- Accelerates Upbound’s strategy to provide technology-driven
financial solutions to customers underserved by the traditional
financial system
- Brings a leading profitable, scalable platform with nearly two
million monthly active customers to Upbound
- Expands customer insights and adds cashflow-based underwriting
capabilities with Brigit’s proprietary AI/ML models
- Financially compelling transaction is expected to be accretive
to Adjusted EBITDA by approximately $25 million to $30 million in
2025 and approximately $70 million to $80 million in 20261
- Further positions Upbound as a growth technology company with
addition of significant financial technology talent and
strengthened R&D capabilities to accelerate innovation and new
product development
- Webcast Investor Call on Friday, December 13, 2024, at 9:00 am
(ET)
Upbound Group, Inc. (“Upbound” or the “Company”) (NASDAQ: UPBD),
a technology and data-driven leader in accessible and inclusive
financial products that address the evolving needs and aspirations
of underserved consumers, today announced it has entered into a
definitive agreement to acquire Brigit, a leading financial health
technology company, for total consideration of up to $460 million
consisting of cash and shares of Upbound common stock. This
transaction is a logical next step reflecting Upbound’s strategic
focus on expanding its technology-driven financial solutions for
consumers who are underserved by the traditional financial
system.
Brigit, which offers a subscription-based model, was launched
nationally in 2019 to expand financial inclusion and help consumers
build a brighter financial future. It is consistently ranked among
the most downloaded financial health apps and is a recognized
leader in innovation in the industry. Built on proprietary
artificial intelligence and machine learning-powered cash flow data
insights, Brigit’s core product is its direct-to-consumer Instant
Cash advance product (earned wage access or EWA) which has saved
its users approximately $1 billion in overdraft fees since
inception2. Brigit also offers a credit builder product that helps
its subscribers build their credit history over time as they
increase their savings, as well as financial wellness solutions and
educational resources to help consumers better manage, save, and
earn money. Brigit currently serves nearly two million monthly
active customers, including over one million active paying
subscribers and almost one million free subscribers. Their
customers are highly engaged, with paid users logging in on average
six times per month. The business is expected to generate revenues
of approximately $215 million to $230 million in 2025 and
approximately $350 million to $400 million in 2026.
Brigit will expand Upbound’s offerings of innovative and
flexible financial solutions, positioning the combined company to
create an industry-leading technology platform for the financially
underserved that meets the consumer wherever they are on their
financial journey. In addition, Brigit’s proprietary data and
sophisticated tech stack are expected to enhance Upbound’s existing
brands, including Acima and Rent-A-Center (RAC), by improving risk
management and fraud prevention, enabling more customer approvals
while also mitigating net losses and enhancing account management.
The combined company’s data-driven insights will create a more
personalized customer experience with the ability to deliver, at
the right time and through the right channels, a wider range of
targeted solutions for consumers. Upbound expects these
enhancements to boost conversion rates, lower churn, and increase
customer loyalty and engagement.
“We are thrilled to welcome Brigit, a company whose mission and
target customer base are closely aligned with ours, into our family
of brands,” said Upbound’s Chief Executive Officer Mitch Fadel.
“Creating a financial solutions platform with Brigit as the
backbone expands our addressable market and enables Upbound to
innovate across even more product categories to improve the
financial health of our customers. The ability to add new products
for our customers beyond lease-to-own is an important part of our
strategy and now we can offer liquidity solutions, budgeting,
credit building, financial literacy and savings. We believe this
transaction will position Upbound for accelerated growth, with
greater scale and a more diversified financial profile, ultimately
driving long-term value for our shareholders.”
“Brigit has helped everyday Americans build a brighter financial
future through a suite of innovative financial products that
leverage cutting-edge cash flow technology,” said Brigit cofounder
& CEO Zuben Mathews. “This transaction is a testament to our
team’s continued passion for helping the underserved and our
dedication to innovation. By combining forces with Upbound, we can
accelerate our impact and better serve the millions of Americans
who have been historically underserved by traditional financial
institutions. Together, we are excited to widen our reach and bring
financial freedom to even more people in need.”
Brigit founders Zuben Mathews and Hamel Kothari will continue to
lead the Brigit team as a business segment of Upbound. Brigit will
continue to operate under its existing branding and will retain its
headquarters in New York City, which is expected to serve as one of
Upbound’s innovation hubs.
Transaction Details
Upbound is acquiring Brigit for up to $460 million, comprised of
(1) $325 million payable at closing, 75% in cash and 25% in Upbound
shares; (2) $75 million in deferred cash consideration over two
years; and (3) a potential earnout of up to $60 million in cash
based on achievement of certain financial performance metrics for
the Brigit business in 2026. Upbound will fund the transaction
through a combination of cash on hand, borrowing capacity under its
$550 million revolving credit facility, and issuance of new shares
of Upbound common stock to Brigit stockholders.
