Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "seeks" or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," "may," "aims," "intends," or "projects." These forward-looking statements include, without limitation, those relating to the impact of ongoing challenging macroeconomic conditions on our business, operations, financial performance and prospects, the future business prospects and financial performance of our Company as a whole and our segments, our growth strategies, our expectations, plans and strategy relating to our capital structure and capital allocation, including any share repurchases under our share repurchase program, the potential impact of the matters discussed in Note 11 - "Contingencies" in this Quarterly Report on Form 10-Q, and other statements that are not historical facts. Unless expressly indicated or the context requires otherwise, the terms "Upbound Group, Inc.," "Company," "we," "us," and "our" in this document refer to Upbound Group, Inc. and, where appropriate, its subsidiaries.

A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially and adversely depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2025 and "Management's Discussion and Analysis of Financial Condition and Results of Operations" below. Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Quarterly Report on Form 10-Q and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. Except as required by law, we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. Factors that could cause or contribute to these differences include, but are not limited to:

Additional important factors that could cause our actual results to differ materially from our expectations are discussed under the section "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 and elsewhere in this Quarterly Report on Form 10-Q.

Our Business

We are a technology and data-driven leader in accessible and inclusive financial solutions that address the evolving needs and aspirations of underserved consumers. Through our Acima and Rent-A-Center segments, we are a leading lease-to-own provider with operations in the United States, Puerto Rico and Mexico. We provide a critical service for underserved consumers by providing them with access to, and the opportunity to obtain ownership of, high-quality, name brand durable products under a flexible lease-purchase agreement with no long-term debt obligation. Our Acima segment offers lease-to-own solutions through retailers in stores and online enabling such retailers to grow sales by expanding their customer base utilizing our differentiated offering and allowing customers to access our flexible lease-to-own solutions at thousands of retailers and to lease a wide range of durable products. Through our Rent-A-Center segment, we provide a fully integrated customer experience through our e-commerce platform and brick and mortar presence.

On January 31, 2025, we completed the acquisition of Brigit, a holistic financial health technology company that has helped millions of customers improve their financial health and literacy, find ways to earn and save money, obtain early access to their earned wages ("cash advances"), build their credit through savings and protect themselves from identity theft. Its mission is to help customers build a better financial future. See Note 2 in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

We were incorporated in the State of Delaware in 1986, and our common stock is traded on the Nasdaq Global Select Market under the ticker symbol "UPBD."

Executive Summary

Our Strategy

Our strategy is focused on achieving our mission to elevate financial opportunity for all and growing our business through emphasis on the following key initiatives:

As we pursue our strategy, we have taken, and may in the future take, advantage of joint venture, partnership, or merger and acquisition opportunities from time to time that advance our key initiatives and elevate the financial mobility of underserved consumers.

Recent Developments

Acima Fraudulent Lease-to-Own Contract Losses. As previously disclosed in our Form 8-K filed on July 22, 2026, the Company recently experienced cybersecurity incidents in which certain non-sensitive customer information and other documents were obtained without authorization. In connection with certain such incidents, we believe the information was subsequently used to facilitate fraudulent lease-to-own agreements, contributing to elevated fraudulent contract losses of approximately $13 million in our Acima segment during the three months ended June 30, 2026. Please reference Note 8 for additional discussion of our reporting of the associated fraudulent lease-to-own contract losses in our Consolidated Statement of Operations.

Upon identifying the data compromise, we promptly began implementing mitigation and remediation measures. These measures, implemented in coordination with external cybersecurity experts, include enhanced authentication controls, additional fraud detection and monitoring capabilities, and other security enhancements. Federal law enforcement was also notified of the incidents.

Our investigation of these incidents remains ongoing and may result in additional remediation and other expenses and fraudulent lease-to-own contract losses in subsequent periods. We may make any legal or regulatory notifications as appropriate based on its investigation findings. Based on our current knowledge of the quantitative and qualitative facts and circumstances related to the incidents, we believe the incidents are not material. Should any of the relevant facts and circumstances substantively change, we will reassess our materiality considerations in accordance with Item 1.05 of Form 8-K.

Dividend. On June 2, 2026, we announced that our board of directors approved a quarterly cash dividend of $0.39 per share. The dividend was paid on July 7, 2026 to our common stockholders of record as of the close of business on June 16, 2026.

Business and Operational Trends

Macroeconomic Conditions. In recent years, we have experienced significant change in business and operational trends driven by macroeconomic conditions, which have directly impacted our customers as well as our operations, including significant changes in the U.S. consumer price index, changes in demand for certain consumer retail categories, changes in consumer payment behaviors, a condensed labor market, which has also contributed to wage inflation, rapid increases in interest rates, changes in tariff and trade policies, and global supply chain disruptions resulting in reduced product availability and rising product costs.

