Upbound Group (NASDAQ:UPBD) reported second-quarter 2026 results that were within its guidance, as improved portfolio performance and cash generation helped offset pressure on consumer demand, particularly for discretionary durable goods.
Chief Executive Officer Fahmi Karam said the company’s risk management and underwriting actions supported cash flow, debt reduction and progress on strategic initiatives despite a challenging economic backdrop for non-prime consumers. Consolidated revenue totaled $1.2 billion, modestly higher than the prior year, while adjusted EBITDA declined year over year to $127 million. Non-GAAP diluted earnings per share were $1.70, down about 4% from the prior-year quarter.
Cybersecurity Incident Pressures Acima GMV
Karam said the company experienced cybersecurity incidents during the second quarter in which certain non-sensitive customer information and other documents were obtained without authorization. The company believes some of the information was subsequently used to facilitate fraudulent lease-to-own agreements.
The incidents resulted in approximately $13 million of elevated fraudulent contract losses in the Acima segment during the quarter. Upbound has begun remediation efforts, including enhanced authentication controls, additional fraud detection and monitoring capabilities, and other security improvements. The company also notified federal law enforcement. Karam said the investigation remains ongoing, but Upbound does not expect a material impact from the incidents.
Acima’s gross merchandise volume, or GMV, declined about 11% year over year to approximately $466 million, while revenue fell 2.5% to $604 million. Management attributed the decline to deliberate underwriting tightening, the cybersecurity incidents and weaker demand for discretionary categories such as furniture and appliances.
Despite lower volume, Acima’s credit results improved. Lease charge-offs declined 50 basis points year over year to 8.8%, while adjusted EBITDA rose about 5% to $98 million. The segment’s adjusted EBITDA margin increased 117 basis points to 16.2%.
Karam said the company is prioritizing risk-adjusted margin over volume in the current environment. He added that Acima has new merchant agreements in its pipeline and expects GMV to return to year-over-year growth during the fourth quarter. Acima’s checkout button with Wayfair is now live, according to the company.
Brigit Growth Continues
Financial wellness and liquidity platform Brigit posted revenue of $71 million, up 37% from a year earlier. Paying users reached approximately 1.7 million at quarter-end, an increase of about 30% year over year. Monthly average revenue per user increased 6.3% to $14.30, supported by a greater mix of premium-tier customers, marketplace engagement and optional expedited-transfer revenue.
Brigit’s net advance loss rate was approximately 3.6%, consistent with recent quarters, and it generated roughly $11.8 million of adjusted EBITDA.
Chief Financial Officer Hal Khouri said the company increased advertising and marketing spending to support subscriber growth, and that returns on the investment remained positive based on customer lifetime value. Karam said demand for Brigit’s products has exceeded expectations and the company may consider additional marketing investment later in the year.
Brigit also entered a multiyear partnership with Experian in May to offer its earned wage access product to Experian Money Plus members. Karam said the relationship expands Brigit beyond its direct-to-consumer model and adds a new distribution and revenue channel. The company is also continuing a pilot of its line-of-credit product, which management said has seen strong demand.
Rent-A-Center Optimizes Store Base
Rent-A-Center recorded its third consecutive quarter of same-store sales growth, with same-store sales increasing 1.6% year over year. Segment revenue was $466 million, and average portfolio value per store rose approximately 3.5% from a year earlier.
Lease charge-offs were approximately 5%, up 30 basis points year over year but within the company’s expected range. Adjusted EBITDA fell about 8% to $63 million amid inflationary expenses and higher fixed costs.
During the quarter, the company closed 69 underperforming Rent-A-Center stores and merged customer accounts into nearby locations. Karam said the initial optimization effort was intended to improve efficiency while limiting revenue disruption. He said the company will continue evaluating its store footprint, using digital capabilities and market-level operating models to improve profitability.
Rent-A-Center has also completed deployment of its Amazon order pickup and returns partnership across approximately 1,500 corporate-owned locations. Karam said the program has driven increased store traffic and brand awareness, though the initiative is still in its early stages.
Guidance Narrowed as Free Cash Flow Outlook Rises
Upbound narrowed its full-year revenue outlook to between $4.7 billion and $4.85 billion, reflecting second-quarter results, lower durable-goods demand and continued underwriting discipline. The company reaffirmed its adjusted EBITDA guidance of $500 million to $535 million and non-GAAP diluted EPS outlook of $4.00 to $4.35.
- Full-year free cash flow guidance increased to approximately $250 million from $200 million.
- Acima expects 2026 GMV and revenue to be flat to down low single digits year over year, with losses stabilizing below 9% for the year.
- Brigit continues to expect annual revenue growth above 30%, with revenue of $265 million to $285 million and adjusted EBITDA of $50 million to $60 million.
- Rent-A-Center expects full-year revenue to be flat to down low single digits, while adjusted EBITDA margin is expected to remain relatively flat from 2025.
For the third quarter, Upbound expects revenue of $1.05 billion to $1.15 billion, adjusted EBITDA of $105 million to $115 million, and non-GAAP diluted EPS of $0.85 to $0.95. Management expects Acima GMV to improve sequentially but remain down low to mid-single digits year over year before returning to growth in the fourth quarter.
The company ended the quarter with approximately $487 million of liquidity, net debt of about $1.3 billion and leverage of 2.6 times trailing-12-month adjusted EBITDA, down from 2.9 times at the end of 2025. Upbound paid a quarterly dividend of $0.39 per share, or approximately $23 million, during the quarter.
About Upbound Group (NASDAQ:UPBD)
Upbound Group, Inc leases household durable goods to customers on a lease-to-own basis in the United States, Puerto Rico, and Mexico. It operates through four segments: Rent-A-Center, Acima, Mexico, and Franchising. The company's brands, such as Rent-A-Center and Acima that facilitate consumer transactions across a range of store-based and virtual channels. It offers furniture comprising mattresses, tires, consumer electronics, appliances, tools, handbags, computers, smartphones, and accessories.
