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Fahmi Karam

Thank you, Mitch, and good morning everyone. I'd like to start by expressing my gratitude to the board for their confidence in me and for giving me the honour to serve as Upbound's next CEO.
I'd also like to thank Mitch for his incredible mentorship over the past 2.5 years and for his invaluable contribution and commitment to Upbound.
Thanks to Mitch's leadership, our company has continued to evolve with our consumers and achieve sustained, profitable growth, strong cash flow generation, and driven value for our shareholders.
Over the past 2 years, we have made incredible progress in executing our growth strategy.
Our performance has positioned us as a differentiated leader in delivering technology-driven financial solutions with room to profitably grow our platform with new products and services.
This is an exciting time for Upbound. Our business is growing, and we have the right strategy and team in place. As CEO, together with our incredibly talented and dedicated team across the company, we will build upon our strong foundation and accelerate our core mission to expand financial inclusion.
I look forward to working closely with Mitch over the next few months to ensure a smooth transition.
Let's now turn to a review of the segment results and then discuss our outlook for fiscal 2025, after which we will take some questions.
Acima recorded a Q4 GMV growth of 15.3% year over year above our expectations and especially impressive coming off 19% growth in the same quarter of 2023, resulting in over 34% GMV growth on a stacked two-year basis.
GMV this quarter was the highest it's been since we added a Acima for 4 years ago, and it was driven by the highest number of applications in a quarter, which were up 19% year over year.
Similar to the 3rd quarter, the growth was approximately a 70-30 split between new merchants and higher productivity from our existing merchant relationships.
And with the Acima Salesforce registering hundreds of new merchant signups each month, we've achieved all-time highs for total locations and active locations.
In addition to our merchant diversification that Mitch mentioned, our largest product category, furniture, only represented approximately 43% of rental revenue in the fourth quarter.
The combination of adding new locations plus trade down resulted in the Acima transacting with nearly a million new customers in 2024, while our Acima direct to consumer marketplace grew nearly 60% from the fourth quarter of 2023.
Acima revenues grew 14.4% year over year, which was the fourth consecutive quarter of double-digit growth, and adjusted IBADA was up nearly 8% from a year ago.
EBITDA margins were down 90 basis points from Q4 of 2023. However, we're up 60 basis points sequentially.
Rent-A-Centeras we discussed on our last call, trade down has impacted near-term margins at Acima, but it offers two important benefits. First, it introduces new customers to Acima and drives repeat business for us at a low cost of acquisition as more and more consumers understand the benefits of the LTO transaction.
It also helps us balance the risk profile of our consumer base, which allows us to lower lease charge-offs. Our loss rate of 9% for the fourth quarter was down 90 basis points year over year and 20 basis points sequentially.
Let's move to the Rent-A-Center results starting on page 8.
Ben Center's results included the impact of approximately 110 stores that were franchised or consolidated and to a more limited extent, the impacts of Hurricane Helene and Milton, which hit the southeastern US early in the quarter.
Due to the footprint optimization effort, Rent-A-Center finished the quarter with 111 locations fewer than year-end 2023.
Same source sales were relatively flat in the 4th quarter, and the percentage of revenue from the web channel increased approximately 70 basis points in the quarter compared to the 4th quarter of 2023.
In terms of product category performance, furniture and appliances represent almost 70% of the product mix with some softness and demand for consumer electronics relative to the year ago period.
Rent-A-Center's revenue was down approximately $15 million year over year, mostly driven by the franchising sale and the lower store count.
However, adjusted EBITDA was up over $8 million in part due to the reductions in operating expenses, including labor and occupancy expenses, and the benefit from the disposition of older fleet inventory.
In addition to these fleet savings that will reverse next year with new higher priced vehicles coming online, the quarter also benefited from expenses related to workers' comp and other store level initiatives that are not expected to recur in 2025.
Beni Center's loss rate in the quarter finished at 5%, which was up 80 basis points from 2023, but as forecasted relatively flat sequentially.
As Mitch mentioned earlier, we took prudent actions in the latter part of the 3rd quarter to protect our portfolio and to respond to pressure on early performance indicators.
As conditions change, our decisioning will adjust, and we'll be ready to responsibly support our consumers' needs across the year if the environment improves.
Let's cover our liquidity and capital allocation policies on slide 9.
Our business has a proven and long track record of delivering strong adjusted EBITDA free cash flow conversion year after year, including generating nearly $150 million of free cash flow in 2023.
In 2024, our higher earnings and accelerating growth at Acima meant higher cash tax payments and a ramp up in networking capital, resulting in free cash flow of approximately $50 million in 2024.
Even as the earnings and associated tax burden increases in 2025, our networking capital investment should moderate, delivering free cash flow more aligned to historical levels.
At year end, our liquidity was $489 million between our cash on hand and revolver availability, and as planned, we leveraged a portion of that liquidity in January to address the upfront consideration for the bridge acquisition.
As we've said in the past, our capital allocation priorities are to reinvest in the business, support the dividend, deliver, pursue strategic M&A, and execute opportunistic share buybacks.
In 2024, our investments in the business included approximately $56 million of CapEx, of which about half supported Rent-A-Center's customer, store, and digital transformation initiatives.
And even with the change in Upbound's near term ABL availability post the Bridget acquisition, the company's resources were more than sufficient to confidently raise the dividend by over 5% and maintain our strong dividend yield.
