Upbound Group, Inc.

Good day and thank you for standing by. Welcome to the Q2 2026 Upbound Group, Inc. 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 will need to press star 11 on your telephone. You will then hear an automated message advising 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, Abraham Albert, Senior Vice President of Finance. Please go ahead.

Good morning. Thank you all for joining us to discuss the company's performance for the second 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 Fahmi Karam, our Chief Executive Officer, and Hal Khouri, 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 upcoming form 10Q and other SDC filings. Upbound Group undertakes no obligation to publicly update or advise 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 reconciliation 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 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 Sammy.

Thank you, Abraham, and good morning, everyone. I'm pleased to share our second quarter results and provide an update on our strategic progress. I'll start with a high-level review of the quarter and our priorities, then hand it over to Hal for the detailed financial results and updated outlook. After that, we'll open up the line for questions. Our second quarter results reflect a continuation of many positive trends we identified last quarter, and we delivered results within all of our guided metrics. Our risk management and underwriting has supported healthy cash flow generation, ongoing balance sheet deleveraging, and solid progress on our key strategic initiatives, despite the challenging economic backdrop. Our core consumer remains resilient, but continues to manage a tighter budget, and we remain focused on giving them flexible, affordable ways to get the products and financial liquidity they need. We operate three complementary brands, Offering a breadth of solutions that help us manage category-specific demand, creates multiple avenues for growth, and position us to deepen customer relationships over time. Before discussing the results, I want to revisit our 2026 priorities. We're continuing to strengthen the connections across our brands by investing in shared capabilities and creating a more connected experience for the customers we serve. Our strategy is straightforward. Meet customers where they are today while expanding the ways we can serve them as their financial needs evolve. As we strengthen the connections across our brands, we're creating more opportunities to serve a customer across multiple products and brands over time, increasing the value of every customer relationship. At the same time, the shared capabilities we're building across the enterprise allow us to make better decisions, scale investments more effectively, and strengthen each brand. Over time, we believe these efforts can support stronger customer outcomes, greater operating leverage, improved capital efficiency and long-term value creation for our shareholders. In parallel, we're applying AI and analytics across the enterprise, starting with underwriting, customer communications, account management and collections, which are targeted initiatives where we can measure impact and scale what works. We are actively integrating AI across discovery, search, and marketing content, while finding new ways to engage customers through generative and agentic AI. Our teams are leveraging AI to better understand customer needs and deliver personalized experiences, whether through automation, intelligent prompts in our stores, or advanced data-driven insights. We are investing in conversational commerce and in-contact servicing, ensuring that every customer interaction is smarter and more seamless. Our growth organization is designed to place customers at the heart of every journey, enabling rapid experimentation and scalable breakthroughs that unlock new revenue streams and reinforce our brand's competitive edge. By harnessing advanced personalization across acquisition, conversion, and retention, we are redefining customer lifetime value through a unified, data-driven approach. Our commitment to enterprise-wide personalization and seamless cross-brand engagement will foster deeper cross-sell, upsell, and loyalty, resulting in sustainable, profitable growth. Before discussing our business by segment, I would like to briefly address the cybersecurity incidents cited in our recent 8K. During the second quarter, we experienced incidents in which certain non-sensitive customer information and other documents were obtained without authorization some of which we believe was subsequently used to facilitate fraudulent lease-to-own agreements, leading to elevated fraudulent contract losses of approximately $13 million in the ASEMA segment during the second quarter. In connection with these incidents and in coordination with external cybersecurity experts, we have already begun implementing remediation measures including enhanced authentication controls, additional fraud detection and monitoring capabilities, and other security enhancements. The company has also notified federal law enforcement of the incidents. While our investigation is still ongoing, we do not expect a material impact from these incidents. Cumulatively, the aforementioned incidents, a continued tightening in our underwriting posture, and macro headwinds, which impacted consumer demand in our key categories, pressured our overall GMV and our SEMA segment by 11% in the second quarter. Looking ahead, our expectations for ASEMA GMB are flat to negative low single digits on the year, returning to growth in the fourth quarter. We remain disciplined in our approach, focusing on maintaining losses in an acceptable range, increasing risk-adjusted margins, and protecting our balance sheet with quality GMB. Now let's turn to our results by segment for the second quarter, starting with Bridges. We saw continued momentum underpinned by another quarter of double-digit year-over-year growth in subscriptions, with revenue growth of 37% year-over-year and maintaining its trajectory towards its financial targets for 2026. 