Upbound Group, Inc.

Good day, and thank you for standing by. Welcome to the Upbound Group Q1 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You'll then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Stephen Koss of Upbound Investor Relations. Please go ahead.

Good morning, and thank you all for joining to discuss the company's performance for the first quarter of 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 Khatam, our Chief Executive Officer, and Hal Khoury, 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 most recent Form 10-K, upcoming Form 10-Q, and other SEC filings. Upbound 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, up on group is not responsible for and does not edit or guarantee the accuracy of our earnings 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 start with a review of our first quarter performance and the progress we're making on our 2026 priorities. I'll then hand it over to Hal for a more detailed discussion of our financial results and outlook. After that, we'll take some of your questions. Our first quarter represented a solid start to 2026 for UpBound. We executed well in a difficult operating environment, delivered results in line with our financial targets, generated robust cash flow, and deleverage our balance sheet while continuing to advance key initiatives that support long-term value creation. We believe Upbound's expanded and increasingly digital portfolio is well-suited to meet consumers' needs in this environment, as consumers seek flexible, convenient, and affordable financial solutions. With our Bridget acquisition last year, we have three complementary brands that deliver a wide range of financial solutions to a similar, and sizable target consumer base. And that diversification helps us manage through category swings, creates multiple paths to growth, and gives us more opportunities to deepen relationships with customers over time. Our work is guided by a set of clear priorities for 2026. We're building Upbound into a more connected, tech-enabled financial platform while fostering sustainable, profitable growth. Across the company, our focus is on using data, advanced analytics, and AI to improve personalization, strengthen underwriting, and enhance operating efficiency across our organization. When we talk about becoming more connected, this refers to creating a better, deeper experience for customers and a more efficient operating model for the company. That means meeting customers where they are, providing a broader set of solutions across their financial journeys, and using data collected at any and every interaction across our brands and channels to make smarter decisions. From product development, value proposition, customer acquisition, conversion and underwriting, to account management and retention. Over time, this stronger connection should translate into enhanced customer engagement, better outcomes, and higher returns on capital. We're also advancing a more unified operating structure for the company. In practical terms, that means a common delivery model, shared resources, and shared data foundations that allow each brand to move faster without recreating the same work in multiple places. Ultimately, this operating model helps ensure teams have the clarity, focus, and tools necessary to execute effectively across key enterprise initiatives. Alongside that, we're applying analytics and AI in practical ways across the enterprise. Our initial focus is on use cases that improve outcomes in underwriting, customer communications, operating efficiency, and enhanced servicing and collections. These are targeted initiatives aimed at enabling better decisions, higher productivity, and a better customer experience. And we're prioritizing areas where we can measure impact and scale what works. We expect to improve merchant experience and onboarding. and to remove friction points, which will enhance both merchant and consumer conversion. These efforts should translate into more loyal customers, repeat interactions, higher LTV per customer, and overall lower customer acquisition costs. A big part of delivering on those priorities is leadership and organizational clarity. We've continued investing in key senior leadership roles and talent. and we're thrilled to welcome our new Chief Technology Officer, Balaji Kumar. Balaji brings more than 25 years of technology leadership experience across financial services and retail. Bringing Balaji onboard strengthens our ability to modernize systems, accelerate execution, and build scalable technology capabilities that support the roadmap we've laid out. With the recent leadership additions of Hal, our CFO, Rebecca Wooters, our Chief Growth Officer, and now Balaji in place, along with the balance of our season's executive team, we believe we are well positioned for 2026 and for the long-term future growth. Now let's turn to our segments and how our first quarter performance exemplifies this approach. Beginning with Bridget, we're pleased with the segment's growth and momentum to start the year. In the first quarter, paying subscribers and monthly average revenue per user both increased double digits year over year, driving a revenue increase of over 40% year-over-year. This performance reflects strong demand and solid execution, and as a result, the segment remains on track to hit its financial targets for 2026. Bridget continues to invest prudently in the products and marketing that will enable additional growth and profitability in future years, as the business continues to enhance its value proposition, driving increased engagement and monetization across the platform. As the brand scales, more and more users are finding value in Bridget's flexible and transparent financial wellness and liquidity solutions, and we're excited about the opportunities ahead for Bridget as we continue expanding how and where customers can use the platform. In particular, product development remains an important focus at Bridget, with the line of credit pilot continuing to advance. We're preparing for a broader rollout later this year, taking a measured approach that prioritizes unit economics customer outcomes, and long-term