As for leverage, our net leverage ratio was approximately 2.7 times at year end and moved to about 3 times when the Bridget deal closed.
With higher free cash flow and EBITDA growth expected in 2025 and a consistent focus on deleveraging, we're reaffirming our commitment to achieving a leverage ratio at or under 2 times.
The speed of reaching 2 times will largely depend on a seamless growth as we maintain discipline and underwriting and expense management to support margins.
Post the Brigit acquisition, we do not currently have any near term plans for M&A, but our capital structure is flexible and we'll be ready if the right combination of value and strategic fit arises.
Let's shift over to our financial outlook.
The near to midterm horizon will be characterized by shifting domestic policies, realignment of traditional geopolitical relationships, uneven macro factors, and disruptive advancements like generative AI.
And while these new variables may emerge, this outlook assumes a stable backdrop consistent with current conditions, with a tight credit environment maintaining current levels of trade down and pressure on durable goods demand, especially in furniture that's still recovering, and we expect to remain under pressure in 2025, albeit a little less than in 2024.
At Acima, we expect continued growth and opportunity with GMV and revenue both up high single digits to low double digits. Adjusted EBITDA margins should improve from the prior year with movement towards the mid-teens area.
At Rent-A-Center, we expect revenue to be down in the low single digit range due to the sale and consolidation of approximately 110 stores that I mentioned earlier.
We expect adjusted EBITDA margins to be in the mid-teens area, decreasing year over year to go higher operating expenses as a percentage of revenue.
2024 benefited from several expense initiatives throughout the year, some of which will not occur again in 2025, especially in the second half of the year, resulting in a normalization of the ratio of operating expenses, less losses to revenue.
The Rent-A-Center leadership team will be working across the year to accelerate the pace of the digital impacts to realize more operating leverage in the business and create further margin enhancing opportunities going forward.
For Bridget, we're reiterating our guidance from December, which is revenue in the $215 million to $230 million range and adjusted I on the $25 million to $30 million range.
Due to closing on January 30, we'll pick up 11/12 of that performance in our consolidated results for 2025.
Our integration plan for Bridget is intentionally light touch, and we are aligned with strong incentives to collaborate for enterprise-wide benefits.
We plan to focus on continued R&D initiatives, marketing efforts to increase paying subscribers, and increasing retention rates, all targeted to achieving a step change in performance for 2026.
At the upbound level, our corporate costs should be flat on a dollar basis to 2024, and we're modeling one interest rate reduction in September.
We expect the tax rate to be consistent with 2024 at approximately 26% and steady across the quarters, with an average diluted share count for the year of approximately $58.9 million shares, which includes approximately $2.7 million shares related to the Bridget acquisition.
Taken together, our outlook for 2025 includes a revenue range of $4.5 billion to $4.75 billion an adjusted EBITDA range of $500 million to $540 million fully diluted non-gap earnings per share of $3.90 to $4.40 and free cash flow ranging from $150 million to $200 million.
We're also pleased to share our preliminary thoughts on the 1st quarter, which is off to a busy start as each of our segments navigate seasonal and macro factors, including the start of tax season and extreme weather in some key geographies.
Based on what we've seen to this point, we expect consolidated revenue to be up mid-single digits year over year with continued momentum at Acima and the addition of Bridget offsetting mid-single digit step back at Rent-A-Center for the reasons we outlined earlier.
Our least charge off metrics are stable to improving, demonstrating that our proactive risk management strategies continue to be effective.
Adjusted Ibadan margins on a consolidated basis are expected to be up slightly, with the pressure on the Rent-A-Center's margins being offset by margin improvements at Acima plus Bridget's contribution.
After accounting for the Bridget-related adjustments to interest expense and share count, we expect non-GAP EPS to range from $0.90 to $1 compared to $0.79 a year ago.
Note that Bridget's contribution in the 1st quarter will include February and March only, and that Bridget's cash advance losses are not included in our lease charge-off metric, which measures performance of leased transactions.
At the segment level, rent a center losses for the 1st quarter should be relatively flat to the period a year ago and a slight improvement from the 4th quarter.
EBITDA margins are expected to be in the mid-teens and below the prior year.
Acima losses should be in the 9% area, improving from the 9.6% in the first quarter of 2024.
As EBITDA margins are expected to improve year over year and be seasonally low compared to our overall annual target of low to mid-teens range.
As we wrap up on slide 11, I'd like to emphasize a couple of the points that Mitch mentioned earlier.
In 2024 we made substantial progress on our key strategic priorities for our customers, we've always supported them with the accessibility and flexibility of the lease to own model.
And now with Bridget, we've added digital financial health products and capabilities.
Bridget's EWA and credit building tools will help our customers improve their financial situation while simultaneously helping us become more relevant more often when our consumers need us the most.
Our consumers' needs and expectations are always evolving, and they count on us to help them lead better financial lives.
We'll continue to bring the relevant solutions to reinforce our relationship and our commitment to the underserved consumer.
For our stakeholders, we remain committed to creating long-term sustainable value by building a strong foundation, allocating capital thoughtfully and growing responsibly.
We delivered on those goals across the year as we extended and repriced our debts back, raised our dividend, and grew revenue, EBITDA and EPS while managing risk in a volatile environment.
We look forward to delivering on our goals again in 2025 and continuing the strong momentum we've built across our brands.
Thank you for your time this morning, operator, you may now open the line for questions.

