Okay, well, thanks to those in the room for joining us and those attending virtually via the webcast. My name is Ryan Flanagan. I'm with the Technology Practice here at ICR. And with me today are Upbound's CEO, Fahmi Karam, and CFO, Hal Khouri. Now, the very exciting part. As a reminder, some of the statements provided during this conversation may be forward-looking and subject to factors that could cause actual results to differ materially and adversely from expectations, including factors described in the company's SEC filings. Upbound Group undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. This conversation may also include references to non-GAAP financial measures. Please refer to the company's SEC filings, which can be found on the company's website for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures.
Gentlemen, thanks for joining me today.
Thanks for having us.
Maybe to start, Fahmi, for those who aren't very familiar with Upbound, can you take a minute to bring us up to speed on maybe some of the different segments, talk about the legacy business, and then bring us up to where we are today?
Sure. And thanks, Ryan, for having us here. It's been a great conference and great to be with all of you in the room today. So yeah, Upbound, we view Upbound as a connected financial ecosystem of platform that is dedicated to serving the underserved consumer. So think of consumers who are traditionally not served by traditional lenders, traditional credit. And what we try to do is provide them access and opportunity to durable goods and financial liquidity for that consumer segment through multiple different channels. We have three major brands, and maybe I'll tick through those very briefly, and then we can get into any of the specifics. But first and foremost is our Rent-A-Center business and our Rent-A-Center brand. That's our legacy business, our mature cash flow generating business. It's been in business now for over 50 years.
We have over 2,200 stores, mostly in the U.S., and 130 of those stores in Mexico. Think about a rent-to-own for mostly furniture and appliances and electronics. Again, a legacy business that has been focused recently on changing and transforming the business model from traditional retail into more of a digital e-commerce player. And we're up to about 27% of our revenue now generated online, and that should grow from this point going forward. Our next business is our Acima virtual lease-to-own business. We acquired Acima at the beginning part of 2021. That is a digital native point of sale solution. We're in 35,000 locations across the U.S. Again, mostly furniture, a little bit different with Acima, but mostly furniture. About 40%-50% of our volume is furniture. We also have a nice mix of jewelry, wheel and tire, and electronics.
With that business, that business has now grown to be our largest segment over the last 12 months or so, growing at a very nice clip. We grew that business last year about 17%. And through the third quarter of 2025, we grew it into the low teens area. So growing very nicely. And again, able to scale that business and grow virtually through our direct-to-consumer channel as well as through several of our retail locations. And then most recently, we acquired a company called Brigit. Brigit is an all-digital financial health app. We acquired that business almost a year ago this month. It was January of 2025 when we closed on that acquisition. That business, again, is a financial health and financial wellness app that is a subscription model.
It has about 1.5 million paying subscribers today with over another 500,000 subscribers that use the free version of that app. And some of the products that we offer as part of the subscription, as part of the bundle, is earned wage access or what we call our Instant Cash product that bridges the gap between paychecks and gives consumers up to $250 of liquidity in between paychecks. It also comes with credit building options and a bunch of really neat financial tools and budgeting tools that help consumers grow in their financial journey. And all three of these businesses, when you think about how they complement each other and why they're together, and again, I mentioned Upbound being a financial platform, it's really to be focused on the underserved consumer, that non-prime consumer. And all three of these businesses have a very similar consumer set.
And the reason why all three of them are together is to be able to really identify what the consumer needs and what the consumer is looking for and helping that consumer across their journey, whether it's through our brick-and-mortar stores or whether our virtual business with Acima or if they're looking to build their credit with Brigit, really being able to access them where they are in their financial journey is kind of the goal. And being able to leverage a lot of the data that we have. We have millions of customers with the acquisition of Brigit. Now we have about three million active customers at any point in time.
So we have millions of transactions, millions of consumers that we have a lot of insights into and being able to take that data and really drive home personalized, customized offerings to meet the consumer with the right product at the right time is kind of the objective. So we've gone down this transformation of having 2,000 brick-and-mortar stores into a digitally native platform that allows us to be smarter with our decisions by harnessing a lot of the data that we have between the three businesses.