While our businesses have historically remained resilient through various economic cycles, the full extent to which our risk management strategy and these macroeconomic trends (including consumer spending and payment behavior) may impact the Company in future periods is uncertain. The continuation of volatile macroeconomic trends may have a material adverse impact on our financial statements, including our results of operations, operating cash flows, liquidity and capital resources.

See "Risk Factors" in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2025, for additional discussion of impacts to our business and additional risks associated with macroeconomic conditions.

Rent-A-Center e-commerce revenue. In recent years, e-commerce revenues have increased over time as a percentage of total rentals and fees revenue in our Rent-A-Center segment. For the six months ended June 30, 2026 and 2025, e-commerce revenues represented approximately 28% and 27% of total lease-to-own revenues, respectively. Due to recent trends in consumer shopping behaviors and expectations, we believe e-commerce solutions are an important part of our lease-to-own offering. However, we are unable to quantify the extent to which e-commerce revenues are incremental compared to what our overall revenues would have been in the absence of those e-commerce transactions. In addition, the profitability of e-commerce transactions can be impacted by different merchandise loss factors compared to traditional store-based transactions in the Rent-A-Center segment. Therefore, we are unable to determine with certainty whether the continuation of this trend toward increased e-commerce transactions will have a significant impact on our financial statements in future periods or be ultimately favorable or unfavorable to our financial results.

Results of Operations

The following discussion focuses on our results of operations and our liquidity and capital resources. You should read this discussion in conjunction with the condensed consolidated financial statements and notes thereto for the six months ended June 30, 2026 included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Key Metrics

Gross Merchandise Volume ("GMV"): The Company defines Gross Merchandise Volume as the retail value in U.S. dollars of merchandise acquired by the Acima segment that is leased to customers through a transaction that occurs within a defined period, net of estimated cancellations as of the measurement date.

Lease Portfolio Value: Represents the aggregate dollar value of the expected monthly rental income associated with current active lease agreements from our Company-owned Rent-A-Center lease-to-own stores and e-commerce platform at the end of any given period.

Same Store Lease Portfolio Value: Represents the aggregate dollar value of the expected monthly rental income associated with current active lease agreements from our Company-owned Rent-A-Center lease-to-own stores that were operated by us for 13 months or more at the end of any given period. The Company excludes from the same store base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store base in the 30th full month following account transfer.

Same Store Sales: Same store sales generally represents revenue earned in Company-owned Rent-A-Center stores that were operated by us for 13 months or more and are reported on a constant currency basis as a percentage of total revenue earned in stores of the segment during the indicated period. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store sales base in the 30th full month following account transfer.

Lease Charge-Offs ("LCOs") (previously referred to as "skip / stolen losses"): Represents charge-offs of the net book value of unrecoverable on-rent merchandise with lease-to-own customers who are past due. This is typically expressed as a percentage of revenues for the applicable period. For the Rent-A-Center segment, LCOs exclude Get It Now, Home Choice and franchise-owned Rent-A-Center locations. For the Acima segment, LCOs exclude fraudulent lease-to-own contract losses.

Brigit Net Advance Losses: Represents charge-offs of Brigit uncollectible cash advances that are more than 45 days past due. This is typically expressed as a percentage of total cash advances originated in the applicable period.

Overview

We report four operating segments: Acima, Rent-A-Center, Brigit and Mexico. The following briefly summarizes our financial performance for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 on a consolidated basis and for our operating segments.

During the first six months ended June 30, 2026, consolidated revenues and gross profit increased by approximately $49.3 million and $59.3 million, respectively, primarily due to an increase in Brigit segment revenues, partially offset by decreases in Rent-A-Center and Acima segment revenues described below. Operating profit increased by approximately $18.4 million, primarily due to the increase in gross profit noted above and decreases in general and administrative expenses and other gains and charges of $10.4 million and $15.9 million, respectively, partially offset by increases in non-labor operating expenses of $61.3 million.

Acima segment revenues decreased approximately $4.1 million for the six months ended June 30, 2026, primarily due to lower merchandise sales revenues of $7.3 million, partially offset by fewer customers electing early purchase options in 2026 resulting in higher rentals and fees revenues of $3.5 million. Operating profit decreased approximately $5.0 million for the six months ended June 30, 2026, primarily due to increases in other gains and charges and non-labor operating expenses of $13.3 million and $3.4 million, respectively, partially offset by an increase in gross profit of $10.8 million. See "Segment Performance" below for further discussion of Acima segment operating results for the six months ended June 30, 2026.

Revenues in our Rent-A-Center segment decreased approximately $8.2 million for the six months ended June 30, 2026, primarily due to decreases in merchandise sales and other revenues of $8.4 million and $6.8 million, respectively, primarily resulting from fewer customers electing early purchase options and lower franchise revenues, partially offset by an increase in rentals and fees revenues of $7.0 million. Operating profit decreased approximately $12.5 million for the six months ended June 30, 2026, primarily due to a decrease in gross profit of approximately $5.7 million driven by lower revenues, in addition to higher non-labor operating expenses and operating labor expenses of approximately $14.4 million and $1.0 million, respectively, partially offset by a decrease in general and administrative expenses of approximately $11.1 million. See "Segment Performance" below for further discussion of Rent-A-Center segment operating results for the six months ended June 30, 2026.

