Synchrony Financial

If you wish to ask a question following the prepared remarks, please press star 1. I will now turn the call over to Catherine Miller, Senior Vice President of Investor Relations. Thank you. You may begin.

Catherine Miller Thank you, and good morning, everyone. Welcome to our quarterly earnings conference call. In addition to today's press release, we have provided a presentation that covers the topics we plan to address during our call. The press release, detailed financial schedules, and presentation are available on our website, synchronyfinancial.com. This information can be accessed by going to the investor relations section of the website. Before we get started, I wanted to remind you that our comments today will include forward-looking statements. These statements are subject to risks and uncertainty, and actual results can differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call, we will refer to non-GAAP financial measures in discussing the company's performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today's call. Finally, Synchrony Financial is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. On the call this morning are Brian Doubles, Synchrony's President and Chief Executive Officer, and Brian Wentzel, Executive Vice President and Chief Financial Officer. I will now turn the call over to Brian Doubles.

Thanks, Catherine. Good morning, everyone. Synchrony ended the year with a strong fourth quarter performance, highlighted by net earnings of $751 million, or $2.04 per diluted share, which included a $0.14 restructuring charge related to a voluntary employee early retirement program. a return on average assets of 2.5%, and a return on tangible common equity of 21.8%. During the quarter, we connected nearly 70 million customers to our partners and generated more than $49 billion of purchase volume, a fourth quarter record, and a year-over-year increase of 3%, as average active account and spend trends continued to sequentially strengthen across almost all of our platforms. Purchase volume across our digital platform increased 6%, driven by higher spend per account and strong customer response to enhance product offerings and refresh value propositions. Diversified in value purchase volume grew 4%, primarily reflecting the impact of partner expansion this year. Purchase volume in health and wellness also grew 4%, reflecting growth in pet and audiology, partially offset by lower spend in cosmetic. In addition, higher spend per account exceeded the impact of lower average active accounts. Purchase volume in our lifestyle platform increased 3%, reflecting higher broad-based spend per account, partially offset by lower average active accounts. And purchase volume in home and auto was down 2%, generally reflecting selective spend in home improvement and lower average active accounts, partially offset by strong growth in spend per account. Synchrony's dual and co-branding cards accounted for 50% of our total purchase volume in the fourth quarter and increased 16% versus last year, driven by product upgrades, higher broad-based spend, and expanded utility across these card programs. We also continue to see year-over-year improvement in the mix of discretionary spend within our out-of-partner purchase volume, with strength coming from categories like electronics, entertainment, and travel. In addition, both average transaction values and average transaction frequency continue to grow across the portfolio. Average transaction values rose about 30 basis points compared to last year, reflecting growth from non-prime and super prime customers. Average transaction frequency increased across all credit cohorts up about 3.7% versus last year. Collectively, these strengthening core trends across our portfolio are a reflection of Synchrony's focus and disciplined execution throughout the year. We delivered strong credit results while also advancing our key strategic priorities to enhance the value and utility of our financing solutions, broaden our reach, and deliver more powerful experiences for our customers and partners alike. And as a result, Synchrony added more than 20 million new accounts, drove engagement with nearly 70 million existing customers, and generated more than 182 billion of sales for our partners, merchants, and providers in 2025. This is the kind of proven success that has established Synchrony as a trusted partner. In the fourth quarter, we added or renewed more than 25 partners, including Bob's Discount Furniture, RH, and Polaris. We're excited to announce our exclusive multi-year agreement with Bob's Discount Furniture to offer short and long-term promotional financing options to customers at more than 200 Bob's locations. This partnership is expected to launch mid-year and strengthen Synchrony's leadership in the home furnishings industry with partnerships across more than half of furniture today's top 100 retailers. In addition, our renewed partnership with Polaris, a leading manufacturer of off-road vehicles, builds on a nearly two-decade long relationship of collaboration to provide financing for vehicles, parts, accessories, gear, as well as vehicle service and protection products through customized promotional financing and loan options. Throughout the past year, Synchrony expanded our portfolio across both national and local businesses, bringing our total added or renewed partners to more than 75, including two of our top five partners and seven of our top 20. Approximately 97% of our total interest and fees from our top 25 partners are renewed through 2028, and our top five partners are renewed through 2030 and beyond, reflecting the deep trust our partners have in Synchrony and our ability to deliver for their businesses. Synchrony also continued to diversify our programs, products, and markets over the past year, providing greater flexibility and broader access for our customers and partners as their needs evolve and priorities shift. We entered into more than 10 merchant and practice management platform partnerships, including Weave, one of the largest patient relationship management software providers in the health and wellness space that supports over 35,000 small and medium-sized practices across dental, cosmetic, vision, and vet. Together, we're focused on eliminating the friction between patient communication and payment experiences and empowering customers with access and financial flexibility, so we're excited to develop a best-in-class patient engagement and payment solution that will seamlessly integrate CareCredit across critical moments that matter in the patient journey, from appointment scheduling and reminders to bill pay. Synchrony now partners with over 50 merchant and practice management platforms like Weave in both the health and wellness and home and auto markets so that we can enable seamless access to our financing solution suite while converting more sales for hundreds of thousands of small and mid-sized businesses that utilize these technology platforms to operate their businesses. Similarly, our acquisition of Versatile is expected to accelerate our multi-source financing strategy, reaching and empowering more customers with smarter financing options across online, in-store, and mobile points of sale. while driving seamless integrations, higher approval rates, and detailed reporting to drive sales across home, auto, and elective medical merchants and providers. And our continued launch of new products across our portfolio is delivering enhanced utility and value for our customers while driving loyalty and sales for our partners. For example, Synchrony PayLater is now offered to more than 6,200 merchants, and thus far our data shows that when we offer a PayLater and revolving products together, we experience an at least 10% average increase in sales, pointing to the expansive purchase power Synchrony can deliver through our multi-product strategy. And in today's world, where purchases are often decided and financing approved before checkout, Synchrony is increasingly wherever our customer is, on the product page, in search results, in digital shopping carts, and even in their inbox, providing effortless access to flexible financing options. The investments we've been making are driving these and other innovations at Synchrony as we seek to expand and deepen the role we play across the consumer finance and payments ecosystem. Over the last year, we have enriched the experiences we deliver while empowering our customers with more dynamic access and choice through the combination of Synchrony's Marketplace, which features our AI search capability called Joy Hunt, and Synchrony's website and native app. Together, the enhancements we've made across these channels contributed to an 18% increase in total visits and 17% more in sales in 2025. Our digital wallet strategy also continued to accelerate, having more than doubled the number of unique provisioned accounts and digital wallet sales compared to last year. This growth also supported a 400 basis point gain in our dual and co-branded cards wallet penetration rate, which should enhance the stickiness of these products and provide natural tailwinds to Synchrony's mobile wallet share as we continue to invest in this strategy and aim to ensure that our products are anywhere our customers want them to be. So no matter how our customers come to Synchrony, with the hundreds of thousands of partners, providers, and small and mid-sized businesses we serve, our digital ecosystem is designed to connect them with the compelling value propositions, broad utility, and flexible payment structures that best align with their needs in that moment. By almost any account, we believe the ways in which Synchrony has executed throughout 2025 have positioned us well for the future. We have invested in our products and digital capabilities to drive greater reach, deeper penetration, and broader utility. We have built enduring relationships with a diverse range of partners who are primed to deliver strong risk-adjusted growth as conditions allow. And with that, I'll turn the call over to Brian to discuss our financial performance in greater detail. Thanks, Brian, and good morning, everyone.