Question and Answer Session

Operator

(Operator Instructions)
Bobby Griffin, Raymond James

Bobby Griffin

Good morning, everybody. Thanks for taking the questions. And, Mitch, con congrats on the retirement. It's been great working with you over the years. I've learned a lot and Sammy, congrats on the new role.

Mitchell Fadel

Thanks Bobby. Yeah, thanks Bobby. I appreciate it.

Bobby Griffin

I guess first I want to start at maybe a high level and can you talk a little bit about your view of your core customer where they sit today versus a couple of months ago, obviously the low end consumer's been under pressure.
It looked like it stabilized a little and then we kind of saw some comments out of you guys as well. As one of your peers and some fighting in the fourth quarter and maybe even some in 25. So just how do you view the consumer now heading into 25, kind of how you're approaching managing that risk and any details there to help us think about what's going on from the core business customer?

Mitchell Fadel

Sure, Bobby, this Mitch, I'll start and then Fahmi karam can weigh in.
The A little different when we think about a Acima and we have had to tighten in both cases last year we've, we tightened.
Acima with the benefit of trade down though is that you see their numbers as far as growth where we can tighten at the bottom and that the trade down is helping quite a bit and You see the losses coming down. Delinquency's in really good shape, and so forth.
So, I think that the trade down at Acima is offsetting the tightening we had to do at the bottom. I don't think that. I know that just from looking at the looking at our internal numbers and the delinquency rates of new customers versus the core customers and so forth.
So, we've really tightened down the bottom and they're getting the benefit of trade down. Rent-A-Center we've had to tighten at the bottom. Also, as I mentioned in my prepared comments, they don't get the benefit quite as quickly or as directly as the Acima does on trade down because they're not in a retail waterfall. So Rent-A-Center, that's same source sales.
Was strong based on based on the environment for the year at 1.5%, but it was flat in the fourth quarter, so it's decelerating a little bit primarily because we've had to tighten the tighten at the bottom and they're not getting all the benefit of trade down the way an as Acima does so.
Our growth vehicle the see is in great shape because of the trade down or the trade down is certainly helping and Rent-A-Centercertainly, even being flat on same store sales is a pretty darn good job in this environment, with still strong mid-team EBITDA margins as we think about next year,
So, Overall, you've heard me say it before too, Bobby. I mean, our core customers kind of always under pressure other than the stimulus time, maybe in 2021. So, it's a long way of saying the trade down is really helping offset the struggle at the at the what you might call the core customer.
Okay.

Fahmi Karam

Maybe just to add to that just a little bit, I think the core customers, as Mitch said, is still under pressure, so our posture from an underwriting standpoint is still, I would say on the on the conservative side and the dynamics that Mitch just laid out between the two major segments and you can see it in the results.
Acima is still growing at a very nice clip. 15% in the fourth quarter coming off a big copier the year before and 17% for the year while also reducing its loss rate. So you can see that impact of us tightening some of that trade down with Granit tenor, losses were relatively.
Flat sequentially, but the portfolio had some pressure in the 4th quarter, and that has an impact on margins, as we said in the 4th quarter as well as going into 2025. But generally speaking, we're taking a cautious approach given where the consumer is and where the Macro is.

Mitchell Fadel

Okay, I appreciate that.

Bobby Griffin

And I guess secondly for me, I mean, maybe we dive into one of the strategic priorities? I think it's on slide 6 you guys referenced on the theme of business improving margins, understand that some of the dynamics between early buyouts a little out of your control back to that trade down aspect.
But If you could maybe highlight a couple of things that you believe are in your control that you can, what's going to get worked on this year, dive into that a little bit, the timing of it, just anything there to help us understand the variables that you feel are opportunities within the team's control from an improvement on even flow through and margin structure of that benefit or that segment excuse me.

