Synchrony closed 2025 with solid Q4 results and a clear playbook for growth: profit resilience, digital expansion, new and renewed partner deals, and cautious credit management. The company reported strong earnings, rising purchase volume driven by digital channels and co-branded cards, and a multi-product push that includes pay later offerings. Leadership highlighted partnerships like Walmart, Lowe’s, Bob’s Discount Furniture, and Polaris as drivers of future receivables growth, while signaling reserve and expense impacts tied to new program launches. Management wrapped with guidance for mid-single-digit receivables growth and an EPS range for 2026 as investments continue.
Kathryn Miller: The quarter began with a reminder that forward-looking comments carry uncertainty, and the company pointed listeners to its investor materials for the full financial detail. Management emphasized non-GAAP reconciliations and noted that only the official webcast should be relied upon for transcripts. That set the tone for a call focused on measured optimism and transparency around assumptions.
Brian Doubles: Synchrony finished the year with net earnings of $751 million in Q4, driven by record quarterly purchase volume of $49 billion and improved returns on assets and equity. The company connected nearly 70 million customers to partners and saw sequential strengthening in active account and spend trends across most platforms. Digital purchase volume rose, diversified purchase channels expanded, and dual and co-branded cards showed notable growth.
Brian Wenzel: On the finance side, net interest income increased while net revenue was essentially flat as higher interest income was offset by partner share adjustments. Net charge-offs moved back within the long-term target range thanks to underwriting discipline and prior credit actions. Reserves and other expenses rose due to program performance and investments, including a restructuring charge tied to a voluntary retirement program.
Across platforms, Health and Wellness and Diversified spending saw year-over-year gains, while Home and Auto was slightly down reflecting selective spend in Home improvement. Average transaction values and frequency climbed, signaling stronger engagement, and the multiproduct approach—combining revolving, co-brand, and pay later—appears to be lifting sales for merchants. Management said pay later, offered at thousands of merchants, tends to add incremental volume rather than cannibalize existing card spend.
Executives highlighted major partnership activity, adding or renewing dozens of relationships and securing long-term renewal coverage for top partners through 2028 and beyond. Walmart’s One Pay launch, in particular, was described as the fastest-growing program Synchrony has introduced, delivering strong early conversion and digital integration. Renewals with established names like Polaris and new multiyear deals with retailers were presented as evidence of partner trust and the firm’s market position.
Digital investments were another theme: enhanced product experiences, AI-driven search, wallet provisioning, and platform integrations all contributed to double-digit gains in visits and sales. Synchrony reported a meaningful increase in digital wallet accounts and an improved wallet penetration for dual and co-branded cards, which management expects to tighten customer loyalty and support mobile wallet share. These technology initiatives are presented as long-term enablers of acquisition and retention.
Looking ahead, leadership provided a guarded outlook for 2026 that assumes no major regulatory shifts and stable macro conditions. The company guided to mid-single-digit receivables growth driven by average active account and purchase volume increases, while expecting net charge-offs to align with long-term targets. Management also offered an EPS range reflecting the combined effect of growth initiatives, product launches like Lowe’s commercial co-brand, and investments in technology and partnerships.
Credit and liquidity remain focal points: delinquency and net charge-off rates improved versus historical averages, allowance coverage edged down modestly, and funding continued to shift toward deposits with secured and unsecured debt complements. Synchrony emphasized that reserve builds tied to new account growth are expected but that qualitative reserve overlays could ease if macro indicators remain stable. Executives stressed they will adjust credit posture as needed in reaction to portfolio signals.
In sum, the message was pragmatic: Synchrony sees momentum across partners, products, and digital channels and is investing for sustained, risk-adjusted growth. Management acknowledged near-term headwinds from reserve and launch costs but argued those moves set the company up for stronger penetration and earnings over the medium term. The conversation closed with Q&A that reinforced confidence in consumer resilience, partner demand, and the strategic role of multiproduct financing in driving future sales and account growth.