The Brigit segment revenues and gross profit increased by $55.0 million and $50.2 million, respectively, for the six months ended June 30, 2026, partially due to only five months being included in operating results for the six months ended June 30, 2025 following the Closing Date, in addition to an increase in Brigit subscription customers during the six months ended June 30, 2026. See "Segment Performance" below for further discussion of Brigit segment operating results for the six months ended June 30, 2026.

The Mexico segment revenues and gross profit increased by 16.9% and 14.7% for the six months ended June 30, 2026, respectively, primarily due to positive impacts of exchange rate fluctuations. See "Segment Performance" below for further discussion of Mexico segment operating results for the six months ended June 30, 2026.

Cash flow from operations was $294.0 million for the six months ended June 30, 2026. As of June 30, 2026, we held $105.3 million of cash and cash equivalents and had outstanding indebtedness of $1.4 billion.

The following table is a reference for the discussion that follows.

Three Months Ended June 30, 2026, compared to Three Months Ended June 30, 2025

Revenue. Total revenues increased by $5.9 million, or 0.5%, to $1,163.4 million for the three months ended June 30, 2026, from $1,157.5 million for the three months ended June 30, 2025. This increase was primarily due to increases of approximately $19.2 million and $2.9 million in the Brigit and Mexico segments, respectively, partially offset by decreases of approximately $15.4 million and $0.7 million in the Acima and Rent-A-Center segments, respectively, as discussed further in the "Segment Performance" section below.

Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the three months ended June 30, 2026 decreased by $7.5 million, or 2.1%, to $350.6 million as compared to $358.1 million for the three months ended June 30, 2025. The decrease was primarily attributable to decreases of approximately $6.4 million and $2.0 million in the Acima and Rent-A-Center segments, respectively, driven by decreases in rentals and fees revenues. Cost of rentals and fees expressed as a percentage of rentals and fees revenue decreased to 38.8% for the three months ended June 30, 2026, as compared to 39.6% for the three months ended June 30, 2025.

Cost of Merchandise Sold. Cost of merchandise sold represents the net book value of rental merchandise at time of sale. Cost of merchandise sold decreased by $10.7 million, or 4.8%, to $210.9 million for the three months ended June 30, 2026, from $221.7 million for the three months ended June 30, 2025, primarily attributable to a decrease of $12.2 million in the Acima segment, driven by lower merchandise sales, partially offset by an increase of approximately $1.3 million in the Rent-A-Center segment. The gross margin percent of merchandise sales decreased to (15.4)% for the three months ended June 30, 2026, from (15.3)% for the three months ended June 30, 2025.

Gross Profit. Gross profit increased by $23.0 million, or 4.0%, to $594.8 million for the three months ended June 30, 2026, from $571.8 million for the three months ended June 30, 2025, primarily due to increases of $18.2 million, $3.1 million and $1.7 million in the Brigit, Acima and Mexico segments, respectively, as discussed further in the section "Segment Performance" below. Gross profit as a percentage of total revenue increased to 51.1% for the three months ended June 30, 2026, from 49.4% for the three months ended June 30, 2025, primarily due to mix-shift changes between subscriptions and fees product categories in the Brigit segment and fewer customers exercising early purchase options in the Acima segment.

Operating Labor. Operating labor includes all salaries and wages paid to operational employees and district managers, together with payroll taxes and benefits. Operating labor increased by $3.2 million or 2.2% to $152.3 million for the three months ended June 30, 2026, as compared to $149.1 million for the three months ended June 30, 2025. Operating labor expressed as a percentage of total revenue was 13.1% for the three months ended June 30, 2026, as compared to 12.9% for the three months ended June 30, 2025.

Non-Labor Operating Expenses. Non-labor operating expenses include LCOs, occupancy, delivery, advertising, selling, insurance, travel and other operating expenses. Non-labor operating expenses increased by $30.2 million, or 13.1%, to $260.3 million for the three months ended June 30, 2026, as compared to $230.1 million for the three months ended June 30, 2025, primarily due to increases of $20.5 million, $8.9 million and $1.7 million in the Brigit, Rent-A-Center and Mexico segments, respectively, partially offset by a decrease of $1.1 million in the Acima segment. The increase in the Brigit segment was primarily due to higher advertising expenses and customer advance losses of $9.1 million and $7.6 million, respectively, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Non-labor operating expenses expressed as a percentage of total revenue was 22.4% for the three months ended June 30, 2026, compared to 19.9% for the three months ended June 30, 2025.