Fahmi Karam

Yeah, thanks Bobby. Yeah, I think you've started to see a little bit of that, the flow through happening between Q3 and Q4 of 2024. We said there was going to be a delay in timing and we started to see the impact of that in the fourth quarter, going into 2025 for Seema, the guide was improved margins as you noted on the page. Generally speaking from a P&L standpoint.
I would say gross profit for the year we think is going to be relatively flat year over year and where you're going to see the benefit and margin improvements is around losses, which obviously we have control over. We just talked about some of the underwriting posture that we're in. And then obviously some scale and operating leverage on the expense side.
So, as we go into 2025, my expectation is for gross profit to be relatively flat, gross profit percentage to be relatively flat, losses coming down, and then some leverage on expenses. In the first quarter, our estimate based on, kind of the tax season where it's starting, signs of strength there plus the trade down, my assumption is that gross profit margin will actually be lower, but we're going to offset that with better losses and better expenses to be up quarter over quarter at a Acima.

Mitchell Fadel

Yeah, add to that, Acima, when you look at, and I think you touched on it, when you think about the 60 basis point improvement in the fourth quarter, we're already starting to see it like we've talked about. When you look at the last two years, 23 and 24, other than the way the second quarter bounces back from the first quarter because the first quarters always lower with all the extra payouts of the tax returns.
You look at the trends and that's the That you can see the turn just from looking between the 3rd quarter and the 4th quarter of last year, that doesn't normally happen that it goes up 60 basis points in the 4th quarter. And so I think we're already seeing the turn as well. I'd reiterate that.

Bobby Griffin

Thank you. I appreciate the details and best of luck here in 25.
Thanks Bobby.

Operator

Vincent Caintic, BTIG.

Vincent Caintic

Hey, good morning. Thanks for taking my questions, but first, a round of congratulations to both of you, Mitch. It's been great seeing you over the past decades to build up a center, then rescue in the center and then build up to his face so well deserved retirement fondly. It's been great seeing you as well, the past previously and well deserved on your role as CEO so congratulations to both of you.
First question on the, so kind of a follow up on previously and on the kind of the macro environment, if you could talk about maybe how much you tightened, and where you see some of the weakness, you get a couple of detail about your applications are up 19%. You're in the sea but your GMV growth is up 15%. So I wonder if that kind of implies the level of tightening.
And then if you could also talk about you highlighted the furniture that makes differences between Acima and Rent-A-Center and attributed some of that to you know some of the sales differences there like how much of that has been ahead and are there other categories where you may be seeing some strength or other categories point out.

Mitchell Fadel

Yeah, Vincent, on the furniture mix, let me start with that, and then Sammy can talk about the underwriting and on the furniture mix, the great news with Acima is the diversification over the last couple of years of the different categories, with that being in the 40% range when it used to be.
I don't know, 5 years ago or 4 years ago when we bought a it might have been 70 or 80%. So between wheel and tire and jewelry and even things like eyeglasses, there's been a lot of diversification there and really has taken the pressure off of a category that's pretty flat.
So, I think that's the good news, very diversified and when furniture does come back, and it's and our drop in furniture, year over year has certainly diminished. It's not any big GAAP anymore for us. It's pretty flat and but still, having said that, I'm really glad to see the diversification of the categories.
And when furniture does come back, it's still a big category, obviously 40 45%, whatever it is. It's going to certainly help us when that does come back, although we didn't. Nobody thinks 2025 is going to be a banner year for it, but maybe by 26 or something like that, so great diversification in that category and on Brenda Center.
Furniture is actually it's about the same percentage. Furniture. I know furniture and appliances is, close to 70%. The furniture part itself is pretty close to the Acima number as far as the percent of the business. The difference in Rent-A-Center, those are where Acima of the profitability of each product is very similar, but at Rent-A-Center, furniture and appliances are two most profitable products to rent.
As you might guess, just based on retail markups of furniture and furniture, especially compared to say electronics. So where Rent-A-Center gets that wholesale to retail markup as well, whereas Acimadoesn't, so they, the margins matter so the fact that the furniture is still a strong product for Rent-A-Center is something we want to continue to do and.
Because it because it really helps drive the margins. So it's a little bit about the diversification and profitability of those products and the underwriting. I'll let Fay talk about that, sure.