The integration of Brigit’s all-digital, scalable platform is
expected to expand Upbound’s addressable market outside of durable
goods and enhance its strong financial profile while adding an
additional complementary growth segment. With approximately 80%
recurring subscription revenue, and an estimated total revenue
growth in 2024 of 40% to 50% compared to 2023 with similar
expectations in 2025, Upbound believes the transaction will
accelerate its growth and is expected to be neutral to non-GAAP EPS
in year one and meaningfully accretive to non-GAAP EPS in year two
and beyond. Brigit will diversify Upbound’s revenue/Adjusted EBITDA
mix; within the next four years, Upbound expects approximately
two-thirds of revenue and Adjusted EBITDA3 will be derived from
virtual and digital platforms.
Following the transaction, Upbound expects pro forma net
leverage ratio of approximately 3x4 and pro forma available
liquidity of nearly $300 million5. Upbound continues to target
leverage of approximately 2x over the long-term.
The acquisition is expected to close in Q1 2025, subject to
receipt of requisite regulatory approvals and satisfaction of other
customary closing conditions.
Advisors
Greenhill & Co. Inc. is acting as financial advisor to
Upbound, Sullivan & Cromwell LLP and Mayer Brown LLP are acting
as its legal counsel. FT Partners is acting as financial advisor to
Brigit and Cooley LLP and Morgan Lewis & Bockius LLP are acting
as its legal counsel.
Investor Conference Call Details
Upbound will host a conference call on Friday, December 13,
2024, at 9:00 am (ET) to discuss this transaction. Interested
parties can access a live webcast of the conference call via this
link or through the Company's investor relations website.
About Upbound Group, Inc.
Upbound Group, Inc. (NASDAQ: UPBD), is a technology and
data-driven leader in accessible and inclusive financial products
that address the evolving needs and aspirations of underserved
consumers. The Company’s customer-facing operating units include
industry-leading brands such as Rent-A-Center® and Acima® that
facilitate consumer transactions across a wide range of store-based
and digital retail channels, including over 2,300 company branded
retail units across the United States, Mexico and Puerto Rico.
Upbound Group, Inc. is headquartered in Plano, Texas. For
additional information about the Company, please visit our website
Upbound.com.
About Brigit
Brigit is a holistic financial health app that has helped
millions of Americans budget better, get their earned wages early,
build their credit through savings, protect themselves from
identity theft, and find ways to earn and save money. Its mission
is to help everyday Americans build a better financial future.
Brigit is backed by Lightspeed, DCM, Nyca, Flourish Ventures,
Hummingbird VC, DN Capital, Will Smith, Kevin Durant, and other
prominent investors.
Cautionary Note Regarding Forward-Looking Statements
This press release and the associated investor presentation and
webcast contain forward-looking statements that involve risks and
uncertainties. These statements are made under the “safe harbor”
provisions of the U.S. Private Securities Litigation Reform Act of
1995. Such forward-looking statements generally can be identified
by the use of forward-looking terminology such as "may," "will,"
"expect," "intend," "could," "estimate," "predict," "continue,"
"should," "anticipate," "believe," or “confident,” or the negative
thereof or variations thereon or similar terminology and include,
among others, statements concerning (a) the anticipated benefits of
the proposed transaction, (b) the anticipated impact of the
proposed transaction on the combined company’s business and future
financial and operating results, (c) the anticipated closing date
for the proposed transaction, (d) other aspects of both companies’
operations and operating results, and (e) our goals, plans and
projections with respect to our operations, financial position and
business strategy. However, there can be no assurance that such
expectations will occur. The Company's actual future performance
could differ materially and adversely from such statements. Factors
that could cause or contribute to such material and adverse
differences include, but are not limited to: (1) risks relating to
the proposed transaction, including (i) the inability to obtain
regulatory approvals required to consummate the transaction with
Brigit on the terms expected, at all or in a timely manner, (ii)
the impact of the additional debt on the Company’s leverage ratio,
interest expense and other business and financial impacts and
restrictions due to the additional debt, (iii) the failure of
conditions to closing the transaction and the ability of the
parties to consummate the proposed transaction on a timely basis or
at all, (iv) the failure of the transaction to deliver the
estimated value and benefits expected by the Company, (v) the
incurrence of unexpected future costs, liabilities or obligations
as a result of the transaction, (vi) the effect of the announcement
of the transaction on the ability of the Company or Brigit to
retain and hire necessary personnel and maintain relationships with
material commercial counterparties, consumers and others with whom
the Company and Brigit do business, (vii) the ability of the
Company to successfully integrate Brigit’s operations over time,
(viii) the ability of the Company to successfully implement its
plans, forecasts and other expectations with respect to Brigit’s
business after the closing and (ix) other risks and uncertainties
inherent in a transaction of this size and nature, (2) the general
strength of the economy and other economic conditions affecting
consumer preferences, demand, payment behaviors and spending; (3)
factors affecting the disposable income available to the Company's
and Brigit’s current and potential customers; (4) the appeal of the
Company’s and Brigit’s offerings to consumers; (5) the Company's
and Brigit’s ability to protect their proprietary intellectual
property; (6) the impact of the competitive environment in the
Company’s and Brigit’s industries; (7) the Company's and Brigit’s
ability to identify and successfully market products and services
that appeal to their current and future targeted customer segments;
(8) consumer preferences and perceptions of the Company's and
Brigit’s brands; (9) the Company’s and Brigit’s compliance with
applicable laws and regulations and the impact of active
enforcement of those laws and regulations, including any changes
with respect thereto or attempts to recharacterize their offerings
as credit sales, (10) information technology and data security
costs; (11) the impact of any breaches in data security or other
disturbances to the Company's or Brigit’s information technology
and other networks and the Company's and Brigit’s ability to
protect the integrity and security of individually identifiable
data of its customers and employees; and (12) the other risks
detailed from time to time in the Company's SEC reports, including
but not limited to, its Annual Report on Form 10-K for the year
ended December 31, 2023 and in its subsequent Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K. You are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Except as required
by law, the Company is not obligated to publicly release any
revisions to these forward-looking statements to reflect the events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events.