General and Administrative Expenses. General and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries, payroll taxes and benefits, stock-based compensation, occupancy, administrative and other expenses, as well as salaries and labor costs for our regional directors, divisional vice presidents and executive vice presidents. General and administrative expenses decreased by $3.7 million, or (5.9)%, to $59.7 million for the three months ended June 30, 2026, as compared to $63.4 million for the three months ended June 30, 2025, primarily due to a decrease of approximately $6 million in the Rent-A-Center segment, partially offset by increases of $1.0 million in the Mexico segment and $1.5 million in Corporate costs. General and administrative expenses expressed as a percentage of total revenue was 5.1% for the three months ended June 30, 2026, compared to 5.5% for the three months ended June 30, 2025.

Other Gains and Charges. Other gains and charges decreased by $11.1 million to $54.4 million for the three months ended June 30, 2026, as compared to $65.5 million for the three months ended June 30, 2025. The decrease in other gains and charges was driven primarily by a decrease of $33.6 million in estimated legal accruals and related litigation and defense expenses as described in Note 11 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, partially offset by an increase of $13.3 million related to Acima fraudulent lease-to-own contract losses as discussed above, $5.3 million related to stock compensation expense associated with the vesting of a portion of the Brigit acquisition equity consideration, and $4.0 million related to store consolidations during the three months ended June 30, 2026.

Operating Profit. Operating profit increased by $3.6 million, or 6.9%, to $54.3 million for the three months ended June 30, 2026, as compared to $50.7 million for the three months ended June 30, 2025, primarily due to increases in revenues and gross profit, in addition to decreases in general and administrative expenses and other gains and charges, partially offset by an increase in non-labor operating expenses, as described above. Operating profit expressed as a percentage of total revenue was 4.7% for the three months ended June 30, 2026, compared to 4.4% for the three months ended June 30, 2025.

Income Tax Expense. Income tax expense increased by $0.3 million to $7.7 million for the three months ended June 30, 2026, as compared to $7.4 million for the three months ended June 30, 2025, primarily due to the increase in earnings before income taxes partially offset by a lower effective tax rate for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Six Months Ended June 30, 2026, compared to Six Months Ended June 30, 2025

Revenue. Total revenues increased by $49.3 million, or 2.1%, to $2,383.2 million for the six months ended June 30, 2026, from $2,333.9 million for the six months ended June 30, 2025. This increase was primarily due to increases of approximately $55.0 million and $6.3 million in the Brigit and Mexico segments, respectively, partially offset by decreases of approximately $8.2 million and $4.1 million in the Rent-A-Center and Acima segments, respectively, as discussed further in the "Segment Performance" section below.

Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the six months ended June 30, 2026 decreased by $2.4 million, or 0.3%, to $708.2 million as compared to $710.6 million for the six months ended June 30, 2025. The decrease was primarily attributable to a decrease of approximately $6.3 million in the Rent-A-Center segment, partially offset by increases of approximately $2.0 million and $1.9 million in the Acima and Mexico segments, respectively, driven by an increase in rentals and fees revenue. Cost of rentals and fees expressed as a percentage of rentals and fees revenue decreased to 38.9% for the six months ended June 30, 2026, as compared to 39.4% for the six months ended June 30, 2025.

Cost of Merchandise Sold. Cost of merchandise sold represents the net book value of rental merchandise at time of sale. Cost of merchandise sold decreased by $12.5 million, or 2.5%, to $478.8 million for the six months ended June 30, 2026, from $491.3 million for the six months ended June 30, 2025, primarily attributable to a decrease of $16.9 million in the Acima segment, driven by lower merchandise sales, partially offset by an increase of approximately $3.8 million in the Rent-A-Center segment. The gross margin percent of merchandise sales decreased to (15.9)% for the six months ended June 30, 2026, from (14.7)% for the six months ended June 30, 2025, primarily resulting from lower early purchase option exercises in the Rent-A-Center segment for the six months ended June 30, 2026.

Gross Profit. Gross profit increased by $59.3 million, or 5.3%, to $1,181.3 million for the six months ended June 30, 2026, from $1,122.0 million for the six months ended June 30, 2025, primarily due to increases of $50.2 million, $10.8 million and $3.9 million in the Brigit, Acima and Mexico segments, respectively, partially offset by a decrease of $5.7 million in the Rent-A-Center segment, as discussed further in the section "Segment Performance" below. Gross profit as a percentage of total revenue increased to 49.6% for the six months ended June 30, 2026, from 48.1% for both the six months ended June 30, 2025.

Operating Labor. Operating labor includes all salaries and wages paid to operational employees and district managers, together with payroll taxes and benefits. Operating labor increased by $3.1 million to $301.4 million for the six months ended June 30, 2026, as compared to $298.3 million for the six months ended June 30, 2025. Operating labor expressed as a percentage of total revenue was 12.6% for the six months ended June 30, 2026, as compared to 12.8% for the six months ended June 30, 2025.

