in consumer-based banking, financial services, leasing, retail, consulting, and government service. I'll let Hal introduce himself shortly, but I'll add that his insights and strategic vision have already proven valuable to our organization. We also welcomed Rebecca Wooders as our Chief Growth Officer, a newly created role for Upbound. As mentioned during our last earnings call, Rebecca's role integrates under one team key strategic functions for our organization. Rebecca will lead digital transformation and initiatives and implement data-driven solutions across all three major segments of the company, promoting growth, innovation, and synergy within our omnichannel model. We have confidence in Rebecca and her team to deliver both short-term and long-term value as we continue to invest in digital products, personalized marketing, customer experience, and leveraging data as intelligence throughout our organization. Adding these experienced leaders to our already strong management team with years of operating experience inside of our brands, I believe is a powerful combination that positions Upbound for long-term value creation. While these key additions help to build the foundation for growth in the years ahead, we also delivered strong operational and financial performance last year. achieving results within our expectations that we shared at the beginning of 2025. Now let's dive deeper into some of the achievements across the enterprise that made 2025 successful. We are proud of the progress we have made executing on our focus areas during the year as we continue to invest in serving our customers with innovative solutions. In January of 2025, we welcomed a new high-growth business into our ecosystem through the successful closing of the Bridget acquisition. This milestone marked the beginning of an exciting combination whose value became increasingly evident throughout the year. From our very first conversations with Bridget, we were impressed by the team's vision, culture, and technical expertise for developing relevant digital financial products that help users build a brighter financial future, a mission that closely aligns with UpBounce. With a relatively small team, Bridget has already achieved remarkable growth and delivered significant value to its users. As we evaluated the acquisition, confidence grew in the potential to unlock even greater value by combining Bridget's technology and rapidly expanding user base with upbound scale and similar target consumer to meet a wider range of financial needs for underserved consumers and evolve our business in a changing competitive landscape. I'm pleased that by 2025, Bridget's performance validated our enthusiasm for the growth opportunities from the transaction. When introducing Bridgit in the first quarter of 2025, we outlined three strategic priorities for the year. Maintaining growth momentum, launching new products, and cross-marketing collaboration with our upbound brands that already serve millions of customers each year. Bridgit demonstrated momentum throughout the year with sequential improvements in year-over-year revenue growth each quarter. Top line performance was fueled by an increase in new users and higher average revenue per user, stemming from greater expedited transfer revenue for our earned wage access product, deeper engagement with Bridget marketplace offers, and continued upsell from Bridget's Plus membership to its premium tier membership, demonstrating the value provided to customers by Bridget's range of products and price points. Bridget also made strides in developing new products, notably piloting a line of credit offering in late 2025. This product leverages Bridget's powerful cash flow underwriting capabilities to provide qualified customers with up to $500 of liquidity for recent or upcoming purchases, bridging the gap between smaller ticket BNPL offerings and larger ticket lease-to-own solutions. The pilot has yielded promising preliminary results, and we are planning a broader rollout in 2026. Finally, Bridget launched a number of cross-selling initiatives, marketing its product to ASEMA and Rent-A-Center customers. These efforts included targeted email campaigns and in-store promotional material at Rent-A-Center and ASEMA staff locations, expanded throughout the year and have shown promising early results. Now let's turn to ASEMA, where our strategic priorities for 2025 included driving repeat business through an even greater focus on the customer, and leveraging digital advancements to grow merchant relationships. In 2025, the team successfully delivered on these priorities, which resulted in revenue and adjusted EBITDA growing low double digits and adjusted EBITDA margins improving 10 basis points year over year, despite a tougher macro environment that saw demand pressure and elevated losses in the second half of the year. ASEMA demonstrated the power of its customer focus through the expansion of its direct-to-consumer marketplace. Over the years, ASEMA has built connections with millions of customers by facilitating transactions at more than 35,000 merchant locations nationwide. Increasingly, and especially over the past year, ASEMA's innovative team is leveraging these relationships and data to empower its customers with additional choice and flexibility. Through its direct-to-consumer channels, ASEMA enables customers to start new leasing experiences with top national retailers, or at virtually any durable goods retailer across the country using the Acema virtual lease card. At the beginning of 2025, Acema's direct-to-consumer marketplace represented a small but promising addition to Acema's established channels. By the end of 2025, the marketplace had experienced substantial growth, with GMV growing more than 100% year-over-year in 2025. The marketplace now accounts for nearly 10% of Acema's GMV, and continues to be a strategic focus as we enter 2026. Its ability to strengthen relationships with existing customers and to provide the ability to shop at a broader range of top retailers, including those without integrated lease-to-own solutions, makes the marketplace a valuable asset for driving repeat business, increasing the lifetime value of ASEMA customers, and driving incremental revenue opportunities for our retailers. Moving on to Rent-A-Center. Throughout 2025, the segment concentrated on digital evolution and disciplined underwriting. The segment made significant progress in elevating the customer experience and strengthening its digital presence, including upgrading the infrastructure of the rentacenter.com website to