Fahmi Karam

And maybe just a follow on the on the categories I think for on Acima all categories are up year over year in the 4th quarter as well as. For the full year, some of the, as Mitch mentioned, furniture may be still under pressure, and the team has done a great job of diversifying where that, where the GMV comes from. Some couple standouts would be the jewelry segment. We've really done well in jewelry really all year.
It's more of a seasonal product, so obviously really strong in the 4th quarter, as well as our wheel and tire practice. It's still a very strong growth and strong performance business for us. As far as the approval rates go, as you mentioned, after 19% in the quarter, our approval rates.
I would say were relatively flat year over year. When I look at 2024 in total, apps were up 26% in total, and the approval rates were down about 70 or so basis points for the year. But if you think about underwriting or managing a portfolio, you always have to break it down into its components, whether it's, new returning customers by channel, whether it's brick and mortar, e-com or our staff business or by product category.
So I would say generally speaking, year over year we had higher approval rates in less risky segments and our less risky categories like furniture, approval rates. For furniture are actually up year over year, but everything else was down in our more risky segments when you compare it to electronics or jewelry and really same with new versus returning consumers.
Generally speaking, new consumers have a higher loss profile than returning consumers, and so our approval rates. A match that, approval rates on new customers given the trade down is down year over year and for returning customers it's slightly up.
So, as with everything underwriting and managers of risk, it's a pretty dynamic process that we go through and our job is to find pockets of risk and also pockets of opportunity and really balance out the mix between growth, losses, and profitability. The team has done a really great job of balancing that while still growing Acima at 17% for the year.

Mitchell Fadel

Yeah, a couple of things I'd add to that on the underwriting, Vincent, as Fahmi, mentioned, the approval rates are pretty flat, but when you look inside of them. They're, there are a lot of people think, well, if you have to tighten at the bottom at the top, it must, there's not much room to gain anything back at the top because you must be approving anybody, everybody anyhow at the top, and that's not necessarily the case.
So, you can weigh in more at the top with the with the approval rate to offset the tightening at the bottom because It's not like you're starting at 100% approval even at the top end of the spectrum when it comes to the approval. So that's kind of an offset inside that.
Certainly you can see with the delinquency and the loss rates we're pretty happy with what the underwriting team's doing.
You made a comment in your question, you implied that maybe the difference between 19% apps versus 15% growth is the difference citing an underwriting and as family just pointed out, there's not 4% less approvals for the reasons we both just talked about. Remember.
Also in that number there's mixed shifts and things like that as we do more direct to consumer and I mentioned some great names being added to our marketplace like Amazon and Walmart and Target, but some of those products come at a lower ticket as well. So you got a mixed shift there as with our AI driven.
Lease ability engine we're able to lease things that we couldn't even lease before. They're durable goods, but they might only be $200 or $300.
So you know that you got a mix shift in there so I wouldn't TRY to draw a straight line between approval rate and the and the really good strong growth that the Acima had. And lastly on the And the new customers, as Fay pointed out, they certainly, new customers are always riskier than your returning customers.
I mean thankfully that both teams at Acima, with like 40% repeat business and Rent-A-Center has always been strong on repeat business in the in the 65% to 70% range. So fortunately we have a lot of great returning customers that are less risky. But having said that, with the new customers are more risky, but I will tell you our credit metrics on new customers year over year are down.
They're performing as we, as there's more on the high end and less on the low end, our new customers are outperforming a year ago with new customers perform, so we're really happy with that as well. And again, really happy with the way the underwriting team is working with the family's direction, of course. So hopefully that gives you the color you are looking for.

Vincent Caintic

Okay, that's perfect, very helpful detail, and that actually answered all my questions. So thanks again and congratulations.

Mitchell Fadel

Thanks, Vincent. I appreciate it.

Operator

Hoang Nguyen, TD Cowen

Hoang Nguyen

Thank you and congratulations on your retirement, Mitch, and congrats on your new role as Sammy.
Maybe if you can touch a little bit on Bridget, so you've closed the acquisitions for a month now. Maybe can you update us on the integration process so far? I know that previously you mentioned one of the benefits from Bridget is cash flow underwriting. I guess I mean how is that going on your side in terms of in terms of integration and what's your on your product road map and how do you plan to cross sell. To, I guess the customer base of the two companies.
Thank you.

Fahmi Karam

Thanks, Hon. I appreciate the question. So yeah, I mean we're 3 weeks in, so on the bridge of acquisition, so not much to report as far as the integration goes and things like that, but we're equally excited today as we were, a couple of months ago when we announced the transaction. We're very pleased that we were able to close it early in the in the quarter and get the process of integrating with them and really cross marketing with them as quickly as possible, and I think. The order of operations, I guess, will be more on the cross marketing side first. The underwriting teams have begun dialogue and figuring out ways that we can leverage some of the cash flow underwriting, but if I was going to prioritize one over the other, I think it's going to be more on the cross marketing given the customer overlap between the two organizations, and then from an underwriting standpoint, it takes a little bit more time to test the data, apply it to our consumer base, how does it complement our underwriting that we do today because it is very different, but it's something that we feel very bullish on our ability now to really understand our consumer, their payment behavior with real-time data. That is going to be a game changer for us. We talk about, the benefits of applying some of the techniques and models and tools that AEMA has been doing for years over on the Rent-A-Center side, the lift that we should be getting from the cash flow underwriting that Bridget does over onto AEMA and Rent-A-Center should be just as strong. So we're still early on in the process. We'll give updates as the year progresses. But we're very excited to add them to the team and get going.