Non-Labor Operating Expenses. Non-labor operating expenses include LCOs, occupancy, delivery, advertising, selling, insurance, travel and other operating expenses. Non-labor operating expenses increased by $61.3 million, or 13.7%, to $510.5 million for the six months ended June 30, 2026, as compared to $449.2 million for the six months ended June 30, 2025, due to increases of $40.1 million, $14.4 million, $3.5 million and $3.4 million in the Brigit, Rent-A-Center, Mexico and Acima segments, respectively. The increase in the Brigit segment was partially due to the six months ended June 30, 2025 including only five months of expenses after the Closing Date, in addition to higher advertising expenses and net advance losses of $18.5 million and $16.5 million, respectively. Non-labor operating expenses expressed as a percentage of total revenue was 21.4% for the six months ended June 30, 2026, compared to 19.2% for the six months ended June 30, 2025.

General and Administrative Expenses. General and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries, payroll taxes and benefits, stock-based compensation, occupancy, administrative and other expenses, as well as salaries and labor costs for our regional directors, divisional vice presidents and executive vice presidents. General and administrative expenses decreased by $10.4 million, or (8.2)%, to $116.8 million for the six months ended June 30, 2026, as compared to $127.2 million for the six months ended June 30, 2025, primarily due to a decrease in bad debt expense of $8.1 million related to franchising trade receivables. General and administrative expenses expressed as a percentage of total revenue was 4.9% for the six months ended June 30, 2026, compared to 5.4% for the six months ended June 30, 2025.

Other Gains and Charges. Other gains and charges decreased by $15.9 million or (14.6)% to $92.9 million for the six months ended June 30, 2026, as compared to $108.8 million for the six months ended June 30, 2025. The decrease in other gains and charges was driven primarily by a decrease of $40.2 million in estimated legal accruals and related litigation and defense expenses as described in Note 11 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, partially offset by an increase of $13.3 million related to Acima fraudulent lease-to-own contract losses as discussed above, $6.1 million related to stock compensation expense associated with the vesting of a portion of the Brigit acquisition equity consideration, and $4.0 million related to store consolidations in the first half of 2026.

Operating Profit. Operating profit increased by $18.4 million, or 16.2%, to $131.7 million for the six months ended June 30, 2026, as compared to $113.3 million for the six months ended June 30, 2025, primarily due to increases in revenues and gross profit, in addition to decreases in general and administrative expenses and other gains and charges, partially offset by an increase in non-labor operating expenses, as described above. Operating profit expressed as a percentage of total revenue was 5.5% for the six months ended June 30, 2026, compared to 4.9% for the six months ended June 30, 2025.

Income Tax Expense. Income tax expense increased by $5.1 million to $23.2 million for the six months ended June 30, 2026, as compared to $18.1 million for the six months ended June 30, 2025, primarily due to the increase in earnings before income taxes for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Segment Performance

Acima segment

Revenues. The decrease in revenues for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily due to a decrease in rentals and fees revenues of $9.1 million and a decrease in merchandise sales revenue of $6.0 million, driven by lower GMV. In addition the decrease in revenues for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025 was partially due to a decrease in merchandise sales revenue of $7.3 million, offset by an increase in rentals and fees revenues of $3.5 million.

Gross Profit. Gross profit increased for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, primarily driven by fewer customers exercising early purchase options. Gross profit as a percentage of segment revenues increased to 32.8% and 31.3% for the three and six months ended June 30, 2026, respectively, compared to 31.5% and 30.4% for the three and six months ended June 30, 2025, respectively, primarily due to fewer customers exercising early purchase options.

Operating Profit. Operating profit as a percentage of segment revenues decreased to 12.2% and 12.0% for the three and six months ended June 30, 2026, respectively, compared to 13.2% and 12.4% for the three and six months ended June 30, 2025, respectively. The decrease in operating profit for the three and six months ended June 30, 2026 was primarily due to an increase in other charges of $13.3 million for both the three and six months ended June 30, 2026, related to Acima fraudulent lease-to-own contract losses as discussed above, partially offset by the increase in gross profit described above. Merchandise losses in our Acima locations due to LCOs, expressed as a percentage of segment revenues, were approximately 8.8% for both the three and six months ended June 30, 2026, compared to 9.3% and 9.1% for the three and six months ended June 30, 2025, respectively. Merchandise losses in our Acima locations due to other merchandise losses, expressed as a percentage of segment revenues, were approximately 0.5% for both the three and six months ended June 30, 2026 compared to 0.4% and 0.3% for the three and six months ended June 30, 2025, respectively.

Rent-A-Center segment

Revenues. The decrease in revenue for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, was primarily due to decreases in merchandise sales of $3.5 million and $8.4 million, respectively, primarily resulting from fewer customers electing early purchase options and lower franchise revenues, partially offset by increases in rentals and fees of $5.9 million and $7.0 million, respectively.