That's great. Appreciate that overview. Listen, you have a bit of a unique perspective here, having sat in the CFO seat for the prior three years and recently rounded out the C-suite with some new additions. How do you feel about the team that's in place right now and just maybe having the right pieces as we enter a new year?
Yeah, so we definitely upgraded the CFO position as part of this transition. And having Hal now in the building for a little over a month or so has been fantastic. We hired a new Chief Growth Officer, Rebecca Wooters, who's been with us now for three or four months. And really, the mandate now is for us to take some of the new ideas from the new leaders and combine that with the leaders of our core businesses that have been with us for a long tenure and very experienced in our day-to-day operations of those businesses and kind of mesh all of them together and come up with the transformation that I mentioned, the digital transformation that I mentioned. So when I joined, a lot of this idea around transforming the Rent-A-Center business into something different was already kind of envisioned.
And when I got here three years ago, it was really around how do we build the foundation, how do we build the infrastructure to do that. And now we have a couple of new leaders to kind of help accelerate that path. And so it's been very important since I've been in my chair now since June to get the right team around the table to help us reset a little bit on the overall vision and how we go about it or actually accelerate the vision, I should say, on how we go about it. And I'm really excited to have Hal and Rebecca join a very tenured team.
Great, great. So turning to one of those new leaders, Hal, assume the CFO role in mid-November. Usually, this type of question gets asked after a full quarter in the seat. But you have 30 years of experience across consumer banking and leasing and finance, so I think you can handle it here. At 60 days in, surveying the business, meeting employees, talking to some customers, a handful of partners, I'm sure. What stands out most at Upbound and what are you most excited about?
Yeah, thanks, Ryan. I'm going to echo a lot of what Fahmi actually was referencing earlier. Rock-solid foundation, rock-solid business across the board. I mean, the assets that Fahmi referenced earlier, the three million customers that we serve every day, very strong overall performance, financial performance of the business, approaching $5 billion in revenues and strong contribution to the bottom line and balance sheets in extremely solid shape. Couple that with an exceptional management team, a supportive board. I think it's a catalyst for us to, as Fahmi referenced earlier, create something unique here, an evolution of the business of sorts.
And I think leveraging technology, the digital assets, one that we have available to us, leveraging data science that we have available in terms of looking at our customers differently, how do we think about that experience within that ecosystem overall, I think we're poised for some very exceptional times ahead. And I'm very excited to be part of the team on that journey.
Great. So hopping back into the three business units with Rent-A-Center, Acima, and Brigit, you gave a great overview of those kind of in isolation. But how do we think about these segments? Because they're very complementary in ways. And you used the P word there, platform. Can you talk about that customer ecosystem and how they all tie together?
Sure. Again, our consumer is somebody that is looking for choice. And our job is to give them access to products that they need and desire. And the three businesses work together almost as if they can meet them where the customer is. If they want to come in and look at the piece of furniture in one of our stores and talk to one of our coworkers, they're welcome to do that. If they want to shop online on Rent-A-Center.com, they're welcome to do that. If they want to have a broader selection through one of our 35,000 locations at Acima, whether it's expanded in products that Rent-A-Center doesn't offer, wheel and tire, or jewelry, they can use one of those locations. And then Brigit takes us out of just durable goods and gets us into more day-to-day goods.
And so that's how they complement each other is we can meet the consumer where they want to shop and how they want to shop. Really, the synergies between the three businesses is for us and the mandate for us is to really be able to take a holistic view of the consumer going forward. And we're kind of in that process right now of getting the infrastructure, getting everybody on the same databases, and being able to share a lot of the information as far as how the consumers, how they earn their money, how do they save their money, how do they spend their money. And again, it goes back down to personalization. How do we get more personalized in our approach to be able to offer that customer the right product at the right time?
Everything that we're doing across the three businesses is geared toward the same consumer base. We talked about it when we bought Brigit a lot. The overlap between the Brigit consumer and our Rent-A-Center and Acima consumers is in that 10% overlap, even though the characteristics of that consumer has a lot of overlap. So there's a huge opportunity for us to cross-sell the different products between all three brands. Again, it comes down to scale. We have a lot of scale. We have a lot of data at our fingertips and a lot of transactions for consumers to be more insightful and help our consumers across their journey.
