Revenues (Notes)

9 Months Ended

Sep. 30, 2022

Revenues [Abstract]

Revenues

Revenues

The following table disaggregates our revenue for the periods ended September 30, 2022 and 2021:

	Three Months Ended September 30, 2022
	Rent-A-Center Business		Acima(1)		Mexico		Franchising		Consolidated
(in thousands)
Store
Rentals and fees	$	426,805	$	387,488	$	15,166	$	—	$	829,459
Merchandise sales	30,009		116,795		812		—		147,616
Installment sales	16,718		—		—		—		16,718
Other	223		165		63		889		1,340
Total store revenues	473,755		504,448		16,041		889		995,133
Franchise
Merchandise sales	—		—		—		22,823		22,823
Royalty income and fees	—		—		—		6,001		6,001
Total revenues	$	473,755	$	504,448	$	16,041	$	29,713	$	1,023,957

(1) Represents revenues for our Acima segment, as defined in Note 1.

	Nine Months Ended September 30, 2022
	Rent-A-Center Business		Acima(1)		Mexico		Franchising		Consolidated
(in thousands)
Store
Rentals and fees	$	1,305,871	$	1,218,143	$	45,790	$	—	$	2,569,804
Merchandise sales	123,255		415,465		2,545		—		541,265
Installment sales	52,355		—		—		—		52,355
Other	964		386		119		2,229		3,698
Total store revenues	1,482,445		1,633,994		48,454		2,229		3,167,122
Franchise
Merchandise sales	—		—		—		67,849		67,849
Royalty income and fees	—		—		—		19,962		19,962
Total revenues	$	1,482,445	$	1,633,994	$	48,454	$	90,040	$	3,254,933

(1) Represents revenues for our Acima segment, as defined in Note 1.

	Three Months Ended September 30, 2021
	Rent-A-Center Business		Acima(1)		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	446,049	$	469,692	$	15,108	$	—	$	930,849
Merchandise sales	37,515		153,725		776		—		192,016
Installment sales	17,028		—		—		—		17,028
Other	394		28		33		627		1,082
Total store revenues	500,986		623,445		15,917		627		1,140,975
Franchise
Merchandise sales	—		—		—		33,671		33,671
Royalty income and fees	—		—		—		6,622		6,622
Total revenues	$	500,986	$	623,445	$	15,917	$	40,920	$	1,181,268

(1) Represents revenues for our Acima segment, as defined in Note 1.

	Nine Months Ended September 30, 2021
	Rent-A-Center Business		Acima(1)		Mexico		Franchising		Consolidated
(In thousands)
Store
Rentals and fees	$	1,313,512	$	1,236,059	$	43,217	$	—	$	2,592,788
Merchandise sales	163,943		479,701		2,394		—		646,038
Installment sales	52,992		—		—		—		52,992
Other	1,239		414		59		1,323		3,035
Total store revenues	1,531,686		1,716,174		45,670		1,323		3,294,853
Franchise
Merchandise sales	—		—		—		96,342		96,342
Royalty income and fees	—		—		—		20,830		20,830
Total revenues	$	1,531,686	$	1,716,174	$	45,670	$	118,495	$	3,412,025

(1) Represents revenues for our Acima segment, as defined in Note 1.

Lease Purchase Agreements

Rent-A-Center Business, Acima, and Mexico

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

Lease payments received at our Rent-A-Center Business stores, certain Acima staffed locations formerly operating under the Preferred Lease brand, and Mexico stores must be prepaid in advance of the next lease term. Under the Acima Holdings business model, revenues may be earned prior to the lease payment due date, in which case revenue is accrued prior to receipt of the lease payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the lease term. See Note 4 for additional information regarding accrued lease 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 lease term. At September 30, 2022 and December 31, 2021, we had $31.7 million and $51.7 million, respectively, in deferred revenue included in accrued liabilities related to our lease to own 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 locations, and Mexico stores is depreciated using the income forecasting method and recognized in cost of rentals and fees in our Consolidated Statement of Operations over the

lease term. Lease merchandise in Acima Holdings is depreciated over the lease term using a straight-line depreciation method. Under the income forecasting method, the consumption of lease merchandise occurs during periods of rental and depreciation directly coincides with the receipt of rental revenue over the lease-to-own contract period. Depreciation under the straight-line method is recognized each period over the term of the lease-to-own contract irrespective of receipt of revenue payments from the customer.

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 options offered through our lease-to own 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 September 30, 2022 and December 31, 2021, we had $2.1 million and $2.6 million in deferred revenue included in accrued liabilities related to extended service plans.

Other. Other revenue consists 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 September 30, 2022 and December 31, 2021, we had $3.6 million and $4.1 million, respectively, in deferred revenue included in accrued liabilities related to franchise fees.