Gross Profit. Gross profit decreased for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, driven primarily by the decrease in revenues described above. Gross profit as a percentage of segment revenues was 67.9% and 66.9% for both the three and six months ended June 30, 2026 and three and six months ended June 30, 2025.

Operating Profit. Operating profit as a percentage of segment revenues was 11.7% and 12.3% for the three and six months ended June 30, 2026, respectively, compared to 13.5% for both the three and six months ended June 30, 2025, respectively. The decrease in operating profit margin for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, was partially driven by the decrease in gross profit described above, in addition to increases in merchandise losses, advertising expenses, and insurance costs. Merchandise losses in our company-owned Rent-A-Center lease-to-own stores due to LCOs, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 5.0% and 4.8% for the three and six months ended June 30, 2026, respectively, compared to 4.7% for both the three and six months ended June 30, 2025. Other merchandise losses in our company-owned Rent-A-Center lease-to-own stores, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 1.1% and 1.0% for the three and six months ended June 30, 2026, respectively, compared to 1.0% and 0.9% for the three and six months ended June 30, 2025, respectively. Other merchandise losses include unrepairable and missing merchandise and loss/damage waiver claims.

Brigit segment

(1) See Key Metrics described above for additional information.

Revenues. The increase in revenues for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, was partially due to the six months ended June 30, 2025 including only five months of revenues after the Closing Date, in addition to an increase in Brigit subscription customers. The Brigit segment revenues included increases of $37.5 million, $9.0 million and $7.6 million in subscription revenue, transfer fee revenue and marketplace revenue, respectively.

Gross Profit. Gross profit as a percentage of segment revenues was 90.2% and 89.3% for the three and six months ended June 30, 2026, respectively, as compared to 88.5% and 88.1% for the three and six months ended June 30, 2025, respectively. The increase was primarily due to mix-shift changes between subscriptions and fees product categories.

Operating Profit. Operating profit as a percentage of segment revenues was 10.6% and 18.8% for the three and six months ended June 30, 2026, respectively, compared to 20.2% and 23.0% for the three and six months ended June 30, 2025, respectively, primarily driven by increases in net advance losses and advertising expenses. Net advance losses expressed as a percentage of total cash advances originated were approximately 3.6% for both the three and six months ended June 30, 2026. Net advance losses expressed as a percentage of total cash advances originated were approximately 2.6% for both the three and six months ended June 30, 2025.

Please refer to Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information about the acquisition of Brigit that was completed on January 31, 2025.

Mexico segment

nm - percent change is not meaningful for comparison

Revenues. Revenues were positively impacted by exchange rate fluctuations of approximately $2.5 million and $5.4 million for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. On a constant currency basis, revenues for the three and six months ended June 30, 2026 increased approximately $0.3 million and $1.0 million, respectively, compared to the three and six months ended June 30, 2025.

Gross Profit. Gross profit was positively impacted by exchange rate fluctuations of approximately $1.7 million and $3.8 million for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. On a constant currency basis, gross profit for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was relatively flat. On a constant currency basis, gross profit for the six months ended June 30, 2026, increased by approximately $0.2 million, as compared to the six months ended June 30, 2025. Gross profit as a percentage of segment revenues was 70.1% for both the three and six months ended June 30, 2026, compared to 71.4% for both the three and six months ended June 30, 2025.

Operating Profit (Loss). Operating profit (loss) was negatively impacted by exchange rate fluctuations of approximately $0.1 million for both the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025. On a constant currency basis, operating profit (loss) for the three and six months ended June 30, 2026 decreased by approximately $2.1 million and $3.4 million, respectively, as compared to the three and six months ended June 30, 2025. Operating profit (loss) as a percentage of segment revenues decreased to (1.3)% and (0.9)% for the three and six months ended June 30, 2026, respectively, compared to 9.9% and 8.4% for the three and six months ended June 30, 2025.

Liquidity and Capital Resources

Overview. For the six months ended June 30, 2026, net cash provided by operating activities was $294.0 million, and we received $205.0 million in cash proceeds from indebtedness. During the same period, we used $353.4 million for debt repayments, $46.0 million for dividends, $42.6 million for customer cash advance originations net of collections, and $31.5 million for capital expenditures. We ended the second quarter of 2026 with $105.3 million of cash and cash equivalents and outstanding indebtedness of $1.4 billion.

Analysis of Cash Flow. Cash provided by operating activities increased by $119.9 million to $294.0 million for the six months ended June 30, 2026, from $174.1 million for the six months ended June 30, 2025, primarily due to an increase of approximately $85.0 million in cash provided by net earnings (net earnings less adjustments to reconcile net earnings to net cash provided by operating activities) and lower inventory purchases of approximately $67.2 million, net of a decrease of approximately $18.6 million of customer lease buyouts through early purchase options, lease charge-offs, and other merchandise losses, driven by lower inventory purchases in the Acima segment resulting from an 8.5% decrease in GMV for the six months ended June 30, 2026. These impacts were partially offset by payment of legal settlements of $15.9 million and a year-over-year increase of approximately $13.8 million in payments of outstanding inventory and trade payables primarily due to higher payments of outstanding inventory payables made for the six months ended June 30, 2026.