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 consumers can use the platform. On the product side, the line of credit pilot continues to progress, and we're working toward a broader rollout with unit economics, customer outcomes, and long-term value front of mind. Additionally, following a successful pilot earlier this year, we are very pleased to announce that in May, Bridget entered into a multi-year partnership with Experian to offer Bridget's earned wage access product to Experian members with Experian Money Plus membership. This partnership represents an expansion of the Bridget platform beyond its direct-to-consumer roots and into embedded financial infrastructure, opening a new revenue channel for the business. The collaboration brings Bridget's cash flow underwriting technology into the Experian platform, adding a new way for members to access funds directly within the app. We're very excited to partner with Experian to scale the program, allowing us to serve more and more consumers along their financial journey. We believe this milestone demonstrates Bridget's ability to expand distributions through trusted partners and create an additional customer growth channel for the business. At ASEMA, from a top-line perspective, credit tightening and the cyber incident did weigh on GMV, which finished the quarter lower year-over-year and below our expectations as we continue to take a conservative underwriting approach in this volatile macro environment. Loss performance continues to benefit from underwriting actions taken over the past year, with lease charge-offs improving to 8.8% and approximately 50 basis point improvement compared to the prior year period. EBITDA margin increased 117 basis points to over 16% in the quarter. This improvement validates the data-driven approach our team has adopted to protect portfolio quality and improve long-term economics, and it supports the foundation for continued investment in the business as we move through 2026. We continue to invest in improving customer experience, expanding digital capabilities, and supporting sustainable GMV growth while maintaining underwriting discipline. From a partner perspective, we are encouraged by new merchant agreements in the pipeline and further integration with current partners, including the checkout button at Wayfair, which is now live. We remain focused on delivering a diverse merchant base and are happy with the pipeline of new merchant wins we expect in the third quarter that should drive year-over-year growth in GMD by the fourth quarter. Moving on to Rent-A-Center. Overall performance in the second quarter was favorable and stable amidst an inflationary expense environment for the company and our consumers. We achieved year-over-year same-store sales growth for the third consecutive quarter, growing 1.6% versus last year. The team continues to prioritize portfolio quality while advancing initiatives aimed at improving customer experience and store-level profitability. Against this backdrop, we have begun a renaissance-wide optimization effort to ensure the brand remains competitive in today's environment with the objective to drive efficient operational performance and enhance long-term returns. These initial optimization efforts led to 69 underperforming store closures in the second quarter, with customer accounts being merged into nearby locations. Following this first phase of optimization, we will continue to evaluate our store count as part of a broader roadmap to leverage our digital capabilities to right-size the footprint, seeking to boost profit contribution. We look to customize our approach by market, including consumer preferences in product and personalized marketing, as well as testing different operating models including shared logistics, We're also excited about the progress we've made with the Amazon partnership we announced last quarter, enabling convenient Amazon order pickup and returns at Rent-A-Center corporate-owned stores, which is now fully deployed in approximately 1,500 locations nationwide. The partnership is driving improved foot traffic and expanding brand awareness. These are the types 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 summarizing our consolidated financial highlights, I want to zoom out and offer a broad view of Upbound's overall portfolio health. We believe our portfolio is strong with delinquencies and losses relatively stable in a tough environment, while we focus on building shared capabilities and delivering intelligence through data to our teams to make better operating and risk decisions and driving customer engagement. These initiatives should result in customer growth, retention, and lifetime value, which will position us for long-term sustainable growth. It's also important to acknowledge the challenges in the current operating environment we're navigating. The non-prime consumer remains resilient but continues to face pressure from elevated costs in essential categories such as groceries, rent, utilities, and energy, which influences purchasing behavior and delays discretionary spending, particularly for larger ticket items such as furniture and appliances. Despite this challenging backdrop in the second quarter, our consolidated results were in line with our expectations. Revenue was $1.2 billion, up modestly year over year. suggested EBITDA declined year-over-year to $127 million due in part to timing of marketing expenses at Bridget and higher fixed costs at Rent-A-Center. Non-GAAP diluted EPS was $1.07, down approximately 4% from the prior year. Cash flow and deleveraging were strong in the quarter, and that cash provided by operating activities was $123 million, up $97 million year-over-year. and Free Cash Flow was $84 million, up from negative $10 million in the prior year quarter. Strong cash generation supports reinvestment in the business, disciplined deleveraging and our broader capital allocation priorities. We're pleased with our second quarter results and team execution across the company. We're investing where it matters most, staying disciplined on investments, costs and underwriting and scaling capabilities that support operating leverage over time. As we look ahead, our priorities are clear, and we'll stay focused on execution through the rest of 2026. With that, I'll turn the call over to Hal to walk through the financials in more detail.