improve its scalability and reliability as the segment continues to focus on growing its e-commerce channel. In addition, the Rent-A-Center team developed new tools to improve the approval process for certain applicants who might not meet our more stringent online underwriting criteria. The website now invites these select online applicants who may previously have been declined to visit their nearest store to complete the process in person. This approach exemplifies Rent-A-Center's ability to harness both expanding digital channels and its robust retail footprint to drive customer acquisitions. By balancing digital innovation with the strength of its physical locations, Rent-A-Center is well positioned to identify and capitalize on further synergies between channels, which will be critical to the segment's growth moving forward. Enhancements to Rent-A-Center's Refer a Friend campaign, the revitalization of its Loyalty Reward Program, and successful marketing efforts that drove strong customer demand in the second half of the year all provided additional support to top-line performance. reinforcing Rent-A-Center's commitment to new customer acquisition, customer engagement, and retention. As a result of these efforts, Rent-A-Center's trends improved through the second half of the year, and the segment finished 2025 with year-over-year same-store sales growth in the fourth quarter of 80 basis points, improving 440 basis points sequentially, paving the way for a sustainable path as we enter the new year. Now let's go to slides five and six and recap how these achievements across our enterprise drove strong consolidated financial results. I am pleased to share that our full year financial results exceeded the midpoint for each of the figures we provided on our third quarter call. Our revenue grew 8.7% to approximately 4.7 billion, representing the highest full year revenue on record for Upbound, surpassing the previous record in fiscal year 2021, which of course benefited from stimulus, and the pandemic-related pull forward in the furniture sector. Adjusted EBITDA for the year was nearly $510 million, which was up 7.5% from the prior year. Our non-GAAP diluted EPS was $4.13 compared to $3.83 in 2024, a 7.8% improvement and near the height of our guidance last quarter. Finally, our cash flow generation was particularly strong in 2025, with free cash flow of $180 million increasing over $130 million year-over-year, and net cash provided by operating activities increasing over $200 million to approximately $306 million, the highest full-year figure since 2022. Year-over-year improvement was due in part to the benefits associated with tax legislation, allowing for accelerated recognition of tax depreciation. Turning to the fourth quarter on slide seven, consolidated revenue was $1.2 billion, a 10.9% increase from a year-ago period, driven primarily by the addition of the Bridges segment, in addition to 8.6% year-over-year revenue growth at ASEMA. Upbound delivered $126 million of adjusted EBITDA, which was a lift of 2.6% year-over-year, and adjusted EBITDA margins of 10.5%, down 90 basis points from last year. Non-GAAP diluted EPS was $1.01, down 4% from the year-ago quarter. Overall, I'm pleased with the financial and operational performance that our team delivered in 2025. Throughout the year, in addition to completing a transformational acquisition, the company executed on key priorities while also proactively implementing targeted risk management adjustments for the increasing pressures that our consumers face. Our core consumer continues to navigate a challenging environment, including the cumulative effects of inflation and elevated prices for essentials like groceries, rent and utilities, which weigh on their purchasing power and wages that have not kept up pace with their cost of living. Both of our lease to own segments took actions to reflect the evolving macroeconomic landscape, and we are pleased with the outcome of these efforts and the health of our portfolio entering 2026. At Bridget, as I mentioned, the segment's growth in 2025 has further demonstrated the growth potential we anticipated when we acquired the business a little over a year ago. and its opportunities for additional expansion make us excited for the future. On that note, as we look ahead to 2026, our priorities remain focused on positioning Upbound for sustainable, profitable growth as we continue to execute our strategic transformation. We will continue investing in our people, data, and technology, including advanced analytics and AI capabilities to better serve our customers and merchants while strengthening our competitive advantages. By leveraging our proprietary data more effectively, we aim to deepen customer personalization, improve satisfaction and retention, drive repeat business, and realize the full benefits of our scale while pursuing increased cross-sell opportunities across our platform of brands. These efforts will also support continued enhancements to underwriting, allowing us to optimize risk-adjusted returns against our targets. We also remain focused on operational excellence by leveraging technology and the core competencies of each of our brands, taking proven best practices and scaling them across the organization. In parallel, we are driving targeted efficiency and cost initiatives, including enhancing coworker efficiency across store operations and customer service, while simplifying processes to favorably impact the overall cost of doing business. We believe these efforts will improve execution, scalability, and discipline across the enterprise while supporting margins and long-term value creation. Over the last few months, as I've transitioned into my new role, I've had the opportunity to assess our business across various key aspects focused on serving our customers, growth opportunities, risk management, and synergies between the brands. While our overall strategic vision and focus areas will remain fairly consistent, we are in the early stages of our transformation, and must continue to evolve to the ever-changing business environment. I'm excited about the opportunities in front of us, and together with our new and existing leaders, I'm even more confident in our ability to execute on our strategic goals. Our goals for the long term are clear. Deliver responsible and profitable growth through disciplined risk management while pursuing operational excellence through data and technology, and effectively manage capital to ensure appropriate returns. With that, I'll hand it over to Hal to cover the financials in more detail.