Mitchell Fadel

Yeah, and I agree, family that cross selling should start pretty darn soon, probably coming right out of tax season where it's going to be more necessary for the consumer as well coming out of tax season to call it April or May. But the teams are already working on that.
They've been on a couple of calls just listening to the marketing teams, Anne and Sarah on our side.
Ferra and Zubin on the on the Bridget team, working together and really etching it out already, so they're going to move pretty fast on that and none of that kind of stuff is in our guidance for next year, so that could all be the latter half of the year could all be a tailwind for us.

Hoang Nguyen

Got it. And I think you mentioned earlier that you had the two sizable merchant wins in the quarter.
Maybe can you talk a little bit about your pipeline, how to start tracking, and what has contributed to the success of your sales team in I guess winning over merchants from other providers.
Thank you.

Mitchell Fadel

Yeah, good question, Hoang. It's been strong, 10%, we talk about 10% location growth in 2024.
And yeah, 10%'s just a number, and sometimes 10% sounds great, and sometimes it's just 10%. But you think about how big the number is when you have 300 or 40,000 locations in the first place and you still can grow at 10% a year. Our sales team is just knocking it out of the park at the seam and yeah, two good wins in the first quarter on regional players, TOP50 furniture players.
And the pipeline remains strong. Lots of conversations going on like we always talk about and it's a long process. We just keep growing at the SMB level in these regional wins as some of the some of the larger players take a lot longer to. To close if you will. So really happy with all the winds and happy with the pipeline.
It continues. It continues to be strong. I think people are needing lease to own in this environment more so. They're waking up to that, so lots of conversations going on like I said.
I dare say that our sales team is the best there is because they're just guys like Chris and Jerry and Ed and Charles and I'll forget a whole bunch of names, but these guys are just with Tyler's direction, Tyler Montro's direction, they are just knocking it out of the park. I think how do you win, technology, are technology strong are offering strong.
The we can integrate really fast we can integrate a lot of different ways so you got to have you got to be able to do that. You got to have the right sales team in the first place you got to be able to integrate, have the right offering, you have the right customer service.
Rent-A-Center helps a lot, it seem a lot of times where, when you think about a company the size of Ashley because we, when you buy a lot of furniture from Ashley, a computer company like [Aze] where you can be on their website as well as, buying computers for Anthony's team on the run the center site.
So, there's a lot of things that benefit us if they. If they've got a few locations that really have a lot of our kind of customers come in, we'll staff them, unlike anybody else in the industry, staff a few stores if that helps. So we've got subject matter experts who're willing to put in the store. So there's a lot of reasons why we're winning and things are really looking bright on the Acima side for sure.

Operator

Thank you.
Kyle Joseph, Stephens

Kyle Joseph

Hey, good morning. Let me echo, congratulations to you both. Just a question for me, regarding furniture retailers, seen a lot of headlines on bankruptcies there.
I just want, and I understand that, seem has been relatively immune to that given diversification, but on the rental center side of the business, is that a big opportunity for you as brick and mortar locations of pure play furniture retailers are on the decline?

Mitchell Fadel

We sure feel like it is, Kyle, especially as we go into 2025, the last quarter of 2024, it might have been a headwind for us with all the with all the going out of business sales going on out there, of course some of them are regional players and some of them are more nationwide, but there's an awful lot of You to your point, an awful lot of close out sales that maybe were a headwind the latter couple of months of the year.
But as we go into 2025, that's all turning, that should all turn the other way. So we do see that as a as a potential. We didn't forecast any, anything great coming out of it, but we certainly see that as upside.

Fahmi Karam

It could be upsides to both around a center and a Acima. So if those customers end up going. To rent a center or one of Acima's partners, as long as we get them from the upbound standpoint, and that could be.

Mitchell Fadel

Upside, yeah, because we weren't in any of the big ones that have closed up, so I guess we just got lucky there, but that is, yeah, it's a benefit as they as they head into a store that more than likely would have a seam in it.

Kyle Joseph

Got it, thanks. Yeah, and then just on the credit side of things, Acima losses are moving in or moved in the opposite direction of rack. You guys touched on this, I think you mentioned that some of that's trade down and some of that the integration of ANO and Acima, you know what's driving that and then I know I know you highlighted that you, underwriting changes at both in different timing there as well.

