Revenues Revenues (Notes)

6 Months Ended

Jun. 30, 2021

Revenues [Abstract]

Revenues [Text Block]

Revenues

The following table disaggregates our revenue for the periods ended June 30, 2021 and 2020:

	Three Months Ended June 30, 2021
	Rent-A-Center Business		Acima		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	438,162	$	463,841	$	14,402	$	—	$	916,405
Merchandise sales	49,050		171,346		833		—		221,229
Installment sales	18,191		—		—		—		18,191
Other	431		93		20		491		1,035
Total store revenues	505,834		635,280		15,255		491		1,156,860
Franchise
Merchandise sales	—		—		—		29,616		29,616
Royalty income and fees	—		—		—		7,499		7,499
Total revenues	$	505,834	$	635,280	$	15,255	$	37,606	$	1,193,975

	Six Months Ended June 30, 2021
	Rent-A-Center Business		Acima		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	867,463	$	766,367	$	28,109	$	—	$	1,661,939
Merchandise sales	126,428		325,976		1,618		—		454,022
Installment sales	35,964		—		—		—		35,964
Other	845		386		26		696		1,953
Total store revenues	1,030,700		1,092,729		29,753		696		2,153,878
Franchise
Merchandise sales	—		—		—		62,671		62,671
Royalty income and fees	—		—		—		14,208		14,208
Total revenues	$	1,030,700	$	1,092,729	$	29,753	$	77,575	$	2,230,757

	Three Months Ended June 30, 2020
	Rent-A-Center Business		Acima		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	385,338	$	139,440	$	9,959	$	—	$	534,737
Merchandise sales	55,741		51,690		649		—		108,080
Installment sales	17,643		—		—		—		17,643
Other	470		113		3		189		775
Total store revenues	459,192		191,243		10,611		189		661,235
Franchise
Merchandise sales	—		—		—		18,047		18,047
Royalty income and fees	—		—		—		4,464		4,464
Total revenues	$	459,192	$	191,243	$	10,611	$	22,700	$	683,746

	Six Months Ended June 30, 2020
	Rent-A-Center Business		Acima		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	778,503	$	301,438	$	22,796	$	—	$	1,102,737
Merchandise sales	102,428		105,678		1,354		—		209,460
Installment sales	32,390		—		—		—		32,390
Other	836		254		7		400		1,497
Total store revenues	914,157		407,370		24,157		400		1,346,084
Franchise
Merchandise sales	—		—		—		30,484		30,484
Royalty income and fees	—		—		—		9,117		9,117
Total revenues	$	914,157	$	407,370	$	24,157	$	40,001	$	1,385,685

Lease Purchase Agreements

Rent-A-Center Business, Acima, and Mexico

Rentals and Fees. Rental merchandise is leased to customers pursuant to rental purchase agreements, which provide for weekly, semi-monthly or monthly rental terms with non-refundable rental payments. At the expiration of each rental term, customers may renew the rental agreement for the next rental term. Generally, the customer has the right to acquire title of the merchandise either through a purchase option or through payment of all required rental terms. Customers can terminate the rental agreement at the end of any rental term without penalty. Therefore, rental transactions are accounted for as operating leases.

Rental payments received at our Rent-A-Center Business, Acima (excluding virtual) and Mexico locations must be prepaid in advance of the next rental term. Under the virtual business model, revenues may be earned prior to the rental payment due date, in which case revenue is accrued prior to receipt of the rental payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the rental term. See Note 4 for additional information regarding accrued rental revenue.

Cash received for rental payments, including fees, prior to the period in which it should be recognized, is deferred and recognized according to the rental term. At June 30, 2021 and December 31, 2020, we had $47.2 million and $45.8 million, respectively, in deferred revenue included in accrued liabilities related to our rental purchase agreements. Revenue related to various payment, reinstatement or late fees is recognized when paid by the customer at the point service is provided. Rental merchandise in our Rent-A-Center Business, former Preferred Lease, and Mexico locations is depreciated using the income forecasting method and is recognized in cost of sales over the rental term. Rental merchandise in the recently acquired Acima Holdings is depreciated over the rental term using a straight-line depreciation method.

We also offer additional product plans along with our rental agreements which provide customers with liability protection against significant damage or loss of a product, and club membership benefits, including various discount programs and product service and replacement benefits in the event merchandise is damaged or lost, and payment insurance in the event eligible customers become unemployed. Customers renew product plans in conjunction with their rental term renewals, and can cancel the plans at any time. Revenue for product plans is recognized over the term of the plan. Costs incurred related to product plans are primarily recognized in cost of sales.

Revenue from contracts with customers

Rent-A-Center Business, Acima, and Mexico

Merchandise Sales. Merchandise sales include payments received for the exercise of the early purchase option offered through our rental purchase agreements or merchandise sold through point of sale transactions. Revenue for merchandise sales is recognized when payment is received and ownership of the merchandise passes to the customer. The remaining net value of merchandise sold is recorded to cost of sales at the time of the transaction.

Installment Sales. Revenue from the sale of merchandise in our retail installment stores is recognized when the installment note is signed and control of the merchandise has passed to the customer. The cost of merchandise sold through installment agreements is recognized in cost of sales at the time of the transaction. We offer extended service plans with our installment agreements which are administered by third parties and provide customers with product service maintenance beyond the term of the installment agreement. Payments received for extended service plans are deferred and recognized, net of related costs, when the installment payment plan is complete and the service plan goes into effect. Customers can cancel extended service plans at any time during the installment agreement period and receive a refund for payments previously made towards the plan. At June 30, 2021 and December 31, 2020, we had $3.0 million and $3.1 million in deferred revenue included in accrued liabilities related to extended service plans.

Other. Other revenue consisted of revenue generated by other miscellaneous product plans offered to our rental and installment customers. Revenue for other product plans is recognized in accordance with the terms of the applicable plan agreement.

Franchising

Merchandise Sales. Revenue from the sale of rental merchandise is recognized upon shipment of the merchandise to the franchisee.

Royalty Income and Fees. Franchise royalties, including franchisee contributions to corporate advertising funds, represent sales-based royalties calculated as a percentage of gross rental payments and sales. Royalty revenue is accrued and recognized as rental payments and merchandise sales occur. Franchise fees are initial fees charged to franchisees for new or converted franchise stores. Franchise fee revenue is recognized on a straight-line basis over the term of the franchise agreement. At both June 30, 2021 and December 31, 2020, we had $4.5 million and $4.7 million in deferred revenue included in accrued liabilities related to franchise fees.