value creation. Turning to ASEMA, the positive results of our targeted efforts to strengthen portfolio health given the challenging operating environment became even clearer in the first quarter, as the prudent underwriting actions taken over the past year have proven effective. Least charge-offs were approximately 8.8% in the first quarter, representing a meaningful improvement from the elevated levels in the second half of last year, including 130 basis point improvement compared to the fourth quarter. This improvement validates the data-driven approach our team has adopted to protect portfolio quality and improve long-term economics, and it supports a foundation for continued investment in the business as we move through 2026. Tightening underwriting, coupled with macro headwinds which impacted demand, pressured our GMV in the first quarter. GMB finished the quarter below our expectations, coming in lower than last year's first quarter performance, which was prior to us making meaningful underwriting changes. In a moment, Hal will go over our guidance and how GMB and the stronger Q1 loss performance are expected to impact our results for the balance of 2026. ASEMA will continue to be disciplined in its approach and will continue building toward meaningful growth opportunities. We're sharpening the value proposition of our flexible leasing solutions and expanding our digital capabilities. At the same time, we're investing in merchant relationships and strengthening the customer experience at tens of thousands of retailers across the country, as well as online through our direct-to-consumer marketplace, which grew approximately 9% year-over-year in the first quarter. We also remain encouraged by the merchant pipeline across small, medium, and large retailers, and by the diversity of the merchant base, which helps support resilience when demand varies across categories. During the quarter, we signed a new agreement with an existing merchant partner that furthers our partnership and is expected to drive meaningful GMV in the second half of the year. The revised agreement enhances our integration and provides a SEMA exclusive rights as a checkout option at the largest e-commerce furniture retailer in the country. At Rent-A-Center, our focus remains on continued cost optimization while strengthening the foundation for more consistent performance. That progress was evident in the first quarter, with the segment achieving year-over-year same-store sales growth for the second consecutive quarter following our strategic tightening over the past several months. The team continues to prioritize portfolio quality while advancing initiatives aimed at improving the customer experience and store-level execution. This is not a single initiative, It's a consistent, integrated operating approach that combines investment and expanding digital capabilities with targeted work to strengthen engagement and execution in the field. In particular, we are focused on measurable initiatives expected to improve performance over time, from reinforcing coworker training and execution in the field to expanding relevant product offering for Rent-A-Center's strongest and most loyal customers. We're also excited about the Amazon partnership we announced last week. While still early, this collaboration enables convenient Amazon order pickup and returns at more than 1,700 Rent-A-Center corporate-owned stores, increasing store relevance, driving brand awareness and in-store traffic, and supporting new customer acquisition. These are the type of initiatives that leverage our existing footprint, enhance the customer experience, and help us introduce our portfolio of flexible financial solutions to an even greater number of consumers. Before turning to consolidated financial highlights, I want to briefly step back and tie together what we're seeing across the business. Across the enterprise, we continue to strengthen the platform by connecting data, capabilities, and teams in more deliberate ways. We are improving personalization, making more targeted, data-driven risk decisions, and identifying opportunities to engage customers more effectively across brands. This work is focused on execution fundamentals, targeting the right customers across channels while delivering value and service that drives repeat business, and then scaling those improvements consistently over time. It's also important to acknowledge the operating environment we're navigating. The non-prime consumer continues to face pressure from elevated costs in essential categories such as groceries, rent, utilities, and energy, which influences purchasing behavior and weighs on discretionary spending, particularly for larger ticket items. At the same time, the first quarter featured a stronger than normal tax refund season. While that supported liquidity for many consumers, it was partially offset by higher energy prices following recent geopolitical developments. Despite this challenging backdrop in the first quarter, our consolidated results were solid and in line with our expectations. Revenue was $1.2 billion, up 3.7% year over year. Adjusted EBITDA increased nearly 8% to $136 million, and non-GAAP diluted EPS was $1.08, up 8% from the prior year. These results reflect disciplined execution and improving outcomes across the platform. Cash flow and deleveraging were also strong in the quarter. Net cash provided by operating activities was $171 million, of $23 million year-over-year, and free cash flow was $136 million, up from $127 million in the prior year quarter. Strong cash generation supports reinvestment in the business, disciplined deleveraging, and our broader capital allocation priorities. We're encouraged by our first quarter results and by the progress the teams are making across the company. We're investing where it matters most, staying disciplined on investments, cost and underwriting, and scaling capabilities that support operating leverage over time. As we look ahead, our priorities are clear, our leadership team is in place, and we'll stay focused on execution throughout the rest of 2026. With that, I'll turn the call over to Hal to walk through the financials in more detail.