Cash used in investing activities decreased by $260.2 million to $73.3 million for the six months ended June 30, 2026, compared to $333.5 million for the six months ended June 30, 2025, primarily due to payment of cash consideration for the acquisition of Brigit of $275.9 million for the six months ended June 30, 2025, partially offset by an increase of $14.0 million in net originations and collections of customer cash advances and an increase of $2.6 million in capital expenditures for the six months ended June 30, 2026.

Cash used in financing activities was $(236.3) million for the six months ended June 30, 2026, compared to cash provided of $204.6 million for the six months ended June 30, 2025. The change in cash used in financing activities compared to the prior year period resulted from lower borrowings under the ABL Credit Facility of $344.0 million during the six months ended June 30, 2026, in addition to higher

repayments of outstanding borrowings under the ABL Credit Facility of $59.0 million and payment of the first installment of the Deferred Consideration of $37.5 million related to the Brigit acquisition as mentioned in Note 2. Cash provided from debt proceeds for the six months ended June 30, 2025 were primarily utilized for the Brigit acquisition.

Liquidity Requirements. Our primary liquidity requirements are for rental merchandise purchases in our Acima and Rent-A-Center segments, which are impacted by consumer demand for our lease-to-own solutions, and customer advances in our Brigit segment. Other capital requirements include expenditures for technology and property assets, and debt service. Our primary source of liquidity has been cash provided by operations.

We generally utilize our ABL Credit Facility for the issuance of letters of credit to manage normal fluctuations in operational cash flow caused by the timing of cash payments relative to cash receipts, and to potentially fund strategic initiatives including acquisitions. In that regard, we may from time to time draw funds under the ABL Credit Facility for general corporate purposes. Amounts are drawn as needed due to the timing of cash flows and are generally paid down as cash is generated by our operating activities. We believe cash flow generated from operations and availability under our ABL Credit Facility will be sufficient to fund our operations during the next twelve months. At July 23, 2026, we had approximately $74.2 million in cash on hand and $336.6 million available under our ABL Credit Facility.

Merchandise Losses. Merchandise losses consist of the following:

Capital Expenditures. We make capital expenditures in order to maintain our existing operations, acquire new capital assets in new and acquired stores and invest in information technology. We spent $31.5 million and $28.8 million on capital expenditures during the six months ended June 30, 2026 and 2025, respectively.

Acquisitions and New Location Openings. The table below summarizes the store location activity for the six-month period ended June 30, 2026 for our Rent-A-Center and Mexico operating segments.

Senior Debt. On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, that provides for a five-year asset-based revolving credit facility with commitments of $550 million and a letter of credit sublimit of $150 million, which commitments may be increased, at our option and under certain conditions, by up to an additional $125 million in the aggregate (as most recently amended on August 29, 2025, the "ABL Credit Facility"). Under the ABL Credit Facility, we may borrow only up to the lesser of the level of the then-current borrowing base and the aggregate amount of commitments under the ABL Credit Facility. The borrowing base is tied to the amount of eligible installment sales accounts, inventory and eligible lease contracts, reduced by certain reserves. The ABL Credit Facility bears interest at a fluctuating rate determined by reference to an adjusted Term SOFR rate plus an applicable margin of 1.50% to 2.00%, which, as of July 23, 2026, was 5.74%. A commitment fee equal to 0.250% to 0.375% of the unused portion of the ABL Credit Facility fluctuates dependent upon average utilization for the prior month as defined by a pricing grid included in the documentation governing the ABL Credit Facility. Loans under the ABL Credit Facility may be borrowed, repaid and re-borrowed until June 7, 2029 (subject to certain springing maturity provisions), at which time all amounts borrowed must be repaid.

The obligations under the ABL Credit Facility are guaranteed by us and certain of our material wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations under the ABL Credit Facility and such guarantees are secured on a first-priority basis by all of our and our subsidiary guarantors' accounts, inventory, deposit accounts, securities accounts, cash and cash equivalents, rental agreements, general intangibles (other than equity interests in our subsidiaries), chattel paper, instruments, documents, letter of credit rights, commercial tort claims related to the foregoing and other related assets and all proceeds thereof related to the foregoing, subject to permitted liens and certain exceptions (such assets, collectively, the "ABL Priority Collateral") and a second-priority basis in substantially all other present and future tangible and intangible personal property of ours and the subsidiary guarantors, subject to certain exceptions.

