PLANO, Texas - Upbound Group, Inc. (NASDAQ: UPBD), a provider of financial products for underserved consumers with a market capitalization of $1.84 billion and strong revenue growth of 7.43% over the last twelve months, announced it will acquire Brigit, a financial health technology company, for up to $460 million in a mix of cash and stock. According to InvestingPro analysis, Upbound maintains robust financial health with a current ratio of 3.51, indicating strong capability to execute such strategic moves. The acquisition, expected to close in Q1 2025, will bolster Upbound's tech-driven financial solutions and expand its customer base.
Brigit's subscription-based platform, launched in 2019, focuses on financial inclusion and has saved users approximately $1 billion in overdraft fees with its Instant Cash advance product. The company also offers credit-building and financial wellness resources, serving nearly two million monthly active customers, including over one million paying subscribers. InvestingPro data shows Upbound is currently trading below its Fair Value, suggesting potential upside from this strategic acquisition. Subscribers can access detailed valuation metrics and 6 additional ProTips about Upbound's growth prospects.
Upbound CEO Mitch Fadel expressed enthusiasm for the alignment of missions between the two companies, emphasizing the expansion of Upbound's market and product innovation. Brigit's co-founder & CEO Zuben Mathews highlighted the combined efforts to serve Americans underserved by traditional financial institutions.
The transaction consists of $325 million at closing, deferred cash consideration of $75 million over two years, and up to $60 million in cash based on Brigit's financial performance in 2026. With an EBITDA of $413.54 million and strong analyst support, including 4 recent upward earnings revisions, Upbound appears well-positioned to finance the deal with cash on hand, credit facilities, and Upbound common stock issuance. For comprehensive analysis of Upbound's financial position and growth trajectory, investors can access the detailed Pro Research Report available on InvestingPro.
The acquisition is projected to be accretive to Upbound's adjusted EBITDA by $25 million to $30 million in 2025 and $70 million to $80 million in 2026. It is also expected to be neutral to non-GAAP EPS in the first year and accretive thereafter.
Brigit will maintain its brand and New York City headquarters, becoming an Upbound innovation hub. The combined company aims to leverage Brigit's AI/ML models to enhance customer experience and financial solutions.
Upbound will host an investor call on Friday to discuss the transaction further. This news article is based on a press release statement.
In other recent news, Upbound Group has reported a steady performance in its Q3 2024 Earnings Call. The company's revenue came close to $1.1 billion, with its Acima segment leading with a 19% growth year-over-year. Despite challenges such as increased charge-off rates and a decline in gross margin, Upbound Group remains focused on customer retention and digital enhancements.
Among recent developments, the company is eyeing expansion into Mexico and expects to meet its full-year revenue guidance of $4.2 billion to $4.3 billion. Adjusted EBITDA is projected to be between $470 million and $480 million, with liquidity close to $600 million at the end of Q3.
The company also highlighted its strategic partnerships with major retailers like Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT), demonstrating its commitment to growth. However, it's important to note that gross margin has declined to 47.8% and lease charge-off rates have increased. Despite these challenges, Upbound Group maintains its robust dividend program and anticipates low double-digit GMV growth for Q4 2024.
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