Great, great. The RAC business obviously is known for being a really compelling cash flow story. Acima, their trended GMV metrics there are really impressive. And the growth in Brigit is really strong with a great margin profile. Can you talk about some of the key drivers within each segment?
Sure. On the Rent-A-Center side, I'll start there. I think for us, a big part of what we're trying to do, I mentioned earlier around being a true omnichannel e-commerce digital platform. We want to give our consumers choice. If they want to walk into one of our locations, we're happy to greet them with our coworkers. But being able to also allow them to shop through a very digital experience and have a great customer experience if they want to shop virtually is something that we spend a lot of time and resources on. And so being able to do that efficiently is partly why we have Rebecca on board. She had a lot of experience on retail and being an e-commerce player at her last position at Signet. And we want to replicate that at Rent-A-Center and be in a true omnichannel business.
On Acima, it's a combination of continuing to add retailers into our network, into our system. We've done a fantastic job over the last three or four years, especially with the pull forward of furniture, diversifying where our GMV comes from on the Acima side, so diversifying away from furniture. When furniture comes back, we'll be able to service those customers and those retailers and so also having a great customer experience, a great retailer experience with Acima but also what we've been really successful doing over the last 12 months is growing our direct-to-consumer business on Acima. It grew 130% year over year in the third quarter of last year and really being able to leverage some of the new AI tools.
We created a proprietary AI leasability engine that allows us basically to give our returning customers access to really any brand, any retailer through our marketplace on Acima.com and through the app. And that gives us a way to continue to grow the business and continue to generate repeat business without being so heavily reliant on being integrated with different retailers' point of sale systems. And then with Brigit, it's all about scaling that business and finding ways to cross-sell and have access to the millions of customers that apply to Acima and Rent-A-Center and getting those consumers over to Brigit. One of the main reasons we bought them is their innovation and adding new products. And growing subscribers gives us more data and gives us more information on what consumers are looking for.
It's our job to make sure that we address those needs and those wants and make new products for us to be more relevant in their lives. So for Brigit, it's a matter of continuing to evolve and continuing to innovate and growing our subscribers from the 1.5 million that we have today into something much, much bigger.
Got it, got it. All right, next one's a bit of a jump ball, but maybe we'll start with Hal on it. Put on my former analyst hat here and ask one about capital allocation. Maybe talk about the strategy there and some of the key priorities here in the new year.
Yeah, sure thing, Ryan. So I think certain principles as it relates to the attribution of capital across the enterprise, first and foremost, driving shareholder risk-adjusted return. We want to make sure that we're doing that by fueling the organic growth of the business and making sure that we have the necessary dollars, people, infrastructure, and support of that. Continue to invest for the future to create best-in-class support and technology and data science and all of the great elements that we referenced earlier, AI at the forefront of all of that. And so beyond that, I think as we look at capital deployment beyond that, looking at leverage, our leverage profile currently with the acquisition of Brigit was heightened. We will look to delever through the course of the coming year to get us in a comfortable place.
And then returning capital back to our shareholders, either through the course of a normal course dividend issuance or where it makes sense to actually take part in some share repurchases as well. So we've got some options out there, but certainly continue to grow the organic portfolio and making sure that the capital is there to deploy, I think, is first and foremost.
Got it, great. Maybe can you talk a little bit about the macro, what you're seeing across the consumer, not from a forward-looking perspective, but maybe spending trends or preferences, changes of landscape out there?
Sure. I would say the consumer, our core consumer, the non-prime consumer is a very resilient consumer. They've been under pressure really since 2022, coming out of the stimulus era with inflation and everything being very expensive for them. We think about a cash-strapped consumer. Things being so expensive in their everyday lives really puts a strain on their finances, which really helps lead into our product category, right, which is our whole, especially with Rent-A-Center and Acima, the value proposition of our business and our products is to give them flexibility. If you think about a lease transaction, we're allowing the consumer to take the product home typically that day or deliver it within days on the Rent-A-Center side and use that product until either they don't like it or they can't afford it anymore and return it to us with no financial obligation going forward.