Mitchell Fadel

Yeah, I think it is just the trade down helping us Acima more than the trade downs helping Rent. Renter, was sequentially, flat.
I think it was 10 basis points or something, but it was basically flat for the 4th quarter, so we're happy that we've stabilized and we look at the delinquency going into tax season, which really starts in earnest today is that when we'll see some money coming through the door.
So, as we go, as we've come into tax season, we're comfortable with where we're in the center is, but yeah, they haven't gotten all the benefit of trade down, helping the number go down. But, we've been able to stabilize it and the delinquency numbers look okay, I always want them a little lower, but they look okay, and we're pretty happy where we are.

Kyle Joseph

Great, thanks very much for answering my questions and congrats again.

Mitchell Fadel

Thanks, Kyle.

Operator

John Hecht, Jefferies

John Hecht

Good morning. Thanks for taking my questions, and, I definitely want to echo the congratulations, to both you, Mitch and Fahmi, good story and a good transition and, just, congratulations all around.
I guess that yeah a lot of the questions you've been asked for me, the first one is, I know it's the first day of tax season that she just included to that, but is there any structural, I mean, we've heard that tax season, the from different operators or credit offers that, tax season, the influence of tax season has changed over the past couple years.
Partly because of timing factors and some other, and some structured tax changes you anything you want to call out this year that you're just looking out for and how that might influence the business.

Mitchell Fadel

Yeah, the only thing I have read about this year compared to really the last 2 years, I would say. I think you're right, it's changed a lot over the years, but really the last couple of years haven't been much different. But everything I'm reading, and I believe it, I mean there are kind of IRS facts that the refunds are starting out higher than last year.
which would be a good thing for us, more money in our customers' pockets. More consumer confidence with more money in their pocket. I think we've proved that during stimulus how much better you can do when there's more money out there. So I think that if that continues to be the case, the higher refunds, I think that's going to be a better season than normal for us for sure.

John Hecht

Okay, that, that's great. Second, you guys have done a good job building out DTC, volume of products and services and so forth. Maybe can you talk about the customer acquisition there, is that the is that as much cross sellers and as new customers.
You know what's the opportunity set there and how does that influence? I'm assuming it's a the customer acquisition profile or the cost might be a little different. So how does it impact the metrics, and then how does the new acquisition influence that over the next, few quarters as well.

Mitchell Fadel

Yeah, that's really, that's a really good question, John, because if we didn't have millions of customers already in our database, which are a lot easier to market to send back to the marketplace, to either go back to the retailer where they came from or to shop to shop on our marketplace with some of the unintegrated retailers.
Your cost of customer acquisition can be pretty darn high if you didn't already, if you didn't already have all those millions of customers. So what we're doing is certainly using a lot of the cross selling and those millions of millions of customers that are both active and inactive already in the database as well as leaning into to driving new customers but doing it very, cautiously from an expense standpoint of.
So, that we don't drive up a lot of costs on customer acquisition, so it's a balance and we can keep our customer new customer acquisition low as we filter in new customers because we have so many repeat customers to deal with first.

John Hecht

Great. I appreciate that and congratulations again.

Operator

Thanks John.
John Rowan, Janney Montgomery Scott

John Rowan

Morning guys.
I'll add my congratulations for both a great career, Mitch and obviously a good promotion. So Mitch, you'll be missed.
I obviously, I'm late in the questions here, so most of my questions have been answered, but any updates on the CFPB lawsuits between CFPB and Acima given the changes at the bureau?

Mitchell Fadel

No, I mean, we're reading the, we're reading the same things you're reading about the bureau. We're waiting for the dust to settle, lots of changes over there and, we'll see what happens. We certainly feel good about our position in those cases, that part hasn't changed, in all those legal cases certainly continue to feel good about our position.
It, like I said, we're all reading the same thing about the CFPB and where it may end up.
But maybe just as important as where they end up or even more important is when you think about the CFPB litigation we have going on. An almost identical lawsuit, one of our competitors, got just about fully dismissed. So, we're that's probably more important than anything else, the fact that a competitor of ours with a very similar lawsuit is basically, one big parts of their case against the CFPB.
So, that's a positive. We still continue to feel good about it and certainly we'll see what happens in Washington as far as, people we talked to there, we just got to wait for the dust to settle. There's a whole lot of confusion right now and we'll see over the next couple of months who we can even talk to up there. I guess it's one way to think about it, John.

John Rowan

Okay, I just, I guess kind of staying with the CFPV to some degree for a second. The, obviously trade down is a big part of the story and You know how much do you think that that's influenced by, or at least was influenced by the pending implementation of the late fee rule and obviously, that's another murky issue at this point but you know how are you looking at, the future of trade downs assuming that you know the late fee rule does not go into effect as ever.