Non-GAAP Financial Measures
This release and the associated investor presentation and
webcast contain certain financial information determined by methods
other than in accordance with U.S. Generally Accepted Accounting
Principles (GAAP), including (1) Adjusted EBITDA (net earnings
before interest, taxes, stock-based compensation, depreciation and
amortization, as adjusted for special items) on a consolidated and
segment basis and (2) Net Leverage Ratio (total debt less
unrestricted cash, divided by Adjusted EBITDA). “Special items”
refers to certain gains and charges we view as extraordinary,
unusual or non-recurring in nature or which we believe do not
reflect our core business activities. Special items are reported as
Other Gains and Charges in our Consolidated Statements of
Operations. Because of the inherent uncertainty related to these
special items, management does not believe it is able to provide a
meaningful forecast of the comparable GAAP measures or
reconciliation to any forecasted GAAP measure without unreasonable
effort. These non-GAAP measures are additional tools intended to
assist our management in comparing our performance on a more
consistent basis for purposes of business decision-making by
removing the impact of certain items management believes do not
directly reflect our core operations. These measures are intended
to assist management in evaluating operating performance and
liquidity, comparing performance and liquidity across periods,
planning and forecasting future business operations, helping
determine levels of operating and capital investments and
identifying and assessing additional trends potentially impacting
our Company that may not be shown solely by comparisons of GAAP
measures. Consolidated Adjusted EBITDA is also used as part of our
incentive compensation program for our executive officers and
others. We believe these non-GAAP financial measures also provide
supplemental information that is useful to investors, analysts and
other external users of our consolidated financial statements in
understanding our financial results and evaluating our performance
and liquidity from period to period. However, non-GAAP financial
measures have inherent limitations and are not substitutes for, or
superior to, GAAP financial measures, and they should be read
together with our consolidated financial statements prepared in
accordance with GAAP. Further, because non-GAAP financial measures
are not standardized, it may not be possible to compare such
measures to the non-GAAP financial measures presented by other
companies, even if they have the same or similar names.
______________________________ 1 Non-GAAP Financial Measure. See
descriptions below in this release. Due to the inherent uncertainty
related to the special items discussed under “Non-GAAP Financial
Measures” below, management does not believe it is able to provide
a meaningful forecast of the comparable GAAP measure or
reconciliation to any forecasted GAAP measure without unreasonable
effort. 2 Assumes all Brigit’s cash advances since inception have
assisted customers with avoiding overdraft fees at an estimated
$34/overdraft. 3 Non-GAAP Financial Measure. See descriptions below
in this release. Due to the inherent uncertainty related to the
special items discussed under “Non-GAAP Financial Measures” below,
management does not believe it is able to provide a meaningful
forecast of the comparable GAAP measure or reconciliation to any
forecasted GAAP measure without unreasonable effort. 4 Non-GAAP
Financial Measure. See descriptions below in this release. Due to
the inherent uncertainty related to the special items discussed
under “Non-GAAP Financial Measures” below, management does not
believe it is able to provide a meaningful forecast of the
comparable GAAP measure or reconciliation to any forecasted GAAP
measure without unreasonable effort. 5 Pro forma net leverage ratio
(total debt less unrestricted cash, divided by Adjusted EBITDA) and
pro forma available liquidity (estimated available borrowings under
the company’s revolving credit facility and unrestricted cash)
assume the acquisition of Brigit is completed March 31, 2025 and
the Company makes the closing date cash payment at that time. Above
metrics reflect the Company’s estimates and are not reflective of
actual amounts or indicative of future results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241212082702/en/
Investor Contact Jeff Chesnut SVP, Strategy &
Corporate Development 972-801-1108 jeff.chesnut@upbound.com
Media Contacts Kelly Kimberly 713-822-7538
Kelly.kimberly@fgsglobal.com Leah Polito 212-687-8080
Leah.polito@fgsglobal.com
Upbound (NASDAQ:UPBD)
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