The consumer is looking for value. They're looking to stretch their dollar in today's world. We saw that through the holiday season again. It's been a pretty stable environment, even though they've been under pressure now for a couple of years. They've had to adjust their spending habits. We've had to adjust how we underwrite the business. We've been pretty consistent with that quarter in, quarter out about kind of where we are from an underwriting standpoint. We've taken a pretty conservative posture over the last 12 months and different ebbs and flows between the businesses. I would say this past year and going into 2026 has been relatively stable. Still, we have to be very cautious in our approach to make sure that we put the right consumer in the right lease package.
Got it. That makes sense. Hopping back to the Brigit business. And I know we're still early days in working on the integration there. You talked about some of the interplay between a few of the different segments. Is there a cross-selling motion? Is there a cross-selling motion happening now? And is that something you envision becoming stronger over time?
So definitely. So the short answer, Ryan, is yes. There's a big cross-selling opportunity. I mentioned the overlap being about 10% between current customers across the brands, even though when you look at them on paper, the demographics tell you there should be a lot more overlap between the brands. So we've started it. We're in the very early stages of doing some of the cross-sell. We've started with the easy part of it, sending emails and doing referrals. We haven't fully gotten to the point where we've integrated systems. As I mentioned before, we're still kind of unifying some of the infrastructure.
But again, when you think about the insights that the cash flow attributes give us on the Brigit side, to be able to apply that on the Rent-A-Center and Acima side will give us a lot more decision-making power around who to approve, how much to approve, how best to manage the account. And more importantly than all those things, or just as important as all those things, is to give that personalized offer to those consumers. And that cash flow data, the cash flow attributes that I mentioned with Brigit, the one thing that we can say with real confidence after a year of owning that business is that data is very potent and is very predictive and gives you a lot of transparency. And the consumers are looking for it. They want to have control. They want to have that transparency.
They also want personalized offers that are relevant to them. And that's what we're trying to do. So the opportunity is still in front of us from that standpoint. We're still very much in the early innings of both cross-sells, sending customers from Acima and Rent-A-Center over to Brigit and vice versa, having some of the Brigit customers come over to Rent-A-Center and Acima. And that's really going to propel us and compound going forward.
Great. It sounds like there's a bit of a differentiated data play in there relative to some competitors who may just have sort of one offering.
If you think about it, I'm sorry, Ryan.
Sure.
I was going to say, if you think about kind of traditional bureau data, which we use on Rent-A-Center and Acima, and we'll continue to use, we view the cash flow attributes as complementary and supplemental to what we do on a day-to-day basis. By definition, in having a non-prime consumer, you're going to have limited information. It's going to be delayed, and it's going to be spotty at best. But with cash flow attributes, you have real-time data. You have full transparency into their situation. And it allows you to be a lot more precise and, again, offer them the right product at the right time.
Great, great. Maybe to close out, you've described a lot of change here in the business in the past several quarters. What is the core message that may be overlooked or that you want investors to focus on kind of as you enter this next leg of growth with these three unified businesses?
Yeah, I think what we just touched on is probably the biggest area to focus on from an investor standpoint: the ability for all these three businesses to complement each other, to kind of interplay with our core consumer. There's a lot of opportunity for us to cross-sell the different products and to innovate from here. One of the things and one of the main reasons we bought Brigit, or had the Brigit acquisition, was around their ability to listen to their consumers, understand the consumer and what they're looking for, and how to serve that consumer. We look to do that across all three of our brands. The business model itself is resilient.
We've proven that over several cycles on the Rent-A-Center side and have proven that through the pandemic on Acima and even with Brigit, a lot of learnings through the pandemic and a lot of volatility through stimulus, and the business model itself is very resilient. Our consumers are resilient, and now that we have all this data that we can then combine together, we're going to be more resilient, so I think that's a big part of the story going forward.
Got it. Makes sense, makes sense. Well, listen, I'm looking at a shot clock that's approaching zero here. So I think that's a good place to stop. But Hal, Fahmi, appreciate the time.
Thank you, Ryan.
Thanks, Ryan.
Appreciate it.