Mitchell Fadel

Yeah, that's a good question. I actually I never thought that that that it was being driven as much by late fee rules as it's driven by the delinquency that that happens with the with the inflation and the environment the way it is now. Just like we talked about the Acima tightening up at the bottom and getting the benefit of trade down, that happens all the way up the spectrum and it's there's at the bottom.
At the lower tiers of the prime customer and the near prime customer, there's stress and you know there's going to be, I think there's going to be continued tightening above us no matter what happens with the late fee rules.
I think it's more about delinquency than it is about that, not to diminish the fact of what they what they could have done in the industry, but I think that the delinquency is It above us in the in the with some of the prime and near prime lenders is going to continue to drive trade down. That's my view, family. I don't know if you have any other view, but.

Fahmi Karam

No, I agree. And John, as when you're increasing price or tightening up, you tend to go faster on the way up than you do on the way down to give up some of that margin.
So our expectation and the guide that we had for the year, was a relatively stable trade down environment.
So we'll see how fast they start unwinding some of those things that they put in place to mitigate the late fee rules. Some are doing it, some aren't. Waiting to see where the where it settles, but either way, we'll be ready to adjust to the environment throughout the year.

John Rowan

Okay, fair enough, thank you.

Mitchell Fadel

Very much.
Thanks.

Operator

Anthony Chukumba, Loop Capital Markets

Anthony Chukumba

Good morning. Let me add my congratulations as well on the retirement and the promotion. So just real quickly, you talked about a seamen marketplace and you talked about the fact that you added these, new, partners, certainly very impressive.
Names. I was, I guess I just had two quick questions. One, even just directionally if you can just let us know what the marketplace, how much GMV had accounted for in 2024, and then, how did that grow in 2024 and sort of what is your expectation in 2025 thanks.

Fahmi Karam

Anthony, good morning. Thanks for the question. So the marketplace in general, we've talked about, the impressive growth rate that it's had this year growing, 60% or so in the fourth quarter, but it is on a relatively small base in total when you think about, almost $1.9 billion of GMV for Acima for the year in a low single digit range is what its contribution is. to GMV, but the growth rate is nice and as Mitch mentioned.
We just recently added some of those bigger names that gives our consumers a lot of different variety and a lot of different options for them to go shop and you know as we talk about, the pipeline for some of the integrated options.
We're going to continue to work on those names and we're in a couple of RFPs that, and we've talked about how long those take to kind of work themselves through and we'll continue to do that. But at the same time, we're trying to find additional ways to increase our GMV and that virtual lease card that we talked about being able to put more of the control in the hands of consumers to be able to go shop.
whether it's through our marketplace or through the app on their phone. That's where we're going to, in the meantime go after the DMV and, now that we have the lease ability engine which allows us to understand what products that they're shopping at these locations, that's a new powerful tool that we look forward to growing as.

Mitchell Fadel

The year goes on. Yeah, and to your point, Sammy, low single digits becomes mid and then, in 2025 and, next couple of years, we'll hit double digits with it. It's a great vehicle for us.

Anthony Chukumba

That's helpful.
Thank you.

Mitchell Fadel

Thanks Anthony.

Operator

Bill Rutter, Bank of America

Bill Rutter

Hi, most of mine have been asked. I just have one.
You mentioned that there's nothing imminent in terms of the M&A pipeline, but you also mentioned that you will continue to look for additional technology solutions to add or digital solutions to add to the platform. I guess how do you think about the next year? Would you be in a position to buy something over the next year or will you be focusing on optimization of Bridget over that period? That's it, thanks.

Fahmi Karam

Thanks for the question. Yeah, I think, as we said, right now, we have plenty of work to do amongst all three brands, plenty of work to do to get the collaboration going with Bridget and You can tell by the guide we have a lot of growth kind of baked in, so we feel like we have plenty to do.
But you never close the door if there's an opportunity that arises that we feel like fit the strategic plan, we feel like we'll expedite that plan and we can get the right value from it, then. You never say never. We'll look at it, but for the moment, I think all the team, here in the building is ready to start integrating with Bridget, and achieve some of the initiatives that we laid out for both Rent-A-Center and Acima, so nothing in the in the near term.
Great.

Operator

Thank.

Fahmi Karam

You.

Operator

You Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back to Mitch for closing remarks.

Mitchell Fadel

Thanks to Wanda and thanks to everyone who joined us today for our 4th quarter update and our outlook for 2025. We appreciate your time.
I'll add my congratulations to Famy on this on this promotion publicly. Add it.
Thankful for the way we work together and look forward to working in the next few months together to make a smooth transition and just as important as that, very thankful for all of our employees, all of our dedicated employees, and of course our merchant partners who are helping us deliver.
What I call pretty impressive 4th quarter results and setting us up for a very strong 2025. So we're, I'm grateful to everyone for their collective efforts, some great jobs being done out there, and I appreciate it. We appreciate it. I know our stakeholders do, and thank you again for your support and look forward to updating you next quarter. Have a great day.

Operator

Ladies and gentlemen, that concludes today's conference call.
Thank you for your participation. You may now disconnect.