On February 17, 2021, we also entered into a term loan credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, that provides for a seven-year $875 million senior secured term loan facility (as most recently amended on August 19, 2025, the "Term Loan Facility"). Subject in each case to certain restrictions and conditions, we may add up to $625 million (plus additional amounts subject to the satisfaction of certain financial ratios) of incremental term loan facilities to the Term Loan Facility or utilize incremental capacity under the Term Loan Facility at any time by issuing or incurring incremental equivalent term debt. Interest on borrowings under the Term Loan Facility is payable at a fluctuating rate of interest determined by reference to the Term SOFR rate plus an applicable margin of 2.75%, subject to a 0.50% Term SOFR floor, which, as of July 23, 2026 was 6.43%.

Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.000% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity on August 19, 2032 (subject to certain springing maturity provisions). The Term Loan Facility is secured by a first-priority security interest in substantially all of present and future tangible and intangible personal property of us and our subsidiary guarantors, other than the ABL Priority Collateral, and by a second-priority security interest in the ABL Priority Collateral, subject to certain exceptions. The obligations under the Term Loan Facility are guaranteed by us and our material wholly owned domestic restricted subsidiaries that also guarantee the ABL Credit Facility.

At July 23, 2026, we had outstanding borrowings of $868.4 million under the Term Loan Facility and available commitments of $336.6 million under our ABL Credit Facility, net of letters of credit.

See Note 5 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our senior debt.

Senior Notes. On February 17, 2021, we issued $450 million in senior unsecured notes due February 15, 2029, at par value, bearing interest at 6.375% (the "Notes"). Interest on the Notes is payable in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. We may redeem some or all of the Notes at any time for cash at the redemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest to, but not including, the redemption date. If we experience specific kinds of change in control, we will be required to offer to purchase the Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest. See Note 6 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our senior notes.

Operating Leases. We lease space for all of our Rent-A-Center and Mexico stores under operating leases expiring at various times through 2036. In addition, we lease space for certain support facilities under operating leases expiring at various times through 2032. Most of our store leases are five-year leases and contain renewal options for additional periods ranging from three to five years at rental rates adjusted according to agreed-upon formulas. As of June 30, 2026, our total remaining obligation for existing store lease contracts was approximately $357.3 million.

We lease vehicles for all of our Rent-A-Center stores under operating leases with lease terms expiring twelve months after the start date of the lease. We classify these leases as short-term and have elected the short-term lease exemption for our vehicle leases, and have therefore excluded them from our operating lease right-of-use assets within our Condensed Consolidated Balance Sheets. As of June 30, 2026, our total remaining minimum obligation for existing Rent-A-Center vehicle lease contracts was approximately $0.6 million.

We also lease vehicles for all of our Mexico stores which have terms expiring at various times through 2030 with rental rates adjusted periodically for inflation. As of June 30, 2026, our total remaining obligation for existing Mexico vehicle lease contracts was approximately $3.2 million.

Uncertain Tax Position. As of June 30, 2026, we have recorded $1.0 million in uncertain tax positions. Although these positions represent a potential future cash liability to us, the amounts and timing of such payments are uncertain.

Seasonality. Our revenue mix in our lease-to-own businesses is moderately seasonal, with the first quarter of each fiscal year generally providing higher sales than any other quarter during a fiscal year. Generally, our customers will more frequently exercise the early

purchase option on their existing lease purchase agreements in our Acima and Rent-A-Center segments or purchase pre-leased merchandise off the showroom floor in our Rent-A-Center segment during the first quarter of each fiscal year, primarily due to the receipt of federal income tax refunds. In contrast, our cash expenditures for our merchandise purchases for the fiscal year are generally the highest beginning in the latter part of the third quarter through the fourth quarter, primarily as a result of holiday promotions that lead to increased demand for our lease-to-own offerings.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires new tabular disclosures disaggregating prescribed expense categories within relevant income statement captions. In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date for ASU No. 2024-03. The adoption of ASU 2024-03 will be required for us for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. We are currently in the preliminary stages of assessing this ASU and the impact it will have on our financial statements following adoption but expect it will result in increased disclosure.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which amends the existing standard that refers to various stages of a software development. Under the new standard, entities will start capitalizing eligible costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. The adoption of ASU 2025-06 will be required for us for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. We are in the preliminary stages of assessing this ASU and the impact it will have on our financial statements following adoption.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270. The new standard specifies the types of interim reporting and the form and content of interim financial statements, adds a comprehensive list of required interim disclosures and includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The adoption of ASU 2025-11 will be required for us for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. We are in the preliminary stages of assessing this ASU and the impact, if any, it will have on our disclosures within our interim financial statements filed on our Quarterly Reports on Form 10-Q.

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt as of the specified effective date. As of June 30, 2026, unless otherwise discussed, we believe the impact of any other recently issued standards that are not yet effective are either not applicable to us at this time, or will not have a material impact on our consolidated financial statements upon adoption.